Fitbit

Performance indicators

2021: Share of global smartwatch sales - 3.8%

Data for 2021

History

2022: Recall of defective smartwatches leading to burns

On March 2, 2022, Fitbit announced the recall of its Ionic smartwatch due to the danger of a burn. According to the US Consumer Product Safety Commission (CPSC), about 1 million devices were sold nationwide and about 693 thousand abroad. Read more here.

2020

Antitrust probe into Google over Fitbit deal

On August 5, 2020, it became known that the European Commission began an in-depth audit against Google due to the company's plans to buy the manufacturer of smartwatches and fitness bracelets Fitbit for $2.1 billion. Read more here.

Purchase of Doki smartwatch developer for children

In early May 2020, it became known about the sale of the developer of children's smartwatches Doki Technologies to Fitbit. The latter, thanks to this acquisition, intends to establish the production of children's smartwatches. Read more here.

2019

Decrease in revenue to $1.43 billion and increase in losses to $320.7 million

Fitbit completed 2019 with revenue of $1.43 billion, less than $1.51 billion in sales a year ago.

In its homeland, the American company earned $799 million for the year, which is more than in 2018 ($880.5 million). In the countries of the Americas, excluding, USA the company's turnover decreased from $101.3 million to $95 million. In countries, the Europe Middle East and (Africa region) EMEA , sales were equal to $410.5 million at the end of 2019, and a year earlier they were measured at $384.2 million. In the Asia-Pacific region, the company's revenue decreased from $146 million to $130.3 million.

Fitbit financials

Fitbit does not just remain a loss-making company - its cash losses are only increasing. In 2019, net losses reached $320.7 million against $185.8 million in losses a year earlier.

In 2019, Fitbit sold a total of 16 million wearable devices, up 15% from the previous year. The average cost of one sold gadget decreased by 17% to $87, which was facilitated by the appearance of more budget products in the manufacturer's assortment, as well as various promotions.

Approximately 39% of new devices activated in 2019 were for people who had previously used Fitbit technology.

In 2019, new devices, which the company includes the Fitbit Versa 2, Fitbit Versa Lite, Fitbit Inspire, Fitbit Inspire HR, Fitbit Ace 2 and Fitbit Aria Air, brought it 55% of revenue. The share of fitness trackers in the vendor's turnover decreased from 53% to 49%. On its own website, the Fitbit.com company earned $143 million for the year, which is 10% higher than revenues a year ago.

The direction of medical solutions, for which the Fitbit Health Solutions division is responsible, registered revenue in the amount of $95 million in 2019. This is 17% more than a year ago.^[1]

Google bought Fitbit for $2.1 billion and enters the wearable electronics market

On November 1, 2019, Google announced the acquisition of Fitbit for $2.1 billion. Thanks to this purchase, the American internet giant will enter the fast-growing market for fitness trackers and smartwatches.

Under the terms of the agreement, Fitbit shareholders will receive $7.35 for each security they own, which is 19% more than the exchange closing rate on October 31, 2019.

Google announces $2.1 billion Fitbit acquisition

Google will pay for the deal from its own funds, that is, without using shares. Qatalyst Partners LLP acted as a financial adviser to Fitbit when entering into a contract with Google, and Fenwick & West LLP advises the company on legal issues. The deal is scheduled to close in 2020.

The fact that Google is going to buy Fitbit, Reuters reported a few days before the official announcement of the deal. On this news, the shares of the manufacturer of fitness bracelets rose by more than 40%.

Earlier in the smartwatch market, Google offered only the operating system - Wear OS. It is used by brands such as LG, Fossil and TicWatch. Google itself did not develop such gadgets, but with the acquisition of Fitbit, this will change. Google has received a powerful base for the development of wearable electronics and will be able to compete with leaders, analysts are sure.

According to CNBC observers, buying Fitbit will allow Google to take a step forward in its strategy to create products for different areas of user life. As for Fitbit, access to Google technologies will help the company make its products even more advanced, journalists at The Verge are sure.

Buying Fitbit will allow Google to take a step forward in its strategy to create products for different areas of user life

In turn, the purchase is also beneficial for Fitbit, which occupies a dominant position in the market, but cedes an increasing share to companies with less expensive gadgets such as Huawei and Xiaomi.

