Along the way, Fitbit’s devices–which include 6 clip-on and wrist-worn activity trackers as well as a connected scale–have transitioned to a mass consumer product. At March 31, the company had sold almost 21 million of its devices since its 2007 inception. Fitbit dominates the fitness wearables industry; the SEC filing cites its whopping 68% share of the U.S. fitness activity tracker market in 2014. It also claims it had 9.5 million paid, active users at March 31, which resulted in $9.5 million in revenue during the first quarter.
The company added 5 new devices and a series of features–such as automatic sleep detection, heart rate tracking, call and text notifications, music control, and GPS tracking for speed, distance and exercise routes–over 2013 and 2014. Fitbit isn’t done innovating yet. It had an R&D budget of $54.2 million in 2014, which could tick up to around $100 million in 2015. In the first quarter alone, the company reported R&D spending of $22.4 million. Specifically, Fitbit said it will “continue to enhance our online dashboard and mobile apps, provide greater personalized guidance, and additional premium services offerings.”
In addition to internal R&D, acquisitions are another means of achieving these goals. The filing cites the March 2015 acquisition of interactive video-based exercise experience player FitStar for up to $32.8 million in cash and stock as an example of the kinds of acquisitions it expects to pursue.
Fitbit has conquered the U.S. fitness enthusiast and even the broader consumer buyer, although it does aim to expand its success in those categories even further via global marketing and partnership efforts. Up next for the startup is the corporate wellness market, which remains largely nascent. “We believe that as healthcare costs continue to rise and as employers continue to seek ways to keep their employees active, engaged, and productive, more employers will implement or enhance their corporate wellness programs,” said the SEC filing on Fitbit’s future priorities. “In order to grow our corporate wellness presence, we intend to enhance our corporate wellness offering as well as expand our sales team focused on this market.”
Fitbit already offers a corporate dashboard for a wellness offering; while it’s no cost for the first year, the company expects to be able to charge about $20,000 annually for anticipated renewals. But for now, this isn’t a significant portion of revenues. The startup is doing just fine so far with its consumer focus. Fitbit had $132 million in net income in 2014, with $48 million in net income during the first quarter. In 2014, Fitbit had $745 million in revenue. And with $337 million in revenue during the first quarter of this year alone, Fitbit is on track to ramp up to an enormous scale quickly.
The most recent consumer electronics IPO was for wearable camera company GoPro , which raised $427 million in June 2014. That’s helping to fuel the notion that Fitbit could raise much more than the stated up to $100 million. GoPro has $1.4 billion in trailing 12 month revenues with $112 million in net income for the same period; it is currently valued at about $6.5 billion, up from $3.5 billion at IPO.
REFERENCE: Fierce Medical Devices; 08 MAY 2015; Stacy Lawrence