|
|
|
|
|
(Mark one)
|
þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from ________________ to ________________
|
Delaware
(State or other jurisdiction of
incorporation or organization)
|
|
20-8920744
(I.R.S. Employer Identification No.)
|
|
|
|
199 Fremont Street, 14th Floor
San Francisco, California
(Address of principal executive offices)
|
|
94105
(Zip Code)
|
Yes
þ
|
No
¨
|
Yes
þ
|
No
¨
|
Large accelerated filer
|
þ
|
|
Accelerated filer
|
¨
|
Non-accelerated filer
|
o
|
(Do not check if a smaller reporting company)
|
Smaller reporting company
|
¨
|
|
|
|
Emerging growth company
|
¨
|
Yes
¨
|
No
þ
|
|
|
Page
Number
|
|
||
|
|
|
|
||
|
|
|
|
Condensed Consolidated Balance Sheets
—September 30, 2017 and December 31, 2016
|
|
|
|
|
|
Condensed Consolidated Statements of Operations
—for the three and nine months ended September 30, 2017 and October 1, 2016
|
|
|
|
|
|
Condensed Consolidated Statements of Comprehensive Income
(Loss)—for the three and nine months ended September 30, 2017 and October 1, 2016
|
|
|
|
|
|
Condensed Consolidated Statements of Cash Flows
—for the nine months ended September 30, 2017 and October 1, 2016
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
continued investments in research and development, sales and marketing and international expansion and the impact of those investments;
|
•
|
trends in our operating expenses, including personnel costs, research and development expense, sales and marketing expense and general and administrative expense;
|
•
|
competitors and competition in our markets;
|
•
|
our ability to anticipate and satisfy consumer preferences;
|
•
|
our smartwatch and its market acceptance and future potential;
|
•
|
our ability to develop new products and services, improve our existing products and services, or engage or expand our user base;
|
•
|
potential insurance recoveries;
|
•
|
our ability to accurately forecast consumer demand and adequately manage inventory;
|
•
|
our ability to deliver an adequate supply of product to meet demand;
|
•
|
our ability to maintain and promote our brand and expand brand awareness;
|
•
|
our ability to detect, prevent, or fix defects;
|
•
|
our reliance on third-party suppliers, contract manufacturers and logistics providers and our limited control over such parties;
|
•
|
trends in our quarterly operating results and other operating metrics;
|
•
|
trends in revenue, costs of revenue and gross margin;
|
•
|
legal proceedings and the impact of such proceedings;
|
•
|
the effect of seasonality on our results of operations;
|
•
|
our ability to attract and retain highly skilled employees;
|
•
|
our expectation to derive the substantial majority of our revenue from sales of devices;
|
•
|
growing our sales of subscription-based services
;
|
•
|
the impact of our acquisitions in enhancing the features and functionality of our devices;
|
•
|
the impact of foreign currency exchange rates;
|
•
|
releasing and shipping new products and services, and the timing thereof;
|
•
|
the sufficiency of our existing cash and cash equivalent balances and cash flow from operations to meet our working capital and capital expenditure needs for at least the next 12 months; and
|
•
|
general market, political, economic and business conditions
.
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||
|
|
|
||||||
|
|
|
|
|
||||
Assets
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
280,681
|
|
|
$
|
301,320
|
|
Marketable securities
|
|
378,548
|
|
|
404,693
|
|
||
Accounts receivable, net
|
|
260,990
|
|
|
477,825
|
|
||
Inventories
|
|
138,781
|
|
|
230,387
|
|
||
Prepaid expenses and other current assets
|
|
173,654
|
|
|
66,346
|
|
||
Total current assets
|
|
1,232,654
|
|
|
1,480,571
|
|
||
Property and equipment, net
|
|
90,823
|
|
|
76,553
|
|
||
Goodwill
|
|
51,036
|
|
|
51,036
|
|
||
Intangible assets, net
|
|
23,943
|
|
|
27,521
|
|
||
Deferred tax assets
|
|
46,221
|
|
|
174,097
|
|
||
Other assets
|
|
9,900
|
|
|
10,448
|
|
||
Total assets
|
|
$
|
1,454,577
|
|
|
$
|
1,820,226
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
178,476
|
|
|
$
|
313,773
|
|
Accrued liabilities
|
|
346,157
|
|
|
390,561
|
|
||
Deferred revenue
|
|
40,058
|
|
|
49,904
|
|
||
Income taxes payable
|
|
293
|
|
|
7,694
|
|
||
Total current liabilities
|
|
564,984
|
|
|
761,932
|
|
||
Other liabilities
|
|
57,958
|
|
|
59,762
|
|
||
Total liabilities
|
|
622,942
|
|
|
821,694
|
|
||
Commitments and contingencies (Note 6)
|
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
|
||||
Class A and Class B common stock
|
|
23
|
|
|
23
|
|
||
Additional paid-in capital
|
|
930,929
|
|
|
859,345
|
|
||
Accumulated other comprehensive loss
|
|
(12,861
|
)
|
|
(978
|
)
|
||
Retained earnings (accumulated deficit)
|
|
(86,456
|
)
|
|
140,142
|
|
||
Total stockholders’ equity
|
|
831,635
|
|
|
998,532
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
1,454,577
|
|
|
$
|
1,820,226
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30, 2017
|
|
October 1, 2016
|
|
September 30, 2017
|
|
October 1, 2016
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
392,522
|
|
|
$
|
503,802
|
|
|
$
|
1,044,763
|
|
|
$
|
1,595,686
|
|
Cost of revenue
|
217,762
|
|
|
263,144
|
|
|
602,459
|
|
|
876,304
|
|
||||
Gross profit
|
174,760
|
|
|
240,658
|
|
|
442,304
|
|
|
719,382
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Research and development
|
84,170
|
|
|
82,972
|
|
|
252,471
|
|
|
235,129
|
|
||||
Sales and marketing
|
77,536
|
|
|
79,872
|
|
|
269,442
|
|
|
305,061
|
|
||||
General and administrative
