Business Wire | Aug 5, 2020 04:06PM EDT

Fitbit Reports Second Quarter Results for the Three Months Ended July 4, 2020

Aug. 05, 2020

SAN FRANCISCO--(BUSINESS WIRE)--Aug. 05, 2020--Fitbit, Inc. (NYSE:FIT) today reported revenue of $261 million, GAAP net loss per share of $(0.39), non-GAAP net loss per share of $(0.12), GAAP net loss of $(104) million, non-GAAP net loss of $(32) million, cash flow from operations of $33 million, and non-GAAP free cash flow of $28 million for its second quarter of 2020.

"We have been focused on helping our community stay physically active and mentally well during the pandemic. In this uncertain COVID-19 environment, we are seeing consumers turn to options that enable them to take charge of their health, such as Fitbit devices. In addition, many customers have taken advantage of Fitbit's free premium trial offering and signed up for our subscription service," said James Park, co-founder and CEO. "While COVID-19 has impacted our business and there continues to be uncertainty around consumer demand and the economy, we are encouraged by the 12% year-over-year POS sales growth we've seen at retail and through Fitbit.com."

Second Quarter 2020 Financial Summary

For the Three Months For the Six Months Ended Ended

In millions, except July 4, June 29, July 4, June 29,percentages and per 2020 2019 2020 2019share amounts

GAAP Results

Revenue $ 261.3 $ 313.6 $ 449.4 $ 585.4

Gross Margin 35.6 % 34.5 % 32.9 % 33.8 %

Net loss $ (104.1) $ (68.5) $ (83.8) $ (148.0)

Net loss Per Share $ (0.39) $ (0.27) $ (0.31) $ (0.58)

Non-GAAP Results

Gross Margin 37.6 % 35.6 % 35.2 % 34.9 %

Net loss $ (31.5) $ (35.8) $ (96.1) $ (73.8)

Net loss Per Share $ (0.12) $ (0.14) $ (0.36) $ (0.29)

Adjusted EBITDA $ (31.8) $ (30.8) $ (107.3) $ (74.0)

Devices Sold 2.5 3.5 4.6 6.5



For additional information regarding the non-GAAP financial measures, see "Non-GAAP Financial Measures" and "Reconciliation of GAAP to Non-GAAP Financial Measures" below.

Second Quarter 2020 Financial Highlights

* Sold 2.5 million devices, down 30% year-over-year, driven by the introduction of one new product in the first half of 2020 versus four new products in the first half of 2019. Average selling price increased 16% year-over-year to $100 per device. The year-over-year price increase was driven primarily by the higher percentage of sales through the Fitbit.com channel, which grew 102% year-over-year to $66 million of sales. * U.S. revenue represented 63% of total revenue or $165 million, down 9% year-over-year. * International revenue represented 37% of total revenue and declined 27% to $97 million: EMEA revenue declined 17% to $72 million, APAC revenue declined 47% to $14 million and Americas excluding U.S. revenue declined 45% to $10 million, (all on a year-over-year basis). * New devices introduced in the past 12 months, Fitbit Charge 4(tm), Fitbit Versa 2(tm), and Fitbit Aria Air(tm), represented 71% of revenue. * GAAP gross margin was 35.6% and non-GAAP gross margin was 37.6%. GAAP gross margin increased 120 basis points and non-GAAP gross margin increased 200 basis points year-over-year driven by higher average selling price, the mix shift to Fitbit.com and growth of premium revenue, as well as $9 million decrease in excess and obsolete inventory write-downs. * GAAP operating expenses represented 70.5% of revenue, increasing 3% year-over-year to $184 million driven by costs related to the pending acquisition by Google LLC; non-GAAP operating expenses represented 54.6% of revenue, decreasing 11% year-over-year to $143 million driven by lower marketing costs and lower customer service costs.

