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Fitbit flexes its muscle in first public earnings report

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Jason Cipriani
Jason Cipriani
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By
Jason Cipriani
Jason Cipriani
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August 6, 2015, 11:30 AM ET
Latest Products At The Wearable Device Technology Expo
Fitbit Inc.'s Fitbit Flex wireless activity and sleep wristband sit on display at the Wearable Expo in Tokyo, Japan, on Wednesday, Jan. 14, 2015. Photograph by Bloomberg via Getty Images
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Fitbit (FIT) managed to knock the company’s first quarterly results as a public company out of the park.

The wearable maker posted a profit of $400 million, an increase of 253% compared to the same time last year. Overseas growth helped fuel the fitness firm’s successful quarter, with sales growing 250% year-over-year.

Additionally, the company sold over 4.5 million devices throughout the quarter, up from the 1.25 million it sold last year in the same timeframe. “Our second quarter results included our highest quarterly revenue in the eight-year history of Fitbit,” said Fitbit CEO James Park in the company’s earnings statement.

However, despite those impressive numbers, Fitbit shares were down as much as 14.41%, trading at $44.20 after-hours, though it’s unclear as to why.

 

Shortly after the company released its earnings report, Park responded to the share slump by telling Fortune he wasn’t going to worry too much about the numbers. “The only thing I can control, and the employees can control, at Fitbit, is really just continuing heads down execution. Hopefully the results end up speaking for themselves over time.”

Meanwhile, the company’s sales benefited from strong Mother’s and Father’s Day sales, spurred in part by well-placed marketing campaigns; including one advertisement that aired during the NBA Finals, which was the most watched basketball Finals in the last 17 years. Another successful campaign saw the Fitbit Flex, a $99 wristband, placed on nearly 20 million Kellogg’s cereal boxes.

Overall, campaign spending was a much-talked about subject during the meeting, with Park explaining that the company plans to strategically and aggressively increase brand awareness in the future.

Another area the company is keen to keep an eye on is its continued commitment to software solution development. For example, the Fitbit Surge received a software update during the second quarter that enables bike tracking. The update allows a user to plan bike routes using its built-in GPS chip. Previously GPS tracking was only available to runners.

Expect Fitbit and team to continue leveraging the social network aspect of the service. The team reaffirmed the company’s core belief that users who buy into the Fitbit ecosystem are less likely to switch to a competing device several times throughout the call.

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The company is also looking into ways it can improve its social network. “I think there’s a lot of different things. One is there’s ways we can increase the density of our social graph.” A problem, the company has already taken steps towards fixing the introduction of its Facebook friend finding feature. On the other hand, adding more options is also on the plan, he said. “Second is increasing the number of things people can do once they are friends,” Park said.

By giving Fitbit owners the ability to encourage friends and family members to purchase tracker, it increases the company’s reach, and potentially sales. As a result, users can then challenge those friends and family members to various competitions, where step counts for a set period of time are calculated and then compared. The winner doesn’t get a trophy, but digital bragging rights are just as good nowadays.

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