Fitbit reports $364M in Q3 revenue, up 5% year-over-year

The year-over-year increase was driven primarily by the introduction of higher priced smartwatches and demand for the new Fitbit Sense.

Fitbit Sense

Fitbit announced its results for the third quarter of the year, reporting revenue of $364 million, GAAP net loss per share of $(0.20), non-GAAP net loss per share of $(0.03), GAAP net loss of $(54) million, non-GAAP net loss of $(8) million, cash flow from operations of $(13) million and non-GAAP free cash flow of $(27) million for its third quarter of 2020.

Q3 2020 Financial Highlights
  • Consumer demand was strong with point-of-sales including up 4% year-over-year.
  • Fitbit sold 3.3 million devices at an average selling price of $104 per device, up 8% year-over-year. The year-over-year increase was driven primarily by the introduction of higher priced smartwatches and consumer demand for the new Fitbit Sense.
  • U.S. revenue represented 54% of total revenue or $195 million, down 6% year-over-year.
  • International revenue represented 46% of total revenue and grew 20% to $169 million: EMEA revenue grew 23% to $102 million, APAC revenue declined 1% to $41 million and Americas excluding U.S. revenue grew 55% to $26 million (all on a year-over-year basis).
  • New devices introduced in the past 12 months include: Fitbit Charge 4, Fitbit Sense, Fitbit Versa 3 and Fitbit Inspire 2, represented 52% of revenue.
  • GAAP gross margin was 37.3% and non-GAAP gross margin was 38.1%. GAAP gross margin increased 620 basis points and non-GAAP gross margin increased 610 basis points year-over-year, driven by lower promotions, lower warranty expense, increased share of our direct channel and growth of Premium revenue.
  • GAAP operating expenses represented 51.4% of revenue, increasing 17% year-over-year to $187 million, driven by costs related to the pending acquisition by Google LLC; non-GAAP operating expenses represented 41.8% of revenue, increasing 6% year-over-year to $152 million, driven by higher employee costs, partially offset by lower marketing costs and lower customer service costs.
On the record

“Fitbit continued to play an important role for our community during this uncertain COVID-19 environment by supporting the mental health and overall wellness of our users with innovative products, features and services. We introduced Fitbit Sense, our most advanced health smartwatch that helps users understand and manage their stress and is also our first device with an ECG app. Fitbit is committed to making health data more accessible and actionable with the new Health Metrics Dashboard, which tracks metrics like breathing rate, heart rate variability and SpO2 – all important metrics when it comes to illness detection,” said James Park, co-founder and CEO. “The response to our new offerings has been strong across both devices and software. We achieved a key financial milestone this quarter with an annual run-rate for consumer services revenue of more than $100 million, highlighting the continued opportunity we have to deepen our relationship with our users.”

The context

During Q3, Fitbit announced its most advanced health smartwatch, Fitbit Sense, with an EDA sensor to help manage stress, plus ECG App, nightly SpO2 and an on-wrist skin temperature sensor. It also launched Versa 3, adding built-in GPS, Google Assistant and a speaker to the best-selling Versa 2 product offering.

In addition, Fitbit Inspire 2 was also announced featuring advanced fitness features such as Active Zone Minutes, and so was the Health Metrics Dashboard, which helps users track health metrics like breathing rate, resting heart rate, heart rate variability, SpO2 and skin temperature all in one place.

Finally, revenue grew 54% year-over-year to $42 million and represented 12% of sales, while the company’s Fitbit Health Solutions business grew 14% year-over-year to $22 million.

As a reminder, Fitbit announced its entry into a Merger Agreement with Google on November 1, 2019, which was approved by the stockholders on January 3, 2020.