Fitbit will lay off 110 employees, 6 percent of its global workforce, as part of a reorganization designed to save the company $200 million in operating expenses after the wearable leader underperformed in the fourth quarter. The Information broke the story yesterday, saying as many as 10 percent of Fitbit's employees might be laid off, but the company's announcement today confirmed the lower figure.
"Fourth quarter results are expected to be below our prior guidance range; however, we are confident this performance is not reflective of the value of our brand, market-leading platform, and company’s long-term potential," CEO James Park said in a statement. "While we have experienced softer-than-expected holiday demand for trackers in our most mature markets, especially during Black Friday, we have continued to grow rapidly in select markets like EMEA, where revenue grew 58 percent during the fourth quarter. To address this reduction in growth and what we believe is a temporary slowdown and transition period, we are taking clear steps to reduce operating costs."
The reorganization is a response to fourth quarter performance considerably under targets. While the full Q4 report and conference call will be held at the end of February, the company announced some metrics today, including that the company sold 6.5 million devices in the quarter for a revenue between $572 million and $580 million, compared to the company’s previously announced guidance range of $725 million to $750 million. For the full-year 2016, Fitbit expects an annual revenue growth of 17 percent -- 25 to 26 percent was forecasted.
Park and Chief Technology Officer Eric Friedman will shoulder some of the burden for the savings themselves -- according to Fitbit, the two intend to take $1 salaries in 2017. Park also stressed that he sees the shortfall as a temporary setback, but that the company's longterm roadmap should put them back on track. He also confirmed that the company has its eyes on the smartwatch market, something that's been the subject of much speculation.
“We believe the evolving wearables market continues to present growth opportunities for us that we will capitalize on by investing in our core product offerings, while expanding into the smartwatch category to diversify revenue and capture share of the over $10 billion global smartwatch market,” said Park. “We believe we are uniquely positioned to succeed in delivering what consumers are looking for in a smartwatch: stylish, well-designed devices that combine the right general purpose functionality with a focus on health and fitness. With the recent acquisition of assets from Pebble, Vector Watch and Coin, we are taking action to position the company for long-term success.”
Even more interesting to MobiHealthNews readers, Park stopped short of discussing a health device, but emphasized the importance of healthcare to Fitbit's longterm plans.
"Looking forward, we believe Fitbit is in a unique position to stimulate new areas of demand by leveraging the data we collect to deliver a more personalized experience while developing upgraded versions of existing products and launching additional products to expand into new categories,” Park said. “As the overall wearable category leader, we exited the year with an engaged community of over 23.2 million active users, making us uniquely positioned to be the partner of choice for the healthcare ecosystem, which is a key component of our long-term strategy.”
