You know you’re in a bad place when revenue plunges 40 per cent and somehow you still beat analyst expectations.
That’s exactly what happened to Fitbit this week, whose quarterly earnings report revealed that revenue was slashed nearly in half to $353 million. The blunt pessimism from Wall Street figured the wearables company would clock around $342 million.
Does that count as success or failure? The stock rose a little on the earnings announcement, but it’s down by almost a third this year. Regardless, Fitbit has its cross-hairs fixated on the future: the company dubbed 2017 a “transition year,” which will culminate with the launch of an all-new smartwatch just ahead of the holiday shopping season.
Fitbit’s forthcoming wearable is designed to compete with the Apple Watch, featuring GPS, water resistance, and multi-day battery life, in addition to the health and fitness tracking capabilities customers are already familiar with.
Until then, though, Fitbit is relying entirely on legacy devices to generate revenue, and consumers simply aren’t as interested as they once were. Many companies, including Fossil and Lenovo, have realized the hard way that the wearables market is not as big as some originally imagined.