[October 31, 2018] |
|
Fitbit Reports Third Quarter 2018 Results
Fitbit, Inc. (NYSE:FIT), the leading global wearables brand, today
reported revenue of $394 million, GAAP net loss per share of ($0.01),
non-GAAP net income per share of $0.04, GAAP net loss of $2 million,
non-GAAP net income of $10 million, cash flow from operations of $59
million and free cash flow of $47 million for its third quarter of 2018.
"We have been incredibly focused on executing our transition plan and as
a result, saw a return to profitability this quarter, and are
re-affirming our full year revenue guidance of $1.5 billion. We
succeeded in growing our healthcare business by 26% and diversifying our
revenue to compete in the changing wearables category and saw sequential
growth in both tracker and smartwatch devices," said James Park,
co-founder and CEO. "We are now the number two player in the smartwatch
space in the U.S. - a category we just entered with zero share only
fourteen months ago. We also launched our most advanced tracker yet,
Fitbit Charge 3, which is blurring the lines between trackers and
smartwatches and is already one of the top selling devices in the U.S.
All this shows the power of the Fitbit brand and our ability to continue
to deliver a wearable platform consumers love and that drives positive
health outcomes."
Third Quarter 2018
|
|
|
For the Three Months Ended
|
|
For the Nine Months Ended
|
In millions, except percentages and per share amounts
|
|
September 29, 2018
|
|
September 30, 2017
|
|
September 29, 2018
|
|
September 30, 2017
|
GAAP Results
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
393.6
|
|
|
$
|
392.5
|
|
|
$
|
940.8
|
|
|
$
|
1,044.8
|
|
Gross Margin
|
|
39.0
|
%
|
|
44.5
|
%
|
|
41.1
|
%
|
|
42.3
|
%
|
Net Loss
|
|
$
|
(2.1
|
)
|
|
$
|
(113.4
|
)
|
|
$
|
(201.2
|
)
|
|
$
|
(231.7
|
)
|
Net Loss Per Share
|
|
$
|
(0.01
|
)
|
|
$
|
(0.48
|
)
|
|
$
|
(0.83
|
)
|
|
$
|
(1.00
|
)
|
Non-GAAP Results
|
|
|
|
|
|
|
|
|
Gross Margin
|
|
40.1
|
%
|
|
45.2
|
%
|
|
42.2
|
%
|
|
43.0
|
%
|
Net Income (Loss)
|
|
$
|
10.0
|
|
|
$
|
(2.8
|
)
|
|
$
|
(85.1
|
)
|
|
$
|
(56.5
|
)
|
Net Income (Loss) Per Share
|
|
$
|
0.04
|
|
|
$
|
(0.01
|
)
|
|
$
|
(0.35
|
)
|
|
$
|
(0.24
|
)
|
Adjusted EBITDA
|
|
$
|
21.0
|
|
|
$
|
5.9
|
|
|
$
|
(81.0
|
)
|
|
$
|
(74.6
|
)
|
Devices Sold
|
|
3.5
|
|
|
3.6
|
|
|
8.4
|
|
|
10.0
|
|
|
For additional information regarding the non-GAAP financial measures,
see "Non-GAAP Financial Measures" and "Reconciliation of GAAP to
Non-GAAP Financial Measures" below.
Third Quarter 2018 Financial Highlights
-
Sold 3.5 million wearable devices. Average selling price increased 3%
year-over-year to $108 per device driven by the growing mix of
smartwatches.
-
U.S. revenue represented 58% of revenue or $230 million, down 6%
year-over-year.
-
International revenue represented 42% of revenue and increased 10%
year-over-year to $163 million: EMEA revenue increased 17% to $104
million; Americas excluding U.S. revenue declined 2% to $25 million;
and APAC revenue was relatively flat at $34 million, all
year-over-year, respectively.
-
New devices introduced in the past year, Fitbit VersaTM,
Fitbit Charge 3TM, Fitbit AceTM and Fitbit Aria 2TM,
represented 62% of revenue.
-
GAAP gross margin was 39.0% and non-GAAP gross margin was 40.1%. Both
GAAP and non-GAAP gross margins were negatively impacted by the change
in mix towards smartwatches, partially offset by improved warranty
costs.
-
GAAP operating expenses represented 44% of revenue, and non-GAAP
operating expenses represented 38% of revenue.
-
GAAP impairment charge of $6 million to reflect the write-down of a
minority equity investment.
Third Quarter 2018 Operational Highlights
-
Diversified wearable device revenue from predominately trackers to
smartwatches and trackers. Smartwatch revenue grew to 49% of revenue
from less than 10% a year ago.
-
Refreshed product line up. Versa outsold competitive offerings from
each of Garmin, Samsung, Fossil in the U.S. Launched Charge 3 tracker
device, our most advanced health & fitness tracker.
