Although Fitbit Inc., San Francisco, saw its first quarter revenue drop 41 percent year-over-year, its $298.9 million still exceeded the company's initial expectations.
In February, Fitbit executives had forecasted $270 million to $290 million in first quarter earnings, on the heels of a disappointing finish to 2016. In March, CEO James Park announced several executive-level changes within Fitbit, as well as a new business strategy based around smartwatches and corporate partnerships. So far, Park said he is pleased with Fitbit’s recent progress, calling 2017 a “transition year” for the wearables manufacturer.
“Underlying consumer demand has been better than our reported results in North America as we work down channel inventory levels, giving us increased confidence that we will enter the second half of 2017 with a relatively clean channel,” Park said in a media release. “While 2017 remains a transition year, we have executed on our restructuring plan and are focused on positioning the company for the next stage of growth within wearables and connected health.”
Fitbit sold 3 million devices in the quarter, with new products such as the Fitbit Charge 2TM, Fitbit Alta HRTM, and Fitbit Flex 2TM representing 84 percent of the total revenue.
In the release, Park said he anticipates second quarter revenue in the range of $330 million to $350 million. For the fiscal year, he is aiming for $1.5 billion to $1.7 billion.
Fitbit earned $2.17 billion in 2016 revenue, after originally forecasting as much as $2.5 billion.
Financial analysts at L&F Capital Management have said the recent success of Fitbit competitors, such as Garmin, has negatively affected Fitbit's sales.