Wearable device maker Fitbit reported quarterly revenue above its own forecast, and said launches planned for this year were on track, sending the company's shares up 7.2 percent in after-market trading on Wednesday.
Continue Reading Below
Investors are betting on Fitbit's new launches to bolster sales, after the company struggled with a lackluster holiday quarter and production issues that weighed on sales.
"As we enter the smartwatch category, I think that will be a catalyst for growth," Chief Executive Officer James Park said on an earnings call.
The company's smartwatch, codenamed "Higgs" will be able to make touchless payments, the ability to store and play music from Pandora, according to media reports.
Fitbit, which has called 2017 "a transition year", also garnered success with its Alta HR, a recently launched wristband that monitors the heart rate and tracks sleep.
Alta HR accounted for under 20 percent of the company's total revenue in the first quarter ended April 1.
Fitbit's revenue fell about 41 percent to $298.9 million in the latest quarter. Analysts on average had estimated revenue of $280.8 million, according to Thomson Reuters I/B/E/S.
"Investors are positive right now as they did beat at the high end of their revenue guidance, in terms of how they were performing relative to their initial targets, revenue was above," Wedbush Securities analyst Nick McKay said.
Fitbit, whose colorful wristbands and clippable widgets help track heart rate, calories, sleeping patterns and step counts, said in February that it expected first-quarter revenue of between $270 million and $290 million.
The company blamed the decline in revenue to a shift among consumers toward higher featured devices and smartwatches.
Fitbit also said the U.S. channel inventory levels declined 30 percent during the quarter and added that inventory levels are moving in the right direction.
The company posted a net loss of $60.1 million, or 27 cents per share, compared with a profit of $11 million, or 5 cents per share, a year earlier.
Excluding items, the company posted a loss of 15 cents per share, smaller than analysts' average estimate of an 18 cents loss.
The company had forecast an adjusted loss of 18 cents-20 cents per share in February.
Fitbit's shares had fallen 22.4 percent this year, through Wednesday's close of $5.68.
(Reporting by Aishwarya Venugopal in Bengaluru; Editing by Sriraj Kalluvila)