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(Mark one)
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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from ________________ to ________________
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Delaware
(State or other jurisdiction of
incorporation or organization)
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20-8920744
(I.R.S. Employer Identification No.)
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199 Fremont Street, 14th Floor
San Francisco, California
(Address of principal executive offices)
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94105
(Zip Code)
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Yes
þ
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No
¨
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Yes
þ
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No
¨
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Yes
¨
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No
þ
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Page
Number
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Condensed Consolidated Balance Sheets
—June 30, 2018 and December 31, 2017
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Condensed Consolidated Statements of Operations
—for the three and six months ended June 30, 2018 and July 1, 2017
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Condensed Consolidated Statements of Comprehensive
Loss—for the three and six months ended June 30, 2018 and July 1, 2017
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Condensed Consolidated Statements of Cash Flows
—for the six months ended June 30, 2018 and July 1, 2017
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•
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continued investments in research and development, sales and marketing and international expansion and the impact of those investments;
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•
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trends in our revenue, cost of revenue, gross margin, operating expenses, including personnel costs, research and development expense, sales and marketing expense and general and administrative expense;
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•
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competitors and competition in our markets;
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•
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our ability to anticipate and satisfy consumer preferences;
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•
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our smartwatches and their market acceptance and future potential;
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•
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our ability to develop and introduce new products and services, including recurring non-device revenue offerings, improve our existing products and services, or engage or expand our user base;
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•
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the impact of tariffs or other restrictions placed on our products imported into the United States from China;
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•
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potential insurance recoveries;
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•
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our ability to accurately forecast consumer demand and adequately manage inventory;
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•
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our ability to deliver an adequate supply of product to meet demand;
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•
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our ability to maintain and promote our brand and expand brand awareness;
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•
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our ability to detect, prevent, or fix defects;
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•
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our reliance on third-party suppliers, contract manufacturers and logistics providers and our limited control over such parties;
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•
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trends in our quarterly operating results and other operating metrics;
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•
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legal proceedings and the impact of such proceedings;
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•
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the impact of changes in tax law on our operating results;
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•
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the impact of our adoption of accounting pronouncements;
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•
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the effect of seasonality on our results of operations;
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•
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our ability to attract and retain highly skilled employees;
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•
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our expectations to derive the substantial majority of our revenue from sales of devices;
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•
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our expectations with respect to shifts in advertising and marketing spend;
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•
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the impact of our acquisitions in enhancing the features and functionality of our devices;
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•
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the impact of foreign currency exchange rates;
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•
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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
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•
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general market, political, economic and business conditions, including potential changes in tariffs
.
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June 30, 2018
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December 31, 2017
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||||
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||||||
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|
||||
Assets
|
|
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|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
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$
|
328,116
|
|
|
$
|
341,966
|
|
Marketable securities
|
|
252,347
|
|
|
337,334
|
|
||
Accounts receivable, net
|
|
242,038
|
|
|
406,019
|
|
||
Inventories
|
|
140,430
|
|
|
123,895
|
|
||
Income tax receivable
|
|
78,385
|
|
|
77,882
|
|
||
Prepaid expenses and other current assets
|
|
63,227
|
|
|
97,269
|
|
||
Total current assets
|
|
1,104,543
|
|
|
1,384,365
|
|
||
Property and equipment, net
|
|
110,185
|
|
|
104,908
|
|
||
Goodwill
|
|
61,058
|
|
|
51,036
|
|
||
Intangible assets, net
