A month has gone by since the last earnings report for Fitbit . Shares have added about 2.7% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Fitbit due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Fitbit Q3 Loss Narrower Than Estimated, Revenues Beat
Fitbit, Inc. reported third-quarter 2020 adjusted loss of 3 cents per share, narrower than the Zacks Consensus Estimate of a loss of 11 cents.
The company’s total revenues came in at $363.9 million, up 5% year over year. Also, the figure surpassed the Zacks Consensus Estimate by 21.7%.
Let’s check out the numbers in detail.
Top-Line Details
During the third quarter, Fitbit sold 3.3 million wearable devices, down 5.7% year over year.
The average selling price increased 8% from the prior-year level to $104 per device for the third quarter. This increase was primarily driven by the introduction of higher priced smartwatches.
Geographically, revenues from the United States — which accounted for 54% of third-quarter revenues — decreased 6% year over year.
International revenues accounted for 46% of the revenues and grew 20% from the prior-year quarter to $169 million. Revenues from Americas — excluding the United States — improved 55% to $26 million and that of EMEA was up 23% year over year to $102 million.
However, revenues from APAC declined 1% from the year-ago quarter to $41 million.
For the quarter, smartwatches represented 60%, trackers accounted for 36% and non-device software offerings comprised 4% of revenues. Smartwatch sales benefited from the introduction of two new smartwatches, Sense and Versa 3.
Operating Results
Non-GAAP gross margin was 38.1%, up 610 basis points year over year. Gross margins were driven by lower promotions, reduced warranty expense and growth of Premium revenues, among others.
Non-GAAP operating expenses were 152 million, up 6% from the year-ago quarter. The increase was driven by higher employee costs, partially offset by lower marketing costs and customer service expenses.
Non-GAAP operating loss was $51.2 million compared with a loss of $52.1 million in the year-ago quarter.
Balance Sheet and Cash Flow
Cash and cash equivalents & marketable securities were $416.4 million compared with $448.2 million in the second quarter.
Accounts receivables were $358.5 million compared with $215.4 million in second-quarter 2020.
Cash flow from operations was ($13) million and free cash flow totaled ($27) million for the third quarter of 2020.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 35% due to these changes.
VGM Scores
Currently, Fitbit has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Fitbit has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Fitbit (FIT) Up 2.7% Since Last Earnings Report?
A month has gone by since the last earnings report for Fitbit . Shares have added about 2.7% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Fitbit due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Fitbit Q3 Loss Narrower Than Estimated, Revenues Beat
Fitbit, Inc. reported third-quarter 2020 adjusted loss of 3 cents per share, narrower than the Zacks Consensus Estimate of a loss of 11 cents.
The company’s total revenues came in at $363.9 million, up 5% year over year. Also, the figure surpassed the Zacks Consensus Estimate by 21.7%.
Let’s check out the numbers in detail.
Top-Line Details
During the third quarter, Fitbit sold 3.3 million wearable devices, down 5.7% year over year.
The average selling price increased 8% from the prior-year level to $104 per device for the third quarter. This increase was primarily driven by the introduction of higher priced smartwatches.
Geographically, revenues from the United States — which accounted for 54% of third-quarter revenues — decreased 6% year over year.
International revenues accounted for 46% of the revenues and grew 20% from the prior-year quarter to $169 million. Revenues from Americas — excluding the United States — improved 55% to $26 million and that of EMEA was up 23% year over year to $102 million.
However, revenues from APAC declined 1% from the year-ago quarter to $41 million.
For the quarter, smartwatches represented 60%, trackers accounted for 36% and non-device software offerings comprised 4% of revenues. Smartwatch sales benefited from the introduction of two new smartwatches, Sense and Versa 3.
Operating Results
Non-GAAP gross margin was 38.1%, up 610 basis points year over year. Gross margins were driven by lower promotions, reduced warranty expense and growth of Premium revenues, among others.
Non-GAAP operating expenses were 152 million, up 6% from the year-ago quarter. The increase was driven by higher employee costs, partially offset by lower marketing costs and customer service expenses.
Non-GAAP operating loss was $51.2 million compared with a loss of $52.1 million in the year-ago quarter.
Balance Sheet and Cash Flow
Cash and cash equivalents & marketable securities were $416.4 million compared with $448.2 million in the second quarter.
Accounts receivables were $358.5 million compared with $215.4 million in second-quarter 2020.
Cash flow from operations was ($13) million and free cash flow totaled ($27) million for the third quarter of 2020.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 35% due to these changes.
VGM Scores
Currently, Fitbit has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Fitbit has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.