02/20/2020

Fitbit Reports 2019 Fourth Quarter and Full Year Results

  • Fitbit Reports $502 Million Q4’19 Revenue and $1.43 Billion FY’19 Revenue
  • Added 2 Million Active Users Increasing Total to 29.6 Million, Grew Devices Sold 15%

SAN FRANCISCO--(BUSINESS WIRE)-- Fitbit, Inc. (NYSE:FIT) today reported revenue of $502 million, GAAP net loss per share of $(0.46), non-GAAP net loss per share of $(0.12), GAAP net loss of $(121) million, non-GAAP net loss of $(31) million, cash flow from operations of $28 million and free cash flow of $18 million for its fourth quarter of 2019.

For the full year 2019, Fitbit reported revenue of $1.43 billion, GAAP net loss per share of $(1.25), non-GAAP net loss per share of $(0.51), GAAP net loss of $(321) million, non-GAAP net loss of $(132) million, cash flow utilized in operations of $(157) million and cash consumption of $(193) million.

“In 2019, we continued to advance our mission of making health accessible to more people around the world by delivering devices, software and services at affordable prices that help improve peoples’ health,” said James Park, co-founder and CEO. “As a result, we sold 16 million devices and our smartwatch business grew 45 percent at retail, due to strong demand for Versa 2. Our community of active users increased to nearly 30 million, and Fitbit Health Solutions grew 17 percent, underscoring the strength of the Fitbit brand. We also launched our new Premium membership, Fitbit’s most personalized experience yet and are seeing improving retention and engagement due to its actionable guidance and coaching. Looking ahead, we expect to grow our higher margin revenue streams in 2020.”

Fourth Quarter and Full Year 2019 Financial Summary

 

 

For the Three Months Ended

 

For the Twelve Months Ended

In millions, except percentages and per share amounts

 

December 31,
2019

 

December 31,
2018

 

December 31,
2019

 

December 31,
2018

GAAP Results

 

 

 

 

 

 

 

 

Revenue

 

$

502.1

 

 

$

571.2

 

 

$

1,434.8

 

 

$

1,512.0

 

Gross Margin

 

24.3

%

 

38.0

%

 

29.8

%

 

39.9

%

Net Income (Loss)

 

$

(120.8

)

 

$

15.4

 

 

$

(320.7

)

 

$

(185.8

)

Net Income (Loss) Per Share

 

$

(0.46

)

 

$

0.06

 

 

$

(1.25

)

 

$

(0.76

)

Non-GAAP Results

 

 

 

 

 

 

 

 

Gross Margin

 

26.3

%

 

38.7

%

 

31.2

%

 

40.9

%

Net Income (Loss)

 

$

(31.5

)

 

$

36.3

 

 

$

(132.0

)

 

$

(48.8

)

Net Income (Loss) Per Share

 

$

(0.12

)

 

$

0.14

 

 

$

(0.51

)

 

$

(0.20

)

Adjusted EBITDA

 

$

(34.9

)

 

$

49.6

 

 

$

(128.3

)

 

$

(31.4

)

Devices Sold

 

6.0

 

 

5.6

 

 

16.0

 

 

13.9

 

For additional information regarding the non-GAAP financial measures, see “Non-GAAP Financial Measures” and “Reconciliation of GAAP to Non-GAAP Financial Measures” below. Please note that certain terms used here, including “active user,” “activations,” and “repeat users,” are defined in our Annual Report on Form 10-K for the full year ended December 31, 2018 or our most recently filed Quarterly Report on Form 10-Q.

Fourth Quarter 2019 Financial Highlights

  • Sold 6 million wearable devices, up 8% year-over-year. Average selling price decreased 19% year-over-year to $81 per device, driven by the introduction of more accessible and affordable devices and higher promotions.
  • International revenue declined 7% year-over-year to $226 million with EMEA up 2% to $153 million, Americas excluding the U.S. down 2% to $44 million and APAC down 40% to $29 million, all on a year-over-year basis.
  • U.S revenue decreased 16% to $276 million and represented 55% of total revenue.
  • New devices introduced in 2019, Fitbit Versa 2™, Fitbit Versa Lite™, Fitbit Inspire™,Fitbit Inspire HR™, Fitbit Ace 2™, and Fitbit Aria Air™ represented 72% of revenue.
  • GAAP gross margin was 24.3%, and non-GAAP gross margin was 26.3%. Gross margin declined year-over- year driven by the device mix shift towards smartwatches, higher promotions, tariffs, and the absence of a benefit from the release of warranty accruals associated with certain products in 2018.
  • GAAP operating expenses represented 47% of revenue, and non-GAAP operating expenses represented 35% of revenue.