|
|
27,740
|
|
|
22,356
|
|
||
Deferred tax assets
|
|
3,528
|
|
|
3,990
|
|
||
Other assets
|
|
16,147
|
|
|
15,420
|
|
||
Total assets
|
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$
|
1,323,201
|
|
|
$
|
1,582,075
|
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Liabilities and Stockholders’ Equity
|
|
|
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|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
155,970
|
|
|
$
|
212,731
|
|
Accrued liabilities
|
|
377,058
|
|
|
452,137
|
|
||
Deferred revenue
|
|
28,116
|
|
|
35,504
|
|
||
Income taxes payable
|
|
22,729
|
|
|
928
|
|
||
Total current liabilities
|
|
583,873
|
|
|
701,300
|
|
||
Long-term deferred revenue
|
|
4,719
|
|
|
6,928
|
|
||
Other liabilities
|
|
55,650
|
|
|
49,884
|
|
||
Total liabilities
|
|
644,242
|
|
|
758,112
|
|
||
Commitments and contingencies (Note 6)
|
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
|
||||
Class A and Class B common stock
|
|
25
|
|
|
24
|
|
||
Additional paid-in capital
|
|
1,006,639
|
|
|
956,060
|
|
||
Accumulated other comprehensive income (loss)
|
|
4,679
|
|
|
(9
|
)
|
||
Accumulated deficit
|
|
(332,384
|
)
|
|
(132,112
|
)
|
||
Total stockholders’ equity
|
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678,959
|
|
|
823,963
|
|
||
Total liabilities and stockholders’ equity
|
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$
|
1,323,201
|
|
|
$
|
1,582,075
|
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Three Months Ended
|
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Six Months Ended
|
||||||||||||
|
June 30, 2018
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July 1, 2017
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June 30, 2018
|
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July 1, 2017
|
||||||||
|
|
|
|
|
|
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|
||||||||
Revenue
|
$
|
299,344
|
|
|
$
|
353,299
|
|
|
$
|
547,209
|
|
|
$
|
652,241
|
|
Cost of revenue
|
180,329
|
|
|
204,054
|
|
|
314,071
|
|
|
384,697
|
|
||||
Gross profit
|
119,015
|
|
|
149,245
|
|
|
233,138
|
|
|
267,544
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Research and development
|
87,047
|
|
|
80,543
|
|
|
176,383
|
|
|
168,301
|
|
||||
Sales and marketing
|
100,845
|
|
|
100,732
|
|
|
172,897
|
|
|
191,906
|
|
||||
General and administrative
|
30,211
|
|
|
31,379
|
|
|
66,299
|
|
|
62,125
|
|
||||
Total operating expenses
|
218,103
|
|
|
212,654
|
|
|
415,579
|
|
|
422,332
|
|
||||
Operating loss
|
(99,088
|
)
|
|
(63,409
|
)
|
|
(182,441
|
)
|
|
(154,788
|
)
|
||||
Interest income, net
|
2,177
|
|
|
193
|
|
|
3,527
|
|
|
1,289
|
|
||||
Other income, net
|
2,258
|
|
|
303
|
|
|
2,775
|
|
|
836
|
|
||||
Loss before income taxes
|
(94,653
|
)
|
|
(62,913
|
)
|
|
(176,139
|
)
|
|
(152,663
|
)
|
||||
Income tax expense (benefit)
|
23,615
|
|
|
(4,673
|
)
|
|
23,006
|
|
|
(34,344
|
)
|
||||
Net loss
|
$
|
(118,268
|
)
|
|
$
|
(58,240
|
)
|
|
$
|
(199,145
|
)
|
|
$
|
(118,319
|
)
|
Net loss per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.49
|
)
|
|
$
|
(0.25
|
)
|
|
$
|
(0.83
|
)
|
|
$
|
(0.52
|
)
|
Diluted
|
$
|
(0.49
|
)
|
|
$
|
(0.25
|
)
|
|
$
|
(0.83
|
)
|
|
$
|
(0.52
|
)
|
Shares used to compute net loss per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
242,898
|
|
|
230,322
|
|
|
241,227
|
|
|
228,788
|
|
||||
Diluted
|
242,898
|
|
|
230,322
|
|
|
241,227
|
|
|
228,788
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
June 30, 2018
|
|
July 1, 2017
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Net loss
|
$
|
(118,268
|
)
|
|
$
|
(58,240
|
)
|
|
$
|
(199,145
|
)
|
|
$
|
(118,319
|
)
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
||||||||
Cash flow hedges:
|
|
|
|
|
|
|
|
||||||||
Change in unrealized gain (loss) on cash flow hedges, net of tax benefit (expense) of $(666), $404, $(666) and $202, respectively
|
5,248
|
|
|
(12,629
|
)
|
|
5,912
|
|
|
(13,789
|
)
|
||||
Less: reclassification for realized net gains included in net loss, net of tax expense (benefit) of $130, $(46), $130 and $(8), respectively
|
(1,028
|
)
|
|
1,430
|
|
|
(1,028
|
)
|
|
1,647
|
|
||||
Net change, net of tax
|
4,220
|
|
|
(11,199
|
)
|
|
4,884
|
|
|
(12,142
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Change in foreign currency translation adjustment
|
—
|
|
|
585
|
|
|
—
|
|
|
314
|
|
||||
Change in unrealized loss on available-for-sale investments, net of tax
|
118
|
|
|
9
|
|
|
(208
|
)
|
|
85
|
|
||||
Less reclassification for realized net gains
|
12
|
|
|
(3
|
)
|
|
12
|
|
|
(12
|
)
|
||||
Net change, net of tax
|
130
|
|
|
6
|
|
|
(196
|
)
|
|
73
|
|
||||
Comprehensive loss
|
$
|
(113,918
|
)
|
|
$
|
(68,848
|
)
|
|
$
|
(194,457
|
)
|
|
$
|
(130,074
|
)
|
|
Six Months Ended
|
||||||
|
June 30, 2018
|
|
July 1, 2017
|
||||
|
|
|
|
||||
Cash Flows from Operating Activities
|
|
|
|
||||
Net loss
|
$
|
(199,145
|
)
|
|
$
|
(118,319
|
)
|
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
|
|
|
|
||||
Provision for inventory obsolescence
|
8,014
|
|
|
8,409
|
|
||
Depreciation
|
23,572
|
|
|
19,199
|
|
||
Write-off of property and equipment
|
7,485
|
|
|
5,250
|
|
||
Amortization of intangible assets
|
3,805
|
|
|
2,753
|
|
||
Stock-based compensation
|
49,498
|
|
|
44,459
|
|
||
Deferred income taxes
|
(1,299
|
)
|
|
16,137
|
|
||
Other
|
(419
|
)
|
|
1,428
|
|
||
Changes in operating assets and liabilities, net of acquisition:
|
|
|
|
||||
Accounts receivable
|
164,195
|
|
|
261,165
|
|
||
Inventories
|
(24,217
|
)
|
|
81,486
|
|
||
Prepaid expenses and other assets
|
37,624
|
|
|
(50,324
|
)
|
||
Fitbit Force recall reserve
|
(291
|
)
|
|
(500
|
)
|
||
Accounts payable
|
(64,184
|
)
|
|
(216,959
|
)
|
||
Accrued liabilities and other liabilities
|
(74,033
|
)
|
|
(43,963
|
)
|
||
Deferred revenue
|
(9,623
|
)
|
|
(5,477
|
)
|
||
Income taxes payable
|
21,801
|
|
|
(1,516
|
)
|
||
Net cash (used in) provided by operating activities
|
(57,217
|
)
|
|
3,228
|
|
||
Cash Flows from Investing Activities
|
|
|
|
||||
Purchase of property and equipment
|
(28,524
|
)
|
|
(39,817
|
)
|
||
Purchases of marketable securities
|
(224,812
|
)
|
|
(317,678
|
)
|
||
Sales of marketable securities
|
73,770
|
|
|
13,806
|
|
||
Maturities of marketable securities
|
236,575
|
|
|
351,144
|
|
||
Acquisition, net of cash acquired
|
(13,646
|
)
|
|
—
|
|
||
Net cash provided by investing activities
|
43,363
|
|
|
7,455
|
|
||
Cash Flows from Financing Activities
|
|
|
|
||||
Repayment of debt
|
(747
|
)
|
|
—
|
|
||
Proceeds from issuance of common stock
|
10,738
|
|
|
11,407
|
|
||
Taxes paid related to net share settlement of restricted stock units
|
(9,987
|
)
|
|
(5,234
|
)
|
||
Net cash provided by financing activities
|
4
|
|
|
6,173
|
|
||
Net (decrease) increase in cash and cash equivalents
|
(13,850
|
)
|
|
16,856
|
|
||
Effect of exchange rate on cash and cash equivalents
|
—
|
|
|
532
|
|
||
Cash and cash equivalents at beginning of period
|
341,966
|
|
|
301,320
|
|
||
Cash and cash equivalents at end of period
|
$
|
328,116
|
|
|
$
|
318,708
|
|
•
|
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 the original sale.
|
•
|
All purchases through Fitbit.com are covered by a 45-day right of return.
|
•
|
Certain distributors are allowed stock rotation rights which are limited rights of return of products purchased during a prior period, generally one quarter.
|
•
|
Certain 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.