Second Quarter 2020 Operational Highlights

* Consumer demand for Fitbit devices was strong in the second quarter with POS up 12% in the second quarter. This was driven by 34% growth in smartwatch sales, led by sales of Versa 2. * Revenue lagged POS sales driven by a large reduction in channel inventory. Global inventory in the channel declined by approximately one million units. * Smartwatches represented 40% of revenue, trackers represented 56% of revenue and non-device software offerings were 4% of revenue. Tracker sales benefited from the introduction of Charge 4 in the first quarter of 2020. Non-device revenue grew 195% year-over-year driven by the growth of our consumer premium health offering. * Following the introduction in the first quarter of 2020 of a 90-day free trial offering of Fitbit Premium to give users more tools to stay healthy during COVID-19, we began to see healthy levels of conversion from free to paid users. Fitbit ranked as a top 10 paid app within the Health & Fitness category on both Google Play and the iOS Store in the United States in the second quarter and now ranks as the number one paid app in the U.S. in Google Play and top five in the iOS store. * Our Fitbit Health Solutions business was negatively impacted by COVID-19 and represented 7% of revenue, or $17 million. * We introduced a COVID-19 resource tab in our free app that provides access to helpful information, tools, and resources, such as connecting with a doctor virtually. * We announced a broader research effort in coordination with health industry leaders like Stanford Medicine and The Scripps Research Institute, to study how data from wearables can detect, track, and contain infectious diseases like COVID-19. * We developed a high-quality, low-cost, easy to use emergency ventilator, Fitbit Flow, which has obtained Emergency Use Authorization from the U.S. Food and Drug Administration, to help address urgent global needs during COVID-19.

COVID-19-Related Impact to Financials

* Our business during the second quarter of 2020 was negatively impacted by the outbreak of COVID-19, which has caused disruptions in the development, manufacture, shipment, and sales of our products. * We maintained the COVID-19 credit allowance of $6 million during the second quarter of 2020. * The current circumstances are dynamic and unprecedented, and the impacts of COVID-19 on our business operations, including the duration and severity of the effect on overall consumer demand, cannot be predicted. However, we expect COVID-19 and associated mitigation efforts to continue to have a significant negative impact on our results in 2020, including our liquidity, although the nature and extent will depend on future developments that are evolving and highly uncertain.

Additional Highlights and Information

* Fitbit announced its entry into a Merger Agreement with Google on November 1, 2019. Upon close of the all-cash transaction, which is subject to customary closing conditions, Fitbit stockholders will receive $7.35 per share in cash, valuing the company at a fully diluted equity value of approximately $2.1 billion. * Fitbit stockholders approved the transaction on January 3, 2020. * Regulatory review of the transaction is ongoing. On August 4, 2020, the European Commission announced it has initiated a Phase II review of the transaction. The duration of a Phase II review cannot be foreseen with certainty. While we still expect Fitbit and Google to secure the necessary regulatory approvals and to close the transaction in 2020, the time frame may extend beyond that. Moreover, the extent to which COVID-19 may impact the timing of receipt of these approvals is uncertain and cannot be predicted. Prior to closing, we do not expect to provide additional updates on the regulatory process other than during the release of future earnings reports. * Due to the pending acquisition by Google, Fitbit does not plan to host an earnings conference call nor provide next-quarter or full-year guidance.

