Fitbit Reports Second Quarter 2018 Results

Fitbit, Inc. (NYSE:FIT), the leading global wearables brand, today
reported revenue of $299 million, GAAP net loss per share of ($0.49),
non-GAAP net loss per share of ($0.22), GAAP net loss of ($118) million,
non-GAAP net loss of ($54) million, cash flow from operations of ($67)
million and free cash flow of ($83) million for its second quarter of

“Our performance in Q2 represents the sixth consecutive quarter that we
have delivered on our financial commitments, made important progress in
transforming our business, and continued to adapt to the changing
wearables market. Demand for Versa, our first ‘mass-appeal’ smartwatch,
is very strong. Within the second quarter, Versa outsold Samsung, Garmin
and Fossil smartwatches combined in North America, improving our
position with retailers, solidifying shelf space for the Fitbit brand
and providing a halo effect to our other product offerings,” said James
Park, co-founder and CEO.

Second Quarter 2018

For additional information regarding the non-GAAP financial
measures, see “Non-GAAP Financial Measures” and “Reconciliation of
GAAP to Non-GAAP Financial Measures” below.

Second Quarter 2018 Financial Highlights

Second Quarter 2018 Operational Highlights

Third Quarter 2018 Guidance

Full Year 2018 Guidance

For additional information regarding the non-GAAP financial measures
presented above, see “Non-GAAP Financial Measures” below.

Webcast and Conference Call Information

Fitbit will host a conference call today at 5:00 p.m. Eastern Time, 2:00
p.m. Pacific Time, to discuss its results. Investors may access a live
webcast of the call through the Investor section of Fitbit’s website at
The call can also be accessed by dialing (888) 468-2440 or (719)
325-4750, access code 7830797. A replay of the call will be archived on
Fitbit’s website for the following six months.

Forward Looking Statements

This press release contains forward-looking statements that involve
risks and uncertainties, including statements regarding our outlook for
the third quarter 2018 and full year 2018; the rate of decline in
tracker sales; expected device mix; trends in revenue, average selling
price, operating expenses, capital expenditures, free cash flow, gross
margins, non-GAAP basic net (loss) income per share, stock-based
compensation expense and non-GAAP effective tax rate; growth in the EMEA
region; channel inventory levels; future product launches; product
supply, including supply of Versa; consumer and retail demand for
smartwatches and trackers; and any potential financial impact of
tariffs. These forward-looking statements are only predictions and may
differ materially from actual results due to a variety of factors,
including: the effects of the highly competitive market in which we
operate, including competition from much larger technology companies;
our ability to anticipate and satisfy consumer preferences in a timely
manner; our ability to successfully develop and timely introduce new
products and services or enhance existing products and services; retail
and customer acceptance of existing and new products; any inability to
accurately forecast consumer demand and adequately manage our inventory;
our ability to ship products on the timelines we anticipate and
unexpected delays; our ability to detect, prevent or fix quality issues
in our products or services; uncertain ability to 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 these third parties or their
suppliers; the ability of third parties to successfully manufacture and
ship in a timely manner quality products; seasonality; product liability
issues, security breaches or other defects, which may adversely affect
product performance, our reputation and brand awareness and overall
market acceptance of our products and services; ability to integrate
acquired technologies and employees into our operations, particularly in
new geographies; warranty claims; the fact that the market for connected
health and fitness devices is relatively new and unproven; the ability
of our channel partners to sell our products; litigation and related
costs; privacy; the impact of changes in tax law; the impact of tariffs;
and other general market, political, economic and business conditions.

Additional risks and uncertainties that could affect our financial
results are included under the caption “Risk Factors” in our Annual
Report on Form 10-K for the full year ended December 31, 2017, and our
most recently filed Quarterly Report on Form 10-Q. 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.

Disclosure of Material Information

Fitbit announces material information to its investors using SEC
filings, press releases, public conference calls and on its Investor
Relations page on the company’s website at

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 diluted net loss per share, non-GAAP free cash flow, 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 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.

Guidance for non-GAAP financial measures excludes Jawbone litigation
costs, stock-based compensation, impact of restructuring, amortization
of acquired intangible assets, and tax effects associated with these
items. We have not reconciled guidance for non-GAAP financial measures
to their most directly comparable GAAP measures because certain items
that impact these measures are uncertain, out of our control and/or
cannot be reasonably predicted. Accordingly, a reconciliation of the
non-GAAP financial measure guidance to the corresponding GAAP measures
is not available without unreasonable effort.

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

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. As the leading
global wearables brand, 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 Blaze®, Fitbit Charge 2®, Fitbit Alta HR™, Fitbit
Alta®, Fitbit Ace™, Fitbit Flex 2®, and Fitbit Zip® activity trackers,
as well as the Fitbit Ionic™ and Fitbit Versa™ smartwatches, Fitbit
Flyer™ wireless headphones and Fitbit Aria 2™Wi-Fi Smart Scale. Fitbit
products are carried in over 39,000 retail stores and in 86 countries
around the globe. Powered by one of the world’s largest social fitness
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 the 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 U.S. and other countries. Additional Fitbit
trademarks can be found at
Third-party trademarks are the property of their respective owners.

Connect with us on Facebook, Instagram or Twitter and share
your Fitbit experience.


Condensed Consolidated Statements of Operations

(In thousands, except per share amounts)



Condensed Consolidated Balance Sheets

(In thousands)


June 30, 2018

December 31, 2017

Taxes paid related to net share settlement of restricted stock


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