For Fitbit, entering the smartwatch market was a bit bumpy, but now it looks like its push into the market has paid off. While the company is still running at a loss, Fitbit’s recent Q2 earnings report showed the success of its Versa smartwatch has lessened its downward revenue and device sales trend was. The company said Versa has outsold all Samsung, Garmin, and Fossil smartwatches in North America combined.
“The success of Versa has improved the company’s positioning with retailers, solidified shelf space for the Fitbit brand, and has provided a halo effect to our other product offerings,” said James Park, CEO, President, and cofounder of Fitbit. “Retailers have been looking for a counterbalance to Apple, and Versa has delivered it.”
According to MobiHealthNews, in the second quarter, Fitbit reported a total revenue of $299 million (down from $353.3 million in Q2 2017), GAAP net loss of $118 million (from $58.2 million), and non-GAAP net loss of $54.2 million (from $19.3 million). This quarter’s 2.7 million devices sold is still short of Q2 2017’s 3.4 million sales, but the average selling price of Fitbit’s devices has increased 6 percent to $106 per item thanks to the growing influence of smartwatch offerings in the company’s catalogue — in fact, smartwatches made up 55 percent of the company’s quarterly revenue, which is up from 30 percent in this year’s first quarter.
“I’m pleased to report that for the sixth quarter in a row we have delivered on our financial commitments and are making progress in our multiyear transition, which include adapting to the changing wearable device market, transforming the business from an episodic-driven model centered around device sales to more non-device recurring revenue, deepening our reach into healthcare, and increasing our agility and optimizing our cost structure,” Park said.
Park also said with the Versa moving forward, the company will be increasing its media and advertising spending, which MobiHealthNews says is a conscious choice to build on the smartwatch’s early success. Fitbit reported that 60% t of device activations came from new users and that among the repeats, 51% had previously been inactive for 90 or more days, showing that building awareness is having an impact on the business.
About his company’s continued interest in health and wellness, Park said:
“We know that wearable devices can help people get healthier. The question now is how these devices will continue to evolve and what role they will play in healthcare. We have been working to lay the foundation for growth into the healthcare channel by strengthening our relationships with key players in the healthcare ecosystem, building out our direct sales team, adding capabilities like the human coach platform, and collaborating with developers to create health-focused apps.”