Full Year 2019 Financial Highlights

  • Sold 16.0 million wearable devices, up 15% year-over-year. Average selling price decreased 17% year-over-year to $87 per device, driven by our decision to introduce more accessible and affordable devices, device mix, and promotions.
  • 39% of all activations came from repeat customers; of repeat customers, 54% came from customers who were inactive during a prior period
  • U.S revenue decreased 9% year-over-year to $799 million and represented 56% of total revenue. International revenue was flat year-over-year to $636 million with EMEA up 7% to $410 million, Americas excluding the U.S. down 6% to $95 million and APAC down 11% to $130 million, all on a year-over-year basis, respectively.
  • Revenue from Fitbit.com was $143 million, representing 10% of revenue.
  • The Fitbit Health Solutions business grew 17% year-over-year to $95 million in revenue.
  • New devices introduced in 2019, Fitbit Versa 2™, Fitbit Versa Lite™, Fitbit Inspire™,Fitbit Inspire HR™, Fitbit Ace 2™, and Fitbit Aria Air™ represented 55% of revenue.
  • GAAP gross margin was 29.8%, and non-GAAP gross margin was 31.2%. Gross margin declined year-over- year driven by the shift in device mix towards smartwatches, higher promotions, tariffs, and the absence of a benefit from the release of warranty accruals associated with certain products in 2018.
  • GAAP operating expenses declined 6% and non-GAAP operating expense declined 10%, each year-over-year, respectively.
  • Cash, cash equivalents, and marketable securities totaled $519 million as of December 31, 2019, compared with $723 million as of December 31, 2018.

Full Year Operational Highlights

  • Active users grew 7% to 29.6 million from 27.6 million as of December 31, 2018, driven by the introduction of more accessible and affordable devices and improved retention and engagement of our users.
  • Smartwatch devices sold grew 27% to 50% of revenue, up from 44% of revenue in 2018. Maintained the #2 selling smartwatch position in the U.S.
  • Tracker devices sold increased 9% to 49% of revenue, down from 53% of revenue in 2018.
  • Launched Fitbit Premium, exited 2019 with improving consumer retention and engagement results.
  • Fitbit Health Solutions launched a national health program, increased its coverage of Medicaid plans with the signing of Wellcare of Georgia and expansion of UHC Medicare Advantage program, and rolled out a chronic condition coaching platform. Fitbit also announced disease detection partnerships with the BMS / Pfizer Alliance and Fibricheck.
  • Headcount totaled 1,684 employees as of December 31, 2019, with 56% of employees in research and development.

Additional Highlights and Information

  • Fitbit announced its entry into a Merger Agreement with Google LLC on November 1, 2019. Upon close of the all-cash transaction, Fitbit stockholders will receive $7.35 per share in cash, valuing the company at a fully diluted equity value of approximately $2.1 billion.
  • Fitbit stockholders approved the transaction on January 3, 2020.
  • Regulatory review of the transaction is ongoing, and we expect Fitbit and Google to secure the necessary regulatory approvals and close the transaction in 2020. Prior to closing, we do not expect to provide any additional updates on the regulatory process other than during subsequent quarterly earnings reports.
  • Due to the pending acquisition by Google, Fitbit does not plan to host an earnings conference call nor provide forward looking guidance.