Fitbit co-founder and CEO James Park, quoted in a press release, called Google an ideal partner that will allow the company to get closer to the goal of helping the maximum people lead healthier and more active lives. The deal will allow the company to accelerate innovation and make a healthy lifestyle available to even more people, he said.

Over the 12 years of Fitbit's existence and before the sale of the company was announced, it sold more than 100 million gadgets and has an audience of 28 million active users around the world. Google stressed that it is not going to use the personal data of these people for advertising purposes, and will protect them.

We are very much waiting for us to bring the best components, software and artificial intelligence to wearable devices to help even more people around the world, "said Rick Osterlo, senior vice president of devices and services at Google.

Despite the sale of Fitbit, the company's devices will still be compatible not only with Android-based devices, but also with hardware on other platforms, including iOS.

According to the BBC, judging by the financial indicators that contain losses, Fitbit is hard to work as an independent company, since larger competitors have significantly strengthened their position in the field of wearable electronics.

According to CCS Insight analyst Leo Gebbie, a strong blow to Fitbit's business was Apple's decision to sell Apple Watch Series 3 smartwatches for $199. That could speed up a deal to sell Fitbit. In addition, Chinese manufacturers, including Xiaomi, offering ultra-cheap gadgets, have a negative impact on Fitbit's business, the expert added.^[2]

2018

Revenue decline to $1.51 billion; net income - $48.8 million

In 2018, Fitbit's revenue amounted to $1.51 billion, down from $1.62 billion a year earlier. Most of the company's products (about 58% in monetary terms) are still sold in the United States. The vendor's annual revenue in this market reached $881 million, down 7% compared to 2017.

In EMEA countries (Europe, Middle East, Africa), the company's revenues decreased by 13% to $384 million, and in the Asia-Pacific region they increased by 27% to $146 million. In the states of the Americas, excluding the United States, Fitbit's turnover turned out to be $101 million, which is 13% less than a year ago.

Fitbit financials

In 2018, Fitbit sold 13.9 million wearable devices, not reaching the value of 2017 about 9%. The average selling value of gadgets during this time increased by 4% and amounted to $105. This rise was helped by the expansion of the range, in which more expensive products appeared. The Fitbit Versa smartwatch and Fitbit Ace and Fitbit Charger 3 fitness bracelets, which the manufacturer classifies as new products, brought it 57% of revenue in 2018.

The report also said 38% of all Fitbit devices activated in 2018 came from the company's loyal customers. More than half (52%) of regular customers are people who have not used Fitbit wearable electronics for some time.

The company in 2018 earned on its website fitbit.com about $155 million in revenue, or 10% of the total. Smartwatch sales generated 44% of revenue, up from 8% in 2017. As a result, Fitbit became the second largest manufacturer of smartwatches in the American market.

Fitbit managed to get rid of losses at the end of 2018, registering a net profit of $48.8 million.

On the day of the financial statements, Fitbit shares fell in price by almost 15% due to a weak forecast for the first quarter of 2019.^[3]

How Fitbit data helped find his stepdaughter's 90-year-old killer

On October 4, 2018, it became known that heart rate data read by the Fitbit fitness tracker helped find the killer. Police charged 90-year-old Anthony Aiello with the murder of his stepdaughter Karen Navarra, whose body with stab wounds to the head and neck was discovered on September 8, 2018. Aiello initially claimed that he left his stepdaughter's house long before the murder, having only been visiting for 15 minutes. However, Karen Navarra's Fitbit data was later collated with security camera footage, and it turned out that Aiello was still in the house at the time of the murder.

Anthony Aiello

Fitbit data shows Karen Navarra's heartbeat spiked at 3: 20pm and then began to slow and completely faded by 3: 28pm. After obtaining a search warrant for Aiello's home, detectives found bloodied clothing. Aiello was arrested on September 25, 2018.

Data from smart home devices are increasingly helping investigators investigate crimes committed without witnesses. In 2017, data from such devices was already used to find the killer - researchers requested data from Amazon Echo and Fitbit to blame the man who stabbed his wife.