-
Active community of users: 55% of our active users viewed Fitbit Feed
in the quarter.
-
58% of activations came from new users, while 42% came from repeat
buyers. Of the repeat buyers, 49% were previously inactive for 90 days
or greater.
Fourth Quarter 2018 Guidance
-
We expect revenue to be greater than $560 million, with device sales
down and a higher average selling price.
-
Non-GAAP net income per share of greater than $0.07.
-
We expect gross margins to trend slightly higher from the third
quarter.
-
Capital expenditures as a percentage of revenue of approximately 5%.
-
We anticipate free cash flow to be approximately $90 million.
-
Non-GAAP effective tax rate of approximately 25%, but can vary
significantly depending on profitability.
-
Stock-based compensation expense of approximately $24 million and
fully diluted share count of approximately 260 million.
Full Year 2018 Guidance
-
We reiterate our full-year 2018 revenue guidance of approximately $1.5
billion.
-
We expect the average selling price of our devices to rise, offset by
a decline in device sales. We expect tracker device sales to decline
and smartwatch device sales to increase.
-
We are on-track to deliver or come in under our full year operating
expense target of $740 million.
-
Capital expenditures as a percentage of revenue of approximately 4%.
-
Excluding the impact of the tax refund payment, we reiterate our free
cash flow guidance of approximately ($20) million for 2018. Including
the refund payment, free cash flow will be approximately $52 million.
-
We expect non-GAAP effective tax rate to be approximately 25%, but may
vary depending on geographic mix of revenue, tax credits, and shift to
profitability.
-
Stock-based compensation expense of approximately $98 million and
basic/diluted share count of approximately 248/260 million.
For additional information regarding the non-GAAP financial measures
presented above, see "Non-GAAP Financial Measures" below.
Webcast and Conference Call Information
Fitbit will host a conference call today at 5:00 p.m. Eastern Time, 2:00
p.m. Pacific Time, to discuss its results. Investors may access a live
webcast of the call through the Investor section of Fitbit's website at
investor.fitbit.com. The call can also be accessed by dialing (888)
394-8218 or (646) 828-8193, access code 2357386. A replay of the call
will be archived on Fitbit's website for the following six months.
Forward Looking Statements
This press release contains forward-looking statements that involve
risks and uncertainties, including statements regarding our outlook for
the fourth quarter 2018 and full year 2018; the rate of decline in
tracker sales and the stabilization of the tracker market; expected
device mix; consumer receptivity to Fitbit Charge 3; the features
offered by our Fitbit Labs Sleep Score beta; future clinical validation
and regulatory approval of our software; future opportunities in health
coaching and wellness solutions; and trends in device sales, revenue,
average selling price, operating expenses, capital expenditures, free
cash flow, gross margins, non-GAAP basic net (loss) income per share,
stock-based compensation expense, non-GAAP effective tax rate and
basic/diluted share count. These forward-looking statements are only
predictions and may differ materially from actual results due to a
variety of factors, including: the effects of the highly competitive
market in which we operate, including competition from much larger
technology companies; our ability to anticipate and satisfy consumer
preferences in a timely manner; our ability to successfully develop and
timely introduce new products and services or enhance existing products
and services; retail and customer acceptance of existing and new
products; any inability to accurately forecast consumer demand and
adequately manage our inventory; our ability to ship products on the
timelines we anticipate and unexpected delays; our ability to detect,
prevent or fix quality issues in our products or services; uncertain
ability to retain employees; our reliance on third-party suppliers,
contract manufacturers, and logistics providers, and our limited control
over such parties; delays in procuring components and product from these
third parties or their suppliers; the ability of third parties to
successfully manufacture and ship in a timely manner quality products;
seasonality; product liability issues, security breaches or other
defects, which may adversely affect product performance, our reputation
and brand awareness and overall market acceptance of our products and
services; ability to integrate acquired technologies and employees into
our operations, particularly in new geographies; warranty claims; the
fact that the market for connected health and fitness devices is
relatively new and unproven; the ability of our channel partners to sell
our products; litigation and related costs; privacy; the impact of
changes in tax law; the impact of tariffs; and other general market,
political, economic and business conditions.
Additional risks and uncertainties that could affect our financial
results are included under the caption "Risk Factors" in our Annual
Report on Form 10-K for the full year ended December 31, 2017, and our
most recently filed Quarterly Report on Form 10-Q. All forward-looking
statements contained herein are based on information available to us as
of the date hereof and we do not assume any obligation to update these
statements as a result of new information or future events.
Disclosure of Material Information
Fitbit announces material information to its investors using SEC
filings, press releases, public conference calls and on its Investor
Relations page on the company's website at http://investor.fitbit.com.
Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are prepared
and presented in accordance with GAAP, we use the following non-GAAP
financial measures in this press release: non-GAAP gross profit,
non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating
income (loss), non-GAAP operating income (loss) before income taxes,
non-GAAP net income (loss), non-GAAP diluted net income (loss) per
share, non-GAAP free cash flow, and adjusted EBITDA. The presentation of
these financial measures is not intended to be considered in isolation
or as a substitute for, or superior to, financial information prepared
and presented in accordance with GAAP.
We use non-GAAP measures to internally evaluate and analyze financial
results. We believe these non-GAAP financial measures provide investors
with useful supplemental information about the financial performance of
our business, enable comparison of financial results between periods
where certain items may vary independent of business performance, and
enable comparison of our financial results with other public companies,
many of which present similar non-GAAP financial measures.
There are limitations associated with the use of non-GAAP financial
measures as an analytical tool. In particular, many of the adjustments
to our GAAP financial measures reflect the exclusion of certain items,
specifically stock-based compensation expense, depreciation,
amortization of intangible assets, impairment of equity investment,
interest income, net, and the related income tax effects of the
aforementioned exclusions, that may be recurring and will be reflected
in our financial results for the foreseeable future. Our adjustments to
our non-GAAP financial measures previously included the exclusion of
litigation expense related to matters with Aliphcom, Inc. d/b/a Jawbone.
In addition, these measures may be different from non-GAAP financial
measures used by other companies, limiting their usefulness for
comparison purposes. A reconciliation of our non-GAAP financial measures
to their most directly comparable GAAP measures has been provided in the
financial statement tables included in this press release, and investors
are encouraged to review the reconciliation.
Guidance for non-GAAP financial measures excludes stock-based
compensation, amortization of acquired intangible assets, and tax
effects associated with these items. We have not reconciled guidance for
non-GAAP financial measures to their most directly comparable GAAP
measures because certain items that impact these measures are uncertain,
out of our control and/or cannot be reasonably predicted. Accordingly, a
reconciliation of the non-GAAP financial measure guidance to the
corresponding GAAP measures is not available without unreasonable effort.
The following are explanations of the adjustments that are reflected in
one or more of our non-GAAP financial measures:
-
Stock-based compensation expense relates to equity awards granted
primarily to our employees. We exclude stock-based compensation
expense because we believe that the non-GAAP financial measures
excluding this item provide meaningful supplemental information
regarding operational performance. In particular, companies calculate
stock-based compensation expense using a variety of valuation
methodologies and subjective assumptions.
-
In January 2017, the Company conducted a reorganization of its
business, including a reduction in workforce. The restructuring costs
impacted our results for the first quarter of 2017. Restructuring
costs primarily included severance-related costs. We believe that
excluding this expense provides greater visibility to the underlying
performance of our business operations, facilitates comparison of our
results with other periods, and may also facilitate comparison with
the results of other companies in our industry.
-
Litigation expense relates to legal costs incurred due to litigation
with Jawbone. We exclude these expenses because we do not believe
these expenses have a direct correlation to the operations of our
business and because of the singular nature of the claims underlying
the Jawbone litigation matters. We began excluding Jawbone litigation
costs in the second quarter of 2016 as these costs significantly
increased in 2016.
-
Amortization of intangible assets relates to our acquisition of
FitStar, Pebble, Vector and Twine Health. We exclude these
amortization expenses because we do not believe these expenses have a
direct correlation to the operation of our business.
-
A non-recurring impairment charge of $6 million to reflect the
write-down of a minority equity investment.
-
Income tax effect of non-GAAP adjustments relates to the tax effect of
the adjustments that we incorporate into non-GAAP financial measures
such as stock-based compensation, amortization of intangibles,
restructuring and valuation allowance in order to provide a more
meaningful measure of non-GAAP net income (loss).
About Fitbit, Inc. (NYSE: FIT)
Fitbit helps people lead healthier, more active lives by empowering them
with data, inspiration and guidance to reach their goals. As the leading
global wearables brand, Fitbit designs products and experiences that
track and provide motivation for everyday health and fitness. Fitbit's
diverse line of innovative and popular products include Fitbit Charge
3™, Fitbit Alta HR™, Fitbit Alta®, Fitbit Ace™, Fitbit Flex 2®,
and Fitbit Zip® activity trackers, as well as the Fitbit
Ionic™ and Fitbit Versa™ smartwatches, Fitbit Flyer™ wireless headphones
and Fitbit Aria 2™ Wi-Fi Smart Scale. Fitbit products are carried in
over 39,000 retail stores and in 86 countries around the globe. Powered
by one of the world's largest social fitness networks and databases of
health and fitness data, the Fitbit platform delivers personalized
experiences, insights and guidance through leading software and
interactive tools, including the Fitbit and Fitbit Coach apps, and the
Fitbit OS for smartwatches. Fitbit Health Solutions develops health and
wellness solutions designed to help increase engagement, improve health
outcomes, and drive a positive return for employers, health plans and
health systems.
