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Fitbit sees weak tracker sales hitting second-quarter revenue
[BENGALURU] Wearable device maker Fitbit Inc forecast current-quarter revenue below Wall Street estimates on Wednesday as the company expects further sales declines for its fitness tracking devices.
The company's core wearable fitness trackers business has fallen sharply as it faces bigger names with deeper pockets, such as Apple and Samsung, that are relatively new entries in the wearable market but control a large and loyal customer base in electronics.
Shares fell 5.1 per cent to US$5.22 in extended trading after the company missed first-quarter sales estimates, selling 2.2 million devices, compared with 2.33 million expected by analysts, according to financial data analytics firm FactSet.
"It is true that growth for trackers continues to slow as consumer preferences shift to more advanced devices and particularly in the first quarter, the decline was compounded," Chief Executive Officer James Park told Reuters in post-earnings call.
Mr Park said Fitbit will ramp up manufacturing capacity to meet expected higher demand for smartwatches and sees revenue from that business exceeding tracker revenue in the second half.
The company, which launched Versa worldwide in April, is hoping the smartwatch would have more of a mass appeal than its Ionic device.
New products introduced in the last 12 months accounted for 34 per cent of device sales, but failed to offset the drop in sales of older fitness trackers.
Fitbit said it expects current-quarter revenue to be in a range of US$275 million to US$295 million, below analysts' estimate of US$309.9 million, according to Thomson Reuters I/B/E/S.
The company's net loss widened to US$80.9 million in the first quarter ended March 31 from US$60.1 million, a year earlier.
On an adjusted basis, the company reported a loss of 17 cents, smaller than estimate of 19 cents.
Revenue fell 17 per cent to US$247.9 million, but topped estimate of US$247.3 million.