Forward Looking Statements

This press release contains “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks and uncertainties. In some cases, you can identify these forward-looking statements by the use of terms such as “expect,” “will,” “continue,” or similar expressions, and variations or negatives of these words, but the absence of these words does not mean that a statement is not forward-looking. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including, but not limited to: the anticipated continued growth of our community of users; the anticipated growth of our premium software subscription platform; any statements regarding the expected timing of the completion of the transaction with Google; the ability of Google and us to complete the proposed transaction considering the various conditions to the transaction, some of which are outside the parties’ control, including those conditions related to regulatory approvals; any statements concerning the expected development or competitive performance relating to Fitbit’s products and services; and any statements of assumptions underlying any of the foregoing. A number of important factors and uncertainties could cause actual results or events to differ materially from those described in these forward-looking statements, including without limitation: the effects of the highly competitive market in which we operate, including competition from much larger technology companies; the impact of the COVID-19 outbreak on the development, manufacturing, and shipment of our products, and on global economic conditions and consumer confidence and spending; our ability to anticipate and satisfy consumer preferences in a timely and cost-effective manner; our ability to successfully develop, timely introduce, and achieve retail and customer acceptance of new products and services, or enhance existing products and services, including software and subscription services; our ability to accurately forecast consumer demand and adequately manage our inventory; our ability to ship products on the timelines we anticipate and avoid unexpected delays; our ability to detect, prevent or fix quality issues in our products and services; our ability to attract and retain employees; our reliance on third-party suppliers, contract manufacturers, and logistics providers and our limited control over such parties; delays in procuring components and product from third parties or their suppliers; the ability of third parties to successfully manufacture and ship quality products in a timely manner; seasonality of demand; the concentrated nature of our retailer and distributor base; product liability issues, security breaches or other defects that may adversely affect product performance and overall market acceptance of our products and services; our ability to integrate acquired technologies and employees of acquired businesses into our operations, particularly in new geographies; warranty claims; the relatively new and unproven market for trackers and wearable devices; the ability of our channel partners to sell our products; litigation and related costs; the impact of privacy and data security laws; changes in tax laws; the impact of tariffs; other general market, political, economic and business conditions, including an epidemic such as the COVID-19 outbreak; the failure to satisfy any of the conditions to the consummation of the proposed transaction with Google, including the receipt of certain governmental and regulatory approvals; the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement; the outcome of any legal proceedings that may be instituted against us related to the Merger Agreement or the proposed transaction; unexpected costs, charges or expenses resulting from the proposed transaction; the occurrence of a Company Material Adverse Effect (as defined in the Merger Agreement).

Additional risks and uncertainties are included under the caption “Risk Factors” in our Annual Report on Form 10-K for the full year ended December 31, 2018 and our most recently filed Quarterly Report on Form 10-Q which are available on our Investor Relations website at investor.fitbit.com and on the SEC website at www.sec.gov. Once filed with the SEC, additional information will be set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019. 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. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on such statements.

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 in this press release: non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating loss, non-GAAP operating loss before income taxes, non-GAAP net loss, non-GAAP basic/diluted net loss per share, free cash flow, non-GAAP research and development expenses, non-GAAP sales and marketing expenses, non-GAAP general and administrative expenses, and adjusted EBITDA. 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 certain items, specifically stock-based compensation expense, depreciation, amortization of intangible assets, interest income, net, acquisition-related costs, 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.

The following are explanations of the adjustments that are reflected in one or more of our non-GAAP financial measures:

  • 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.
  • Acquisition-related costs relates to acquisition retention bonuses, integration costs, advisory and consulting, legal, accounting, tax, other professional service fees, and SEC filing fees to the extent associated with the pending Merger or our acquisition of other companies.
  • Restructuring costs primarily included severance-related costs. We believe that excluding this expense provides greater visibility to the underlying performance of our business operations, facilitates comparison of our results with other periods, and may also facilitate comparison with the results of other companies in our industry.
  • Litigation expense relates to legal costs incurred due to litigation with Aliphcom, Inc. d/b/a Jawbone. We exclude these expenses because we do not believe they have a direct correlation to the operations of our business and because of the singular nature of the claims underlying the Jawbone litigation matters.
  • Amortization of intangible assets relates to our acquisitions of FitStar, Pebble, Vector and Twine Health. We exclude these amortization expenses because we do not believe they have a 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 such as stock-based compensation, amortization of intangibles, restructuring and valuation allowance in order to provide a more meaningful measure of non-GAAP net loss.
  • We define free cash flow as net cash provided by (used in) operating activities less purchase of property and equipment. We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that can possibly be used for investing in our business and strengthening the balance sheet, but it is not intended to represent the residual cash flow available for discretionary expenditures. Free cash flow is not prepared in accordance with U.S. GAAP, and should not be considered in isolation of, or as an alternative to, measures prepared in accordance with U.S. GAAP.