|
|
Three Months Ended June 30, 2018
|
|
Six Months Ended June 30, 2018
|
||||||||||||||||
|
Under ASC 605
|
Impact
|
Under ASC 606
|
|
Under ASC 605
|
Impact
|
Under ASC 606
|
||||||||||||
|
|
|
|
|
|
|
|
||||||||||||
Revenue
|
$
|
298,783
|
|
$
|
561
|
|
$
|
299,344
|
|
|
$
|
545,834
|
|
$
|
1,375
|
|
$
|
547,209
|
|
Accounts receivable, net
|
167,042
|
|
74,996
|
|
242,038
|
|
|
167,042
|
|
74,996
|
|
242,038
|
|
||||||
Deferred revenue
|
33,789
|
|
(954
|
)
|
32,835
|
|
|
33,789
|
|
(954
|
)
|
32,835
|
|
||||||
Accrued liabilities
|
302,734
|
|
74,324
|
|
377,058
|
|
|
302,734
|
|
74,324
|
|
377,058
|
|
||||||
Accumulated deficit
|
(332,945
|
)
|
561
|
|
(332,384
|
)
|
|
(333,759
|
)
|
1,375
|
|
(332,384
|
)
|
|
June 30, 2018
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
153,241
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
153,241
|
|
U.S. government agencies
|
—
|
|
|
74,897
|
|
|
—
|
|
|
74,897
|
|
||||
Corporate debt securities
|
—
|
|
|
217,806
|
|
|
—
|
|
|
217,806
|
|
||||
Derivative assets
|
—
|
|
|
5,464
|
|
|
—
|
|
|
5,464
|
|
||||
Total
|
$
|
153,241
|
|
|
$
|
298,167
|
|
|
$
|
—
|
|
|
$
|
451,408
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivative liabilities
|
$
|
—
|
|
|
$
|
736
|
|
|
$
|
—
|
|
|
$
|
736
|
|
Stock warrant liability
|
—
|
|
|
—
|
|
|
486
|
|
|
486
|
|
||||
Total
|
$
|
—
|
|
|
$
|
736
|
|
|
$
|
486
|
|
|
$
|
1,222
|
|
|
December 31, 2017
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
193,066
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
193,066
|
|
U.S. government agencies
|
—
|
|
|
79,624
|
|
|
—
|
|
|
79,624
|
|
||||
Corporate debt securities
|
—
|
|
|
291,582
|
|
|
—
|
|
|
291,582
|
|
||||
Total
|
$
|
193,066
|
|
|
$
|
371,206
|
|
|
$
|
—
|
|
|
$
|
564,272
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivative liabilities
|
$
|
—
|
|
|
$
|
2,138
|
|
|
$
|
—
|
|
|
$
|
2,138
|
|
Stock warrant liability
|
—
|
|
|
—
|
|
|
208
|
|
|
208
|
|
||||
Total
|
$
|
—
|
|
|
$
|
2,138
|
|
|
$
|
208
|
|
|
$
|
2,346
|
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
|
Cash and Cash Equivalents
|
|
Marketable Securities
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash
|
$
|
134,519
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
134,519
|
|
|
$
|
134,519
|
|
|
$
|
—
|
|
Money market funds
|
153,241
|
|
|
—
|
|
|
—
|
|
|
153,241
|
|
|
153,241
|
|
|
—
|
|
||||||
U.S. government agencies
|
75,032
|
|
|
—
|
|
|
(135
|
)
|
|
74,897
|
|
|
10,376
|
|
|
64,521
|
|
||||||
Corporate debt securities
|
217,942
|
|
|
4
|
|
|
(140
|
)
|
|
217,806
|
|
|
29,980
|
|
|
187,826
|
|
||||||
Total
|
$
|
580,734
|
|
|
$
|
4
|
|
|
$
|
(275
|
)
|
|
$
|
580,463
|
|
|
$
|
328,116
|
|
|
$
|
252,347
|
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
|
Cash and Cash Equivalents
|
|
Marketable Securities
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash
|
$
|
115,028
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
115,028
|
|
|
$
|
115,028
|
|
|
$
|
—
|
|
Money market funds
|
193,066
|
|
|
—
|
|
|
—
|
|
|
193,066
|
|
|
193,066
|
|
|
—
|
|
||||||
U.S. government agencies
|
79,722
|
|
|
1
|
|
|
(99
|
)
|
|
79,624
|
|
|
6,595
|
|
|
73,029
|
|
||||||
Corporate debt securities
|
291,738
|
|
|
15
|
|
|
(171
|
)
|
|
291,582
|
|
|
27,277
|
|
|
264,305
|
|
||||||
Total
|
$
|
679,554
|
|
|
$
|
16
|
|
|
$
|
(270
|
)
|
|
$
|
679,300
|
|
|
$
|
341,966
|
|
|
$
|
337,334
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
|
|
|
|
||||
Due in one year
|
$
|
252,347
|
|
|
$
|
319,112
|
|
Due in one to two years
|
—
|
|
|
18,222
|
|
||
Total
|
$
|
252,347
|
|
|
$
|
337,334
|
|
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||||||||||
|
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
|
|
$
|
5,420
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Cash flow designated hedges
|
Accrued liabilities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Hedges not designated
|
Prepaid expenses and other current assets
|
|
44
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Hedges not designated
|
Accrued liabilities
|
|
—
|
|
|
736
|
|
|
—
|
|
|
2,138
|
|
||||
Total fair value of derivative instruments
|
|
|
$
|
5,464
|
|
|
$
|
736
|
|
|
$
|
—
|
|
|
$
|
2,138
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
Income Statement Location
|
|
June 30, 2018
|
|
July 1, 2017
|
|
June 30, 2018
|
|
July 1, 2017
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange cash flow hedges:
|
|
|
|
|
|
|
|
|
|
||||||||
Gain (loss) recognized in OCI – effective portion
|
|
|
$
|
5,914
|
|
|
$
|
(13,029
|
)
|
|
$
|
6,578
|
|
|
$
|
(13,987
|
)
|
Gain (loss) reclassified from OCI into income – effective portion
|
Revenue
|
|
1,157
|
|
|
(1,035
|
)
|
|
1,157
|
|
|
(280
|
)
|
||||
Loss reclassified from OCI into income – effective portion
|
Operating expenses
|
|
—
|
|
|
(440
|
)
|
|
—
|
|
|
(1,405
|
)
|
||||
Gain recognized in income – ineffective portion
|
Other income, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21
|
|
||||
Gain recognized in income – excluded time value portion
|
Other income, net
|
|
—
|
|
|
660
|
|
|
—
|
|
|
843
|
|
||||
Foreign exchange balance sheet hedges:
|
|
|
|
|
|
|
|
|
|
||||||||
Gain (loss) recognized in income
|
Other income, net
|
|
4,793
|
|
|
(3,547
|
)
|
|
2,299
|
|
|
(6,776
|
)
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
June 30, 2018
|
|
July 1, 2017
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Total amounts presented in the condensed consolidated statement of operations in which the effects of cash flow hedges are recorded in revenue
|
$
|
299,344
|
|
|
$
|
353,299
|
|
|
$
|
547,209
|
|
|
$
|
652,241
|
|
Total amounts presented in the condensed consolidated statement of operations in which the effects of cash flow hedges are recorded in operating expenses
|
218,103
|
|
|
212,654
|
|
|
415,579
|
|
|
422,332
|
|
||||
Gains (losses) on foreign exchange contracts designated as cash flow hedges reclassified from OCI into revenue
|
1,157
|
|
|
(1,035
|
)
|
|
1,157
|
|
|
(280
|
)
|
||||
Gains (losses) on foreign exchange contracts designated as cash flow hedges reclassified from OCI into operating expenses
