Guides FY16 Non-GAAP Gross Margin of 48.5%
to 49.0%
Fitbit, Inc. (NYSE:FIT) the leader in the connected health and
fitness market, today reported revenue of $711.6 million, GAAP
diluted net income per share of $0.26, non-GAAP diluted net income
per share of $0.35, and adjusted EBITDA of $125.3 million, for its
fourth quarter of 2015.
For the full-year 2015, the company reported revenue of $1.86
billion, GAAP diluted net income per share of $0.75, non-GAAP
diluted net income per share of $1.07, and adjusted EBITDA of
$389.9 million.
“We believe we are beginning 2016 with strong customer
engagement and retention, an accelerating pace of innovation and
competitive differentiation, and a foundation of significant
revenue growth and profitability in 2015,” said James Park, Fitbit
co-founder and CEO. “I am very optimistic about our growth
opportunities and long-term vision as a broader digital health
company.”
Fourth Quarter and Full Year 2015 Financial
Summary
As of or For the Three Months Ended
December 31,
As of or For the Year Ended
December 31,
In millions, except percentages and per share amounts
2014
2015 2014 2015 GAAP
Results Revenue $ 370.2
$ 711.6 $ 745.4
$
1,858 Gross margin 46.2 %
48.9 % 48.0 %
48.5 % Net income $ 39.2
$ 64.2 $ 131.8
$ 175.7 Diluted net income per share $ 0.19
$
0.26 $ 0.63
$ 0.75 Non-GAAP Results
Gross margin 45.9 %
48.8 % 50.7 %
48.5
% Net income $ 43.8
$ 87.4 $ 114.1
$
254.1 Diluted net income per share $ 0.21
$
0.35 $ 0.56
$ 1.07 Adjusted EBITDA $
75.6
$ 125.3 $ 191.0
$ 389.9 Devices
Sold 5.3
8.2 10.9
21.4 Active Users 6.7
16.9 Registered Device Users 11.0
29.0
For additional information regarding the non-GAAP financial
measures, see “Non-GAAP Financial Measures” and “Reconciliation of
GAAP to Non-GAAP Financial Measures” below.
Fourth Quarter 2015 Financial Highlights
- Sold 8.2 million connected health and
fitness devices
- Q415 revenue increased 92%
year-over-year; adjusted EBITDA increased 66%
- U.S. comprised 75% of Q4 revenue; EMEA
12%, APAC 8%, and Other Americas 5%
- U.S. revenue grew 100% year-over-year;
EMEA 191%, APAC 6%, and Other Americas 77%
- Newer products, Fitbit ChargeTM, Fitbit
Charge HRTM and Fitbit SurgeTM, comprised 79% of revenue
- Q4 non-GAAP gross margin adjusted for
foreign currency exchange rate impact was 50.0%
- Non-GAAP operating expenses comprised
32.2% of revenue in Q415, compared to 25.9% in Q414 and 28.6% in
Q315
Full-Year 2015 Financial Highlights
- Sold 21.4 million connected health and
fitness devices
- FY15 revenue increased 149%
year-over-year; adjusted EBITDA increased 104%
- U.S. comprised 74% of FY15 revenue;
EMEA 11%, APAC 10%, and Other Americas 5%
- U.S. revenue grew 146% year-over-year;
EMEA 244%, APAC 110%, and Other Americas 139%
- Cash, cash equivalents and marketable
securities totaled $664.5 million at December 31, 2015, compared to
$195.6 million at December 31, 2014 and $575.5 million at September
30, 2015
Fourth Quarter 2015 and Recent Fitbit Operational
Highlights
- Active users grew 152% to 16.9 million
at year-end 2015 from 6.7 million at year-end 2014
- Added 18.0 million new registered
device users in 2015, of which 13.0 million, 72%, were active users
at year-end; Total year-end 2015 registered device users was 29.0
million
- Introduced Fitbit BlazeTM and Fitbit
AltaTM. Fitbit Blaze won 18 top-pick awards at CES
- Pre-order volume for Alta and Blaze
exceeded internal forecasts; Blaze was already ranked 2nd last week
in Amazon’s best selling smartwatches over $100
- Introduced SmartTrackTM automatic
exercise tracking
- New partnerships with Public School,
Westin and Thermos
- R&D headcount grew to 624 at
year-end 2015, comprising 57% of the company’s employees
- Added 1,000 Fitbit Wellness enterprise
customers in 2015
Outlook and Guidance
Fitbit expects full-year 2016 revenue in the range of $2.4 to
$2.5B, driven by new product introductions and geographic
expansion, with gross margins ranging from 48.5% to 49.0% driven by
the margin profile of new products and related accessories.
