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Wearable device maker Fitbit's revenue beats estimates, shares sprint
[BENGALURU] Wearable fitness device maker Fitbit Inc's quarterly revenue raced past analysts' estimates as demand jumped for its new devices, sending its shares up as much as 8.1 per cent in after-market trading.
The company has been spending heavily to diversify its portfolio of colourful wristbands and clippable devices that track calories, sleeping patterns and heart rate, as well as enter new markets.
Fitbit's new products, Blaze and Alta and related accessories, accounted for 54 per cent of revenue in the second quarter, up from 50 per cent in the preceding quarter, the company said on Tuesday.
About two-thirds of the total activation of Alta and Blaze were by new customers, while the rest were by those who own, or previously owned another Fitbit device, the company said.
The company said it sold 5.7 million devices in the second quarter ended July 2, its highest sales since the last holiday season. Fitbit sold 4.5 million devices in the second quarter of 2015.
Both Blaze, a smartwatch, and Alta, a wristband, were released in March. They have an average four out of five-star rating on Amazon.com.
Fitbit's shares were up 6.2 per cent at US$13.98 in after-hours trading.
The company's executives also played down investor fears of rising competition during a post-earnings conference call, terming it a "misconception".
The reality is that most of these companies have not altered the competitive dynamics, chief executive James Park said.
Fitbit faces rising competition from Chinese electronics company Xiaomi, Garmin Ltd, Samsung Electronics and Apple Inc with its Apple Watch line.
The company was the global market leader with a 24.5 per cent share at the end of the first quarter, according to research firm IDC. Xiaomi had a 19 per cent share and Apple 7.5 per cent.
Fitbit is also pushing into markets outside the United States. Revenue from Europe, Middle East and Africa more than doubled to US$99.5 million in the latest quarter, the company said.
Revenue rose 46.5 per cent to US$586.5 million, beating the average analyst estimate of US$578.5 million.
The company's net income attributable to shareholders fell to US$6.3 million, or three cents per share, from US$7.1 million, or seven cents per share, a year earlier.
Fitbit's operating costs more than doubled to US$235.3 million in the quarter.
Excluding items, the company reported a profit of 12 cents per share, edging past analysts' average estimate of 11 cents per share, according to Thomson Reuters I/B/E/S.
Up to Tuesday's close, the company's shares had fallen about 56 per cent this year.