|
—
|
|
|
(440
|
)
|
|
—
|
|
|
(1,405
|
)
|
|
Gross Amounts Offset in the Condensed Consolidated Balance Sheets
|
|
Gross Amounts Not Offset in Condensed Consolidated Balance Sheets
|
||||||||||||||||||||
June 30, 2018
|
Gross Amounts Recognized
|
|
Gross Amounts Offset
|
|
Net Amounts Presented
|
|
Financial Instruments
|
|
Cash Collateral Received
|
|
Net Amount
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign exchange contracts assets
|
$
|
5,464
|
|
|
$
|
—
|
|
|
$
|
5,464
|
|
|
$
|
736
|
|
|
$
|
—
|
|
|
$
|
4,728
|
|
Foreign exchange contracts liabilities
|
736
|
|
|
—
|
|
|
736
|
|
|
736
|
|
|
—
|
|
|
—
|
|
||||||
|
|||||||||||||||||||||||
|
Gross Amounts Offset in the Condensed Consolidated Balance Sheets
|
|
Gross Amounts Not Offset in Condensed Consolidated Balance Sheets
|
||||||||||||||||||||
December 31, 2017
|
Gross Amounts Recognized
|
|
Gross Amounts Offset
|
|
Net Amounts Presented
|
|
Financial Instruments
|
|
Cash Collateral Received
|
|
Net Amount
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign exchange contracts assets
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign exchange contracts liabilities
|
2,138
|
|
|
—
|
|
|
2,138
|
|
|
—
|
|
|
—
|
|
|
2,138
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||
|
June 30, 2018
|
|
June 30, 2018
|
||||
|
|
|
|
||||
Beginning balances
|
$
|
36,448
|
|
|
$
|
42,432
|
|
Deferral of revenue
|
8,328
|
|
|
15,708
|
|
||
Recognition of deferred revenue
|
(11,941
|
)
|
|
(25,305
|
)
|
||
Ending balances
|
$
|
32,835
|
|
|
$
|
32,835
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
June 30, 2018
|
|
July 1, 2017
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Beginning balances
|
$
|
82,612
|
|
|
$
|
68,317
|
|
|
$
|
109,872
|
|
|
$
|
98,851
|
|
Increases
|
36,929
|
|
|
48,285
|
|
|
63,001
|
|
|
89,911
|
|
||||
Write-offs/Returns taken
|
(44,545
|
)
|
|
(65,082
|
)
|
|
(97,877
|
)
|
|
(137,242
|
)
|
||||
Ending balances
|
$
|
74,996
|
|
|
$
|
51,520
|
|
|
$
|
74,996
|
|
|
$
|
51,520
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
|
|
||||||
|
|
|
|
||||
Components
|
11,687
|
|
|
3,825
|
|
||
Finished goods
|
128,743
|
|
|
120,070
|
|
||
Total inventories
|
$
|
140,430
|
|
|
$
|
123,895
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
|
|
||||||
|
|
|
|
||||
POP displays, net
|
$
|
10,345
|
|
|
$
|
14,750
|
|
Prepaid marketing
|
2,768
|
|
|
6,074
|
|
||
Derivative assets
|
5,464
|
|
|
—
|
|
||
Prepaid expenses
|
14,482
|
|
|
24,204
|
|
||
Insurance receivable
|
—
|
|
|
37,300
|
|
||
Other
|
30,168
|
|
|
14,941
|
|
||
Total prepaid expenses and other current assets
|
$
|
63,227
|
|
|
$
|
97,269
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
|
|
||||||
|
|
|
|
||||
Tooling and manufacturing equipment
|
$
|
76,119
|
|
|
$
|
66,854
|
|
Furniture and office equipment
|
22,509
|
|
|
20,942
|
|
||
Purchased and internally-developed software
|
20,346
|
|
|
18,112
|
|
||
Leasehold improvements
|
63,787
|
|
|
58,431
|
|
||
Total property and equipment
|
182,761
|
|
|
164,339
|
|
||
Less: Accumulated depreciation and amortization
|
(72,576
|
)
|
|
(59,431
|
)
|
||
Property and equipment, net
|
$
|
110,185
|
|
|
$
|
104,908
|
|
|
Goodwill
|
||
|
|||
|
|
||
Balance at December 31, 2017
|
$
|
51,036
|
|
Goodwill acquired
|
10,022
|
|
|
Balance at June 30, 2018
|
$
|
61,058
|
|
|
June 30, 2018
|
|
December 31, 2017
|
|
Weighted Average Remaining Useful Life
(years)
|
||||||||||||||||||||
|
Gross
|
|
Accumulated Amortization
|
|
Net
|
|
Gross
|
|
Accumulated Amortization
|
|
Net
|
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Developed technology
|
$
|
35,988
|
|
|
$
|
(12,249
|
)
|
|
$
|
23,739
|
|
|
$
|
30,588
|
|
|
$
|
(8,738
|
)
|
|
$
|
21,850
|
|
|
3.4
|
Customer relationships
|
3,918
|
|
|
(308
|
)
|
|
3,610
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6.4
|
||||||
Trademarks and other
|
1,150
|
|
|
(759
|
)
|
|
391
|
|
|
1,278
|
|
|
(772
|
)
|
|
506
|
|
|
0.6
|
||||||
Total intangible assets, net
|
$
|
41,056
|
|
|
$
|
(13,316
|
)
|
|
$
|
27,740
|
|
|
$
|
31,866
|
|
|
$
|
(9,510
|
)
|
|
$
|
22,356
|
|
|
|
|
Cost of Revenue
|
|
Operating Expenses
|
|
Total
|
||||||
|
|
|
|
|
|
||||||
Remaining 2018
|
$
|
3,735
|
|
|
$
|
386
|
|
|
$
|
4,121
|
|
2019
|
6,690
|
|
|
771
|
|
|
7,461
|
|
|||
2020
|
5,910
|
|
|
588
|
|
|
6,498
|
|
|||
2021
|
5,910
|
|
|
541
|
|
|
6,451
|
|
|||
2022
|
1,236
|
|
|
541
|
|
|
1,777
|
|
|||
Thereafter
|
258
|
|
|
1,174
|
|
|
1,432
|
|
|||
Total finite-lived intangible assets, net
|
$
|
23,739
|
|
|
$
|
4,001
|
|
|
$
|
27,740
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
|
|
||||||
Product warranty
|
$
|
50,468
|
|
|
$
|
87,882
|
|
Accrued revenue reserve from returns
|
74,996
|
|
|
—
|
|
||
Accrued manufacturing expense and freight
|
34,493
|
|
|
41,901
|
|
||
Accrued sales incentives
|
87,756
|
|
|
111,592
|
|
||
Accrued sales and marketing
|
24,693
|
|
|
44,401
|
|
||
Accrued research and development
|
4,819
|
|
|
8,983
|
|
||
Accrued co-op advertising and marketing development funds
|
19,521
|
|
|
30,408
|
|
||
Employee-related liabilities
|
23,054
|
|
|
33,266
|
|
||
Sales taxes and VAT payable
|
26,127
|
|
|
21,340
|
|
||
Inventory received but not billed
|
4,615
|
|
|
10,526
|
|
||
Accrued legal settlements and fees
|
4,819
|
|
|
36,693
|
|
||
Derivative liabilities
|
736
|
|
|
2,138
|
|
||
Other
|
20,961
|
|
|
23,007
|
|
||
Accrued liabilities
|
$
|
377,058
|
|
|
$
|
452,137
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
June 30, 2018
|
|
July 1, 2017
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Beginning balances
|
$
|
71,975
|
|
|
$
|
90,459
|
|
|
$
|
87,882
|
|
|
$
|
99,923
|
|
Charged to cost of revenue
|
(8,486
|
)
|
|
(1,595
|
)
|
|
(10,967
|
)
|
|
17,342
|
|
||||
Changes related to pre-existing warranties
|
(4,469
|
)
|
|
4,913
|
|
|
(7,872
|
)
|
|
2,473
|
|
||||
Settlement of claims
|
(8,552
|
)
|
|
(21,016
|
)
|
|
(18,575
|
)
|
|
(46,977
|
)
|
||||
Ending balances
|
$
|
50,468
|
|
|
$
|
72,761
|
|
|
$
|
50,468
|
|
|
$
|
72,761
|
|
(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.