Fitbit and the Fitbit logo are trademarks or registered trademarks
of Fitbit, Inc. in the U.S. and other countries. Additional Fitbit
trademarks can be found at www.fitbit.com/legal/trademark-list.
Third-party trademarks are the property of their respective owners.
Connect with us on Facebook, Instagram or Twitter and share
your Fitbit experience.
|
|
|
FITBIT, INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(unaudited)
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
September 29, 2018
|
|
September 30, 2017
|
|
September 29, 2018
|
|
September 30, 2017
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
393,575
|
|
|
$
|
392,522
|
|
|
$
|
940,784
|
|
|
$
|
1,044,763
|
|
Cost of revenue
|
|
240,061
|
|
|
217,762
|
|
|
554,132
|
|
|
602,459
|
|
Gross profit
|
|
153,514
|
|
|
174,760
|
|
|
386,652
|
|
|
442,304
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Research and development
|
|
79,840
|
|
|
84,170
|
|
|
256,223
|
|
|
252,471
|
|
Sales and marketing
|
|
66,676
|
|
|
77,536
|
|
|
239,573
|
|
|
269,442
|
|
General and administrative
|
|
24,812
|
|
|
40,690
|
|
|
91,111
|
|
|
102,815
|
|
Total operating expenses
|
|
171,328
|
|
|
202,396
|
|
|
586,907
|
|
|
624,728
|
|
Operating loss
|
|
(17,814
|
)
|
|
(27,636
|
)
|
|
(200,255
|
)
|
|
(182,424
|
)
|
Interest income, net
|
|
2,072
|
|
|
1,162
|
|
|
5,599
|
|
|
2,451
|
|
Other income (expense), net
|
|
(5,141
|
)
|
|
(702
|
)
|
|
(2,366
|
)
|
|
134
|
|
Loss before income taxes
|
|
(20,883
|
)
|
|
(27,176
|
)
|
|
(197,022
|
)
|
|
(179,839
|
)
|
Income tax expense (benefit)
|
|
(18,827
|
)
|
|
86,227
|
|
|
4,179
|
|
|
51,883
|
|
Net loss
|
|
$
|
(2,056
|
)
|
|
$
|
(113,403
|
)
|
|
$
|
(201,201
|
)
|
|
$
|
(231,722
|
)
|
Net loss per share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.01
|
)
|
|
$
|
(0.48
|
)
|
|
$
|
(0.83
|
)
|
|
$
|
(1.00
|
)
|
Diluted
|
|
$
|
(0.01
|
)
|
|
$
|
(0.48
|
)
|
|
$
|
(0.83
|
)
|
|
$
|
(1.00
|
)
|
Shares used to compute net loss per share:
|
|
|
|
|
|
|
|
|
Basic
|
|
245,838
|
|
|
234,242
|
|
|
242,746
|
|
|
230,918
|
|
Diluted
|
|
245,838
|
|
|
234,242
|
|
|
242,746
|
|
|
230,918
|
|
|
|
|
|
FITBIT, INC.
Condensed Consolidated Balance Sheets
(In thousands)
(unaudited)
|
|
|
|
September 29, 2018
|
|
December 31, 2017
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
402,237
|
|
|
$
|
341,966
|
|
Marketable securities
|
|
221,083
|
|
|
337,334
|
|
Accounts receivable, net
|
|
325,964
|
|
|
406,019
|
|
Inventories
|
|
195,112
|
|
|
123,895
|
|
Income tax receivable
|
|
8,962
|
|
|
77,882
|
|
Prepaid expenses and other current assets
|
|
45,541
|
|
|
97,269
|
|
Total current assets
|
|
1,198,899
|
|
|
1,384,365
|
|
Property and equipment, net
|
|
106,520
|
|
|
104,908
|
|
Goodwill
|
|
61,058
|
|
|
51,036
|
|
Intangible assets, net
|
|
25,680
|
|
|
22,356
|
|
Deferred tax assets
|
|
3,920
|
|
|
3,990
|
|
Other assets
|
|
10,003
|
|
|
15,420
|
|
Total assets
|
|
$
|
1,406,080
|
|
|
$
|
1,582,075
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Accounts payable
|
|
$
|
232,991
|
|
|
$
|
212,731
|
|
Accrued liabilities
|
|
386,384
|
|
|
452,137
|
|
Deferred revenue
|
|
27,350
|
|
|
35,504
|
|
Income taxes payable
|
|
6,580
|
|
|
928
|
|
Total current liabilities
|
|
653,305
|
|
|
701,300
|
|
Long-term deferred revenue
|
|
5,458
|
|
|
6,928
|
|
Other liabilities
|
|
52,596
|
|
|
49,884
|
|
Total liabilities
|
|
711,359
|
|
|
758,112
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
Class A and Class B common stock
|
|
25
|
|
|
24
|
|
Additional paid-in capital
|
|
1,025,803
|
|
|
956,060
|
|
Accumulated other comprehensive income (loss)
|
|
3,333
|
|
|
(9
|
)
|
Accumulated deficit
|
|
(334,440
|
)
|
|
(132,112
|
)
|
Total stockholders' equity
|
|
694,721
|
|
|
823,963
|
|
Total liabilities and stockholders' equity
|
|
$
|
1,406,080
|
|
|
$
|
1,582,075
|
|
|
|
|
|
|
|
|
|
|
|
FITBIT, INC.