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. Fitbit designs products and experiences that track and provide motivation for everyday health and fitness. Fitbit’s diverse line of innovative and popular products include Fitbit Charge 3™, Fitbit Inspire HR™, Fitbit Inspire™, and Fitbit Ace 2™ activity trackers, as well as the Fitbit Ionic™ and Fitbit Versa™ family of smartwatches, Fitbit Flyer™ wireless headphones, and Fitbit Aria™ family of connected scales. Fitbit products are carried in approximately 39,000 retail stores and in over 100 countries around the globe. Powered by one of the world’s largest health and fitness social networks and databases of health and fitness data, the Fitbit platform delivers personalized experiences, insights and guidance through leading software and interactive tools, including the Fitbit and Fitbit Coach apps, and Fitbit OS for smartwatches. Fitbit Health Solutions develops health and wellness solutions designed to help increase engagement, improve health outcomes, and drive a positive return for employers, health plans and health systems.

Fitbit and the Fitbit logo are trademarks or registered trademarks of Fitbit, Inc. in the United States and other countries. Additional Fitbit trademarks can be found at www.fitbit.com/legal/trademark-list. Third-party trademarks 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 per share amounts)

(unaudited)

 

Three Months Ended

 

Twelve Months Ended

 

December 31,
2019

 

December 31,
2018

 

December 31,
2019

 

December 31,
2018

 

 

 

 

 

 

 

 

Revenue

$

502,142

 

 

$

571,199

 

 

$

1,434,788

 

 

$

1,511,983

 

Cost of revenue

380,089

 

 

354,272

 

 

1,007,116

 

 

908,404

 

Gross profit

122,053

 

 

216,927

 

 

427,672

 

 

603,579

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

86,703

 

 

75,946

 

 

300,354

 

 

332,169

 

Sales and marketing

106,828

 

 

104,518

 

 

329,800

 

 

344,091

 

General and administrative

43,591

 

 

25,516

 

 

118,231

 

 

116,627

 

Total operating expenses

237,122

 

 

205,980

 

 

748,385

 

 

792,887

 

Operating income (loss)

(115,069

)

 

10,947

 

 

(320,713

)

 

(189,308

)

Interest income, net

1,815

 

 

2,209

 

 

10,291

 

 

7,808

 

Other income (expense), net

115

 

 

(276

)

 

1,357

 

 

(2,642

)

Loss before income taxes

(113,139

)

 

12,880

 

 

(309,065

)

 

(184,142

)

Income tax expense (benefit)

7,696

 

 

(2,492

)

 

11,646

 

 

1,687

 

Net income (loss)

$

(120,835

)

 

$

15,372

 

 

$

(320,711

)

 

$

(185,829

)

Net income (loss) per share:

 

 

 

 

 

 

 

Basic

$

(0.46

)

 

$

0.06

 

 

$

(1.25

)

 

$

(0.76

)

Diluted

$

(0.46

)

 

$

0.06

 

 

$

(1.25

)

 

$

(0.76

)

Shares used to compute net income (loss) per share:

 

 

 

 

 

 

 

Basic

261,693

 

 

249,973

 

 

257,500

 

 

244,603

 

Diluted

261,693

 

 

260,399

 

 

257,500

 

 

244,603

 

FITBIT, INC.

Condensed Consolidated Balance Sheets

(In thousands)

(unaudited)

 

 

December 31, 2019

 

December 31, 2018

 

 

 

 

 

 

 

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

334,479

 

 

$

473,956

 

Marketable securities

 

184,023

 

 

249,493

 

Accounts receivable, net

 

435,269

 

 

414,209

 

Inventories

 

136,752

 

 

124,871

 

Income tax receivable

 

573

 

 

6,957

 

Prepaid expenses and other current assets

 

28,656

 

 

42,325

 

Total current assets

 

1,119,752

 

 

1,311,811

 

Property and equipment, net

 

82,756

 

 

106,286

 

Operating lease right-of use-assets

 

70,225

 

 

 

Goodwill

 

64,812

 

 

60,979

 

Intangible assets, net

 

16,746

 

 

23,620

 

Deferred tax assets

 

4,111

 

 

4,489

 

Other assets

 

