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February 23, 2017updated 19 Jul 2022 9:57am

Fitbit cuts 6% of jobs as wearable sales struggle

The company takes measures to reduce operating costs, improve efficiencies, and strengthen performance.

By CBR Staff Writer

Fitbit has reported a 19% decline in fourth-quarter revenue, hurt by diminishing consumer demand for its wearable fitness trackers.

Revenue in the three months ended 31 December 2016 declined to $573.8m, compared to $711.6m for the same period in 2015.

The company reported a net loss of $146.3m, or $0.65 loss per share, compared to a net income of $64.2m, or $0.26 earnings per share for the same period in 2015.

In terms of device sales, Fitbit said it sold 6.5 million wearables in Q4 and 22.3 million devices for the full year of 2016.

Though the US revenue dropped 28% compared to a year ago, EMEA revenue grew 58%. Also, four of Fitbit’s new products represented 96% of revenue.

Active users grew 37% to 23.2 million in Q4 from 16.9 million at year end 2015.

In Q4, Fitbit paid $23m to acquire the assets of US smartwatch maker Pebble and $15m for the assets of Vector Watch.

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For the first quarter of 2017, Fitbit expects revenue to be in the range of $270m to $290m, and a net loss of 18 cents to 20 cents per share.

The company’s financial outlook looks better for the fiscal year. It projects revenue of $1.5bn to $1.7bn with a net loss between 22 cents to 44 cents.

Fitbit co-founder and CEO James Park said: “We will leverage our leadership position, recently acquired talent and IP, and the valuable data we collect to improve demand and continue to set the pace of innovation for the industry through more personalised experiences, deeper insights and guidance, expansion into new categories and deeper integration within the healthcare system.”

The company is taking measures to reduce operating costs, improve efficiencies, and strengthen performance.

For 2017, Fitbit is looking to reduce operating costs to improve efficiencies by reducing its 2016 exit operating expense run rate by $200m. It includes a reduction in force that impacts 6% of the global work force.

The company is also hiring a new executive vice president of operations, Jeff Devine, to manage overall operations, customer service, and quality.

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