Forward Looking Statements

This press release contains "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks and uncertainties. In some cases, you can identify these forward-looking statements by the use of terms such as "expect," "will," "continue," or similar expressions, and variations or negatives of these words, but the absence of these words does not mean that a statement is not forward-looking. All statements other than statements of historical fact could be deemed forward-looking statements, including, but not limited to: our ability to develop innovative products and services that can help people during the COVID-19 pandemic; any statements regarding the anticipated impact of COVID-19 on our business; the expected timing of the completion of the transaction with Google; the ability of Google and us to complete the proposed transaction considering the various conditions to the transaction, some of which are outside the parties' control, including those conditions related to regulatory approvals; any statements concerning the expected development or competitive performance relating to Fitbit's products and services; and any statements of assumptions underlying any of the foregoing. A number of important factors and uncertainties could cause actual results or events to differ materially from those described in these forward-looking statements, including without limitation: the impact of COVID-19 on our business, results of operations, or financial condition, including the development, manufacturing, and shipment of our products; general public health, market, political, economic and business conditions, including the impact of COVID-19 on global economic conditions and consumer confidence and spending; the effects of the highly competitive market in which we operate, including competition from much larger technology companies; our ability to anticipate and satisfy consumer preferences in a timely and cost-effective manner; our ability to successfully develop, timely introduce, and achieve retail and customer acceptance of new products and services, or enhance existing products and services, including software and subscription services; our ability to accurately forecast consumer demand and adequately manage our inventory; our ability to ship products on the timelines we anticipate and avoid unexpected delays; our ability to detect, prevent or fix quality issues in our products and services; our ability to attract and retain employees; our reliance on third-party suppliers, contract manufacturers, and logistics providers and our limited control over such parties; delays in procuring components and products from third parties or their suppliers; the ability of third parties to manufacture and ship quality products in a timely manner; seasonality of demand; the concentrated nature of our retailer and distributor base; product liability issues, security breaches, or other factors that may adversely affect product performance and overall market acceptance of our products and services; our ability to integrate acquired technologies and employees of acquired businesses into our operations, particularly in new geographies; warranty claims; the relatively new and unproven market for trackers and wearable devices; the ability of our channel partners to sell our products; litigation and related costs; the impact of privacy and data security laws; changes in tax laws; the impact of tariffs; the failure to satisfy any of the conditions to the consummation of the proposed transaction with Google, including the receipt of certain governmental and regulatory approvals; the occurrence of any event, change, or other circumstance that could give rise to the termination of the Merger Agreement; the outcome of any legal proceedings that may be instituted against us related to the Merger Agreement or the proposed transaction; unexpected costs, charges or expenses resulting from the proposed transaction; the occurrence of a Company Material Adverse Effect (as defined in the Merger Agreement).

Additional risks and uncertainties are included under the caption "Risk Factors" in our Annual Report on Form 10-K for the full year ended December 31, 2019, and our Quarterly Report Form 10-Q for the three months ended April 4, 2020, which are available on our Investor Relations website at investor.fitbit.com and on the Security Exchange Commission (SEC) website at www.sec.gov. Once filed with the SEC, additional information will be set forth in our Quarterly Report on Form 10-Q for the three months ended July 4, 2020. All forward-looking statements contained herein are based on information available to us as of the date hereof and we do not assume any obligation to update these statements as a result of new information or future events. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on such statements.

Non-GAAP Financial Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures in this press release: non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating loss, non-GAAP operating loss before income taxes, non-GAAP net income (loss), non-GAAP basic/diluted net income (loss) per share, free cash flow, non-GAAP research and development expenses, non-GAAP sales and marketing expenses, non-GAAP general and administrative expenses, and adjusted EBITDA. The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP.

We use non-GAAP measures to internally evaluate and analyze financial results. We believe these non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and enable comparison of our financial results with other public companies, many of which present similar non-GAAP financial measures.

There are limitations associated with the use of non-GAAP financial measures as an analytical tool. In particular, many of the adjustments to our GAAP financial measures reflect the exclusion of certain items, specifically stock-based compensation expense, depreciation, amortization of intangible assets, interest income, net, acquisition-related costs, and the related income tax effects of the aforementioned exclusions, that are recurring and will be reflected in our financial results for the foreseeable future. In addition, these measures may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes. A reconciliation of our non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included in this press release, and investors are encouraged to review the reconciliation.