|
|
Unrealized Gains (Losses) on Cash Flow Hedges
|
|
Currency Translation Adjustments
|
|
Unrealized Gains (Losses) on Available-for-Sale Investments
|
|
Total
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Balance at December 31, 2017
|
$
|
66
|
|
|
$
|
—
|
|
|
$
|
(75
|
)
|
|
$
|
(9
|
)
|
Other comprehensive income (loss) before reclassifications
|
5,912
|
|
|
—
|
|
|
(208
|
)
|
|
5,704
|
|
||||
Amounts reclassified from AOCI
|
(1,028
|
)
|
|
—
|
|
|
12
|
|
|
(1,016
|
)
|
||||
Other comprehensive income (loss)
|
4,884
|
|
|
—
|
|
|
(196
|
)
|
|
4,688
|
|
||||
Balance at June 30, 2018
|
$
|
4,950
|
|
|
$
|
—
|
|
|
$
|
(271
|
)
|
|
$
|
4,679
|
|
Remaining 2018
|
$
|
17,328
|
|
2019
|
33,571
|
|
|
2020
|
29,398
|
|
|
2021
|
27,136
|
|
|
2022
|
26,855
|
|
|
Thereafter
|
37,555
|
|
|
Total future minimum lease payments
|
$
|
171,843
|
|
|
Stock Options Outstanding
|
|||||||||
|
Number of
Shares Subject
to
Stock Options
|
|
Weighted–
Average
Exercise
Price
|
|
Aggregate
Intrinsic
Value
(1)
|
|||||
Balance—December 31, 2017
|
21,386
|
|
|
$
|
3.01
|
|
|
|
||
Granted
|
—
|
|
|
—
|
|
|
|
|||
Exercised
|
(1,768
|
)
|
|
2.55
|
|
|
|
|||
Forfeited or canceled
|
(561
|
)
|
|
7.02
|
|
|
|
|||
Balance—June 30, 2018
|
19,057
|
|
|
2.93
|
|
|
$
|
58,535
|
|
|
|
|
|
|
|
|
|||||
Stock options vested and expected to vest—June 30, 2018
|
19,057
|
|
|
2.93
|
|
|
58,535
|
|
||
Stock options exercisable—June 30, 2018
|
16,654
|
|
|
2.61
|
|
|
55,317
|
|
|
RSUs
Outstanding
|
|
Weighted-
Average
Grant Date
Fair Value
|
|||
Unvested balance—December 31, 2017
|
19,188
|
|
|
$
|
9.13
|
|
Granted
|
12,557
|
|
|
5.02
|
|
|
Vested
|
(4,810
|
)
|
|
8.80
|
|
|
Forfeited or canceled
|
(3,135
|
)
|
|
8.24
|
|
|
Unvested balance—June 30, 2018
|
23,800
|
|
|
$
|
7.15
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
June 30, 2018
|
|
July 1, 2017
|
||||||||
Cost of revenue
|
$
|
2,032
|
|
|
$
|
1,492
|
|
|
$
|
3,130
|
|
|
$
|
1,510
|
|
Research and development
|
15,090
|
|
|
12,648
|
|
|
29,761
|
|
|
27,333
|
|
||||
Sales and marketing
|
3,911
|
|
|
3,987
|
|
|
7,358
|
|
|
7,622
|
|
||||
General and administrative
|
4,824
|
|
|
3,839
|
|
|
9,249
|
|
|
7,994
|
|
||||
Total stock-based compensation expense
|
$
|
25,857
|
|
|
$
|
21,966
|
|
|
$
|
49,498
|
|
|
$
|
44,459
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
June 30, 2018
|
|
July 1, 2017
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net loss
|
$
|
(118,268
|
)
|
|
$
|
(58,240
|
)
|
|
$
|
(199,145
|
)
|
|
$
|
(118,319
|
)
|
|
|
|
|
|
|
|
|
||||||||
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares of common stock—basic for Class A and Class B
|
242,898
|
|
|
230,322
|
|
|
241,227
|
|
|
228,788
|
|
||||
Effect of dilutive securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Weighted-average shares of common stock—diluted for Class A and Class B
|
242,898
|
|
|
230,322
|
|
|
241,227
|
|
|
228,788
|
|
||||
Net loss per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.49
|
)
|
|
$
|
(0.25
|
)
|
|
$
|
(0.83
|
)
|
|
$
|
(0.52
|
)
|
Diluted
|
$
|
(0.49
|
)
|
|
$
|
(0.25
|
)
|
|
$
|
(0.83
|
)
|
|
$
|
(0.52
|
)
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
June 30, 2018
|
|
July 1, 2017
|
||||
|
|
|
|
|
|
|
|
||||
Stock options to purchase common stock
|
12,201
|
|
|
19,074
|
|
|
12,203
|
|
|
20,924
|
|
RSUs
|
8,035
|
|
|
9,929
|
|
|
8,865
|
|
|
10,066
|
|
Diluted impact of ESPP
|
189
|
|
|
70
|
|
|
170
|
|
|
152
|
|
Diluted common stock subject to vesting
|
—
|
|
|
110
|
|
|
—
|
|
|
120
|
|
Total
|
20,425
|
|
|
29,183
|
|
|
21,238
|
|
|
31,262
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
June 30, 2018
|
|
July 1, 2017
|
||||
C
|
11
|
%
|
|
14
|
%
|
|
*
|
|
|
12
|
%
|
B
|
*
|
|
|
*
|
|
|
10
|
%
|
|
*
|
|
A
|
*
|
|
|
11
|
|
|
*
|
|
|
11
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||
C
|
17
|
%
|
|
17
|
%
|
B
|
15
|
|
|
13
|
|
D
|
11
|
|
|
*
|
|
E
|
*
|
|
|
11
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
June 30, 2018
|
|
July 1, 2017
|
||||||||
United States
|
$
|
182,451
|
|
|
$
|
199,201
|
|
|
$
|
321,947
|
|
|
$
|
369,621
|
|
Americas excluding United States
|
15,838
|
|
|
24,412
|
|
|
31,938
|
|
|
44,380
|
|
||||
Europe, Middle East, and Africa
|
65,969
|
|
|
108,601
|
|
|
130,507
|
|
|
196,373
|
|
||||
APAC
|
35,086
|
|
|
21,085
|
|
|
62,817
|
|
|
41,867
|
|
||||
Total
|
$
|
299,344
|
|
|
$
|
353,299
|
|
|
$
|
547,209
|
|
|
$
|
652,241
|
|
•
