Fitbit Inc. (NYSE: FIT) on Wednesday reported first-quarter earnings and revenue that top analysts’ estimate. But the stock still plunges more than 14 percent as the company provides guidance that below analysts’ estimates.
The company said that the first-quarter revenue jumped 50 percent to $505.4 million, which beat the analyst estimate of $444.6 million. Excluding certain items, profit were 10 cents a share for the quarter ended March. Analysts had projected adjusted earnings of 0.03 cents a share.
Nearly half of the revenue came from two new products Fibit Blazea, a smartwatch, and Fibit Alta, a slim activity-tracking wristband, in the first quarter. They accounted for 47 percent of revenue in the period with each selling a million units while these two products were only shipping for about a month.
"The fact that we introduced the new Blaze and Alta in the last month of the quarter and they drove almost 50 percent of our revenue is pretty remarkable," Fitbit chief financial officer Bill Zerella noted on the earnings call. "It demonstrates how important it is for us to bring new products to market on a regular basis."
But the company spent more money to fund its innovation efforts. Operating expenses jumped to $215 million, or 39 percent of sales, from $79 million, or 22 percent of sales, a year earlier.
Despite strong sales of new products, the company posted weak guidance for second quarter. The company expected second-quarter adjusted profit to be 8 cents to 11 cents a share, missing analysts’ projection of 26 cents a share. Sales will be $565 million to $585 million, falling short of analysts’ estimates of $531.3 million. Full-year profit guidance will be $1.12 to $1.24 a share, up from previous guidance of $1.08 to $1.20 a share.
Fitbit shares dropped 16 percent to $14.25 at 12:36 p.m. in New York.