The following are explanations of the adjustments that are reflected in one or more of our non-GAAP financial measures:

* Stock-based compensation expense relates to equity awards granted primarily to our employees. We exclude stock-based compensation expense because we believe that the non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance. Companies calculate stock-based compensation expense using a variety of valuation methodologies and subjective assumptions. * Acquisition-related costs relates to bonuses in connection with the Merger, integration costs, advisory and consulting, legal, accounting, tax, other professional service fees, and SEC filing fees to the extent associated with the pending Merger or our acquisition of other companies. * Restructuring costs primarily included severance-related costs. We believe that excluding this expense provides greater visibility to the underlying performance of our business operations, facilitates comparison of our results with other periods, and may also facilitate comparison with the results of other companies in our industry. * Amortization of intangible assets relates to our acquisitions of FitStar, Pebble, Vector and Twine Health. We exclude these amortization expenses because we do not believe they have a direct correlation to the operation of our business. * Income tax effect of non-GAAP adjustments relates to the tax effect of the adjustments that we incorporate into non-GAAP financial measures such as stock-based compensation, amortization of intangibles, restructuring and valuation allowance in order to provide a more meaningful measure of non-GAAP net loss. * We define free cash flow as net cash provided by (used in) operating activities less purchase of property and equipment. We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that can possibly be used for investing in our business and strengthening the balance sheet, but it is not intended to represent the residual cash flow available for discretionary expenditures. Free cash flow is not prepared in accordance with U.S. GAAP, and should not be considered in isolation of, or as an alternative to, measures prepared in accordance with U.S. GAAP.

About Fitbit, Inc. (NYSE: FIT)

Fitbit helps people lead healthier, more active lives by empowering them with data, inspiration, and guidance to reach their goals. Fitbit designs products and experiences that track and provide motivation for everyday health and fitness. Fitbit's diverse line of innovative and popular products include Fitbit Charge 4(tm), Fitbit Charge 3(tm), Fitbit Inspire HR(tm), Fitbit Inspire(tm), and Fitbit Ace 2(tm) activity trackers, as well as the Fitbit Ionic(tm) and Fitbit Versa(tm) family of smartwatches, Fitbit Flyer(tm) wireless headphones, and Fitbit Aria(tm) family of connected scales. Fitbit products are carried in over 39,000 retail stores and in over 100 countries around the globe. Powered by one of the world's largest health and fitness social networks and databases of health and fitness data, the Fitbit platform delivers personalized experiences, insights and guidance through leading software and interactive tools, including the Fitbit and Fitbit Coach apps, and Fitbit OS for smartwatches. Fitbit Health Solutions develops health and wellness solutions designed to help increase engagement, improve health outcomes, and drive a positive return for employers, health plans and health systems.

Fitbit and the Fitbit logo are trademarks or registered trademarks of Fitbit, Inc. in the United States, and other countries. Additional Fitbit trademarks can be found at www.fitbit.com/legal/trademark-list. Third-party trademarks are the property of their respective owners.

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FITBIT, INC.

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

(unaudited)

Three Months Ended Six Months Ended

July 4, 2020 June 29, July 4, 2020 June 29, 2019 2019



Revenue $ 261,272 $ 313,556 $ 449,430 $ 585,446

Cost of revenue 168,230 205,342 301,466 387,779

Gross profit 93,042 108,214 147,964 197,667

Operating expenses:

Research and 83,733 70,919 165,322 147,958 development

Sales and 65,470 83,060 122,431 151,676 marketing

General and 35,049 24,865 77,090 51,557 administrative

Total operating 184,252 178,844 364,843 351,191 expenses

Operating loss (91,210) (70,630) (216,879) (153,524)

Interest income, 13 2,622 1,306 6,088 net

Other income, net 2,237 461 2,233 1,734

Loss before income (88,960) (67,547) (213,340) (145,702) taxes

Income tax expense 15,137 971 (129,537) 2,281 (benefit)

Net loss $ (104,097) $ (68,518) $ (83,803) $ (147,983)

Net loss per share:

Basic $ (0.39) $ (0.27) $ (0.31) $ (0.58)

Diluted $ (0.39) $ (0.27) $ (0.31) $ (0.58)

Shares used tocompute net loss per share:

