Fitbit reported that unit sales of its devices went up by 36 percent during the first quarter, driven by a 117 percent gain in smartwatch sales and the introduction of new Inspire and Inspire HR trackers. The net loss narrowed by 2 percent from the year-ago quarter to $79.5 million, as revenues increased by 9 percent to $271.9 million.
The quarter saw year-over-year sales of trackers grow by 17 percent, reversing a three-year decline, while smartwatch revenues grew to make up 42 percent of total revenues, up from 30 percent.
The management said it saw continued momentum across all the product categories. It highlighted the performance of the Fitbit Health Solutions business, which grew by 70 percent in revenues to $30.5 million, with strong performance outside the U.S.
Fitbit's sales abroad represented 50 percent of the turnover, as they jumped by 26 percent to $137 million in the quarter. In Europe, the Middle-East and Africa (EMEA), they were up by 35 percent to $87 million, while they climbed by 24 percent in Asia-Pacific to $34 million. However, U.S. sales were off by 3 percent to $135 million, and they were down by 5 percent to $15 million in the rest of the Americas.
The gross margin contracted by 1.1 percentage points to 32.9 percent, driven by a change in the mix toward smartwatches and the elimination of one-time items that favorably benefited the first quarter of 2018. Operating and R&D expenses declined by 12.7 percent.
The management said it is committed to offering more affordable devices with engaging health and fitness features this year, which should lead to higher revenues and higher numbers of active users and devices sold. It anticipates that the growth of its Fitbit Health Solutions will accelerate to reach a turnover of $100 million for the full year.