|
Fitbit Ace
, our first tracker for kids, tracks steps, activity and sleep, reminds kids to move, motivates with badges and rewards, and provides parental control. We began shipping Fitbit Ace in May 2018.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
June 30, 2018
|
|
July 1, 2017
|
||||||||
Revenue
|
$
|
299,344
|
|
|
$
|
353,299
|
|
|
$
|
547,209
|
|
|
$
|
652,241
|
|
Net loss
|
$
|
(118,268
|
)
|
|
$
|
(58,240
|
)
|
|
$
|
(199,145
|
)
|
|
$
|
(118,319
|
)
|
Adjusted EBITDA
|
$
|
(55,800
|
)
|
|
$
|
(28,172
|
)
|
|
$
|
(102,026
|
)
|
|
$
|
(80,475
|
)
|
Devices sold
|
2,684
|
|
|
3,373
|
|
|
4,834
|
|
|
6,329
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
June 30, 2018
|
|
July 1, 2017
|
||||||||
Net loss
|
$
|
(118,268
|
)
|
|
$
|
(58,240
|
)
|
|
$
|
(199,145
|
)
|
|
$
|
(118,319
|
)
|
Stock-based compensation expense
|
25,857
|
|
|
21,966
|
|
|
49,498
|
|
|
43,731
|
|
||||
Litigation expense
|
—
|
|
|
1,533
|
|
|
765
|
|
|
1,419
|
|
||||
Restructuring
|
—
|
|
|
—
|
|
|
—
|
|
|
6,375
|
|
||||
Depreciation and intangible assets amortization
|
15,173
|
|
|
11,435
|
|
|
27,377
|
|
|
21,952
|
|
||||
Interest income, net
|
(2,177
|
)
|
|
(193
|
)
|
|
(3,527
|
)
|
|
(1,289
|
)
|
||||
Income tax expense (benefit)
|
23,615
|
|
|
(4,673
|
)
|
|
23,006
|
|
|
(34,344
|
)
|
||||
Adjusted EBITDA
|
$
|
(55,800
|
)
|
|
$
|
(28,172
|
)
|
|
$
|
(102,026
|
)
|
|
$
|
(80,475
|
)
|
|
Six Months Ended
|
||||||
|
June 30, 2018
|
|
July 1, 2017
|
||||
Net cash provided by (used in) operating activities
|
$
|
(57,217
|
)
|
|
$
|
3,228
|
|
Purchase of property and equipment
|
(28,524
|
)
|
|
(39,817
|
)
|
||
Non-GAAP free cash flow
|
$
|
(85,741
|
)
|
|
$
|
(36,589
|
)
|
Net cash provided by investing activities
|
$
|
43,363
|
|
|
$
|
7,455
|
|
Net cash provided by financing activities
|
$
|
4
|
|
|
$
|
6,173
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
June 30, 2018
|
|
July 1, 2017
|
||||||||
Consolidated Statements of Operations Data:
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
299,344
|
|
|
$
|
353,299
|
|
|
$
|
547,209
|
|
|
$
|
652,241
|
|
Cost of revenue
(1)
|
180,329
|
|
|
204,054
|
|
|
314,071
|
|
|
384,697
|
|
||||
Gross profit
|
119,015
|
|
|
149,245
|
|
|
233,138
|
|
|
267,544
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Research and development
(1)
|
87,047
|
|
|
80,543
|
|
|
176,383
|
|
|
168,301
|
|
||||
Sales and marketing
(1)
|
100,845
|
|
|
100,732
|
|
|
172,897
|
|
|
191,906
|
|
||||
General and administrative
(1)
|
30,211
|
|
|
31,379
|
|
|
66,299
|
|
|
62,125
|
|
||||
Total operating expenses
|
218,103
|
|
|
212,654
|
|
|
415,579
|
|
|
422,332
|
|
||||
Operating loss
|
(99,088
|
)
|
|
(63,409
|
)
|
|
(182,441
|
)
|
|
(154,788
|
)
|
||||
Interest income, net
|
2,177
|
|
|
193
|
|
|
3,527
|
|
|
1,289
|
|
||||
Other income, net
|
2,258
|
|
|
303
|
|
|
2,775
|
|
|
836
|
|
||||
Loss before income taxes
|
(94,653
|
)
|
|
(62,913
|
)
|
|
(176,139
|
)
|
|
(152,663
|
)
|
||||
Income tax expense (benefit)
|
23,615
|
|
|
(4,673
|
)
|
|
23,006
|
|
|
(34,344
|
)
|
||||
Net loss
|
$
|
(118,268
|
)
|
|
$
|
(58,240
|
)
|
|
$
|
(199,145
|
)
|
|
$
|
(118,319
|
)
|
(1)
|
Includes stock-based compensation expense as follows (in thousands)
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
June 30, 2018
|
|
July 1, 2017
|
||||||||
Stock-Based Compensation Expense:
|
|
|
|
|
|
|
|
||||||||
Cost of revenue
|
$
|
2,032
|
|
|
$
|
1,492
|
|
|
$
|
3,130
|
|
|
$
|
1,510
|
|
Research and development
|
15,090
|
|
|
12,648
|
|
|
29,761
|
|
|
27,333
|
|
||||
Sales and marketing
|
3,911
|
|
|
3,987
|
|
|
7,358
|
|
|
7,622
|
|
||||
General and administrative
|
4,824
|
|
|
3,839
|
|
|
9,249
|
|
|
7,994
|
|
||||
Total stock-based compensation expense
|
$
|
25,857
|
|
|
$
|
21,966
|
|
|
$
|
49,498
|
|
|
$
|
44,459
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||
|
June 30, 2018
|
|
July 1, 2017
|
|
June 30, 2018
|
|
July 1, 2017
|
||||
|
(as a percentage of revenue)
|
||||||||||
Consolidated Statements of Operations Data:
|
|
|
|
|
|
|
|
||||
Revenue
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
Cost of revenue
|
60
|
|
|
58
|
|
|
57
|
|
|
59
|
|
Gross profit
|
40
|
|
|
42
|
|
|
43
|
|
|
41
|
|
Operating expenses:
|
|
|
|
|
|
|
|
||||
Research and development
|
29
|
|
|
23
|
|
|
32
|
|
|
26
|
|
Sales and marketing
|
34
|
|
|
28
|
|
|
32
|
|
|
29
|
|
General and administrative
|
10
|
|
|
9
|
|
|
12
|
|
|
10
|
