Fitbit Reports Revenue of $505 Million in Q1 2016

Fitbit39s Blaze shown here and Alta models sold one million units each in the latter part of the first quarter Photo courtesy Fitbit
<p>Fitbit&#39;s Blaze, shown here, and Alta models sold one million units each in the latter part of the first quarter. (Photo courtesy Fitbit.)</p>

Fitbit, San Francisco, reported revenue of $505 million in the first quarter of 2016, according to financials released on Wednesday.

The $505 million represented 50 percent growth over the first quarter of 2015. The wearable device manufacturer also raised its revenue expectations for the second quarter and profit guidance for the rest of the year.  The company expects second quarter revenue in the range of $565 million to $585 million, and 2016 revenue in the range of $2.5 million and $2.6 million.

“The strong growth and defensibility of our business continues to be powered by product innovation, the network effects of our community, our expanding global distribution and investment in our brand,” James Park, CEO, Fitbit, said in a statement. “Based on the first quarter’s performance and momentum, we are confident about the remainder of the year, which is reflected in our increased guidance.”

Fitbit sold 4.8 million connected health and fitness devices in the first quarter. The United States compromised 70 percent of first quarter revenue, and U.S. first quarter revenue grew 33 percent year over year. The Europe, Middle East and Africa region accounted for 15 percent of first quarter revenue, the Asia-Pacific region accounted for 11 percent of revenue and other Americas accounted for four percent of revenue.

"Our users have a wide range of BMI [body mass index] and are spread relatively evenly across wide range of age groups," Park told analysts in Wednesday's conference call. "You might think that what we do is only meant for fitness fanatics, but in reality as statistics show, our user base is incredibly broad with users in many different stages of their fitness journey from couch to marathon. And in many cases they're just starting out."

Fitbit's Blaze, which debuted in January's Consumer Electronics show, and Alta models sold one million units each in the latter part of the quarter and comprised 47 percent of the company's first quarter revenue.

Park told analysts that the company's corporate wellness division continued to be strong in the first quarter, even though it remains a small portion of its total revenue because of retail growth. Health systems added to Fitbit wellness included university hospitals in Cleveland, Vermont Health in Michigan and Ascencion Health, which has a footprint covering 23 states and Washington, DC.

"With healthcare cost continuing to rise for employers, insurers and consumers, it is no surprise that innovation and employee wellness programs continues to be increasingly important for both the private and public sector alike," Park told analysts. "Our corporate wellness business is also focused on building awareness and credibility within the corporate wellness industry driven by a strong track record with employers and continued investment in enterprise sales and marketing."

On the legal front, Fitbit won a ruling from the U.S. International Trade Commission last week that invalidated the last of Jawbone Inc., San Franscisco, patents in dispute before the federal agency, according to a Bloomberg report. The trade secret case is scheduled for a May 9 trial in Washington, DC. Jawbone and Fitbit are engaged in other federal court litigation, with accusations that include employee poaching and patent infringement.

Fitbit was the leading worldwide wearable vendor in 2015, according to the most recent report issued by the International Data Corp. Behind Fitbit's 21 million unit shipments, in order, in 2015 were Xiaomi's 12 million shipments, Apple's 11.6 million shipments, Garmin's 3.3 million shipments, Samsung's 3.1 million shipments and the 27 million combined shipments from other wearable vendors.

In January, Fitbit reported revenue of $1.86 billion in 2015 and revenue of $712 million in the fourth quarter of 2015. At the time, the company projected 2016 revenue between $2.4 billion and $2.5 billion.

Fitbit, which debuted on the New York Stock Exchange in 2015 (NYSE:FIT), traded down over 14 percent to $14.67 per share in Thursday morning trading. The decline was attributed to disappointing earnings guidance for the second quarter, according to TheStreet. The company has traded in a range between $11.91 per share and $51.90 per share since its initial public offering.

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