Fitbit scored a small coup on earnings this week, ever so slightly beating revenue expectations for the quarter. The company pulled in $247.9 million, up over Wall Street’s expected $247.3 million. Of course, that’s still a notable drop from this time last year, when the company pulled in $298.9 million.
The numbers are down as the overall fitness tracking category has declined, and the company sold 2.2 million devices in the quarter, missing analyst expectations of 2.33 million. Fitbit has adjusted its second quarter revenue expectation, accordingly. “We expect results to be impacted by the reduced demand by the channel for trackers, partially offset by an increase in smartwatch revenue, driven primarily by Versa sales,” the company wrote in a release announcing earnings. “We expect smartwatches to grow as a percentage of revenue, but our overall mix to continue to be skewed towards trackers.”
That’s in line with the company’s overall strategy over the past year, which saw a marked shift into the world of smartwatches — a rare overall bright light in the fitness wearable space, thanks in large part to the success of the Apple Watch. Fitbit has invested a good chunk of change in acquisitions, resulting in the release of the Ionic and Versa. And given the devices’ higher per unit price, the company ultimately has to sell fewer to maintain revenue.
The release mostly glosses over the existence of the Ionic, save for a mention of the fact that the device was announced in the past year — and that it helped reduce “development hours by around 45-percent on the Versa.” That makes perfect sense, of course — the hard work of incorporating all of its recent acquisitions and distilling all of those learnings into a hardware and software offering were mostly accomplished with the Ionic.
The point of all of that being that now Fitbit knows how to make a smartwatch, so doing so in the future should be less resource-intensive, moving forward. That will likely come in handy as the company seems poised to invest more and more of its resources into its growing healthcare sector.
Fitbit stock jumped recently, courtesy of its announced partnership with Google, which will help make health info tracked on its devices more easily accessible by doctors. There is, of course, plenty of money to be made in the healthcare sector, but Fitbit is going to have a bit of an uphill battle getting providers to take its offerings more seriously as medical devices.
“We continued to deepen our relationship with our users, investing in software and services that deliver on our promise of helping people achieve better health outcomes,” CEO James Park said in a release tied to the earnings. “To this end, we closed the acquisition of Twine Health and, most recently announced a long-term collaboration with Google that will accelerate innovation in digital health and wearables.”