Fitbit shares fell 13% in after-hours trading on Monday after the wearable device maker reported lower-than-expected earnings as the market for its fitness trackers continued to shrink.
Fitbit launched a new smartwatch, the Ionic, last year in a bid to diversify its product line and offer an alternative to the market-leading Apple Watch. But CEO James Park told analysts on Monday that growth in 2017 was “impacted by a product lineup that was skewed towards connected health and fitness trackers versus the faster growing smartwatch segment.”
For the fourth quarter, the company reported Monday that revenue fell 0.5% to $570.8 million, missing the average analyst estimate of $588.9 million.
Fitbit’s net loss narrowed to $45.5 million, or 19 cents per share, from $146.3 million, or 65 cents per share, a year earlier. But on an adjusted basis, it lost 2 cents per share, versus expectations that it would break even.
Total devices sold fell to 5.4 million from 6.5 million for the quarter and to 15.3 million from 22.3 million for the full year. Sales of fitness trackers dropped about 17% in the holiday quarter.
“Fitbit has been under pressure from rivals such as Apple Inc., Samsung Electronics, Xiaomi Inc. and Garmin Ltd. that have been gaining ground in a fast saturating wearables market,” Reuters noted.
Park said that going forward Fitbit would launch more smartwatches to speed up the shift away from fitness trackers, adding that sales of the Ionic product took a hit from stiff competition as it was not a “mass appeal watch.”
“The Ionic’s long gestation enabled others to steal Fitbit’s lead at the high end, with Apple being a clear beneficiary,” Engadget reported. “Sales of the Apple Watch are believed to have surpassed those of the entire Swiss watch industry for the 2017 holiday season.”
For the first quarter, Fitbit said it expects an adjusted loss per share in the range of 18 cents to 21 cents and revenue of $240 million to $255 million. Analysts on average expected a loss of 9 cents on revenue of $340.3 million.