Operating margins reflect strategic investments expected in 2016 to
further develop Fitbit’s Digital Health strategy, expand corporate
wellness offerings, support 2017 and 2018 product roadmaps and
further build out back office infrastructure to support increasing
scale and global breadth, including migrating business systems to
SAP.
Fitbit expects 2016 adjusted EBITDA ranging from $400 to $480
million, and non-GAAP diluted net income per share ranging from
$1.08 to $1.20. Stock-based compensation is expected to be in the
range of $85 to $95 million. Full-year 2016 guidance reflects an
expected effective tax rate of approximately 30% which will vary
depending on the mix between domestic and international revenue,
and a fully diluted share count of 245 to 251 million.
For the first quarter 2016, Fitbit expects several dynamics to
drive results. For the first time in the company’s history, Fitbit
will make a global launch of new products, Fitbit Blaze and Alta.
Launching media campaigns around the world is expected to drive
higher sales and marketing expenses for the quarter. Also, the
timing of shipments into sales channels may result in the majority
of reorders, especially for Alta, coming in the second quarter of
2016. The company also expects to incur additional manufacturing
costs in the first quarter to maximize production of new products
to meet expected demand, which is expected to impact gross margins
in the quarter.
As a result, for the first quarter of 2016, Fitbit estimates
revenue in the range of $420 million to $440 million. Non-GAAP
gross margin is expected to be approximately 46.5%. First quarter
adjusted EBITDA is projected to be in the range of $5 million to
$16 million, and non-GAAP diluted net income per share is expected
in the range of $0.00 to $0.02. Stock-based compensation expense is
estimated at $18 million to $20 million. First quarter guidance
reflects an expected tax rate of 30%, and a fully diluted share
count of 244 to 246 million.
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 free, 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 (913) 312-6681, access code 3235468. 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
financial outlook for the first quarter 2016 and the full year of
2016, our investments in research and development and the impact of
those investments, our competitive differentiation, and our global
market opportunity. 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; 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;
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; quarterly and seasonal fluctuations; our reliance on
third-party suppliers, contract manufacturers, and logistics
providers, and our limited control over such parties; the ability
of our channel partners to sell our products; market acceptance of
our other products and services beyond wearable devices; the fact
that the market for connected health and fitness devices is
relatively new and unproven; litigation; privacy; and the impact of
foreign currency exchange rates 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 most recently filed Quarterly Report on Form 10-Q, which is
available on our Investor Relations website at investor.fitbit.com
and on the SEC website at www.sec.gov. Additional information will
also be set forth in our Annual Report on Form 10-K for the full
year ended December 31, 2015. 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.
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: non-GAAP gross margin;
non-GAAP operating expenses; non-GAAP operating income; non-GAAP
net income; non-GAAP diluted shares; non-GAAP diluted net income
per share; adjusted EBITDA; revenue excluding the effect of changes
in foreign exchange rates; and non-GAAP gross profit and non-GAAP
gross margin excluding the effect of changes in foreign exchange
rates. 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 items, specifically stock-based compensation expense,
amortization of intangible assets, and the related income tax
effects of the aforementioned exclusions, that are recurring and
will be reflected in our financial results for the foreseeable
future. 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 gross margin, non-GAAP diluted shares,
non-GAAP diluted net income per share, and adjusted EBITDA to their
most directly comparable GAAP measures because items that impact
these measures are 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:
- In March 2014, we recalled the Fitbit
Force after some of our users experienced allergic reactions to
adhesives in the wristband. This recall primarily impacted our
results for the fourth quarter of 2013, the first quarter of 2014
and the fourth quarter of 2015.
- 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.
- Revaluation of redeemable convertible
preferred stock warrant liability is a non-cash charge that will
not recur in the periods following our initial public
offering.
- Amortization of intangible assets
relates to our acquisition of FitStar. We exclude these
amortization expenses because we do not believe these expenses have
a direct correlation to the operation of our business.
- The change in contingent consideration
relates to our acquisition of FitStar. This is a non-recurring
benefit that has no direct correlation to the operation of our
business.
- Income tax effect of non-GAAP
adjustments relates to the tax effect of the adjustments that we
incorporate into non-GAAP financial measures in order to provide a
more meaningful measure of non-GAAP net income.