9,684

 

 

8,362

 

Total assets

 

$

1,368,086

 

 

$

1,515,547

 

Liabilities and Stockholders’ Equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

194,626

 

 

$

251,657

 

Accrued liabilities

 

513,530

 

 

437,234

 

Operating lease liabilities

 

23,511

 

 

 

Deferred revenue

 

32,307

 

 

29,400

 

Income taxes payable

 

636

 

 

1,092

 

Total current liabilities

 

764,610

 

 

719,383

 

Long-term deferred revenue

 

8,535

 

 

7,436

 

Long-term operating lease liabilities

 

67,902

 

 

 

Other liabilities

 

39,776

 

 

52,790

 

Total liabilities

 

880,823

 

 

779,609

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

Class A and Class B common stock

 

26

 

 

25

 

Additional paid-in capital

 

1,126,827

 

 

1,055,046

 

Accumulated other comprehensive income (loss)

 

187

 

 

(66

)

Accumulated deficit

 

(639,777

)

 

(319,067

)

Total stockholders’ equity

 

487,263

 

 

735,938

 

Total liabilities and stockholders’ equity

 

$

1,368,086

 

 

$

1,515,547

 

FITBIT, INC.

Condensed Consolidated Statements of Cash Flow

(In thousands)

(unaudited)

 

Three Months Ended

 

Twelve Months Ended

 

December 31,
2019

 

December 31,
2018

 

December 31,
2019

 

December 31,
2018

Cash Flows from Operating Activities

 

 

 

 

 

 

 

Net income (loss)

$

 

(120,835

)

 

$

 

15,372

 

 

$

 

(320,711

)

 

$

 

(185,829

)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

Provision for doubtful accounts

 

268

 

 

 

19

 

 

 

297

 

 

 

56

 

Provision for excess and obsolete inventory

 

848

 

 

 

2,809

 

 

 

6,011

 

 

 

11,828

 

Depreciation

 

10,924

 

 

 

13,501

 

 

 

54,139

 

 

 

48,889

 

Non-cash lease expense

 

1,209

 

 

 

 

 

19,170

 

 

 

Accelerated depreciation of property and equipment

 

37

 

 

 

218

 

 

 

206

 

 

 

7,731

 

Amortization of intangible assets

 

2,599

 

 

 

2,060

 

 

 

8,699

 

 

 

7,926

 

Amortization of issuance costs and discount on debt

 

 

 

475

 

 

 

 

 

785

 

Stock-based compensation

 

18,564

 

 

 

23,396

 

 

 

77,739

 

 

 

97,009

 

Deferred income taxes

 

(234

)

 

 

(858

)

 

 

384

 

 

 

(2,548

)

Impairment of equity investment

 

 

 

 

 

 

 

6,000

 

Other

 

565

 

 

 

(392

)

 

 

515

 

 

 

(1,395

)

Changes in operating assets and liabilities, net of acquisition:

 

 

 

 

 

 

 

Accounts receivable

 

(89,930

)

 

 

(88,263

)

 

 

(21,313

)

 

 

(8,036

)

Inventories

 

107,029

 

 

 

67,204

 

 

 

(18,471

)

 

 

(12,860

)

Prepaid expenses and other assets

 

3,269

 

 

 

2,558

 

 

 

15,141

 

 

 

125,914

 

Fitbit force recall reserve

 

(243

)

 

 

(50

)

 

 

(1

)

 

 

(445

)

Accounts payable

 

(64,386

)

 

 

18,850

 

 

 

(52,560

)

 

 

35,207

 

Accrued liabilities and other liabilities

 

154,267

 

 

 

52,478

 

 

 

93,262

 

 

 

(11,978

)

Lease liabilities

 

(1,914

)

 

 

 

(22,889

)

 

 

Deferred revenue

 

6,592

 

 

 

4,027

 

 

 

4,006

 

 

 

(5,622

)

Income taxes payable

 

(349

)

 

 

(5,078

)

 

 

(456

)

 

 

575

 

Net cash provided by (used in) operating activities

 

28,280

 

 

 

108,326

 

 

 

(156,832

)

 

 

113,207

 

Cash Flows from Investing Activities

 

 

 

 

 

 

 

Purchase of property and equipment

 

(10,254

)

