What Drove Fitbit’s Sales in Q1?

Devices sold increases for Fitbit

Fitbit sold 2.9 million devices in the first quarter—a rise of 36% YoY (year-over-year). The smartwatch drove the shipment growth. The units rose 117%, while tracker shipments rose 17%. Smartwatches accounted for 42% of the total revenues, which resulted in sales growth of 10% for Fitbit in the first quarter.

Fitbit refreshed its product portfolio. The company also experienced an increase in consumer demand. Fitbit continues to launch new products. The products launched in the last 12 months accounted for 67% of the first-quarter sales.

What Drove Fitbit’s Sales in Q1?

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Fitbit tracker sales experienced sales growth for the first time since the first quarter of 2016. During the company’s earnings call, CEO James Park said, “Trackers have always been key to our portfolio and we continue to see a clear segment of users who prefer this form factor.”

Fitbit also claimed that Inspire HR is the best-selling device in the United States and in the retail channel. Fitbit’s device has outperformed Samsung (SSNLF), Fossil (FOSL), and Garmin (GRMN). Fitbit’s Inspire helped reverse the decline in trackers.

Fitbit’s smartwatch portfolio has grown at a much faster rate compared to industry growth. The smartwatch portfolio will likely help the company regain market share. Fitbit expects device shipments to grow in 2019 due to the introduction of lower-priced products. Fitbit expects smartwatches to exceed 50% of the total revenues, which will likely have a positive impact on unit growth.

Fitbit Health Solutions

Fitbit Health Solutions’ vertical is estimated to post sales of $100 million in 2019. Fitbit also expects to grow its premium subscription service this year, which will likely result in sales growth of 1%–4% for Fitbit in 2019.

Since the revenues from Fitbit Health Solutions continue to expand, the company expects its gross margins to increase over the next few quarters. In the first quarter, Fitbit Health Solutions’ business grew 70% to $30.5 million.