Basic 267,872 256,160 266,742 254,659

Diluted 267,872 256,160 266,742 254,659



FITBIT, INC.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

July 4, 2020 December 31, 2019



Assets

Current assets:

Cash and cash equivalents $ 343,476 $ 334,479

Marketable securities 104,755 184,023

Accounts receivable, net 215,394 435,269

Inventories 65,371 136,752

Income tax receivable 26,753 573

Prepaid expenses and other current assets 31,829 28,656

Total current assets 787,578 1,119,752

Property and equipment, net 78,552 82,756

Operating lease right-of use-assets 65,579 70,225

Goodwill 64,812 64,812

Intangible assets, net 9,668 16,746

Deferred tax assets 26,017 4,111

Other assets 10,269 9,684

Total assets $ 1,042,475 $ 1,368,086

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable $ 79,726 $ 194,626

Accrued liabilities 358,288 513,530

Operating lease liabilities 21,687 23,511

Deferred revenue 32,589 32,307

Income taxes payable 1,448 636

Total current liabilities 493,738 764,610

Long-term deferred revenue 4,626 8,535

Long-term operating lease liabilities 61,410 67,902

Other liabilities 52,385 39,776

Total liabilities 612,159 880,823



Stockholders' equity:

Class A and Class B common stock 27 26

Additional paid-in capital 1,153,520 1,126,827

Accumulated other comprehensive income 350 188

Accumulated deficit (723,581) (639,778)

Total stockholders' equity 430,316 487,263

Total liabilities and stockholders' equity $ 1,042,475 $ 1,368,086



FITBIT, INC.

Condensed Consolidated Statements of Cash Flow

(in thousands)

(unaudited)

Three Months Ended Six Months Ended

July 4, 2020 June 29, July 4, 2020 June 29, 2019 2019

Cash Flows fromOperating Activities

Net loss $ (104,097) $ (68,518) $ (83,803) $ (147,983)

Adjustments toreconcile net lossto net cash used in operatingactivities:

Provision for (441) 16 6,045 48 doubtful accounts

Provision forexcess and 3,415 2,644 13,260 4,122 obsolete inventory

Depreciation 10,453 16,733 21,042 30,106

Non-cash lease 6,953 3,902 8,477 11,615 expense

Accelerateddepreciation of 613 170 626 170 property andequipment

Amortization of 3,049 2,061 7,078 4,121 intangible assets

Stock-based 19,770 20,547 39,497 41,091 compensation

Deferred income (21,865) 154 (21,819) 134 taxes

Other 319 212 324 162

Changes inoperating assetsand liabilities, net ofacquisition:

Accounts (32,669) (8,031) 213,830 155,561 receivable

Inventories 36,243 9,775 56,544 (41,183)

Prepaid expenses 22,320 1,862 (5,753) 14,416 and other assets

Income taxes 113,074 (449) (26,180) (409) receivable

Accounts payable (19,279) (18,861) (123,657) (100,517)

Accruedliabilities and 2,464 (28,048) (141,269) (97,964) other liabilities

Lease liabilities (6,144) (8,605) (10,900) (13,577)

Deferred revenue (1,427) (1,216) (3,627) (3,475)

Income taxes (251) (771) 813 (514) payable

Net cash providedby (used in) 32,500 (76,423) (49,472) (144,076) operatingactivities

Cash Flows fromInvesting Activities

Purchase ofproperty and (4,994) (4,731) (8,550) (10,827) equipment

Purchases ofmarketable - (108,880) (59,735) (220,495) securities

Sales ofmarketable - 2,016 - 2,016 securities

Maturities ofmarketable 71,174 111,120 139,365 239,429 securities

Net cash providedby (used in) 66,180 (475) 71,080 10,123 investingactivities

Cash Flows fromFinancing Activities

Payment offinancing lease (1,384) (340) (1,384) (937) liability

Proceeds fromissuance of common 544 5,881 1,002 6,812 stock

Taxes paid relatedto net sharesettlement of (6,361) (4,227) (12,229) (10,649) restricted stockunits

Net cash providedby (used in) (7,201) 1,314 (12,611) (4,774) financingactivities

Net increase(decrease) in cash 91,479 (75,584) 8,997 (138,727) and cashequivalents

Cash and cashequivalents at 251,997 410,813 334,479 473,956 beginning ofperiod

Cash and cashequivalents at end $ 343,476 $ 335,229 $ 343,476 $ 335,229 of period



FITBIT, INC.