 

 

(12,706

)

 

 

(36,531

)

 

 

(52,880

)

Purchases of marketable securities

 

(59,610

)

 

 

(104,684

)

 

 

(347,579

)

 

 

(353,948

)

Sales of marketable securities

 

7,108

 

 

 

1,038

 

 

 

9,124

 

 

 

9,983

 

Maturities of marketable securities

 

83,464

 

 

 

75,918

 

 

 

405,596

 

 

 

433,594

 

Acquisition, net of cash acquired

 

(2,224

)

 

 

(2,250

)

 

 

(4,849

)

 

 

(19,253

)

Net cash provided by (used in) investing activities

 

18,484

 

 

 

(42,684

)

 

 

25,761

 

 

 

17,496

 

Cash Flows from Financing Activities

 

 

 

 

 

 

 

Repayment of debt

 

(550

)

 

 

 

 

(550

)

 

 

(747

)

Payment of financing lease liability

 

(464

)

 

 

 

 

(2,703

)

 

 

Proceeds from issuance of common stock

 

5,974

 

 

 

9,829

 

 

 

13,018

 

 

 

21,470

 

Taxes paid related to net share settlement of restricted stock units

 

(4,676

)

 

 

(3,752

)

 

 

(18,171

)

 

 

(19,436

)

Net cash provided by (used in) financing activities

 

284

 

 

 

6,077

 

 

 

(8,406

)

 

 

1,287

 

Net increase (decrease) in cash and cash equivalents

 

47,048

 

 

 

71,719

 

 

 

(139,477

)

 

 

131,990

 

Cash and cash equivalents at beginning of period

 

287,431

 

 

 

402,237

 

 

 

473,956

 

 

 

341,966

 

Cash and cash equivalents at end of period

$

 

334,479

 

 

$

 

473,956

 

 

$

 

334,479

 

 

$

 

473,956

 

FITBIT, INC.

Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except percentages and per share amounts)

(unaudited)

 

Three Months Ended

 

Twelve Months Ended

 

December 31,
2019

 

December 31,
2018

 

December 31,
2019

 

December 31,
2018

Non-GAAP gross profit:

 

 

 

 

 

 

 

GAAP gross profit

$

122,053

 

 

$

216,927

 

 

$

427,672

 

 

$

603,579

 

Stock-based compensation expense

2,006

 

 

2,183

 

 

6,403

 

 

7,312

 

Impact of restructuring

 

 

 

 

190

 

 

 

Acquisition-related costs

5,638

 

 

 

 

5,638

 

 

 

Intangible assets amortization

2,392

 

 

1,853

 

 

7,872

 

 

7,189

 

Non-GAAP gross profit

$

132,089

 

 

$

220,963

 

 

$

447,775

 

 

$

618,080

 

 

 

 

 

 

 

 

 

Non-GAAP gross margin (as a percentage of revenue):

 

 

 

 

 

 

 

GAAP gross margin

24.3

%

 

38.0

%

 

29.8

%

 

39.9

%

Stock-based compensation expense

0.4

 

 

0.4

 

 

0.4

 

 

0.5

 

Impact of restructuring

 

 

 

 

 

 

 

Acquisition-related costs

1.1

 

 

 

 

0.4

 

 

 

Intangible assets amortization

0.5

 

 

0.3

 

 

0.6

 

 

0.5

 

Non-GAAP gross margin

26.3

%

 

38.7

%

 

31.2

%

 

40.9

%

 

 

 

 

 

 

 

 

Non-GAAP research and development:

 

 

 

 

 

 

 

GAAP research and development

$

86,703

 

 

$

75,946

 

 

$

300,354

 

 

$

332,169

 

Stock-based compensation expense

(10,418

)

 

(13,330

)

 

(44,855

)

 

(57,188

)

Impact of restructuring

 

 

 

 

(1,550

)

 

 

Acquisition-related costs

(18,411

)

 

 

 

(18,411

)

 

 

Non-GAAP research and development

$

57,874

 

 

$

62,616

 

 

$

235,538

 

 

$

274,981

 

 

 

 

 

 

 

 

 

Non-GAAP sales and marketing expense:

 

 

 

 

 

 

 

GAAP sales and marketing

$

106,828

 

 

$

104,518

 

 

