Fitbit cuts 2019 revenue view, Versa Lite sales lag; shares tankhttps://indianexpress.com/article/technology/tech-news-technology/fitbit-cuts-2019-revenue-view-versa-lite-sales-lag-shares-tank-5869895/

Fitbit cuts 2019 revenue view, Versa Lite sales lag; shares tank

Fitbit Inc cut its 2019 revenue forecast on Wednesday, blaming disappointing sales of its newly launched cheapest smartwatch Versa Lite, sending its shares tumbling as much as 16 per cent to a record low.

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Fitbit in March launched Versa Lite, priced at 0, compared with 0 for the full version. (Image of Fitbit Versa)

Wearable device maker Fitbit Inc cut its 2019 revenue forecast on Wednesday, blaming disappointing sales of its newly launched cheapest smartwatch Versa Lite, sending its shares tumbling as much as 16 per cent to a record low. Fitbit in March launched Versa Lite, priced at $160, compared with $200 for the full version. The watch, which can track workouts and heart rate, lacked some features such as the ability to store music directly.

The company had moved into the smartwatch market to cushion the hit from slowing growth of its popular colourful fitness trackers but has faced tough competition from deeper-pocket companies such as Apple Inc and Samsung Electronics.

Smartwatch revenue decreased by 27 per cent year-over-year in the second quarter, the company said. Fitbit lowered its 2019 revenue forecast to between $1.43 billion and $1.48 billion, compared with its prior expectations of $1.52 billion to $1.58 billion. The report suggests that the overall health of Fitbit’s business is not as strong as thought, DA Davidson analyst Thomas Forte said.

Versa Lite also weighed on average selling price, which fell 19 per cent year-over-year to $86 per device and missed Wall Street expectations of $91, according to research firm FactSet.

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Some analysts also pointed to the weak performance of the company’s health business, widely seen as a growth driver, which connects users with doctors, hospitals and lifestyle coaches. Fitbit has been partnering with health insurers and making tuck-in acquisitions in the healthcare market as part of efforts to diversify its revenue stream in the backdrop of sluggish sales of its tracker devices.

Wedbush Securities’ analyst Alicia Reese said the health solutions segment grew only 16 per cent in the second quarter and may not deliver on its expected full-year revenue of $100 million. The business reported a 70 per cent growth in the preceding quarter to post revenue of $30.5 million.

For the third quarter, Fitbit forecast revenue of between $335 million and $355 million, below the analysts’ average estimate of $399.4 million, according to IBES data from Refinitiv.

The company also forecast an adjusted loss of between 9 cents and 11 cents per share. Analysts were expecting a profit of 2 cents per share. Fitbit’s net loss narrowed to $68.5 million, or 27 cents per share, in the second quarter ended June 30, from $118.3 million, or 49 cents per share, a year earlier.

Excluding items, the company lost 14 cents per share, smaller than estimates of 18 cents loss. Revenue rose about 5 per cent to $313.6 million, beating analysts’ average estimates of $312 million. The company’s shares have fallen 15.5 per cent this year to Wednesday’s close.