|
40,690
|
|
|
33,333
|
|
|
102,815
|
|
|
106,297
|
|
||||
Total operating expenses
|
202,396
|
|
|
196,177
|
|
|
624,728
|
|
|
646,487
|
|
||||
Operating income (loss)
|
(27,636
|
)
|
|
44,481
|
|
|
(182,424
|
)
|
|
72,895
|
|
||||
Interest income, net
|
1,162
|
|
|
970
|
|
|
2,451
|
|
|
2,391
|
|
||||
Other income (expense), net
|
(702
|
)
|
|
(1,037
|
)
|
|
134
|
|
|
68
|
|
||||
Income (loss) before income taxes
|
(27,176
|
)
|
|
44,414
|
|
|
(179,839
|
)
|
|
75,354
|
|
||||
Income tax expense
|
86,227
|
|
|
18,294
|
|
|
51,883
|
|
|
31,858
|
|
||||
Net income (loss)
|
$
|
(113,403
|
)
|
|
$
|
26,120
|
|
|
$
|
(231,722
|
)
|
|
$
|
43,496
|
|
Net income (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.48
|
)
|
|
$
|
0.12
|
|
|
$
|
(1.00
|
)
|
|
$
|
0.20
|
|
Diluted
|
$
|
(0.48
|
)
|
|
$
|
0.11
|
|
|
$
|
(1.00
|
)
|
|
$
|
0.18
|
|
Shares used to compute net income (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
234,242
|
|
|
222,412
|
|
|
230,918
|
|
|
219,079
|
|
||||
Diluted
|
234,242
|
|
|
243,687
|
|
|
230,918
|
|
|
242,652
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30, 2017
|
|
October 1, 2016
|
|
September 30, 2017
|
|
October 1, 2016
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
(113,403
|
)
|
|
$
|
26,120
|
|
|
$
|
(231,722
|
)
|
|
$
|
43,496
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Cash flow hedges:
|
|
|
|
|
|
|
|
||||||||
Change in unrealized gain (loss) on cash flow hedges, net of tax benefit (expense) of $192, $155, ($7) and $(1,315), respectively
|
(6,793
|
)
|
|
(221
|
)
|
|
(20,582
|
)
|
|
2,784
|
|
||||
Less: reclassification for realized net gains included in net income, net of tax expense (benefit) of $-, $-, $7 and $509, respectively
|
6,617
|
|
|
(2,850
|
)
|
|
8,264
|
|
|
(4,828
|
)
|
||||
|
(176
|
)
|
|
(3,071
|
)
|
|
(12,318
|
)
|
|
(2,044
|
)
|
||||
Change in foreign currency translation adjustment
|
—
|
|
|
(39
|
)
|
|
314
|
|
|
(199
|
)
|
||||
Change in unrealized loss on available-for-sale investments,
net of tax
|
48
|
|
|
(164
|
)
|
|
133
|
|
|
(38
|
)
|
||||
Less reclassification for realized net gains
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
||||
Net change, net of tax
|
48
|
|
|
(164
|
)
|
|
121
|
|
|
(38
|
)
|
||||
Comprehensive income (loss)
|
$
|
(113,531
|
)
|
|
$
|
22,846
|
|
|
$
|
(243,605
|
)
|
|
$
|
41,215
|
|
|
Nine Months Ended
|
||||||
|
September 30, 2017
|
|
October 1, 2016
|
||||
|
|
|
|
||||
Cash Flows from Operating Activities
|
|
|
|
||||
Net income (loss)
|
$
|
(231,722
|
)
|
|
$
|
43,496
|
|
Adjustments to reconcile net income (loss) to net cash
provided by operating activities: |
|
|
|
||||
Provision for doubtful accounts
|
7,805
|
|
|
—
|
|
||
Provision for inventory obsolescence
|
13,395
|
|
|
1,014
|
|
||
Depreciation
|
28,338
|
|
|
23,883
|
|
||
Write-off of property and equipment
|
5,250
|
|
|
762
|
|
||
Amortization of intangible assets
|
4,134
|
|
|
1,578
|
|
||
Stock-based compensation
|
67,256
|
|
|
58,175
|
|
||
Deferred income taxes
|
132,815
|
|
|
(27,794
|
)
|
||
Other
|
1,301
|
|
|
(323
|
)
|
||
Changes in operating assets and liabilities, net of acquisitions:
|
|
|
|
||||
Accounts receivable
|
208,899
|
|
|
7,756
|
|
||
Inventories
|
79,448
|
|
|
(50,883
|
)
|
||
Prepaid expenses and other assets
|
(125,504
|
)
|
|
(38,788
|
)
|
||
Fitbit Force recall reserve
|
(668
|
)
|
|
(3,628
|
)
|
||
Accounts payable
|
(122,160
|
)
|
|
(13,125
|
)
|
||
Accrued liabilities and other liabilities
|
(48,201
|
)
|
|
43,285
|
|
||
Deferred revenue
|
(9,846
|
)
|
|
554
|
|
||
Income taxes payable
|
(1,822
|
)
|
|
19,756
|
|
||
Net cash provided by operating activities
|
8,718
|
|
|
65,718
|
|
||
Cash Flows from Investing Activities
|
|
|
|
||||
Purchase of property and equipment
|
(58,199
|
)
|
|
(66,798
|
)
|
||
Purchases of marketable securities
|
(494,540
|
)
|
|
(552,752
|
)
|
||
Sales of marketable securities
|
19,806
|
|
|
45,011
|
|
||
Maturities of marketable securities
|
500,576
|
|
|
249,269
|
|
||
Acquisitions, net of cash acquired
|
(556
|
)
|
|
(5,600
|
)
|
||
Net cash used in investing activities
|
(32,913
|
)
|
|
(330,870
|
)
|
||
Cash Flows from Financing Activities
|
|
|
|
||||
Payments of offering costs
|
—
|
|
|
(1,236
|
)
|
||
Proceeds from issuance of common stock
|
13,893
|
|
|
18,316
|
|
||
Taxes paid related to net share settlement of restricted stock units
|
(10,804
|
)
|
|
(3,228
|
)
|
||
Net cash provided by financing activities
|
3,089
|
|
|
13,852
|
|
||
Net decrease in cash and cash equivalents
|
(21,106
|
)
|
|
(251,300
|
)
|
||
Effect of exchange rate on cash and cash equivalents
|
467
|
|
|
(326
|
)
|
||
Cash and cash equivalents at beginning of period
|
301,320
|
|
|
535,846
|
|
||
Cash and cash equivalents at end of period
|
$
|
280,681
|
|
|
$
|
284,220
|
|
•
|
Retailers and distributors are generally allowed to return products that were originally sold through to an end-user under provisions of their contracts, called “open-box” returns, and such returns may be made at any time after original sale.
|
•
|
All purchases through Fitbit.com are covered by a 45-day right of return.
|
•
|
Distributors are allowed stock rotation rights which are limited rights of return of products purchased during a prior period, generally one quarter.
|
•
|
Distributors and retailers are allowed return rights for defective products.
|
•
|
Certain distributors are offered price protection that allows for the right to a partial credit for unsold inventory held by the distributor if the Company reduces the selling price of a product.
