Stronger demand helps Fitbit top expectations

Fitbit Inc. gave investors some muchneeded good news, reporting revenue that beat projections and suggesting that it’s finally making progress in its transformation from a maker of step-counting gadgets to essential health-monitoring tools.

The San Francisco hardware maker’s profitability has sagged while it confronts a maturing market and falling sales. Fitbit shares have lost more than half of their value over the past year, as investors lost patience that upcoming products would resuscitate demand. The company had reported earnings that came in well-below analyst expectations the past two quarters, and cut staff this year to reduce operating costs.

Sales fell 41 percent to $298.9 million in the quarter that ended March 31, Fitbit said Wednesday. Analysts had been expecting sales of $279.4 million, according to data compiled by Bloomberg. The company said it lost 15 cents per share, excluding some costs, compared with analysts’ projection of a loss of 18 cents per share.

Fitbit’s shares gained 7 percent in after-hours trading.

CEO James Park has been trying to prove to investors that he can transform Fitbit into a digital-health company that relies less on consumers and more on the health care industry. The company continues to increase its corporate program and this year it unveiled an alliance with the UnitedHealthcare Motion wellness program that lets participants use Fitbit’s Charge 2 fitness tracker.

Though the company has hung on as the market leader for fitness bands, it faces competition from lower-cost products and smartwatches from Apple and Samsung. Fitbit’s longterm growth depends on its ability to diversify into other product categories and software.

Fitbit is “focused on positioning the company for the next stage of growth with wearables and connected health,” Park said in a statement.

The company forecast sales in the current period of $330 million to $350 million, compared with estimates of $350.1 million.

Expectations were low for the first part of the year, considering that the market for activity trackers is shrinking and Fitbit planned no major new products, said Charlie Anderson, an analyst at Dougherty & Co. In the smartwatch category, Anderson said he expects that Fitbit’s growth will be tempered by competition from the Apple product and the scores of Android watches.

“The good things are its loyal user base, but the bad thing is that it’s hard to get confidence that it’ll bring features to the table that aren’t already in the market,” Anderson said.