Fitbit Profit Down, Outlook Weak; Shares Plunge 12%

(RTTNews) - Shares of Fitbit Inc. (FIT) slumped over 12 percent in extended hours trading after the maker of wearable technology reported a drop in first-quarter profit hurt largely by a surge in operating costs. The company also detailed a weak outlook for the second quarter.

Fitbit's profit for the first-quarter dropped to $11.0 million or $0.05 per share from $48.0 million or $0.22 per share last year. Adjusted earnings were $0.10 per share.

Revenues for the quarter rose to $505.4 million from $336.8 million last year.

Analysts polled by Thomson Reuters estimated earnings of $0.03 per share on revenues of $443.24 million.

The company said it sold 4.8 million fitness devices in the first quarter, as U.S. revenue grew 33 percent year-over-year; APAC surged 142 percent, EMEA jumped 113 percent and Other Americas rose 74 percent.

Gross margins narrowed to 46.3 percent from 50.2 percent last year.

Meanwhile, the company said its new devices Fitbit Blaze and Alta comprised 47% of first quarter revenues.

Operating costs rose to $215.0 million from $79.3 million last year.

Looking forward, Fitbit expects second-quarter adjusted earnings of $0.08 to $0.11 per share and revenues of $565 million to $585 million. Analysts currently estimate earnings of $0.26 per share and revenues of $532.79 million.

For the full year, the company estimates earnings of $1.12 to $1.24 per share and revenues of $2.5 billion to $2.6 billion. Analysts currently estimate earnings of $1.13 per share on revenues of $2.46 billion.

Earlier, the company expected earnings of $1.08 to $1.20 per share on revenues of $2.4 billion to $2.5 billion for the full year.

FIT closed Wednesday's trading at $17.10, down $0.08 or 0.47%, on the NYSE. The stock further dropped $2.14 or 12.51% in the after-hours trading.