The new smartwatch that Fitbit has released is assisting the company in climbing out of a financial rut. The company based in San Francisco was successful in exceeding expectations during the most recent fiscal period and is targeting a return to profitability by the end of this year.
Wall Street anticipated a quarterly income of $285 million, which is equivalent to a twenty per cent drop in sales as compared to the previous year. The real revenue brought in by Fitbit was $299, representing a decrease of only 15 per cent. Despite having revenues that were better than predicted, the business was still in the red to the tune of $54.2 million, which is far higher than the mere $19.3 million deficit it had a year before.
In comparison to their 30 per cent share in the preceding quarter, smartwatches now account for the majority of Fitbit’s revenue, making about 55 per cent of the company’s total revenue. In point of fact, Fitbit reported that it was having trouble keeping up with the demand for its most recent wristwatch model, the Versa. It is rather remarkable that during the quarter, sales of Versa smartwatches in North America outperformed the total sales of Samsung, Garmin, and Fossil smartwatches in that region.
James Park, the CEO of Fitbit, discussed the device’s continued success during the company’s earnings call.
According to what he said, “we observed continued momentum for our mass-appeal wristwatch, Fitbit Versa,” which ultimately resulted in the product selling out throughout the quarter.
“The introduction of Versa not only increased our brand’s relevancy but also brought to light the chance to recapture market share as we grow in the wristwatch category and continue to create both hardware and software options that consumers find appealing,”
The company anticipates that it will achieve financial stability in the third quarter of 2018 and that it will resume both growth and profitability in the fourth quarter of 2018. Strong sales of smartwatches and the introduction of new devices like Charge 3 should undoubtedly be beneficial to this endeavour.
During the second quarter of 2018, Fitbit reported sales of 2.7 million fitness trackers and smartwatches, which is a decrease from the 3.4 million units sold during the same period in 2017. The growing proportion of more costly smartwatches contributed to a six per cent increase in the average selling price when compared to the previous year.
The Asia-Pacific market was the market that performed the best in terms of geographical performance. Year-over-year revenue there increased by 66 per cent. The revenue decreased by around 40 per cent across Europe, the Middle East, and Africa, which saw the largest decline overall. In the United States, sales were relatively stable despite reporting a decline of 8%.
Following the release of the report, the stock experienced an increase of 8% in the after-hours trading session. Since then, the shares have given up some of their gains, although they are currently trading roughly 3 per cent higher.