|
|
September 30, 2017
|
||||||||||
|
Level 1
|
|
Level 2
|
|
Total
|
||||||
|
|
|
|
|
|
||||||
Assets:
|
|
|
|
|
|
||||||
Money market funds
|
$
|
129,790
|
|
|
$
|
—
|
|
|
$
|
129,790
|
|
U.S. government agencies
|
—
|
|
|
50,707
|
|
|
50,707
|
|
|||
Corporate debt securities
|
—
|
|
|
375,891
|
|
|
375,891
|
|
|||
Derivative assets
|
—
|
|
|
1,307
|
|
|
1,307
|
|
|||
Total
|
$
|
129,790
|
|
|
$
|
427,905
|
|
|
$
|
557,695
|
|
Liabilities:
|
|
|
|
|
|
||||||
Derivative liabilities
|
$
|
—
|
|
|
$
|
11,826
|
|
|
$
|
11,826
|
|
|
December 31, 2016
|
||||||||||
|
Level 1
|
|
Level 2
|
|
Total
|
||||||
|
|
|
|
|
|
||||||
Assets:
|
|
|
|
|
|
||||||
Money market funds
|
$
|
50,125
|
|
|
$
|
—
|
|
|
$
|
50,125
|
|
U.S. government agencies
|
—
|
|
|
86,526
|
|
|
86,526
|
|
|||
Corporate debt securities
|
—
|
|
|
390,286
|
|
|
390,286
|
|
|||
Derivative assets
|
—
|
|
|
10,625
|
|
|
10,625
|
|
|||
Total
|
$
|
50,125
|
|
|
$
|
487,437
|
|
|
$
|
537,562
|
|
Liabilities:
|
|
|
|
|
|
||||||
Derivative liabilities
|
$
|
—
|
|
|
$
|
3,780
|
|
|
$
|
3,780
|
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
|
Cash and Cash Equivalents
|
|
Marketable Securities
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash
|
$
|
102,841
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
102,841
|
|
|
$
|
102,841
|
|
|
$
|
—
|
|
Money market funds
|
129,790
|
|
|
—
|
|
|
—
|
|
|
129,790
|
|
|
129,790
|
|
|
—
|
|
||||||
U.S. government agencies
|
50,703
|
|
|
4
|
|
|
—
|
|
|
50,707
|
|
|
25,795
|
|
|
24,912
|
|
||||||
Corporate debt securities
|
375,959
|
|
|
50
|
|
|
(118
|
)
|
|
375,891
|
|
|
22,255
|
|
|
353,636
|
|
||||||
Total
|
$
|
659,293
|
|
|
$
|
54
|
|
|
$
|
(118
|
)
|
|
$
|
659,229
|
|
|
$
|
280,681
|
|
|
$
|
378,548
|
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
|
Cash and Cash Equivalents
|
|
Marketable Securities
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash
|
$
|
179,076
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
179,076
|
|
|
$
|
179,076
|
|
|
$
|
—
|
|
Money market funds
|
50,125
|
|
|
—
|
|
|
—
|
|
|
50,125
|
|
|
50,125
|
|
|
—
|
|
||||||
U.S. government agencies
|
86,533
|
|
|
8
|
|
|
(15
|
)
|
|
86,526
|
|
|
—
|
|
|
86,526
|
|
||||||
Corporate debt securities
|
390,466
|
|
|
24
|
|
|
(204
|
)
|
|
390,286
|
|
|
72,119
|
|
|
318,167
|
|
||||||
Total
|
$
|
706,200
|
|
|
$
|
32
|
|
|
$
|
(219
|
)
|
|
$
|
706,013
|
|
|
$
|
301,320
|
|
|
$
|
404,693
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||
|
|
|
|
||||
Due in one year
|
$
|
364,734
|
|
|
$
|
355,152
|
|
Due in one to two years
|
13,814
|
|
|
49,541
|
|
||
Total
|
$
|
378,548
|
|
|
$
|
404,693
|
|
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||||||||||
|
Balance Sheet Location
|
|
Fair Value Derivative
Assets
|
|
Fair Value Derivative Liabilities
|
|
Fair Value Derivative
Assets
|
|
Fair Value Derivative Liabilities
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
Cash flow designated hedges
|
Prepaid expenses and other current assets
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
813
|
|
|
$
|
—
|
|
Cash flow designated hedges
|
Accrued liabilities
|
|
—
|
|
|
11,826
|
|
|
—
|
|
|
1,428
|
|
||||
Hedges not designated
|
Prepaid expenses and other current assets
|
|
1,307
|
|
|
—
|
|
|
9,812
|
|
|
—
|
|
||||
Hedges not designated
|
Accrued liabilities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,352
|
|
||||
Total fair value of derivative instruments
|
|
|
$
|
1,307
|
|
|
$
|
11,826
|
|
|
$
|
10,625
|
|
|
$
|
3,780
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
Income Statement Location
|
|
September 30, 2017
|
|
October 1, 2016
|
|
September 30, 2017
|
|
October 1, 2016
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange cash flow hedges:
|
|
|
|
|
|
|
|
|
|
||||||||
Gain (loss) recognized in OCI – effective portion
|
|
|
$
|
(6,603
|
)
|
|
$
|
(560
|
)
|
|
$
|
(20,590
|
)
|
|
$
|
975
|
|
Gain (loss) reclassified from OCI into income – effective portion
|
Revenue
|
|
(6,617
|
)
|
|
3,060
|
|
|
(6,897
|
)
|
|
1,511
|
|
||||
Gain (loss) reclassified from OCI into income – effective portion
|
Operating expenses
|
|
—
|
|
|
(65
|
)
|
|
(1,405
|
)
|
|
2,343
|
|
||||
Gain (loss) recognized in income – ineffective portion
|
Other income (expense), net
|
|
—
|
|
|
76
|
|
|
21
|
|
|
(109
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Gain recognized in income – excluded time value portion
|
Other income (expense), net
|
|
672
|
|
|
—
|
|
|
1,516
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange balance sheet hedges:
|
|
|
|
|
|
|
|
|
|
||||||||
Gain (loss) recognized in income
|
Other income (expense), net
|
|
(2,062
|
)
|
|
(477
|
)
|
|
(8,838
|
)
|
|
3,567
|
|
|
Gross Amounts Offset in the Condensed Consolidated Balance Sheets
|
|
Gross Amounts Not Offset in Condensed Consolidated Balance Sheets
|
||||||||||||||||||||
September 30, 2017
|
Gross Amounts Recognized
|
|
Gross Amounts Offset
|
|
Net Amounts Presented
|
|
Financial Instruments
|
|
Cash Collateral Received
|
|
Net Amount
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign exchange contracts assets
|
$
|
1,307
|
|
|
$
|
—
|
|
|
$
|
1,307
|
|
|
$
|
1,307
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign exchange contracts liabilities
|
11,826
|
|
|
—
|
|
|
11,826
|
|
|
1,307
|
|
|
—
|
|
|
10,519
|
|
||||||
|
|||||||||||||||||||||||
|
Gross Amounts Offset in the Condensed Consolidated Balance Sheets
|
|
Gross Amounts Not Offset in Condensed Consolidated Balance Sheets
|
||||||||||||||||||||
December 31, 2016
|
Gross Amounts Recognized
|
|
Gross Amounts Offset
|
|
Net Amounts Presented
|
|
Financial Instruments
|
|
Cash Collateral Received
