Fitbit swings to Q4 profit amid strong device sales; stock falls on weak guidance

Wearable maker Fitbit (FIT) reported a net profit for the fourth quarter compared to a loss in the prior-year period. Though the results came in above analysts’ forecast, the company’s stock dropped about 12% during the extended trading hours Wednesday after its outlook fell short of expectations.

On an adjusted basis, Fitbit reported earnings of $0.14 per share for the December quarter on revenues of $571.2 million, which is broadly flat year-over-year. The results topped Wall Street estimates. A year earlier, it had posted a loss of $0.02 per share. Unadjusted profit was $15.4 million or $0.06 per share, compared to a loss of $45.5 million or $0.19 per share in the fourth quarter of 2017.

The turnaround was driven by a 3% increase in device sales to 5.6 million units, on an average selling price of $100 per device

The turnaround was driven by a 3% increase in device sales to 5.6 million units, on an average selling price of $100 per device, down 2%. The sales growth was achieved mainly by adding tracking-device Fitbit Charge3 to the product mix. New devices – Fitbit Versa, Fitbit Ace, and Fitbit Charge3 – accounted for about 79% of total revenue during the three-month period.

“In 2019 we’re committed to offering more affordable devices with engaging health and fitness features, making the health benefits of being on Fitbit even more accessible. We expect our Fitbit Health Solutions revenue growth to accelerate to approximately $100 million and to grow non-device consumer revenue,” said CEO James Park.

Also see: Apple Q1 revenue drops but tops estimate

In an indication that the recovery seen in the fourth quarter might not be sustained, the management currently forecasts a net loss in the range of $24 per share to $22 per share for the March quarter, when revenues are expected to grow 1-8% to the range of $250 million to $268 million.

Full-year 2019 revenues are estimated between $1.52 billion and $1.58 billion, up 1-4% compared to last year. Though device sales are expected to grow during the remainder of the year, the average selling price is seen falling further.

Fitbit’s shares gained about 22% so far this year, after witnessing significant volatility throughout 2018. The stock closed Wednesday’s regular session higher but fell sharply in the after-hours following the earnings report.

Listen to on-demand earnings calls and hear how management responds to analysts’ questions