Reconciliation of GAAP to Non-GAAP Financial Measures

(in thousands, except percentages and per share amounts)

(unaudited)

Three Months Ended Six Months Ended

July 4, June 29, July 4, June 29, 2020 2019 2020 2019

Non-GAAP gross profit:

GAAP gross profit $ 93,042 $ 108,214 $ 147,964 $ 197,667

Stock-based compensation 2,033 1,521 4,212 2,951 expense

Impact of restructuring - - - 190

Acquisition-related costs 1,497 - 2,262 -

Intangible assets 1,548 1,853 3,940 3,707 amortization

Non-GAAP gross profit $ 98,120 $ 111,588 $ 158,378 $ 204,515



Non-GAAP gross margin (as a percentage of revenue):

GAAP gross margin 35.6 % 34.5 % 32.9 % 33.8 %

Stock-based compensation 0.8 0.5 0.9 0.5 expense

Impact of restructuring - - - -

Acquisition-related costs 0.6 - 0.5 -

Intangible assets 0.6 0.6 0.9 0.6 amortization

Non-GAAP gross margin 37.6 % 35.6 % 35.2 % 34.9 %



Non-GAAP research and development:

GAAP research and $ 83,733 $ 70,919 $ 165,322 $ 147,958 development

Stock-based compensation (11,442) (11,892) (22,561) (23,880) expense

Impact of restructuring - - - (1,550)

Acquisition-related costs (9,653) - (15,364) -

Non-GAAP research and $ 62,638 $ 59,027 $ 127,397 $ 122,528 development



Non-GAAP sales and marketing expense:

GAAP sales and marketing $ 65,470 $ 83,060 $ 122,431 $ 151,676

Stock-based compensation (2,899) (3,175) (5,674) (6,313) expense

Impact of restructuring - - - (589)

Acquisition-related costs (1,836) - (4,240) -

Intangible assets (1,354) (136) (2,797) (271) amortization

Non-GAAP sales and $ 59,381 $ 79,749 $ 109,720 $ 144,503 marketing



Non-GAAP general and administrative expense:

GAAP general and $ 35,049 $ 24,865 $ 77,090 $ 51,557 administrative

Stock-based compensation (3,396) (3,959) (7,050) (7,947) expense

Impact of restructuring - - - (129)

Acquisition-related costs (10,934) - (17,826) -

Intangible assets (147) (72) (341) (143) amortization

Non-GAAP general and $ 20,572 $ 20,834 $ 51,873 $ 43,338 administrative



FITBIT, INC.

Reconciliation of GAAP to Non-GAAP Financial Measures

(in thousands, except percentages and per share amounts)

(unaudited)

Three Months Ended Six Months Ended

July 4, 2020 June 29, July 4, 2020 June 29, 2019 2019

Non-GAAP operating expenses:

GAAP operating $ 184,252 $ 178,844 $ 364,843 $ 351,191 expenses

Stock-basedcompensation (17,737) (19,026) (35,285) (38,140) expense

Impact of - - - (2,268) restructuring

Acquisition-related (22,423) - (37,430) - costs

Intangible assets (1,501) (208) (3,138) (414) amortization

Non-GAAP operating $ 142,591 $ 159,610 $ 288,990 $ 310,369 expenses



Non-GAAP operatingloss and loss before incometaxes:

GAAP operating loss $ (91,210) $ (70,630) $ (216,879) $ (153,524)