|
|
Net Amount
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign exchange contracts assets
|
$
|
10,625
|
|
|
$
|
—
|
|
|
$
|
10,625
|
|
|
$
|
3,780
|
|
|
$
|
—
|
|
|
$
|
6,845
|
|
Foreign exchange contracts liabilities
|
3,780
|
|
|
—
|
|
|
3,780
|
|
|
3,780
|
|
|
—
|
|
|
—
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30, 2017
|
|
October 1, 2016
|
|
September 30, 2017
|
|
October 1, 2016
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Beginning balances
|
$
|
51,520
|
|
|
$
|
80,277
|
|
|
$
|
98,851
|
|
|
$
|
74,045
|
|
Increases
|
146,356
|
|
|
46,654
|
|
|
236,267
|
|
|
166,205
|
|
||||
Returns taken
|
(135,978
|
)
|
|
(59,763
|
)
|
|
(273,220
|
)
|
|
(173,082
|
)
|
||||
Ending balances
|
$
|
61,898
|
|
|
$
|
67,168
|
|
|
$
|
61,898
|
|
|
$
|
67,168
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||
|
|
||||||
|
|
|
|
||||
Components
|
$
|
9,072
|
|
|
$
|
1,035
|
|
Finished goods
|
129,709
|
|
|
229,352
|
|
||
Total inventories
|
$
|
138,781
|
|
|
$
|
230,387
|
|
|
September 30, 2017
|
|
December 31, 2016
|
|||||
|
|
|||||||
|
|
|
|
|||||
Income tax receivable
|
$
|
96,467
|
|
|
$
|
481
|
|
|
POP displays, net
|
16,189
|
|
|
22,804
|
|
|||
Prepaid marketing
|
3,865
|
|
|
5,764
|
|
|||
Derivative assets
|
1,307
|
|
|
10,625
|
|
|||
Prepaid expenses
|
16,508
|
|
|
17,161
|
|
|||
Insurance receivable
|
26,795
|
|
—
|
|
—
|
|
||
Other
|
12,523
|
|
|
9,511
|
|
|||
Total prepaid expenses and other current assets
|
$
|
173,654
|
|
|
$
|
66,346
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||
|
|
||||||
|
|
|
|
||||
Tooling and manufacturing equipment
|
$
|
55,713
|
|
|
$
|
60,944
|
|
Furniture and office equipment
|
18,463
|
|
|
14,424
|
|
||
Purchased and internally-developed software
|
18,524
|
|
|
12,032
|
|
||
Leasehold improvements
|
45,867
|
|
|
28,489
|
|
||
Total property and equipment
|
138,567
|
|
|
115,889
|
|
||
Less: Accumulated depreciation and amortization
|
(47,744
|
)
|
|
(39,336
|
)
|
||
Property and equipment, net
|
$
|
90,823
|
|
|
$
|
76,553
|
|
|
September 30, 2017
|
|
December 31, 2016
|
|
Weighted Average Remaining Useful Life
(years)
|
||||||||||||||||||||
|
Gross
|
|
Accumulated Amortization
|
|
Net
|
|
Gross
|
|
Accumulated Amortization
|
|
Net
|
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Developed technology
|
$
|
26,648
|
|
|
$
|
(7,209
|
)
|
|
$
|
19,439
|
|
|
$
|
26,092
|
|
|
$
|
(3,247
|
)
|
|
$
|
22,845
|
|
|
4.7
|
Trademarks and other
|
1,278
|
|
|
(714
|
)
|
|
564
|
|
|
1,278
|
|
|
(542
|
)
|
|
736
|
|
|
1.2
|
||||||
Total finite-lived intangible assets subject to amortization, net
|
27,926
|
|
|
(7,923
|
)
|
|
20,003
|
|
|
27,370
|
|
|
(3,789
|
)
|
|
23,581
|
|
|
|
||||||
In-process research and development
|
3,940
|
|
|
—
|
|
|
3,940
|
|
|
3,940
|
|
|
—
|
|
|
3,940
|
|
|
|
||||||
Total intangible assets, net
|
$
|
31,866
|
|
|
$
|
(7,923
|
)
|
|
$
|
23,943
|
|
|
$
|
31,310
|
|
|
$
|
(3,789
|
)
|
|
$
|
27,521
|
|
|
|
|
Cost of Revenue
|
|
Operating Expenses
|
|
Total
|
||||||
|
|
|
|
|
|
||||||
Remaining 2017
|
$
|
1,333
|
|
|
$
|
58
|
|
|
$
|
1,391
|
|
2018
|
5,332
|
|
|
230
|
|
|
5,562
|
|
|||
2019
|
4,552
|
|
|
230
|
|
|
4,782
|
|
|||
2020
|
3,772
|
|
|
46
|
|
|
3,818
|
|
|||
2021
|
3,772
|
|
|
—
|
|
|
3,772
|
|
|||
Thereafter
|
678
|
|
|
—
|
|
|
678
|
|
|||
Total finite-lived intangible assets, net
|
$
|
19,439
|
|
|
$
|
564
|
|
|
$
|
20,003
|
|
|
September 30, 2017
|
|
December 31, 2016
|
||||
|
|
||||||
Product warranty
|
$
|
86,679
|
|
|
$
|
99,923
|
|
Accrued manufacturing expense and freight
|
43,045
|
|
|
75,579
|
|
||
Accrued sales incentives
|
66,237
|
|
|
74,181
|
|
||
Accrued sales and marketing
|
28,711
|
|
|
41,948
|
|
||
Accrued co-op advertising and marketing development funds
|
18,273
|
|
|
40,002
|
|
||
Sales taxes and VAT payable
|
17,098
|
|
|
8,891
|
|
||
Employee-related liabilities
|
28,484
|
|
|
13,934
|
|
||
Inventory received but not billed
|
5,663
|
|
|
7,363
|
|
||
Accrued legal fees
|
7,319
|
|
|
3,963
|
|
||
Derivative liabilities
|
11,826
|
|
|
3,780
|
|
||
Other
|
32,822
|
|
|
20,997
|
|
||
Accrued liabilities
|
$
|
346,157
|
|
|
$
|
390,561
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30, 2017
|
|
October 1, 2016
|
|
September 30, 2017
|
|
October 1, 2016
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Beginning balances
|
$
|
72,761
|
|
|
$
|
76,841
|
|
|
$
|
99,923
|
|
|
$
|
40,212
|
|
Charged to cost of revenue
|
26,825
|
|
|
47,042
|
|
|
44,167
|
|
|
148,494
|
|
||||
Changes related to pre-existing warranties
|
5,669
|
|
|
(18,727
|
)
|
|
8,142
|
|
|
(19,214
|
)
|
||||
Settlement of claims
|
(18,576
|
)
|
|
(42,215
|
)
|
|
(65,553
|
)
|
|
(106,551
|
)
|
||||
Ending balances
|
$
|
86,679
|
|
|
$
|
62,941
|
|
|
$
|
86,679
|
|
|
$
|
62,941
|
|
(1)
|
Does not include reserves established as a result of the recall of the Fitbit Force. See the section titled “
—
Fitbit Force Recall Reserve” in the Company’s Annual Report on Form 10-K for additional information regarding such reserves.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30, 2017
|
|
October 1, 2016
|
|
September 30, 2017
|
|
October 1, 2016
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Beginning balance
|
$
|
1,022
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Restructuring charges
|
—
|
|
|
—
|
|
|
6,375
|
|
|
—
|
|
||||
Cash paid
|
(359
|
)
|
|
—
|
|
|
(4,984
|
)
|
|
—
|
|
||||
Other - noncash
|
—
|
|
|
—
|
|
|
(728
|
)
|
|
—
|
|
||||
Ending balance
|
$
|
663
|
|
|
$
|
—
|
|
|
$
|
663
|
|
|
$
|
—
|
|
|
Unrealized Gains (Losses) on Cash Flow Hedges
|
|
Currency Translation Adjustments
|
|
Unrealized Gains (Losses) on Available-for-Sale Investments
