Fitbit posted strong earnings for the quarter ending June 30, but sales of its Versa Lite smartwatch were weaker than expected. As a result, the firm was forced to lower its revenue guidance for the rest of 2019.
“While we are disappointed to lower guidance for the year, we remain confident in our long-term transformation strategy and have demonstrated good results across key areas of the business,” Fitbit co-founder and CEO James Park said in a prepared statement. “We saw growth in devices sold, increased active users and continued growth in our Fitbit Health Solutions channel, up 42 percent in the first half of 2019.”
Fitbit posted a net loss of $35.8 million on revenues of $313.6 million, the latter of which is an improvement of about 5 percent year-over-year (Fitbit reported a net loss of $54.2 million in the same quarter a year ago.)
In the good news department, device sales overall were up a whopping 31 percent YOY. Fitness tracker sales were the star, representing 59 percent of Fitbit’s revenues thanks to 51 percent growth in units sold.
But smartwatches stumbled, despite the launch of the affordable Versa Lite model earlier this year. Fitbit’s smartwatch revenues fell 29 percent YOY and the product family represented just 38 percent of the firm’s revenues.
“Versa Lite received good consumer reviews, but we saw that consumers were willing to pay more for a smartwatch with additional features or look for discounting versus everyday value,” Mr. Parks said in a post-earnings conference call. As you may recall, Fitbit launched Versa Lite in March, and sales were initially quite good: In the previous quarter, the firm reported a 117 percent increase in smartwatches YOY. At the time, it said that Versa Lite was its biggest success story so far in 2019.
To counter this, Fitbit promises a “full launch” this fall. Presumably, the new lineup will be tilted more towards fitness trackers and premium smartwatch designs.
“Coupled with innovative hardware and software offerings, we believe we’re well-positioned to bring more users to the Fitbit platform and continue to grow our business,” Mr. Park added.