|
Condensed Consolidated Statements of Cash Flow
|
(In thousands)
|
(unaudited)
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
September 29, 2018
|
|
September 30, 2017
|
|
September 29, 2018
|
|
September 30, 2017
|
Cash Flows from Operating Activities
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(2,056
|
)
|
|
$
|
(113,403
|
)
|
|
$
|
(201,201
|
)
|
|
$
|
(231,722
|
)
|
Adjustments to reconcile net loss to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Provision for doubtful accounts
|
|
41
|
|
|
7,622
|
|
|
37
|
|
|
7,805
|
|
Provision for inventory obsolescence
|
|
1,005
|
|
|
4,986
|
|
|
9,019
|
|
|
13,395
|
|
Depreciation
|
|
11,816
|
|
|
9,139
|
|
|
35,388
|
|
|
28,338
|
|
Write-off of property and equipment
|
|
28
|
|
|
-
|
|
|
7,513
|
|
|
5,250
|
|
Amortization of intangible assets
|
|
2,061
|
|
|
1,381
|
|
|
5,866
|
|
|
4,134
|
|
Stock-based compensation
|
|
24,115
|
|
|
22,797
|
|
|
73,613
|
|
|
67,256
|
|
Deferred income taxes
|
|
(391
|
)
|
|
116,678
|
|
|
(1,690
|
)
|
|
132,815
|
|
Impairment of equity investment
|
|
6,000
|
|
|
-
|
|
|
6,000
|
|
|
-
|
|
Other
|
|
(278
|
)
|
|
56
|
|
|
(693
|
)
|
|
1,301
|
|
Changes in operating assets and liabilities, net of acquisition:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
(83,968
|
)
|
|
(52,266
|
)
|
|
80,227
|
|
|
208,899
|
|
Inventories
|
|
(55,847
|
)
|
|
(2,038
|
)
|
|
(80,064
|
)
|
|
79,448
|
|
Prepaid expenses and other assets
|
|
85,732
|
|
|
(75,180
|
)
|
|
123,356
|
|
|
(125,504
|
)
|
Accounts payable
|
|
80,541
|
|
|
94,799
|
|
|
16,357
|
|
|
(122,160
|
)
|
Accrued liabilities and other liabilities
|
|
6,116
|
|
|
(4,406
|
)
|
|
(68,208
|
)
|
|
(48,869
|
)
|
Deferred revenue
|
|
(26
|
)
|
|
(4,369
|
)
|
|
(9,649
|
)
|
|
(9,846
|
)
|
Income taxes payable
|
|
(16,148
|
)
|
|
(306
|
)
|
|
5,653
|
|
|
(1,822
|
)
|
Net cash provided by operating activities
|
|
58,741
|
|
|
5,490
|
|
|
1,524
|
|
|
8,718
|
|
Cash Flows from Investing Activities
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
(11,650
|
)
|
|
(18,382
|
)
|
|
(40,174
|
)
|
|
(58,199
|
)
|
Purchases of marketable securities
|
|
(60,174
|
)
|
|
(176,862
|
)
|
|
(284,986
|
)
|
|
(494,540
|
)
|
Sales of marketable securities
|
|
19,250
|
|
|
6,000
|
|
|
93,020
|
|
|
19,806
|
|
Maturities of marketable securities
|
|
72,748
|
|
|
149,432
|
|
|
309,323
|
|
|
500,576
|
|
Acquisition, net of cash acquired
|
|
-
|
|
|
(556
|
)
|
|
(13,646
|
)
|
|
(556
|
)
|
Net cash provided by (used in) investing activities
|
|
20,174
|
|
|
(40,368
|
)
|
|
63,537
|
|
|
(32,913
|
)
|
Cash Flows from Financing Activities
|
|
|
|
|
|
|
|
|
Repayment of debt
|
|
-
|
|
|
-
|
|
|
(747
|
)
|
|
-
|
|
Proceeds from issuance of common stock
|
|
903
|
|
|
2,486
|
|
|
11,641
|
|
|
13,893
|
|
Taxes paid related to net share settlement of restricted stock units
|
|
(5,697
|
)
|
|
(5,570
|
)
|
|
(15,684
|
)
|
|
(10,804
|
)
|
Net cash (used in) provided by financing activities
|
|
(4,794
|
)
|
|
(3,084
|
)
|
|
(4,790
|
)
|
|
3,089
|
|
Net increase (decrease) in cash and cash equivalents
|
|
74,121
|
|
|
(37,962
|
)
|
|
60,271
|
|
|
(21,106
|
)
|
Effect of exchange rate on cash and cash equivalents
|
|
-
|
|
|
(63
|
)
|
|
-
|
|
|
467
|
|
Cash and cash equivalents at beginning of period
|
|
328,116
|
|
|
318,706
|
|
|
341,966
|
|
|
301,320
|
|
Cash and cash equivalents at end of period
|
|
$
|
402,237
|
|
|
$
|
280,681
|
|
|
$
|
402,237
|
|
|
$
|
280,681
|
|
|
|
FITBIT, INC.