|
|
Total
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Balance at December 31, 2016
|
$
|
(477
|
)
|
|
$
|
(314
|
)
|
|
$
|
(187
|
)
|
|
$
|
(978
|
)
|
Other comprehensive income (loss) before reclassifications
|
(20,582
|
)
|
|
314
|
|
|
133
|
|
|
(20,135
|
)
|
||||
Amounts reclassified from AOCI
|
8,264
|
|
|
—
|
|
|
(12
|
)
|
|
8,252
|
|
||||
Other comprehensive income (loss)
|
(12,318
|
)
|
|
314
|
|
|
121
|
|
|
(11,883
|
)
|
||||
Balance at September 30, 2017
|
$
|
(12,795
|
)
|
|
$
|
—
|
|
|
$
|
(66
|
)
|
|
$
|
(12,861
|
)
|
|
Total
|
||
Remaining 2017
|
$
|
9,244
|
|
2018
|
40,767
|
|
|
2019
|
46,623
|
|
|
2020
|
42,860
|
|
|
2021
|
41,296
|
|
|
Thereafter
|
100,317
|
|
|
Total future minimum lease payments
|
$
|
281,107
|
|
|
Stock Options Outstanding
|
|||||||||
|
Number of
Shares Subject
to
Stock Options
|
|
Weighted–
Average
Exercise
Price
|
|
Aggregate
Intrinsic
Value
(1)
|
|||||
|
(in thousands)
|
|
|
|
(in thousands)
|
|||||
Balance—December 31, 2016
|
34,454
|
|
|
$
|
3.85
|
|
|
|
||
Granted
|
1,150
|
|
|
5.63
|
|
|
|
|||
Exercised
|
(6,634
|
)
|
|
1.15
|
|
|
|
|
||
Forfeited or canceled
|
(6,775
|
)
|
|
9.59
|
|
|
|
|||
Balance—September 30, 2017
|
22,195
|
|
|
2.99
|
|
|
$
|
93,199
|
|
|
|
|
|
|
|
|
|||||
Stock options exercisable—September 30, 2017
|
16,455
|
|
|
2.42
|
|
|
77,220
|
|
||
Stock options vested and expected to vest—September 30, 2017
|
22,084
|
|
|
2.99
|
|
|
92,872
|
|
|
RSUs
Outstanding
|
|
Weighted-
Average
Grant Date
Fair Value
|
|||
|
(in thousands)
|
|
|
|||
Unvested balance—December 31, 2016
|
11,578
|
|
|
$
|
16.85
|
|
Granted
|
14,499
|
|
|
6.55
|
|
|
Vested
|
(4,673
|
)
|
|
12.81
|
|
|
Forfeited or canceled
|
(3,909
|
)
|
|
12.94
|
|
|
Unvested balance—September 30, 2017
|
17,495
|
|
|
10.27
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30, 2017
|
|
October 1, 2016
|
|
September 30, 2017
|
|
October 1, 2016
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Cost of revenue
|
$
|
1,379
|
|
|
$
|
1,014
|
|
|
$
|
2,889
|
|
|
$
|
3,407
|
|
Research and development
|
12,947
|
|
|
12,314
|
|
|
40,280
|
|
|
34,432
|
|
||||
Sales and marketing
|
3,679
|
|
|
3,030
|
|
|
11,301
|
|
|
8,492
|
|
||||
General and administrative
|
4,792
|
|
|
3,647
|
|
|
12,786
|
|
|
11,844
|
|
||||
Total stock-based compensation expense
|
$
|
22,797
|
|
|
$
|
20,005
|
|
|
$
|
67,256
|
|
|
$
|
58,175
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30, 2017
|
|
October 1, 2016
|
|
September 30, 2017
|
|
October 1, 2016
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
(113,403
|
)
|
|
$
|
26,120
|
|
|
$
|
(231,722
|
)
|
|
$
|
43,496
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares of common stock—basic for Class A and Class B
|
234,242
|
|
|
222,412
|
|
|
230,918
|
|
|
219,079
|
|
||||
Effect of dilutive securities
|
—
|
|
|
21,275
|
|
|
—
|
|
|
23,573
|
|
||||
Weighted-average shares of common stock—diluted for Class A and Class B
|
234,242
|
|
|
243,687
|
|
|
230,918
|
|
|
242,652
|
|
||||
Net income (loss) per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.48
|
)
|
|
$
|
0.12
|
|
|
$
|
(1.00
|
)
|
|
$
|
0.20
|
|
Diluted
|
$
|
(0.48
|
)
|
|
$
|
0.11
|
|
|
$
|
(1.00
|
)
|
|
$
|
0.18
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
September 30, 2017
|
|
October 1, 2016
|
|
September 30, 2017
|
|
October 1, 2016
|
||||
|
|
|
|
|
|
|
|
||||
Stock options to purchase common stock
|
14,768
|
|
|
3,553
|
|
|
18,874
|
|
|
3,549
|
|
RSUs
|
9,791
|
|
|
3,063
|
|
|
10,235
|
|
|
3,611
|
|
Warrants
|
411
|
|
|
—
|
|
|
137
|
|
|
—
|
|
Diluted impact of ESPP
|
73
|
|
|
—
|
|
|
125
|
|
|
—
|
|
Diluted common stock subject to vesting
|
100
|
|
|
—
|
|
|
113
|
|
|
—
|
|
Total
|
25,143
|
|
|
6,616
|
|
|
29,484
|
|
|
7,160
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
September 30, 2017
|
|
October 1, 2016
|
|
September 30, 2017
|
|
October 1, 2016
|
||||
|
|
|
|
|
|
|
|
||||
A
|
17
|
%
|
|
14
|
%
|
|
14
|
%
|
|
14
|
%
|
B
|
12
|
|
|
*
|
|
|
*
|
|
|
*
|
|
C
|
*
|
|
|
13
|
|
|
*
|
|
|
12
|
|
D
|
*
|
|
|
10
|
|
|
*
|
|
|
15
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30, 2017
|
|
October 1, 2016
|
|
September 30, 2017
|
|
October 1, 2016
|
||||||||
|
|
|
|
|
|
|
|
||||||||
United States
|
$
|
244,204
|
|
|
$
|
361,239
|
|
|
$
|
613,825
|
|
|
$
|
1,158,116
|
|
Americas excluding United States
|
25,276
|
|
|
25,939
|
|
|
69,656
|
|
|
76,708
|
|
||||
Europe, Middle East, and Africa
|
88,672
|
|
|
80,932
|
|
|
285,045
|
|
|
255,127
|
|
||||
APAC
|
34,370
|
|
|
35,692
|
|
|
76,237
|
|
|
105,735
|
|
||||
Total
|
$
|
392,522
|
|
|
$
|
503,802
|
|
|
$
|
1,044,763
|
|
|
$
|
1,595,686
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30, 2017
|
|
October 1, 2016
|
|
September 30, 2017
|
|
October 1, 2016
|
||||||||
|
(in thousands)
|
||||||||||||||
Revenue
|
$
|
392,522
|
|
|
$
|
503,802
|
|
|
$
|
1,044,763
|
|
|
$
|
1,595,686
|
|
Net income (loss)
|
$
|
(113,403
|
)
|
|
$
|
26,120
|
|
|
$
|
(231,722
|
)
|
|
$
|
43,496
|
|
Adjusted EBITDA
|
$
|
5,853
|
|
|
$
|
80,786
|
|
|
$
|
(74,622
|
)
|
|
$
|
174,219
|
|
Devices sold
|
3,624
|
|
|
5,283
|
|
|
9,952
|
|
|
15,798
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30, 2017
|
|
October 1, 2016
|
|
September 30, 2017
|
|
October 1, 2016
|
||||||||
Net income (loss)
|
$
|
(113,403
|
)
|
|
$
|
26,120
|
|
|
$
|
(231,722
|
)
|
|
$
|
43,496
|
|
Stock-based compensation expense
|
22,797
|
|
|
20,005
|
|
|
66,528
|
|
|
58,175
|
|
||||
Depreciation and intangible assets amortization
|
10,520
|
|
|
11,275
|
|
|
32,472
|
|
|
25,461
|
|
||||
Restructuring
|
—
|
|
|
—
|
|
|
6,375
|
|
|
—
|
|
||||
Litigation expense
|
874
|
|
|
6,062
|
|
|
2,293