|
Total operating expenses
|
73
|
|
|
60
|
|
|
76
|
|
|
65
|
|
Operating loss
|
(33
|
)
|
|
(18
|
)
|
|
(33
|
)
|
|
(24
|
)
|
Interest income, net
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
Other income, net
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
Loss before income taxes
|
(32
|
)
|
|
(18
|
)
|
|
(31
|
)
|
|
(24
|
)
|
Income tax expense (benefit)
|
8
|
|
|
(2
|
)
|
|
5
|
|
|
(6
|
)
|
Net loss
|
(40
|
)%
|
|
(16
|
)%
|
|
(36
|
)%
|
|
(18
|
)%
|
|
Three Months Ended
|
|
Change
|
|
Six Months Ended
|
|
Change
|
||||||||||||||||||||||
(dollars in thousands)
|
June 30, 2018
|
|
July 1, 2017
|
|
$
|
|
%
|
|
June 30, 2018
|
|
July 1, 2017
|
|
$
|
|
%
|
||||||||||||||
Revenue
|
$
|
299,344
|
|
|
$
|
353,299
|
|
|
$
|
(53,955
|
)
|
|
(15
|
)%
|
|
$
|
547,209
|
|
|
$
|
652,241
|
|
|
$
|
(105,032
|
)
|
|
(16
|
)%
|
|
Three Months Ended
|
|
Change
|
|
Six Months Ended
|
|
Change
|
||||||||||||||||||||||
(dollars in thousands)
|
June 30, 2018
|
|
July 1, 2017
|
|
$
|
|
%
|
|
June 30, 2018
|
|
July 1, 2017
|
|
$
|
|
%
|
||||||||||||||
Cost of revenue
|
$
|
180,329
|
|
|
$
|
204,054
|
|
|
$
|
(23,725
|
)
|
|
(12
|
)%
|
|
$
|
314,071
|
|
|
$
|
384,697
|
|
|
$
|
(70,626
|
)
|
|
(18
|
)%
|
Gross profit
|
119,015
|
|
|
149,245
|
|
|
(30,230
|
)
|
|
(20
|
)%
|
|
233,138
|
|
|
267,544
|
|
|
(34,406
|
)
|
|
(13
|
)%
|
||||||
Gross margin
|
40
|
%
|
|
42
|
%
|
|
|
|
|
|
43
|
%
|
|
41
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Change
|
|
Six Months Ended
|
|
Change
|
||||||||||||||||||||||
(dollars in thousands)
|
June 30, 2018
|
|
July 1, 2017
|
|
$
|
|
%
|
|
June 30, 2018
|
|
July 1, 2017
|
|
$
|
|
%
|
||||||||||||||
Research and development
|
$
|
87,047
|
|
|
$
|
80,543
|
|
|
$
|
6,504
|
|
|
8
|
%
|
|
$
|
176,383
|
|
|
$
|
168,301
|
|
|
$
|
8,082
|
|
|
5
|
%
|
|
Three Months Ended
|
|
Change
|
|
Six Months Ended
|
|
Change
|
||||||||||||||||||||||
(dollars in thousands)
|
June 30, 2018
|
|
July 1, 2017
|
|
$
|
|
%
|
|
June 30, 2018
|
|
July 1, 2017
|
|
$
|
|
%
|
||||||||||||||
Sales and marketing
|
$
|
100,845
|
|
|
$
|
100,732
|
|
|
$
|
113
|
|
|
—
|
%
|
|
$
|
172,897
|
|
|
$
|
191,906
|
|
|
$
|
(19,009
|
)
|
|
(10
|
)%
|
|
Three Months Ended
|
|
Change
|
|
Six Months Ended
|
|
Change
|
||||||||||||||||||||||
(dollars in thousands)
|
June 30, 2018
|
|
July 1, 2017
|
|
$
|
|
%
|
|
June 30, 2018
|
|
July 1, 2017
|
|
$
|
|
%
|
||||||||||||||
General and administrative
|
$
|
30,211
|
|
|
$
|
31,379
|
|
|
$
|
(1,168
|
)
|
|
(4
|
)%
|
|
$
|
66,299
|
|
|
$
|
62,125
|
|
|
$
|
4,174
|
|
|
7
|
%
|
|
Three Months Ended
|
|
Change
|
|
Six Months Ended
|
|
Change
|
||||||||||||||||||||||
(dollars in thousands)
|
June 30, 2018
|
|
July 1, 2017
|
|
$
|
|
%
|
|
June 30, 2018
|
|
July 1, 2017
|
|
$
|
|
%
|
||||||||||||||
Interest income, net
|
$
|
2,177
|
|
|
$
|
193
|
|
|
$
|
1,984
|
|
|
1,028
|
%
|
|
$
|
3,527
|
|
|
$
|
1,289
|
|
|
$
|
2,238
|
|
|
174
|
%
|
Other income, net
|
2,258
|
|
|
303
|
|
|
1,955
|
|
|
645
|
%
|
|
2,775
|
|
|
836
|
|
|
1,939
|
|
|
232
|
%
|
|
Three Months Ended
|
|
Change
|
|
Six Months Ended
|
|
Change
|
||||||||||||||||||||||
(dollars in thousands)
|
June 30, 2018
|
|
July 1, 2017
|
|
$
|
|
%
|
|
June 30, 2018
|
|
July 1, 2017
|
|
$
|
|
%
|
||||||||||||||
Income tax expense (benefit)
|
$
|
23,615
|
|
|
$
|
(4,673
|
)
|
|
$
|
28,288
|
|
|
(605
|
)%
|
|
$
|
23,006
|
|
|
$
|
(34,344
|
)
|
|
$
|
57,350
|
|
|
(167
|
)%
|
Effective tax rate
|
(24.9
|
)%
|
|
7.4
|
%
|
|
|
|
|
|
(13.1
|
)%
|
|
22.5
|
%
|
|
|
|
|
|
Six Months Ended
|
||||||
|
June 30, 2018
|
|
July 1, 2017
|
||||
Net cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
(57,217
|
)
|
|
$
|
3,228
|
|
Investing activities
|
43,363
|
|
|
7,455
|
|
||
Financing activities
|
4
|
|
|
6,173
|
|
||
Net change in cash and cash equivalents
|
$
|
(13,850
|
)
|
|
$
|
16,856
|
|
Exhibit
|
|
|
|
Incorporated by Reference
|
|
Filed
|
||||||
Number
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
Herewith
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1*
|
|
|
8-K
|
|
001-37444
|
|
10.1
|
|
6/06/2018
|
|
|
|
10.2*
|
|
|
8-K
|
|
001-37444
|
|
10.2
|
|
6/06/2018
|
|
|
|
10.3*
|
|
|
8-K
|
|
001-37444
|
|
10.1
|
|
6/20/2018
|
|
|
|
10.4†
|
|
|
|
|
|
|
|
|
|
|
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
|
*
|
Indicates a management contract or compensatory plan.
|
†
|
Portions of this exhibit have been granted confidential treatment by the SEC.
