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Fitbit found profits in high season, but disappointing outlook clouds earnings



Fitbit is returning to show growth in unit sales, but the company has just delivered a negative earnings forecast for the current quarter.

The wearables producer had a net income of $ 15.4 million, or 6 cents per share, compared to a loss of $ 45.5 million, or 19 cents per share in the previous period. After adjustment for share-based compensation and other effects, Fitbit

FIT, + 3.93%

claimed income of 14 cents per share, compared to a corrected loss of 2 cents per share a year ago. Revenues were close to $ 571

.2 million compared to $ 570.8 million in the quarter. Analysts surveyed by FactSet expect Fitbit to earn an adjusted 7 cents per share on revenue of $ 569 million.

The stock was down 3.6% in the after-sales deal on Wednesday.

Chief Executive James Park told MarketWatch that this past quarter was the first since 2016 where the company has posted an increase in units sold. Fitbit will look to make better money on the active user base, which grew 9% in 2018, including through a new paid software offering expected to be launched in the second half of the year.

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For the current quarter, Fitbit expects a adjusted loss per share of 22 cents to 24 cents on revenue of $ $ 250 million to $ 268 million. That is well below the analysts' estimates, which requires a loss of 15 cents per share on revenue of $ 272 million, according to FactSet. Fitbit projects for year-round revenues of $ 1.52 billion to $ 1.58 billion, compared to the FactSet consensus of $ 1.57 billion.

CFO Ron Kisling told MarketWatch that the outlook in the first quarter shows that the March period is typically the slowest for Fitbit, which weighs on margins since the company still has fixed production costs. He expects the gross margins to come up as the year goes by.

Fitbit gained 8% in 2018 from the healthcare business, which focuses on integrating wearables into insurance and wellness plans. The management expects the revenue growth for this area of ​​the company to accelerate in 2019 and reach around $ 100 million. Health education work has been interesting for investors over the past few months as they represent Fitbit's work to become less dependent on unit sales to consumers, but Wedbush recently downgraded Fitbits stock due to lack of information on the company's health efforts.

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Park acknowledged that the goal of $ 100 million is still less than 10% of the company's total revenue, but he called it "a quite significant milestone "and considered the expected double-digit growth rate healthy. Many factors boost health solutions, according to Park, including the recent introduction of two wearables specifically designed for health care plans. The company's Fitbit Care program, which combines coaching and software to help individuals reach their health goals, is also "coming up," he said.

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The company ended the quarter with $ 723.4 million in cash and traded securities on the balance sheet, approximately 42% of Fitbits Market value from Wednesday's proximity.

"We feel very good about [the cash position] given the seasonal nature of income," Kisling said. "It is important that we can invest in growth and opportunities to deepen our relationships with customers, especially by investing in the service sector and increasing our reach to health care."

The stock has increased 29% over the past three months, then in the vicinity of Wednesday, while the S & P 500 index

SPX, -0.05%

has crossed up 4% in that time.


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