Fitbit’s Spectacular Q4 Earnings Can’t Seem to Balance Out Guidance

By Chris Lange Updated Jan 13, 12:52PM EST · Published Feb 22, 4:26PM EST

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Fitbit’s Spectacular Q4 Earnings Can’t Seem to Balance Out Guidance — © Courtesy of Fitbit Inc.

Fitbit Inc. (NYSE: FIT) reported its fourth-quarter financial results after the markets closed on Monday. The company had $0.35 in earnings per share (EPS) on $711.6 million in revenue compared to consensus estimates from Thomson Reuters calling for $0.25 in EPS on $647.82 million in revenue.

In the fourth quarter the company sold 8.2 million connected health and fitness devices. Also revenue in the U.S. grew 100% year over year, EMEA grew 191%, APAC grew 6% and Other Americas grew 77%.

Active users grew 152% to 16.9 million at the end of 2015 compared to 6.7 million at the end of 2014. Also the company added 18 million new registered device users in 2015, of which 13 million, 72%, were active users at year-end and the total year-end 2015 registered device users was 29 million.
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Despite such strong results the guidance is what tanked this stock. Fitbit detailed in its report:

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, the company expects EPS to be in the range of $0.00 to $0.02 and revenues in the range of $420 million to $440 million. There are consensus estimates that call for $0.24 in EPS on $484.58 million in revenue.

James Park, Fitbit co-founder and CEO, commented on earnings:

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. I am very optimistic about our growth opportunities and long-term vision as a broader digital health company.

Shares of Fitbit closed Monday up 5.9% at $16.52, with a consensus analyst price target of $33.84 and a 52-week trading range of $12.90 to $51.90. Following the release of the earnings report the stock was initially down 15% at $13.99 in the after-hours trading session.

About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.