- Adjustment to shares includes the
conversion of the redeemable convertible preferred stock into
shares of common stock as though the conversion had occurred at the
beginning of all periods presented, the shares issued in our
initial public offering in June 2015, as if they had been
outstanding since the beginning of the second quarter of 2015, and
the shares issued in our follow-on offering in November 2015, as if
they had been outstanding since the beginning of the fourth quarter
of 2015.
- We translated revenue and non-GAAP
gross profit derived from non-U.S. dollar based transactions for
the three months and full year ended December 31,
2015 using the exchange rates that were effective in the
comparable prior year period to calculate revenue, non-GAAP gross
profit, and non-GAAP gross margin to exclude the effect of changes
in foreign exchange rates.
For more information on our non-GAAP financial measures and a
reconciliation of such measures to the nearest GAAP measure, please
see the “Reconciliation of GAAP to Non-GAAP Financial Measures”
table in this press release.
Registered Device Users
A user becomes a registered device user on the first day
the user: (a) becomes a paid subscriber of Fitbit Premium, (b)
becomes a paid subscriber to FitStar or (c) uses a health and
fitness tracker or Aria scale with his or her Fitbit account. The
user is counted only once on the first day of becoming a registered
device user. The number of registered device users excludes
users who have only downloaded our mobile apps without pairing a
health and fitness tracker or Aria scale and users who have only
downloaded free versions of FitStar but are not subscribers to its
paid premium offerings.
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 leader in the connected health and fitness
category, Fitbit designs products and experiences that
track everyday health and fitness. Fitbit’s diverse line of
award-winning products includes Fitbit Surge™, Fitbit Blaze™,
Fitbit Charge HR™, Fitbit Alta™, Fitbit Charge™, Fitbit Flex®,
Fitbit One® and Fitbit Zip® activity trackers, as well as the Aria®
Wi-Fi Smart Scale. Fitbit products are carried in 50,000 retail
stores and in 63 countries around the globe.
Fitbit, the Fitbit logo, Fitbit Surge, Fitbit Blaze, Fitbit
Charge HR, Alta, Fitbit Charge, Fitbit Flex, Fitbit One, Fitbit
Zip, Aria, PurePulse, SmartTrack, and FitStar are trademarks,
service marks and/or registered trademarks of Fitbit, Inc. in the
United States and in other countries. All other trademarks, service
marks, and product names used herein 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 for per share amounts)
(unaudited)
Three Months Ended
December 31,
Year Ended
December 31,
2014 2015 2014 2015
Revenue $ 370,184 $ 711,570 $ 745,433 $ 1,857,998 Cost of revenue
199,290 363,271 387,776 956,935 Gross
profit 170,894 348,299 357,657 901,063
Operating expenses: Research and development 18,325 54,227 54,167
150,035 Sales and marketing 69,882 154,069 112,005 332,741 General
and administrative 9,647 29,466 33,556 77,793 Change in contingent
consideration — — — (7,704 ) Total operating
expenses 97,854 237,762 199,728 552,865
Operating income 73,040 110,537 157,929 348,198 Interest income
(expense), net (681 ) 43 (2,222 ) (1,019 ) Other expense, net
(8,212 ) (101 ) (15,934 ) (59,230 ) Income before income taxes
64,147 110,479 139,773 287,949 Income
tax expense 24,907 46,314 7,996 112,272
Net income $ 39,240 $ 64,165 $ 131,777 $
175,677 Less: noncumulative dividends to preferred
stockholders (1,343 ) — (5,326 ) (2,526 ) Less: undistributed
earnings attributable to participating securities (29,358 ) —
(98,103 ) (59,133 ) Net income attributable to common
stockholders—basic 8,539 64,165 28,348 114,018 Add: undistributed
earnings to dilutive participating securities 3,326 —