|
Reconciliation of GAAP to Non-GAAP Financial Measures
|
(In thousands, except percentages and per share amounts)
|
(unaudited)
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
September 29, 2018
|
|
September 30, 2017
|
|
September 29, 2018
|
|
September 30, 2017
|
Non-GAAP gross profit:
|
|
|
|
|
|
|
|
|
GAAP gross profit
|
|
$
|
153,514
|
|
|
$
|
174,760
|
|
|
$
|
386,652
|
|
|
$
|
442,304
|
|
Stock-based compensation expense
|
|
1,999
|
|
|
1,379
|
|
|
5,129
|
|
|
2,889
|
|
Impact of restructuring
|
|
-
|
|
|
-
|
|
|
-
|
|
|
37
|
|
Intangible assets amortization
|
|
2,304
|
|
|
1,319
|
|
|
5,336
|
|
|
3,957
|
|
Non-GAAP gross profit
|
|
$
|
157,817
|
|
|
$
|
177,458
|
|
|
$
|
397,117
|
|
|
$
|
449,187
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP gross margin (as a percentage of revenue):
|
|
|
|
|
|
|
|
|
GAAP gross margin
|
|
39.0
|
%
|
|
44.5
|
%
|
|
41.1
|
%
|
|
42.3
|
%
|
Stock-based compensation expense
|
|
0.5
|
|
|
0.4
|
|
|
0.5
|
|
|
0.3
|
|
Impact of restructuring
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Intangible assets amortization
|
|
0.6
|
|
|
0.3
|
|
|
0.6
|
|
|
0.4
|
|
Non-GAAP gross margin
|
|
40.1
|
%
|
|
45.2
|
%
|
|
42.2
|
%
|
|
43.0
|
%
|
|
|
|
|
|
|
|
|
|
Non-GAAP research and development:
|
|
|
|
|
|
|
|
|
GAAP research and development
|
|
$
|
79,840
|
|
|
$
|
84,170
|
|
|
$
|
256,223
|
|
|
$
|
252,471
|
|
Stock-based compensation expense
|
|
(14,097
|
)
|
|
(12,947
|
)
|
|
(43,858
|
)
|
|
(39,939
|
)
|
Impact of restructuring
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(2,744
|
)
|
Non-GAAP research and development
|
|
$
|
65,743
|
|
|
$
|
71,223
|
|
|
$
|
212,365
|
|
|
$
|
209,788
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP sales and marketing:
|
|
|
|
|
|
|
|
|
GAAP sales and marketing
|
|
$
|
66,676
|
|
|
$
|
77,536
|
|
|
$
|
239,573
|
|
|
$
|
269,442
|
|
Stock-based compensation expense
|
|
(3,638
|
)
|
|
(3,679
|
)
|
|
(10,996
|
)
|
|
(10,914
|
)
|
Impact of restructuring
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(2,000
|
)
|
Intangible assets amortization
|
|
315
|
|
|
-
|
|
|
(316
|
)
|
|
-
|
|
Non-GAAP sales and marketing
|
|
$
|
63,353
|
|
|
$
|
73,857
|
|
|
$
|
228,261
|
|
|
$
|
256,528
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP general and administrative:
|
|
|
|
|
|
|
|
|
GAAP general and administrative
|
|
$
|
24,812
|
|
|
$
|
40,690
|
|
|
$
|
91,111
|
|
|
$
|
102,815
|
|
Stock-based compensation expense
|
|
(4,381
|
)
|
|
(4,792
|
)
|
|
(13,630
|
)
|
|
(12,786
|
)
|
Litigation expense
|
|
-
|
|
|
(874
|
)
|
|
(765
|
)
|
|
(2,293
|
)
|
Impact of restructuring
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1,594
|
)
|
Intangible assets amortization
|
|
(71
|
)
|
|
(62
|
)
|
|
(214
|
)
|
|
(177
|
)
|
Non-GAAP general and administrative
|
|
$
|
20,360
|
|
|
$
|
34,962
|
|
|
$
|
76,502
|
|
|
$
|
85,965
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP operating expenses:
|
|
|
|
|
|
|
|
|
GAAP operating expenses
|
|
$
|
171,328
|
|
|
$
|
202,396
|
|
|
$
|
586,907
|
|
|
$
|
624,728
|
|
Stock-based compensation expense
|
|
(22,116
|
)
|
|
(21,418
|
)
|
|
(68,484
|
)
|
|
(63,639
|
)
|
Litigation expense
|
|
-
|
|
|
(874
|
)
|
|
(765
|
)
|
|
(2,293
|
)
|