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FITBIT, INC.
|
|
|
|
|
|
Date:
|
August 3, 2018
|
|
|
/s/ Ronald W. Kisling
|
|
|
|
|
Ronald W. Kisling
|
|
|
|
|
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
[*]
|
Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended
|
To:
|
Charles Schwab & Co., Inc.
|
Re:
|
Office Sublease dated April 11, 2016 (the “
Lease
”) between Charles Schwab & Co., Inc., a California corporation (“
Sublandlord
”), and Fitbit Inc., a Delaware corporation (“
Tenant
”), concerning Floor 7 of the office building located at 215 Fremont Street, San Francisco, California.
|
1.
|
The Delivery Date for Floor 7 was January 1, 2017 (the “
7th Floor Delivery Date
”).
|
2.
|
As a result of the 7th Floor Delivery Date, the Rent Commencement Date for Floor 7 was April 1, 2017, and the initial Base Rent for such floor was $[*] per month, until April 1, 2018, at which time the Base Rent for such Floor increased to $[*].
|
3.
|
The Subtenant Improvement Allowance for Floor 7 was $[*].
|
4.
|
The Rent Commencement Date for each previously delivered Floor and the current Base Rent for each such Floor is as follows:
|
Floor
|
Rent Commencement Date
|
Current Monthly Base Rent through 3/31/19
|
Initial Premises (Floors 3 and 6)
|
April 1, 2016 (Floor 3)
July 1, 2016 (Floor 6)
|
$[*]
|
5.
|
The Base Year for Floor 7 is 2017, and Subtenant’s Share for such Floor is [*]%.
|
6.
|
Sublandlord and Subtenant agree that the Initial Premises Subtenant Work Letter governed construction of the Subtenant Improvements for Floor 7, except (i) the amount of the Subtenant Improvement Allowance for Floor 7 was as set forth in Section 3 above, (ii) all references to the “Initial Premises” meant Floor 7, and (iii) Sections 5.1 and 5.2 of the Subtenant Work Letter were inapplicable.
|
7.
|
Pursuant to Section 6.4 of the Lease, Subtenant previously requested to exercise its right to use Building UPS Power and E-Power for the Premises. At this time the Backup Utility Feed for 2018 is estimated to be $[*] for Floor 7, and such amount has been paid in full.
|
To:
|
Charles Schwab & Co., Inc.
|
Re:
|
Office Sublease dated April 11, 2016 (the “
Lease
”) between Charles Schwab & Co., Inc., a California corporation (“
Sublandlord
”), and Fitbit Inc., a Delaware corporation (“
Tenant
”), concerning Floor 7A of the office building located at 215 Fremont Street, San Francisco, California.
|
1.
|
The Delivery Date for Floor 7A was January 1, 2017 (the “
Floor 7A Delivery Date
”).
|
2.
|
As a result of the Floor 7A Delivery Date, the Rent Commencement Date for Floor 7A was April 1, 2017, and the initial Base Rent for such floor was $[*] per month, until April 1, 2018, at which time the Base Rent for such Floor increased to $[*].
|
3.
|
The Subtenant Improvement Allowance for Floor 7A was $[*].
|
4.
|
The Rent Commencement Date for each previously delivered Floor and the current Base Rent for each such Floor is as follows:
|
Floor
|
Rent Commencement Date
|
Current Monthly Base Rent through 3/31/19
|
Initial Premises (Floors 3 and 6)
|
April 1, 2016 (Floor 3)
July 1, 2016 (Floor 6)
|
$[*]
|
5.
|
The Base Year for Floor 7A is 2017, and Subtenant’s Share for such Floor is [*]%.
|
6.
|
Sublandlord and Subtenant agree that the Initial Premises Subtenant Work Letter governed construction of the Subtenant Improvements for Floor 7A, except (i) the amount of the Subtenant Improvement Allowance
|
7.
|
Pursuant to Section 6.4 of the Lease, Subtenant previously requested to exercise their right to use Building UPS Power and E-Power for the Premises. At this time the Backup Utility Feed for 2018 is estimated to be $[*] for Floor 7A, and such amount has been paid in full.
|
To:
|
Charles Schwab & Co., Inc.
|
Re:
|
Office Sublease dated April 11, 2016 (the “
Lease
”) between Charles Schwab & Co., Inc., a California corporation (“
Sublandlord
”), and Fitbit Inc., a Delaware corporation (“
Tenant
”), concerning Floor 5 of the office building located at 215 Fremont Street, San Francisco, California.
|
1.
|
The Delivery Date for Floor 5 was November 1, 2017 (the “
5th Floor Delivery Date
”).
|
2.
|
As a result of the 5th Floor Delivery Date, the Rent Commencement Date for Floor 5 was February 1, 2018, and the initial Base Rent for such floor was $[*] per month, until April 1, 2018, at which time the Base Rent for such Floor increased to $[*].
|
3.
|
The Subtenant Improvement Allowance for Floor 5 shall be $[*].
|
4.
|
The Rent Commencement Date for each previously delivered Floor and the current Base Rent for each such Floor is as follows:
|
Floor
|
Rent Commencement Date
|
Current Monthly Base Rent through 3/31/19
|
Initial Premises (Floors 3 and 6)
|
April 1, 2016 (Floor 3)
July 1, 2016 (Floor 6)
|
$[*]
|
Floor 7
|
April 1, 2017
|
$[*]
|
Floor 7A
|
April 1, 2017
|
$[*]
|
5.
|
The Base Year for Floor 5 is 2018, and Subtenant’s Share for such Floor is [*]%.
|
6.
|
Sublandlord and Subtenant agree that the Initial Premises Subtenant Work Letter shall govern construction of the Subtenant Improvements for Floor 5, except (i) the amount of the Subtenant Improvement Allowance for Floor 5 shall be as set forth in Section 3 above, (ii) all references to the “Initial Premises” shall mean Floor 5, and (iii) Sections 5.1 and 5.2 of the Subtenant Work Letter shall be inapplicable.
|
|
||
|
|
|
Date:
|
August 3, 2018
|
/s/ James Park
|
|
|
James Park
President, Chief Executive Officer, and Chairman
(Principal Executive Officer)
|
|
||
|
|
|
Date:
|
August 3, 2018
|
/s/ Ronald W. Kisling
|
|
|
Ronald W. Kisling
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
Date: August 3, 2018
|
By:
|
/s/ James Park
|
|
|
James Park
|
|
|
President, Chief Executive Officer, and Chairman
(Principal Executive Officer)
|
Date: August 3, 2018
|
By:
|
/s/ Ronald W. Kisling
|
|
|
Ronald W. Kisling
|
|
|
Chief Financial Officer
(Principal Financial and Accounting Officer)
|