$

329,800

 

 

$

344,091

 

Stock-based compensation expense

(2,685

)

 

(3,730

)

 

(11,585

)

 

(14,726

)

Impact of restructuring

 

 

 

 

(589

)

 

 

Acquisition-related costs

(4,222

)

 

 

 

(4,222

)

 

 

Intangible assets amortization

(135

)

 

(135

)

 

(541

)

 

(451

)

Non-GAAP sales and marketing

$

99,786

 

 

$

100,653

 

 

$

312,863

 

 

$

328,914

 

 

 

 

 

 

 

 

 

Non-GAAP general and administrative expense:

 

 

 

 

 

 

 

GAAP general and administrative

$

43,591

 

 

$

25,516

 

 

$

118,231

 

 

$

116,627

 

Stock-based compensation expense

(3,455

)

 

(4,153

)

 

(14,896

)

 

(17,783

)

Litigation expense

 

 

 

 

 

 

(765

)

Impact of restructuring

 

 

 

 

(129

)

 

 

Acquisition-related costs

(19,719

)

 

 

 

(19,719

)

 

 

Intangible assets amortization

(71

)

 

(73

)

 

(285

)

 

(286

)

Non-GAAP general and administrative

$

20,346

 

 

$

21,290

 

 

$

83,202

 

 

$

97,793

 

FITBIT, INC.

Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except percentages and per share amounts)

(unaudited)

 

Three Months Ended

 

Twelve Months Ended

 

December 31,
2019

 

December 31,
2018

 

December 31,
2019

 

December 31,
2018

Non-GAAP operating expenses:

 

 

 

 

 

 

 

GAAP operating expenses

$

237,122

 

 

$

205,980

 

 

$

748,385

 

 

$

792,887

 

Stock-based compensation expense

(16,558

)

 

(21,213

)

 

(71,336

)

 

(89,697

)

Litigation expense

 

 

 

 

 

 

(765

)

Impact of restructuring

 

 

 

 

(2,268

)

 

 

Acquisition-related costs

(42,352

)

 

 

 

(42,352

)

 

 

Intangible assets amortization

(206

)

 

(208

)

 

(826

)

 

(737

)

Non-GAAP operating expenses

$

178,006

 

 

$

184,559

 

 

$

631,603

 

 

$

701,688

 

 

 

 

 

 

 

 

 

Non-GAAP operating income (loss) and income (loss) before income taxes:

 

 

 

 

 

 

 

GAAP operating income (loss)

$

(115,069

)

 

$

10,947

 

 

$

(320,713

)

 

$

(189,308

)

Stock-based compensation expense

18,564

 

 

23,396

 

 

77,739

 

 

97,009

 

Litigation expense

 

 

 

 

 

 

765

 

Impact of restructuring

 

 

 

 

2,458

 

 

 

Acquisition-related costs

47,990

 

 

 

 

47,990

 

 

 

Intangible assets amortization

2,598

 

 

2,061

 

 

8,698

 

 

7,926

 

Non-GAAP operating income (loss)

(45,917

)

 

36,404

 

 

(183,828

)

 

(83,608

)

Interest income, net

1,815

 

 

2,209

 

 

10,291

 

 

7,808

 

Other income (expense), net

115

 

 

(276

)

 

1,357

 

 

3,358

 

Non-GAAP income (loss) before income taxes

$

(43,987

)

 

$

38,337

 

 

$

(172,180

)

 

$

(72,442

)

 

 

 

 

 

 

 

 

Non-GAAP net income (loss) and net income (loss) per share:

 

 

 

 

 

 

 

Net income (loss)

$

(120,835

)

 

$

15,372

 

 

$

(320,711

)

 

$

(185,829

)

Stock-based compensation expense

18,564

 

 

23,396

 

 

77,739

 

 

97,009

 

Litigation expense

 

 

 

 

 

 

765

 

Impact of restructuring

 

 

 

 

2,458

 

 

 

Acquisition-related costs

47,990

 

 

 

 

47,990

 

 

 

Impairment of equity investment

 

 

 

 

 

 

6,000

 

Intangible assets amortization

2,598

 

 

2,061

 

 

8,698

 

 

7,926

 

Income tax effect of non-GAAP adjustments

20,193

 

 

(4,481

)

