Fitbit’s IPO Plans Backed By “Phenomenal” Financials

image

Last Thursday, Fitbit filed its initial SEC forms declaring that it will make a public stock offering in the coming months. Within those forms, Fitbit outlined its current financial performance, and the numbers have been interpreted as so outstanding that the figures themselves are making nearly as much news as the IPO announcement.

Prior to the release, many speculated that the activity tracker market had a limited shelf life due to Apple, Samsung, and Google fielding smartwatches that offer a similar set of features. Pressure is also mounting on the activity tracker market from the same consumer electronics manufacturers that are building step-counting features directly into smartphones. Traditional activity tracker manufacturers have responded in a variety of ways, with some enhancing their trackers with deeper smartphone integration such as text, email, and app notifications that will help them compete with smartwatches. Fitbit has gone the opposite direction. The company has carved out its marketshare by offering a device that is more affordable than a smartwatch, but that delivers more fitness tracking functionality than smartwatches are currently able to.

image

The company has the numbers to back up its strategy. This quarter, Fitbit booked $48 million net profit, that’s up 440 percent from last year. Revenue is also growing. At $336 million this quarter, its up 209 percent. Jan Dawson, a financial analyst with Jackdaw Research, calls the growth phenomenal and says, “These revenue growth and margin metrics help to explain why the company is going for an IPO now — the numbers are very, very good.”

While critics worry that the activity tracker market will eventually erode as its technology is consolidated by smartphones and emerging multi-purpose wearables, advocates point to other successful niche technology vendors that have maintained market share despite competition from the same giants, notably GoPro cameras and Beats Headphones. Despite virtually every smartphone on the market coming with both a video camera and a pair of headphones, GoPro and Beats have maintained growth and financial success by offering a superior product that serves a more targeted consumer. Fitbit is looking to follow this same business model and it has strong financial underpinnings to help it on its way.


Enjoy HIStalk Connect? Sign up for update alerts, or follow us at @HIStalkConnect.

↑ Back to top

Founding Sponsors

Platinum Sponsors