10,175 8,821 Net income attributable to common
stockholders—diluted $ 11,865 $ 64,165 $ 38,523
$ 122,839 Net income per share attributable to
common stockholders: Basic $ 0.21 $ 0.30 $ 0.70
$ 0.88 Diluted $ 0.19 $ 0.26 $ 0.63
$ 0.75 Weighted average shares used to compute net
income per share attributable to common stockholders: Basic 40,676
210,438 40,351 129,886 Diluted 63,742
245,009 61,179 164,213
FITBIT, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands) (unaudited)
December 31,
2014
December 31,
2015
Assets Current assets: Cash and cash equivalents $ 195,626 $
535,846 Marketable securities — 128,632 Accounts receivable, net
238,859 469,260 Inventories 115,072 178,146 Prepaid expenses and
other current assets 13,614 43,530
Total current assets
563,171 1,355,414 Property and equipment, net 26,435 44,501
Goodwill — 22,157 Intangible assets, net — 12,216 Deferred tax
assets 42,001 83,020 Other assets 1,444 1,758
Total
assets $ 633,051 $ 1,519,066
Liabilities, Redeemable Convertible
Preferred Stock, and Stockholders’ Equity
Current liabilities: Fitbit Force recall reserve $ 22,476 $ 5,122
Accounts payable 195,666 260,842 Accrued liabilities 70,940 194,977
Deferred revenue 9,009 44,448 Income taxes payable 30,631 2,868
Long-term debt, current portion 132,589 — Total current
liabilities 461,311 508,257 Redeemable convertible preferred stock
warrant liability 15,797 — Other liabilities 12,867 29,358
Total liabilities 489,975 537,615 Redeemable convertible
preferred stock 67,814 — Stockholders’ equity Common stock and
additional paid-in capital 7,983 737,841 Accumulated other
comprehensive income 37 691
Retained earnings
67,242 242,919 Total stockholders’ equity 75,262 981,451
Total liabilities, redeemable
convertible preferred stock, and stockholders’ equity
$ 633,051 $ 1,519,066
Reconciliation of GAAP to
Non-GAAP Financial Measures (In thousands, except
percentages and per share amounts) (unaudited)
Three Months Ended
December 31,
Year Ended
December 31,
2014 2015 2014 2015
Non-GAAP gross profit: GAAP gross profit $ 170,894 $ 348,299
$ 357,657 $ 901,063 Stock-based compensation expense 356 2,117 890
4,739 Impact of Fitbit Force recall (1,227 ) (3,715 ) 19,451 (5,755
) Intangible assets amortization — 451 — 1,351
Non-GAAP gross profit $ 170,023 $ 347,152 $
377,998 $ 901,398
Non-GAAP gross profit as
a percentage of revenue: GAAP gross profit as a percentage of
revenue 46.2 %
48.9
%
48.0 %
48.5
%
Stock-based compensation expense 0.1 0.3 0.1 0.3 Impact of Fitbit
Force recall (0.4 ) (0.5 ) 2.6 (0.3 ) Intangible assets
amortization — 0.1 — — Non-GAAP gross
profit as a percentage of revenue 45.9 % 48.8 % 50.7 % 48.5 %
Non-GAAP research and development: GAAP research and
development $ 18,325 $ 54,227 $ 54,167 $ 150,035 Stock-based
compensation expense (1,192 ) (7,341 ) (2,350 ) (18,251 ) Non-GAAP
research and development $ 17,133 $ 46,886 $ 51,817
$ 131,784
Non-GAAP sales and marketing:
GAAP sales and marketing $ 69,882 $ 154,069 $ 112,005 $ 332,741
Stock-based compensation expense (645 ) (2,339 ) (1,295 ) (7,419 )
Non-GAAP sales and marketing $ 69,237 $ 151,730 $
110,710 $ 325,322
Non-GAAP general and
administrative: GAAP general and administrative $ 9,647 $
29,466 $ 33,556 $ 77,793 Stock-based compensation expense (1,166 )
(3,543 ) (2,269 ) (10,615 ) Impact of Fitbit Force recall 972 4,363
(3,389 ) 4,416 Intangible assets amortization — (82 ) —
(245 ) Non-GAAP general and administrative $ 9,453
30,204 $ 27,898 $ 71,349
Non-GAAP
operating expenses: GAAP operating expenses $ 97,854 $ 237,762
$ 199,728 $ 552,865 Stock-based compensation expense (3,003 )
(13,223 ) (5,914 ) (36,285 ) Impact of Fitbit Force recall 972
4,363 (3,389 ) 4,416 Intangible assets amortization — (82 ) — (245
) Change in contingent consideration — — —