Fitbit does not object to the transfer of data to investigators - the company's confidentiality agreement explicitly states that it uses the data it collects "to improve the security and protection of our users and third parties." It also states that the company "can use this information to respond to a legal request." Unlike Amazon, which initially refused to provide the data, arguing that voice interactions with Alexa were protected by data privacy law. The company later handed over the data to the judicial authorities at the request of the owner.^[4]

Fitbit buys Twine Health

On February 13, 2018, fitness tracker and smartwatch maker Fitbit announced the purchase of American startup Twine Health. The deal, the value of which has not been disclosed, will further expand Fitbit's presence in the healthcare segment. Read more here.

2017

Double the growth of losses

On February 26, 2018, Fitbit released a financial report for 2017, from which it turned out that the company was growing losses due to falling sales of wearable electronics.

Fitbit's net loss in 2017 reached $277.2 million, more than double the loss of 2016, when the company missed $102.8 million.

Fitbit Q4 and 2017 Financial Results Overall

In 2017, buyers purchased a total of only 15.3 million Fitbit fitness trackers and smartwatches, which is significantly less than in 2016, when 22.3 million Fitbit wearable devices were sold, reports The Telegraph.^[5]

The fall in popularity of Fitbit is also evidenced by the results of the final quarter - the most important period for the company, which traditionally accounts for the peak of sales. In October-December 2017, Fitbit sold 5.4 million devices against 6.5 million a year earlier. However, the company claims that the number of active Fitbit users increased by 9% and as of December 31, 2017 reached 25.4 million against 23.2 million at the same time in 2016.

Although Fitbit reported that in 2017 the average retail price of its wearable electronics increased by 8% to $101, weak demand brought down the company's revenue: annual turnover decreased by a quarter, from $2.17 to $1.62 billion.^[6]

Most of the revenue - $944 million or 59% - Fitbit earned in the United States. The second most important market was EMEA (Europe, Middle East and Africa), which accounted for $440 million or 27% of total sales. Fitbit brought another 7% of revenue ($115 and $116 million, respectively) to the Asia-Pacific region and other countries of North and Latin America. It is also noted that the United States and Asian countries, Fitbit's revenue in 2017 fell by 39% and 12%, and in EMEA and other states of the American continent, sales increased by 13% and 6%.

Fitbit's results were a disappointment for investors: according to CNBC, after the publication of the results, the company's shares collapsed in price by 15%.^[7]

Fitbit fitness bracelets - incentive to get up from hospital bed

Getting to your feet after surgery is often not easy. At the Cedars-Sinai Medical Center in Los Angeles, USA, they figured out how to motivate patients to get up from a hospital bed using Fitbit fitness trackers. Patients who have undergone various surgeries, including knee or hip replacements, are given smart bracelets that help stimulate people to walk, CNBC reported in early December 2017.

Patients are given smart bracelets that help encourage people to walk, (2017)

Usually healthy people are recommended to take 10 thousand steps a day, but the doctors of the Cedars-Sinai clinic found that patients who take at least a thousand steps every day are discharged from the hospital faster than those who do not travel this distance.

Patients need to walk after operations, which is confirmed by decades of research. We know that and decided to use Fitbit to encourage people to move. Brennan Spiegel, Director of Medical Services Research at Cedars-Sinai Clinic

Data on the steps taken by the patient are displayed on the interactive screen in his ward along with statistics of the activity of other patients who have undergone the same operation. Thus, doctors help people set realistic goals for themselves and achieve them.

Of course, walking around the hospital is not the most inspiring activity. To make walks more exciting, the medical center resorted to the power of art and developed a kind of "art tours" - routes with a calculated number of steps, along which patients at the end of the journey can see a painting or wall painting.

This really encourages patients to leave their wards and walk for a reason, but for a certain purpose.[8] Timothy Daskivich, one of the doctors at Cedars-Sinai Clinic

Severe burns due to a fitness bracelet exploding on his hand

On April 24, 2017, it became known that a resident of Wisconsin (USA) received second-degree burns as a result of a new fitness bracelet on her wrist.

According to Dina Mitchell, with whom the incident occurred, the Fitbit Flex 2 fitness tracker was presented to her for her birthday. The woman had been using the gadget for only two weeks when one day the bracelet suddenly flashed on her arm while reading the book.

US resident received second-degree burns due to a fitness bracelet exploding on her arm

The bracelet melted and the pieces of plastic got into my skin. I'll probably have a scar now. Can you imagine what could happen if a child was in my place? - said the victim in an interview with ABC News.[9]

When the device caught fire, the woman tore it off her wrist and threw it back to the pole. The burn was so bad that Mitchell had to see the doctor. The doctor removed pieces of plastic and rubber from the wound on her arm, the American woman claims.