|
|
|
17,620
|
|
||||
Interest income, net
|
(1,162
|
)
|
|
(970
|
)
|
|
(2,451
|
)
|
|
(2,391
|
)
|
||||
Income tax expense
|
86,227
|
|
|
18,294
|
|
|
51,883
|
|
|
31,858
|
|
||||
Adjusted EBITDA
|
$
|
5,853
|
|
|
$
|
80,786
|
|
|
$
|
(74,622
|
)
|
|
$
|
174,219
|
|
|
Nine Months Ended
|
||||||
|
September 30, 2017
|
|
October 1, 2016
|
||||
Net cash provided by operating activities
|
$
|
8,718
|
|
|
$
|
65,718
|
|
Purchase of property and equipment
|
(58,199
|
)
|
|
(66,798
|
)
|
||
Non-GAAP free cash flow
|
$
|
(49,481
|
)
|
|
$
|
(1,080
|
)
|
Net cash used in investing activities
|
$
|
(32,913
|
)
|
|
$
|
(330,870
|
)
|
Net cash provided by financing activities
|
$
|
3,089
|
|
|
$
|
13,852
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30, 2017
|
|
October 1, 2016
|
|
September 30, 2017
|
|
October 1, 2016
|
||||||||
|
(in thousands)
|
||||||||||||||
Consolidated Statements of Operations Data:
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
392,522
|
|
|
$
|
503,802
|
|
|
$
|
1,044,763
|
|
|
$
|
1,595,686
|
|
Cost of revenue
(1)
|
217,762
|
|
|
263,144
|
|
|
602,459
|
|
|
876,304
|
|
||||
Gross profit
|
174,760
|
|
|
240,658
|
|
|
442,304
|
|
|
719,382
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Research and development
(1)
|
84,170
|
|
|
82,972
|
|
|
252,471
|
|
|
235,129
|
|
||||
Sales and marketing
(1)
|
77,536
|
|
|
79,872
|
|
|
269,442
|
|
|
305,061
|
|
||||
General and administrative
(1)
|
40,690
|
|
|
33,333
|
|
|
102,815
|
|
|
106,297
|
|
||||
Total operating expenses
|
202,396
|
|
|
196,177
|
|
|
624,728
|
|
|
646,487
|
|
||||
Operating income (loss)
|
(27,636
|
)
|
|
44,481
|
|
|
(182,424
|
)
|
|
72,895
|
|
||||
Interest income, net
|
1,162
|
|
|
970
|
|
|
2,451
|
|
|
2,391
|
|
||||
Other income (expense), net
|
(702
|
)
|
|
(1,037
|
)
|
|
134
|
|
|
68
|
|
||||
Income (loss) before income taxes
|
(27,176
|
)
|
|
44,414
|
|
|
(179,839
|
)
|
|
75,354
|
|
||||
Income tax expense
|
86,227
|
|
|
18,294
|
|
|
51,883
|
|
|
31,858
|
|
||||
Net income (loss)
|
$
|
(113,403
|
)
|
|
$
|
26,120
|
|
|
$
|
(231,722
|
)
|
|
$
|
43,496
|
|
(1)
|
Includes stock-based compensation expense as follows:
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30, 2017
|
|
October 1, 2016
|
|
September 30, 2017
|
|
October 1, 2016
|
||||||||
|
(in thousands)
|
||||||||||||||
Cost of revenue
|
$
|
1,379
|
|
|
$
|
1,014
|
|
|
$
|
2,889
|
|
|
$
|
3,407
|
|
Research and development
|
12,947
|
|
|
12,314
|
|
|
40,280
|
|
|
34,432
|
|
||||
Sales and marketing
|
3,679
|
|
|
3,030
|
|
|
11,301
|
|
|
8,492
|
|
||||
General and administrative
|
4,792
|
|
|
3,647
|
|
|
12,786
|
|
|
11,844
|
|
||||
Total stock-based compensation expense
|
$
|
22,797
|
|
|
$
|
20,005
|
|
|
$
|
67,256
|
|
|
$
|
58,175
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||
|
September 30, 2017
|
|
October 1, 2016
|
|
September 30, 2017
|
|
October 1, 2016
|
||||
|
(as a percentage of revenue)
|
||||||||||
Consolidated Statements of Operations Data:
|
|
|
|
|
|
|
|
||||
Revenue
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
Cost of revenue
|
55
|
|
|
52
|
|
|
58
|
|
|
55
|
|
Gross profit
|
45
|
|
|
48
|
|
|
42
|
|
|
45
|
|
Operating expenses:
|
|
|
|
|
|
|
|
||||
Research and development
|
21
|
|
|
16
|
|
|
24
|
|
|
15
|
|
Sales and marketing
|
20
|
|
|
16
|
|
|
26
|
|
|
19
|
|
General and administrative
|
10
|
|
|
7
|
|
|
10
|
|
|
6
|
|
Total operating expenses
|
51
|
|
|
39
|
|
|
60
|
|
|
40
|
|
Operating income (loss)
|
(6
|
)
|
|
9
|
|
|
(18
|
)
|
|
5
|
|
Interest income, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Other income (expense), net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Income (loss) before income taxes
|
(6
|
)
|
|
9
|
|
|
(18
|
)
|
|
5
|
|
Income tax expense
|
24
|
|
|
4
|
|
|
5
|
|
|
2
|
|
Net income (loss)
|
(30
|
)%
|
|
5
|
%
|
|
(23
|
)%
|
|
3
|
%
|
|
Three Months Ended
|
|
Change
|
|
Nine Months Ended
|
|
Change
|
||||||||||||||||||||||
(dollars in thousands)
|
September 30, 2017
|
|
October 1, 2016
|
|
$
|
|
%
|
|
September 30, 2017
|
|
October 1, 2016
|
|
$
|
|
%
|
||||||||||||||
Revenue
|
$
|
392,522
|
|
|
$
|
503,802
|
|
|
$
|
(111,280
|
)
|
|
(22
|
)%
|
|
$
|
1,044,763
|
|
|
$
|
1,595,686
|
|
|
$
|
(550,923
|
)
|
|
(35
|
)%
|
|
Three Months Ended
|
|
Change
|
|
Nine Months Ended
|
|
Change
|
||||||||||||||||||||||
(dollars in thousands)
|
September 30, 2017
|
|
October 1, 2016
|
|
$
|
|
%
|
|
September 30, 2017
|
|
October 1, 2016
|
|
$
|
|
%
|
||||||||||||||
Cost of revenue
|
$
|
217,762
|
|
|
$
|
263,144
|
|
|
$
|
(45,382
|
)
|
|
(17
|
)%
|
|
$
|
602,459
|
|
|
$
|
876,304
|
|
|
$
|
(273,845
|
)
|
|
(31
|
)%
|
Gross profit
|
174,760
|
|
|
240,658
|
|
|
(65,898
|
)
|
|
(27
|
)
|
|
442,304
|
|
|
719,382
|
|
|
(277,078
|
)
|
|
(39
|
)
|
||||||
Gross margin
|
45
|
%
|
|
48
|
%
|
|
|
|
|
|
42
|
%
|
|
45
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Change
|
|
Nine Months Ended
|
|
Change
|
||||||||||||||||||||||
(dollars in thousands)
|
September 30, 2017
|
|
October 1, 2016
|
|
$
|
|
%
|
|
September 30, 2017
|
|
October 1, 2016
|
|
$
|
|
%
|
||||||||||||||
Research and development
|
$
|
84,170
|
|
|
$
|
82,972
|
|
|
$
|
1,198
|
|
|
1
|
%
|
|
$
|
252,471
|
|
|
$
|
235,129
|
|
|
$
|
17,342
|
|
|
7
|
%
|
|
Three Months Ended
|
|
Change
|
|
Nine Months Ended
|
|
Change
|
||||||||||||||||||||||
(dollars in thousands)
|
September 30, 2017
|
|
October 1, 2016
|
|
$
|
|
%
|
|
September 30, 2017
|
|
October 1, 2016
|
|
$
|
|
%
|
||||||||||||||
Sales and marketing
|
$
|
77,536
|
|
|
$
|
79,872
|
|
|
$
|
(2,336
|
)
|
|
(3
|
)%
|
|
$
|
269,442
|
|
|
$
|
305,061
|
|
|
$
|
(35,619
|
)
|
|
(12
|
)%
|
|
Three Months Ended
