The development underscores a rising demand for affordable wearables among consumers.
In a development that signals a welcome break for wearable devices, wearable device maker Fitbit Inc reported better-than expected first-quarter results reaffirming its full-year revenue forecast.
The wearable device maker was able to sell more smartwatches and wearable devices that track health at affordable prices.
With the news reaching the market, Fitbit’s shares rose by 1.5% to $5.45 in late trading.
Fitbit, which played a significant role in pioneering the wearable devices craze, posted better-than-expected growth for the first quarter for the first time in three years.
Fitbit got a boost from its new Inspire line; smartwatch sales also more than doubled in the quarter. Of the new devices launched in the past 12 months, the Inspire brand, made up 67% of its revenue in the first quarter.
It sold 2.9 million devices in the first quarter, 36% higher than the previous year. Its average selling prices dropped by 19% to $91 per device since Fitbit focused on selling relatively cheaper devices to better compete with heavyweights such as Samsung and Apple.
According to data from FactSet, Fitbit is likely to sell 2 million devices at an average selling price of $109.33.
Its marketing strategy revolves around providing more value to consumers. Its sells the Inspire at $69.95 and the Inspire HR, capable of heart rate monitoring, at $99.95. In comparison, Apple’s smartwatches start at $279 while Samsung’s watches and trackers lead in at $200.
No wonder, Fitbit’s Health Solutions business grew by 70% in the first quarter and posted a revenue of $30.5 million. Fitbit’s Health Solutions focuses on subscription-based fitness coaching services that connect users with doctors, hospitals and lifestyle coaches.
“We think Fitbit is on the right track pushing to get its trackers and smartwatches on as many wrists as possible, and then ultimately leveraging the user-base and technology for its healthcare initiatives,” said Alicia Reese, senior associate, equity research, Wedbush Securities Inc.
Fitbit’s net loss has narrowed to $79.5 million, equivalent to 31 cents per share, in the first quarter ended March 30 from $80.9 million, or 34 cents per share, a year earlier.
Excluding items, Fitbit reported a loss of 15 cents per share, beating analysts’ average estimate of a loss of 22 cents, according to IBES data from Refinitiv.
Fitbit’s revenues rose to $271.9 million, up from $247.9 million, above Wall Street forecast of $259.7 million.
Fitbit has reaffirmed its full-year revenue forecast of $1.52 billion to $1.58 billion, expecting to sell more devices at cheaper prices.
For the second quarter, Fitbit forecast revenue between $305 million and $320 million, the midpoint of which is slightly below the average analysts’ estimate of $312.8 million.
Fitbit has forecast an adjusted loss for the second quarter between 17 cents to 20 cents per share compared to analysts’ estimated loss of 16 cents.