Fitbit is cutting around six per cent of its workforce following poor performance against expectations and plummeting shares in Q4 2016. Based on preliminary financial information, the US wearable tech company said it expects to report 6.5m devices sold and revenue in the range of $572m to $580m for the period – short of expected range of between $725m to $750.
In addition, the company expects non-GAAP diluted net loss per share in the range of $0.51 to $0.56 compared to the previous guidance range of net income per share of $0.14 to $0.18.
For the whole of 2016, Fitbit announced expected annual revenue growth of around 17 per cent, down from the forecasted growth 25 to 26 per cent. While also expecting to earn around $32m in non-GAAP free cash flow and approximately $700m in cash, cash equivalents and marketable securities.
“Fourth quarter results are expected to be below our prior guidance range; however, we are confident this performance is not reflective of the value of our brand, market-leading platform, and company’s long-term potential,” said James Park, Fitbit co-founder and CEO. “While we have experienced softer-than-expected holiday demand for trackers in our most mature markets, especially during Black Friday, we have continued to grow rapidly in select markets like EMEA, where revenue grew 58 per cent during the fourth quarter.”
As a result of the poor performance, Fitbit announced it is ‘conducting a reorganisation of its business’ – meaning approximately 110 employees will be made redundant. Fitbit expects the cost of the reorganisation to be around $4m.