An emergency operator in Milwaukee, Wisconsin, confirmed to the news outlet that Mitchell was treated in one of the departments the day after the incident.

The woman notified the manufacturer of the incident, and Fitbit offered her to replace the burnt gadget for free. The company also promised to carefully understand what happened.

We are extremely concerned about Ms Mitchell's message regarding her Flex 2 bracelet and will consider it with all seriousness as the health and safety of customers is a priority for us. Fitbit products are designed and manufactured in accordance with strict standards and undergo comprehensive testing to ensure the safety of our users, USA Today comments to Fitbit.

This is the first such case that Fitbit has learned about, and the company sees no reason why people need to stop wearing Flex devices, the fitness tracker manufacturer added.^[10]

2016

Union with Medtronic to integrate glucometers into FitBit devices

In December 2016, it was announced that Fitbit Inc and the largest medical device maker Medtronic had announced a deal that would allow FitBit devices to integrate a digital platform to help patients with type 2 diabetes. The company hopes that this deal could be a driver of Fitbit's revenue growth, as well as set a new trend in the wearable market.

Under the terms of the partnership, FitBit wearables will include built-in glucometers for continuous blood sugar measurement, as well as activity trackers from FitBit. The new IPRO 2 MyLog mobile application will collect data from a glucometer and tracker and, based on this data, offer the user different options for physical activity depending on glucose levels during the day. Thus, doctors can optimize the treatment of patients with type 2 diabetes.

The potential market for new devices is huge. According to the WHO, in the world, about 8.5% of people over 18 are diagnosed with type 1 or type 2 diabetes. The task of modern medicine is to provide such people with a high quality of life, including by promptly monitoring glucose levels and adjusting physical activity. Using the FitBit tracker, patients will be able to quickly monitor their condition, lead an active lifestyle and prevent deterioration of their condition.

The FitBit and Medtronic partnership is one of the first examples where a medical device is tightly integrated with consumer wearable electronics. For Medtronic, such integration is an opportunity to take the lead in a changing healthcare system, where accurate and up-to-date data on a patient's health become a top value.

For FitBit, partnerships could be the most significant growth driver. This happens at the most appropriate moment when the leader in the field of wearable electronics has a significant decrease in growth rate: from 200% year-on-year in the second quarter of 2015 to 23% year-on-year in the third quarter of 2016. However, even with this drop in sales growth, FitBit increased its market share from 21.5% in the third quarter of 2015 to 23% in the third quarter of 2016. Partnering with Medtronic could boost FitBit device sales with a potentially large market for such^[11].

At trading on December 16, FitBit shares fell 1.45% to $7.48. The market capitalization of the company at this time is $1.7 billion.

Takeover of Pebble for $40 million excluding debts

December 7, 2016 it became known about the purchase by Fitbit of the pioneer of the computerized watch market - Pebble Technologies, which ceases to exist.

As the founder and CEO of this company, Eric Migicovsky, wrote on Pebble's blog, Pebble is winding down its business, including the production and sale of smartwatches. It is noted that already released devices will be able to continue to work, but over time their functionality and quality of support will deteriorate, since updates will not be released for them.

Biggest wearable electronics maker buys smartwatch market pioneer

Users who ordered new Pebble products through the Kickstarter website will be refunded by March 2017. Eric Migikowski did not give the reasons for the closure of the company and only noted that the decision was made due to "various factors."

In assessing our future, we have come to the need to join a company that shares our views on how wearable technology can bring joy and benefit to our lives, the head of Pebble said.

Such a company was Fitbit, which acquired Pebble, closing the deal on December 6, 2016. According to Bloomberg, the purchase cost was $40 million, excluding debts and Pebble's own funds.

As part of the agreement, Fitbit received at its disposal new developers, as well as technology, software and other intellectual property of Pebble, while the rest of the assets (for example, production equipment and batches of released watches) will be sold separately.

According to Fitbit CEO and co-founder James Park, the company, having bought Pebble, will be able to accelerate the expansion of production and develop devices aimed at medical workers, insurers and entrepreneurs.^[12]

Pebble is considered one of the first manufacturers of smartwatches. The company raised money for the production of devices on a crowdfunding platform.

Notes