|
|
Change
|
|
Nine Months Ended
|
|
Change
|
||||||||||||||||||||||
(dollars in thousands)
|
September 30, 2017
|
|
October 1, 2016
|
|
$
|
|
%
|
|
September 30, 2017
|
|
October 1, 2016
|
|
$
|
|
%
|
||||||||||||||
General and administrative
|
$
|
40,690
|
|
|
$
|
33,333
|
|
|
$
|
7,357
|
|
|
22
|
%
|
|
$
|
102,815
|
|
|
$
|
106,297
|
|
|
$
|
(3,482
|
)
|
|
(3
|
)%
|
|
Three Months Ended
|
|
Change
|
|
Nine Months Ended
|
|
Change
|
||||||||||||||||||||||
(dollars in thousands)
|
September 30, 2017
|
|
October 1, 2016
|
|
$
|
|
%
|
|
September 30, 2017
|
|
October 1, 2016
|
|
$
|
|
%
|
||||||||||||||
Interest income, net
|
$
|
1,162
|
|
|
$
|
970
|
|
|
$
|
192
|
|
|
20
|
%
|
|
$
|
2,451
|
|
|
$
|
2,391
|
|
|
$
|
60
|
|
|
3
|
%
|
Other income (expense), net
|
(702
|
)
|
|
(1,037
|
)
|
|
335
|
|
|
(32
|
)%
|
|
134
|
|
|
68
|
|
|
66
|
|
|
97
|
%
|
|
Three Months Ended
|
|
Change
|
|
Nine Months Ended
|
|
Change
|
||||||||||||||||||||||
(dollars in thousands)
|
September 30, 2017
|
|
October 1, 2016
|
|
$
|
|
%
|
|
September 30, 2017
|
|
October 1, 2016
|
|
$
|
|
%
|
||||||||||||||
Income tax expense (benefit)
|
$
|
86,227
|
|
|
$
|
18,294
|
|
|
$
|
67,933
|
|
|
371
|
%
|
|
$
|
51,883
|
|
|
$
|
31,858
|
|
|
$
|
20,025
|
|
|
63
|
%
|
Effective tax rate
|
(317.3
|
)%
|
|
41.2
|
%
|
|
|
|
|
|
|
|
(28.8
|
)%
|
|
42.3
|
%
|
|
|
|
|
|
|
|
Nine Months Ended
|
||||||
|
September 30, 2017
|
|
October 1, 2016
|
||||
Net cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
8,718
|
|
|
$
|
65,718
|
|
Investing activities
|
(32,913
|
)
|
|
(330,870
|
)
|
||
Financing activities
|
3,089
|
|
|
13,852
|
|
||
Net decrease in cash and cash equivalents
|
$
|
(21,106
|
)
|
|
$
|
(251,300
|
)
|
•
|
the level of demand for our wearable devices and our ability to maintain or increase the size and engagement of our community of users;
|
•
|
the timing and success of new product and service introductions by us and the transition from legacy products;
|
•
|
the timing and success of new product and service introductions by our competitors or any other change in the competitive landscape of our market;
|
•
|
the mix of products sold in a quarter;
|
•
|
the continued market acceptance of, and the growth of the market for, wearable devices;
|
•
|
pricing pressure as a result of competition or otherwise;
|
•
|
delays or disruptions in our supply, manufacturing, or distribution chain;
|
•
|
errors in our forecasting of the demand for our products, which could lead to lower revenue or increased costs, or both;
|
•
|
seasonal buying patterns of consumers;
|
•
|
increases in levels of channel inventory resulting from sales to our retailers and distributors in anticipation of future demand;
|
•
|
increases in and timing of sales and marketing and other operating expenses that we may incur to grow and expand our operations and to remain competitive;
|
•
|
insolvency, credit, or other difficulties faced by our distributors and retailers, affecting their ability to purchase or pay for our products;
|
•
|
insolvency, credit, or other difficulties confronting our suppliers, contract manufacturers, or logistics providers leading to disruptions in our supply or distribution chain;
|
•
|
levels of product returns, stock rotation, and price protection rights;
|
•
|
levels of warranty claims or estimated costs of warranty claims;
|
•
|
adverse litigation judgments, settlements, or other litigation-related costs;
|
•
|
changes in the legislative or regulatory environment, such as with respect to privacy, information security, health and wellness devices, consumer product safety, and advertising;
|
•
|
product recalls, regulatory proceedings, or other adverse publicity about our products;
|
•
|
fluctuations in foreign exchange rates;
|
•
|
costs related to the acquisition of businesses, talent, technologies, or intellectual property, including potentially significant amortization costs and possible write-downs; and
|
•
|
general economic conditions in either domestic or international markets.
|
•
|
inability to satisfy demand for our products;
|
•
|
reduced control over delivery timing and product reliability;
|
•
|
reduced ability to oversee the manufacturing process and components used in our products;
|
•
|
reduced ability to monitor compliance with our product manufacturing specifications;
|
•
|
price increases;
|
•
|
insolvency, credit problems, or other financial difficulties confronting our suppliers, contract manufacturers, or logistic providers;
|
•
|
difficulties in establishing additional or alternative contract manufacturing relationships if we experience difficulties with our existing suppliers, contract manufacturers or logistic providers;
|
•
|
shortages of materials or components;
|
•
|
misappropriation of our intellectual property;
|
•
|
suppliers, contract manufacturers, and logistics providers may choose to limit or terminate their relationship with us;
|
•
|
exposure to natural catastrophes, political unrest, terrorism, labor disputes, and economic instability resulting in the disruption of trade from foreign countries in which our products are manufactured;
|
•
|
changes in local economic conditions in countries where our suppliers, contract manufacturers, or logistics providers are located;
|
•
|
the imposition of new laws and regulations, including those relating to labor conditions, quality and safety standards, imports, duties, taxes, and other charges on imports, as well as trade restrictions and restrictions on currency exchange or the transfer of funds; and
|
•
|
insufficient warranties and indemnities on components supplied to our contract manufacturers.
