Fitbit lager jumps for wearables pioneer posts first profit for two years

Fitbit Inc. shares increased more than 10% in demand on Wednesday, after wearables pioneer had a surprisingly adjusted profit for the third quarter. It was the first time in two years that Fitbit generated positive adjusted earnings.

The company generated an adjusted earnings per share of 4 cents for the quarter at a turnover of 393.6 million dollars. Analysts surveyed by FactSet expected a loss of 1 percent and a turnover of 381.3 million dollars. Revenues rose somewhat on an annual basis, after many years of decline.

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earnings surprise reflects progress in the company's cost-saving venture, with operating expenses down 17% in the quarter. Management also emphasized strong performance on the product page as Versa smartwatch continues to sell well. Chief Executive James Park said the company sees "good speed" for its new Charge 3 fitness tracker, which began delivering during the quarter.

International sales increased by 10% during the period, driven by strength in Europe, the Middle East and Africa. Park said he sees "very positive" demand for Charge 3 in the region.

Read: Fitbits issues are not just Apple competition, says Morgan Stanley

. Due to the holiday, Fitbit expects the device mix to shift slightly more towards training trackers due to the recent introduction of Charge 3, which revived the company's tracker offer and was not available for a good part of the third quarter. Management expects the change of mix to give a "small lift" to the gross margins.

In general, Fitbit forecasts 7 cents in adjusted earnings per share in December quarter, over 5 cents modeled by analysts.

The company has attempted to move outside unit sales to consumers and into multiple recurring income opportunities within the wider health sector, but it has been a bit slow to take off. Management refused to discuss specific figures for its health-care business, but Park said that sales growth of 26% for this area was a "big business" and reflected the fact that disease management is more important for health plans and insurance companies.

"We have been able to capitalize on that need," said Park MarketWatch.

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Fitbit closed the quarter with $ 623 million in cash and traded securities on the balance sheet, just over half of the market value from Wednesday's proximity . Finance Director Ron Kisling told MarketWatch that although the company has sufficient working capital, it is important to maintain the opportunities to invest in growth. The company sees potential to strengthen its service and dive further into the health ecosystem.

Shares have gone 23% in the last 12 months from Wednesday's close, compared with a 5.3% increase for S & P 500

SPX, + 1.09%

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