Thanks to strong sales of smartwatches and cost cutting efforts, Fitbit managed to turn things around in the fourth quarter and the year 2018. For the full year the company's revenues were still down by 6.4 percent to 1,512 million, and around 44 percent of them came from smartwatches, up from 8 percent in 2017. The gross margin declined by 2.9 percentage points to 39.9 percent, but the net loss narrowed to $185.5 million, down from $277.2 million in 2017, as expenses were dramatically reduced.
In the fourth quarter, Fitbit's revenues inched up by 0.1 percent to $571.2 million, while net income soared to $15.4 million, as compared to a loss of $45.5 million for the fourth quarter of 2017. The gross margin dropped by 5.6 percentage points to 38.0 percent in the quarter, negatively impacted by the shift in product mix toward smartwatches, where competition is particularly strong.
The management said these results validated its strategy. It grew the number of its active users by 9 percent to 27.6 million and became the number two player in the smartwatch category in the U.S. The company sold 5.6 million wearable devices, up by 3 percent from the year-ago quarter, although the average selling price declined by 2 percent to $100 per device, which the company attributed to the launch of the Charge 3 fitness tracker. New devices, which include the Fitbit Versa smartwatch, the Fitbit Ace and the Fitbit Charge 3, accounted for 79 percent of revenues.
In Europe, the Middle East and Africa (EMEA), Fitbit's revenues declined by 4 percent to $150 million in the quarter. U.S. sales were off by 1 percent to $328 million, and they were down by 5 percent in the rest of the Americas. On the other hand, Fitbit's sales in Asia-Pacific jumped by 26 percent $49 million.
In the full financial year, sales outside the U.S. were off by 6 percent to $631 million, accounting for 42 percent of revenues, with shares in the total turnover of 25 percent for the EMEA region, 10 percent for Asia-Pacific and 7 percent for the Americas excluding the U.S. Sales through fitbit.com represented 10 percent of total revenues.
The management said it is committed this year to offering more affordable devices with engaging health and fitness features, leading to higher revenues, higher numbers for active users and of devices sold. It anticipates that the growth of its Fitbit Health Solutions will accelerate to reach a turnover of $100 million. The Fitbit Health Solutions business recorded an 8 percent sales increase in 2018.