7,704 Non-GAAP operating expenses $ 95,823 $ 228,820
$ 190,425 $ 528,455
Reconciliation of GAAP to Non-GAAP Financial Measures (In
thousands, except percentages and per share amounts)
(unaudited) Three Months Ended
December 31,
Year Ended
December 31,
2014 2015 2014 2015
Non-GAAP operating income: GAAP operating income $ 73,040 $
110,537 $ 157,929 $ 348,198 Stock-based compensation expense 3,359
15,340 6,804 41,024 Impact of Fitbit Force recall (2,199 ) (8,078 )
22,840 (10,171 ) Intangible assets amortization — 533 — 1,596
Change in contingent consideration — — —
(7,704 ) Non-GAAP operating income $ 74,200 $ 118,332
$ 187,573 $ 372,943
Non-GAAP net income and
net income per share: Net income $ 39,240 $ 64,165 $ 131,777 $
175,677 Stock-based compensation expense 3,359 15,340 6,804 41,024
Impact of Fitbit Force recall (2,199 ) (8,078 ) 22,840 (10,171 )
Revaluation of redeemable convertible
preferred stock warrant liability
6,451 — 13,272 56,655 Intangible assets amortization — 533 — 1,596
Change in contingent consideration — — — (7,704 ) Income tax effect
of non-GAAP adjustments (3,044 ) 15,423 (60,557 ) (2,966 )
Non-GAAP net income $ 43,807 $ 87,383 $ 114,136
$ 254,111 GAAP diluted shares 63,742 245,009
61,179 164,213
Diluted effect of redeemable convertible
preferred stock conversion
139,851 — 139,642 65,903 Initial public offering shares — 1,565 —
5,424 Other dilutive equity awards 1,756 — 1,786
901 Non-GAAP diluted shares 205,349 246,574
202,607 236,441 Non-GAAP diluted net income
per share $ 0.21 $ 0.35 $ 0.56 $ 1.07
Adjusted EBITDA: Net income $ 39,240 $ 64,165 $
131,777 $ 175,677 Impact of Fitbit Force recall (2,199 ) (8,078 )
22,840 (10,171 ) Stock-based compensation expense 3,359 15,340
6,804 41,024
Revaluation of redeemable convertible
preferred stock warrant liability
6,451 — 13,272 56,655 Depreciation and intangible assets
amortization 3,167 7,566 6,131 21,107 Change in contingent
consideration — — — (7,704 ) Interest (income) expense, net 681 (43
) 2,222 1,019 Income tax expense 24,907 46,314 7,996
112,272 Adjusted EBITDA $ 75,606 $ 125,264
$ 191,042 $ 389,879
Stock-based
compensation expense: Cost of revenue $ 356 $ 2,117 $ 890 $
4,739 Research and development 1,192 7,341 2,350 18,251 Sales and
marketing 645 2,339 1,295 7,419 General and administrative 1,166
3,543 2,269 10,615 Total stock-based
compensation expense $ 3,359 $ 15,340 $ 6,804
$ 41,024
FITBIT, INC. Revenue and
Gross Margin on a Constant Currency Basis (In thousands)
(unaudited)
Three Months EndedDecember 31,
Year EndedDecember 31, 2014
2015 2014 2015 GAAP revenue $
370,184 $ 711,570 $ 745,433 $ 1,857,998 Foreign exchange effect
16,636 56,294 Revenue excluding foreign exchange
effect $ 728,206 $ 1,914,292 GAAP revenue year-over-year change 92
% 149 % Revenue excluding foreign exchange effect year-over-year
change 97 % 157 % Non-GAAP gross profit $ 170,023 $ 347,152
$ 377,998 $ 901,398 Foreign exchange effect 16,636 56,294
Non-GAAP gross profit excluding foreign exchange effect $
363,788 $ 957,692 Non-GAAP gross margin 45.9 % 48.8 % 50.7 % 48.5 %
Non-GAAP gross margin excluding foreign exchange effect 50.0 % 50.0
%
FITBIT, INC. Revenue by Geographical
Region (In thousands) (unaudited)
Three Months
EndedDecember 31, Year EndedDecember
31, 2014 2015 2014
2015 United States $ 266,220 $ 532,363 $ 562,553 $
1,381,152 Americas excluding United States 21,422 37,844 38,576
92,252 Europe, Middle East, and Africa 29,168 84,786 60,699 208,767
APAC 53,374 56,577 83,605 175,827 Total $
370,184 $ 711,570 $ 745,433 $ 1,857,998
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160222006486/en/
Fitbit, Inc.Investor Contact:Brad Samson,
415-604-4106investor@fitbit.comMedia Contact:Jen Ralls,
415-722-6937PR@fitbit.com
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