The wearables company's new Ionic smartwatch didn't meet its holiday expectations as fitness tracker sales dropped 17%.
While revenue increased 23% year-over-year to $503.8 million, earnings fell well short of second-quarter expectations.
The wearable devices maker has been facing stiff competition in a fitness tracker market dominated by Fitbit and Xiaomi.
IDC survey predicts smart wearables, including watches, will surpass the basic wearable category in 2018.
