Fitbit announces early lockup expiration, stock offering

[NEW YORK] Wearable fitness device maker Fitbit Inc agreed to lift lockup restrictions on over 2 million shares more than a month earlier than scheduled and announced an offering of 21 million shares.

The news sent the company's shares down 10 per cent in extended trading on Monday, overshadowing its strong results and forecast.

Fitbit has been trying to attract more corporate customers, who buy its wrist bands and smart watches in bulk and pay the company subscription fees to track employees' health indicators such as heart rate, calories and sleep patterns.

The device maker said last month that it had added over 20 corporate customers in the past four months, including Barclays Plc and GoDaddy Inc. Target Corp has also said it plans to make Fitbit devices available to employees.

Fitbit's Chief Financial Officer William Zerella said retailers expected "very strong" holiday demand for fitness trackers. "We are seeing continued consumer adoption of our product. Our penetration rates are still very low even in the U.S. There is still a lot of opportunity of growth," he said.

The United States accounts for two-thirds of the company's total revenue.

Fitbit forecast a profit of 20-25 cents per share and revenue of US$620 million-US$650 million for the fourth quarter.

Analysts on average were expecting earnings of 20 cents per share and revenue of US$583.5 million, according to Thomson Reuters I/B/E/S.

Fitbit's revenue nearly tripled to US$409.3 million in the quarter ended Sept. 30, beating the average analyst estimate of US$352 million, mainly due to strong demand from markets outside the Americas.

Net income, however, fell 33.5 per cent to US$45.8 million, or 19 cents per share, as research and development and marketing costs surged.

Excluding items, Fitbit earned 24 cents per share, sailing past analysts' expectations of 10 cents.

The company said lockup restrictions on about 2.3 million shares would be lifted on Nov 4, earlier than the previous schedule of Dec 14.

Fitbit, which had about 207 million shares outstanding as of Saturday, plans to sell 7 million shares in the offering and selling stockholders about 14 million.

Fitbit's shares were trading at US$36.90 after the bell.

Up to Monday's close, the stock had more than doubled in value since its debut on June 18.

REUTERS