Impact of restructuring
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(6,338
|
)
|
Intangible assets amortization
|
|
244
|
|
|
(62
|
)
|
|
(530
|
)
|
|
(177
|
)
|
Non-GAAP operating expenses
|
|
$
|
149,456
|
|
|
$
|
180,042
|
|
|
$
|
517,128
|
|
|
$
|
552,281
|
|
|
|
|
|
FITBIT, INC.
|
Reconciliation of GAAP to Non-GAAP Financial Measures
|
(In thousands, except percentages and per share amounts)
|
(unaudited)
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
September 29, 2018
|
|
September 30, 2017
|
|
September 29, 2018
|
|
September 30, 2017
|
Non-GAAP operating income (loss) and income (loss) before income
taxes:
|
|
|
|
|
|
|
GAAP operating loss
|
|
$
|
(17,814
|
)
|
|
$
|
(27,636
|
)
|
|
$
|
(200,255
|
)
|
|
$
|
(182,424
|
)
|
Stock-based compensation expense
|
|
24,115
|
|
|
22,797
|
|
|
73,613
|
|
|
66,528
|
|
Litigation expense
|
|
-
|
|
|
874
|
|
|
765
|
|
|
2,293
|
|
Impact of restructuring
|
|
-
|
|
|
-
|
|
|
-
|
|
|
6,375
|
|
Intangible assets amortization
|
|
2,060
|
|
|
1,381
|
|
|
5,866
|
|
|
4,134
|
|
Non-GAAP operating income (loss)
|
|
8,361
|
|
|
(2,584
|
)
|
|
(120,011
|
)
|
|
(103,094
|
)
|
Interest income, net
|
|
2,072
|
|
|
1,162
|
|
|
5,599
|
|
|
2,451
|
|
Other income (expense), net
|
|
(5,141
|
)
|
|
(702
|
)
|
|
(2,366
|
)
|
|
134
|
|
Non-GAAP operating income (loss) before income taxes
|
|
$
|
5,292
|
|
|
$
|
(2,124
|
)
|
|
$
|
(116,778
|
)
|
|
$
|
(100,509
|
)
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income (loss) and net income (loss) per share:
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(2,056
|
)
|
|
$
|
(113,403
|
)
|
|
$
|
(201,201
|
)
|
|
$
|
(231,722
|
)
|
Stock-based compensation expense
|
|
24,115
|
|
|
22,797
|
|
|
73,613
|
|
|
66,528
|
|
Litigation expense
|
|
-
|
|
|
874
|
|
|
765
|
|
|
2,293
|
|
Impact of restructuring
|
|
-
|
|
|
-
|
|
|
-
|
|
|
6,375
|
|
Impairment of equity investment
|
|
6,000
|
|
|
-
|
|
|
6,000
|
|
|
-
|
|
Intangible assets amortization
|
|
2,060
|
|
|
1,381
|
|
|
5,866
|
|
|
4,134
|
|
Income tax effect of non-GAAP adjustments
|
|
(20,077
|
)
|
|
85,574
|
|
|
29,810
|
|
|
95,909
|
|
Non-GAAP net income (loss)
|
|
$
|
10,042
|
|
|
$
|
(2,777
|
)
|
|
$
|
(85,147
|
)
|
|
$
|
(56,483
|
)
|
|
|
|
|
|
|
|
|
|
GAAP diluted shares
|
|
245,838
|
|
|
234,242
|
|
|
242,746
|
|
|
230,918
|
|
Other dilutive equity awards
|
|
14,509
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Non-GAAP diluted shares
|
|
260,347
|
|
|
234,242
|
|
|
242,746
|
|
|
230,918
|
|
Non-GAAP diluted net income (loss) per share
|
|
$
|
0.04
|
|
|
$
|
(0.01
|
)
|
|
$
|
(0.35
|
)
|
|
$
|
(0.24
|
)
|
|
|
|
|
|
|
|
|
|
Non-GAAP free cash flow:
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
58,741
|
|
|
$
|
5,490
|
|
|
$
|
1,524
|
|
|
$
|
8,718
|
|
Purchases of property and equipment
|
|
(11,650
|
)
|
|
(18,382
|
)
|
|
(40,174
|
)
|
|
(58,199
|
)
|
Non-GAAP free cash flow
|
|
$
|
47,091
|
|
|
$
|
(12,892
|
)
|
|
$
|
(38,650
|
)
|
|
$
|
(49,481
|
)
|
Net cash provided by (used in) investing activities
|
|
$
|
20,174
|
|
|
$
|
(40,368
|
)
|
|
$
|
63,537
|
|
|
$
|
(32,913
|
)
|
Net cash provided by (used in) financing activities
|
|
$
|
(4,794
|
)
|
|
$
|
(3,084
|
)
|
|
$
|
(4,790
|
)
|
|
$
|
3,089
|
|
|
|
|
|
FITBIT, INC.