|
•
|
establishing and maintaining effective controls at foreign locations and the associated increased costs;
|
•
|
adapting our technologies, products, and services to non-U.S. consumers’ preferences and customs;
|
•
|
variations in margins by geography;
|
•
|
increased competition from local providers of similar products;
|
•
|
longer sales or collection cycles in some countries;
|
•
|
compliance with foreign laws and regulations;
|
•
|
compliance with the laws of numerous taxing jurisdictions where we conduct business, potential double taxation of our international earnings, and potentially adverse tax consequences due to U.S. and foreign tax laws as they relate to our international operations;
|
•
|
compliance with anti-bribery laws, such as the FCPA and the U.K. Bribery Act, by us, our employees, and our business partners;
|
•
|
complexity and other risks associated with current and future foreign legal requirements, including legal requirements related to consumer protection, consumer product safety, and data privacy frameworks, such as the E.U. General Data Protection Regulation, and any applicable privacy and data protection laws in foreign jurisdictions where we currently conduct business or intend to conduct business in the future;
|
•
|
currency exchange rate fluctuations and related effects on our operating results;
|
•
|
economic and political instability in some countries, particularly those in China where we have expanded;
|
•
|
the uncertainty of protection for intellectual property rights in some countries and practical difficulties of enforcing rights abroad;
|
•
|
tariffs and customs duties and the classification of our products by applicable governmental bodies; and
|
•
|
other costs of doing business internationally.
|
•
|
use our accounts receivable, inventory, trademarks, and most of our other assets as security in other borrowings or transactions;
|
•
|
incur additional indebtedness;
|
•
|
sell certain assets;
|
•
|
guarantee certain obligations of third parties;
|
•
|
declare dividends or make certain distributions; and
|
•
|
undergo a merger or consolidation or other transactions.
|
•
|
overall performance of the equity markets;
|
•
|
actual or anticipated fluctuations in our revenue and other operating results;
|
•
|
changes in the financial projections we may provide to the public or our failure to meet these projections;
|
•
|
failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors;
|
•
|
recruitment or departure of key personnel;
|
•
|
the economy as a whole and market conditions in our industry;
|
•
|
negative publicity related to problems in our manufacturing or the real or perceived quality of our products, as well as the failure to timely launch new products that gain market acceptance;
|
•
|
rumors and market speculation involving us or other companies in our industry;
|
•
|
announcements by us or our competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures, or capital commitments;
|
•
|
new laws or regulations or new interpretations of existing laws or regulations applicable to our business;
|
•
|
lawsuits threatened or filed against us;
|
•
|
other events or factors, including those resulting from war, incidents of terrorism, or responses to these events; and
|
•
|
sales of shares of our Class A common stock by us or our stockholders.
|
•
|
provide that our board of directors will be classified into three classes of directors with staggered three-year terms at such time as the outstanding shares of our Class B common stock represent less than a majority of the combined voting power of our common stock;
|
•
|
permit the board of directors to establish the number of directors and fill any vacancies and newly created directorships;
|
•
|
require super-majority voting to amend some provisions in our restated certificate of incorporation and restated bylaws;
|
•
|
authorize the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan;
|
•
|
provide that only the chairman of our board of directors, our chief executive officer, or a majority of our board of directors will be authorized to call a special meeting of stockholders;
|
•
|
provide for a dual class common stock structure in which holders of our Class B common stock have the ability to control the outcome of matters requiring stockholder approval, even if they own significantly less than a majority of the outstanding shares of our Class A and Class B common stock, including the election of directors and significant corporate transactions, such as a merger or other sale of our company or its assets;
|
•
|
prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders;
|
•
|
provide that the board of directors is expressly authorized to make, alter, or repeal our bylaws; and
|
•
|
establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings.
|
Exhibit
|
|
|
|
Incorporated by Reference
|
|
Filed
|
||||||
Number
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
Herewith
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1
|
|
Warrant to Purchase Stock by and between the Registrant and Granite Peak Technologies, LLC, dated July 10, 2017.
|
|
|
|
|
|
|
|
|
|
X
|
31.1
|
|
Rule 13a-14(a) / 15d-14(a) Certification of Chief Executive Officer.
|
|
|
|
|
|
|
|
|
|
X
|
31.2
|
|
Rule 13a-14(a) / 15d-14(a) Certification of Chief Financial Officer.
|
|
|
|
|
|
|
|
|
|
X
|
32.1#
|
|
Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer.
|
|
|
|
|
|
|
|
|
|
X
|
101.INS
|
|
XBRL Instance Document.
|
|
|
|
|
|
|
|
|
|
X
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
|
|
|
|
|
|
|
|
|
X
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
|
|
|
|
|
|
X
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
|
|
|
|
|
|
X
|
101.LAB
|
|
XBRL Taxonomy Extension Labels Linkbase Document.
|
|
|
|
|
|
|
|
|
|
X
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
|
|
|
|
|
|
|
X
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FITBIT, INC.
|
|
|
|
|
|
Date:
|
November 3, 2017
|
|
|
/s/ WILLIAM ZERELLA
|
|
|
|
|
William Zerella
|
|
|
|
|
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
Exhibit
|
|
|
|
Incorporated by Reference
|
|
Filed
|
||||||
Number
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
Herewith
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1
|
|
|
|
|
|
|
|
|
|
|
X
|
|
31.1
|
|
|
|
|
|
|
|
|
|
|
X
|
|
31.2
|
|
|
|
|
|
|
|
|
|
|
X
|
|
32.1#
|
|
|
|
|
|
|
|
|
|
|
X
|
|
101.INS
|
|
XBRL Instance Document.
|
|
|
|
|
|
|
|
|
|
X
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
|
|
|
|
|
|
|
|
|
X
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
|
|
|
|
|
|
X
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
|
|
|
|
|
|
X
|
101.LAB
|
|
XBRL Taxonomy Extension Labels Linkbase Document.
|
|
|
|
|
|
|
|
|
|
X
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
|
|
|
|
|
|
|
X
|
1.6.
|
Treatment of Warrant Upon Acquisition of Company.
|
|
||
|
|
|
Date:
|
November 3, 2017
|
/s/ James Park
|
|
|
James Park
President, Chief Executive Officer, and Chairman
(Principal Executive Officer)
|
|
||
|
|
|
Date:
|
November 3, 2017
|
/s/ William Zerella
|
|
|
William Zerella
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
Date: November 3, 2017
|
By:
|
/s/ James Park
|
|
|
James Park
|
|
|
President, Chief Executive Officer, and Chairman
(Principal Executive Officer)
|
Date: November 3, 2017
|
By:
|
/s/ William Zerella
|
|
|
William Zerella
|
|
|
Chief Financial Officer
(Principal Financial and Accounting Officer)
|