 

51,808

 

 

25,330

 

Non-GAAP net income (loss)

$

(31,490

)

 

$

36,348

 

 

$

(132,018

)

 

$

(48,799

)

 

 

 

 

 

 

 

 

GAAP diluted shares

261,693

 

 

249,973

 

 

257,500

 

 

244,603

 

Other dilutive equity awards

 

 

10,426

 

 

 

 

 

Non-GAAP diluted shares

261,693

 

 

260,399

 

 

257,500

 

 

244,603

 

Non-GAAP diluted net income (loss) per share

$

(0.12

)

 

$

0.14

 

 

$

(0.51

)

 

$

(0.20

)

FITBIT, INC.

Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except percentages and per share amounts)

(unaudited)

 

Three Months Ended

 

Twelve Months Ended

 

December 31,
2019

 

December 31,
2018

 

December 31,
2019

 

December 31,
2018

Free cash flow:

 

 

 

 

 

 

 

Net cash provided by (used in) operating activities

$

28,280

 

 

$

108,326

 

 

$

(156,832

)

 

$

113,207

 

Purchases of property and equipment

(10,254

)

 

(12,706

)

 

(36,531

)

 

(52,880

)

Free cash flow

$

18,026

 

 

$

95,620

 

 

$

(193,363

)

 

$

60,327

 

Net cash provided by (used in) investing activities

$

18,484

 

 

$

(42,684

)

 

$

25,761

 

 

$

17,496

 

Net cash provided by (used in) financing activities

$

284

 

 

$

6,077

 

 

$

(8,406

)

 

$

1,287

 

 

 

 

 

 

 

 

 

Adjusted EBITDA:

 

 

 

 

 

 

 

Net income (loss)

$

(120,835

)

 

$

15,372

 

 

$

(320,711

)

 

$

(185,829

)

Stock-based compensation expense

18,564

 

 

23,396

 

 

77,739

 

 

97,009

 

Litigation expense

 

 

 

 

 

 

765

 

Impact of restructuring

 

 

 

 

2,458

 

 

 

Acquisition-related costs

47,990

 

 

 

 

47,990

 

 

 

Impairment of equity investment

 

 

 

 

 

 

6,000

 

Depreciation and intangible assets amortization

13,522

 

 

15,561

 

 

62,836

 

 

56,815

 

Interest income, net

(1,815

)

 

(2,209

)

 

(10,291

)

 

(7,808

)

Income tax expense (benefit)

7,696

 

 

(2,492

)

 

11,646

 

 

1,687

 

Adjusted EBITDA

$

(34,878

)

 

$

49,628

 

 

$

(128,333

)

 

$

(31,361

)

 

 

 

 

 

 

 

 

Stock-based compensation expense:

 

 

 

 

 

 

 

Cost of revenue

$

2,006

 

 

$

2,183

 

 

$

6,403

 

 

$

7,312

 

Research and development

10,418

 

 

13,330

 

 

44,855

 

 

57,188

 

Sales and marketing

2,685

 

 

3,730

 

 

11,585

 

 

14,726

 

General and administrative

3,455

 

 

4,153

 

 

14,896

 

 

17,783

 

Total stock-based compensation expense

$

18,564

 

 

$

23,396

 

 

$

77,739

 

 

$

97,009

 

FITBIT, INC.

Revenue by Geographic Region

(In thousands)

(unaudited)

 

Three Months Ended

 

Twelve Months Ended

 

December 31,
2019

 

December 31,
2018

 

December 31,
2019

 

December 31,
2018

United States

$

276,409

 

 

$

328,416

 

 

$

799,016

 

 

$

880,534

 

Americas, excluding United States

43,734

 

 

44,545

 

 

94,961

 

 

101,282

 

Europe, Middle East, and Africa

152,873

 

 

149,503

 

 

410,485

 

 

384,196

 

Asia Pacific

29,126

 

 

48,735

 

 

130,326

 

 

145,971

 

Total

$

502,142

 

 

$

571,199

 

 

$

1,434,788

 

 

$

1,511,983

 

 

Investor Contact:

Tom Hudson, (415) 604-4106
investor@fitbit.com

Media Contact:

Jen Ralls, (415) 722-6937
PR@fitbit.com

Source: Fitbit, Inc.