|
Reconciliation of GAAP to Non-GAAP Financial Measures
|
(In thousands, except percentages and per share amounts)
|
(unaudited)
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
September 29, 2018
|
|
September 30, 2017
|
|
September 29, 2018
|
|
September 30, 2017
|
Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(2,056
|
)
|
|
$
|
(113,403
|
)
|
|
$
|
(201,201
|
)
|
|
$
|
(231,722
|
)
|
Stock-based compensation expense*
|
|
24,115
|
|
|
22,797
|
|
|
73,613
|
|
|
66,528
|
|
Litigation expense
|
|
-
|
|
|
874
|
|
|
765
|
|
|
2,293
|
|
Impact of restructuring
|
|
-
|
|
|
-
|
|
|
-
|
|
|
6,375
|
|
Impairment of equity investment
|
|
6,000
|
|
|
-
|
|
|
6,000
|
|
|
-
|
|
Depreciation and intangible assets amortization
|
|
13,877
|
|
|
10,520
|
|
|
41,254
|
|
|
32,472
|
|
Interest income, net
|
|
(2,072
|
)
|
|
(1,162
|
)
|
|
(5,599
|
)
|
|
(2,451
|
)
|
Income tax expense (benefit)
|
|
(18,827
|
)
|
|
86,227
|
|
|
4,179
|
|
|
51,883
|
|
Adjusted EBITDA
|
|
$
|
21,037
|
|
|
$
|
5,853
|
|
|
$
|
(80,989
|
)
|
|
$
|
(74,622
|
)
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense:
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
$
|
1,999
|
|
|
$
|
1,379
|
|
|
$
|
5,129
|
|
|
$
|
2,889
|
|
Research and development
|
|
14,097
|
|
|
12,947
|
|
|
43,858
|
|
|
40,281
|
|
Sales and marketing
|
|
3,638
|
|
|
3,679
|
|
|
10,996
|
|
|
11,300
|
|
General and administrative
|
|
4,381
|
|
|
4,792
|
|
|
13,630
|
|
|
12,786
|
|
Total stock-based compensation expense*
|
|
$
|
24,115
|
|
|
$
|
22,797
|
|
|
$
|
73,613
|
|
|
$
|
67,256
|
|
|
* A portion of stock-based compensation expense for the nine months
ended September 30, 2017 was allocated to and included in "Impact of
restructuring," thus explaining the difference between the total by
function presented in this table compared to the amounts presented in
the above tables.
|
FITBIT, INC.
|
Revenue by Geographic Region
|
(In thousands)
|
(unaudited)
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
September 29, 2018
|
|
September 30, 2017
|
|
September 29, 2018
|
|
September 30, 2017
|
United States
|
$
|
230,171
|
|
|
$
|
244,204
|
|
|
$
|
552,118
|
|
|
$
|
613,825
|
Americas, excluding United States
|
24,799
|
|
|
25,276
|
|
|
56,737
|
|
|
69,656
|
Europe, Middle East, and Africa
|
104,186
|
|
|
88,672
|
|
|
234,693
|
|
|
285,045
|
APAC
|
34,419
|
|
|
34,370
|
|
|
97,236
|
|
|
76,237
|
Total
|
$
|
393,575
|
|
|
$
|
392,522
|
|
|
$
|
940,784
|
|
|
$
|
1,044,763
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20181031005754/en/
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