Stock-basedcompensation 19,770 20,547 39,497 41,091 expense

Impact of - - - 2,458 restructuring

Acquisition-related 23,920 - 39,692 - costs

Intangible assets 3,049 2,061 7,078 4,121 amortization

Non-GAAP operating (44,471) (48,022) (130,612) (105,854) loss

Interest income, 13 2,622 1,306 6,088 net

Other income, net 2,237 461 2,233 1,734

Non-GAAP loss $ (42,221) $ (44,939) $ (127,073) $ (98,032) before income taxes



Non-GAAP net lossand net loss per share:

Net loss $ (104,097) $ (68,518) $ (83,803) $ (147,983)

Stock-basedcompensation 19,770 20,547 39,497 41,091 expense

Impact of - - - 2,458 restructuring

Acquisition-related 23,920 - 39,692 - costs

Intangible assets 3,049 2,061 7,078 4,121 amortization

Income tax effectof non-GAAP 25,832 10,139 (98,582) 26,474 adjustments

Non-GAAP net loss $ (31,526) $ (35,771) $ (96,118) $ (73,839)



GAAP diluted shares 267,872 256,160 266,742 254,659

Other dilutive - - - - equity awards

Non-GAAP diluted 267,872 256,160 266,742 254,659 shares

Non-GAAP diluted $ (0.12) $ (0.14) $ (0.36) $ (0.29) net loss per share



FITBIT, INC.

Reconciliation of GAAP to Non-GAAP Financial Measures

(in thousands, except percentages and per share amounts)

(unaudited)

Three Months Ended Six Months Ended

July 4, 2020 June 29, July 4, 2020 June 29, 2019 2019

Free cash flow:

Net cash providedby (used in) $ 32,500 $ (76,423) $ (49,472) $ (144,076) operatingactivities

Purchases ofproperty and (4,994) (4,731) (8,550) (10,827) equipment

Free cash flow $ 27,506 $ (81,154) $ (58,022) $ (154,903)

Net cash providedby (used in) by $ 66,180 $ (475) $ 71,080 $ 10,123 investingactivities

Net cash providedby (used in) $ (7,201) $ 1,314 $ (12,611) $ (4,774) financingactivities



Adjusted EBITDA:

Net loss $ (104,097) $ (68,518) $ (83,803) $ (147,983)

Stock-basedcompensation 19,770 20,547 39,497 41,091 expense

Impact of - - - 2,458 restructuring

Acquisition-related 23,920 - 39,692 - costs

Depreciation andintangible assets 13,502 18,792 28,120 34,225 amortization

Interest expense, (13) (2,622) (1,306) (6,088) net

Income tax benefit 15,137 971 (129,537) 2,281 (expense)

Adjusted EBITDA $ (31,781) $ (30,830) $ (107,337) $ (74,016)



Stock-basedcompensation expense:

Cost of revenue $ 2,033 $ 1,521 $ 4,212 $ 2,951

Research and 11,442 11,892 22,561 23,880 development

Sales and marketing 2,899 3,175 5,674 6,313

General and 3,396 3,959 7,050 7,947 administrative

Total stock-basedcompensation $ 19,770 $ 20,547 $ 39,497 $ 41,091 expense



FITBIT, INC.

Revenue by Geographic Region

(in thousands)

(unaudited)

Three Months Ended Six Months Ended

July 4, June 29, July 4, June 29, 2020 2019 2020 2019

United States $ 164,729 $ 180,862 $ 266,768 $ 315,953

Americas, excluding United 10,455 19,178 21,198 34,505 States

Europe, Middle East, and 72,375 87,563 129,381 174,661 Africa

Asia Pacific 13,713 25,953 32,083 60,327

Total $ 261,272 $ 313,556 $ 449,430 $ 585,446



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CONTACT: Investor Contact:

CONTACT: Tom Hudson, (415) 604-4106 investor@fitbit.com

CONTACT: Media Contact:

CONTACT: Jen Ralls, (415) 722-6937 PR@fitbit.com