Fitbit beats Q1 revenue expectations as smartwatch growth continues

Fitbit’s financial rebound continued in the first quarter, as the company generated $271.9 million in revenue, beating Wall Street expectations of $259.7 million. The good news is almost exclusively the domain of the company’s increased focus on smartwatches, which grew 117 percent year over year.

That, in turn, is thanks to this year’s debut of the Versa Lite, a version of Fitbit’s best smartwatch that’s focused on cost, one of the company’s primary selling point against the dominant Apple Watch. It’s a continued payoff of Fitbit’s purchase of Pebble, Vector and Coin — a hail Mary designed to put the company back on track after initially ceding the smartwatch space to Apple, Samsung, Garmin and the like.

Interestingly, while revenue has been shifting from trackers to smartwatches, the tracker side of things also saw modest year on year gains of 17 percent (bringing the total number of devices sold up 36 percent y-o-y), courtesy of the launch of the Inspire, which consolidates several of Fitbit’s trackers into a single line. While the category is generally believed to have plateaued, CEO James Park tells TechCrunch the company is predicting continued growth on that side — albeit at a significantly slower pace than watches.

“We’re continuing to forecast growth in the tracker business, and even faster growth and smartwatch business — but group growth in both segments,” the executive explains.

Forward momentum will require continued innovation on Fitbit’s part and while Park wouldn’t comment directly on plans to release successors to the standard Versa and Ionic, he says the company has “a pretty predictable spring fall launch cadence. And it just really depends on where things are in our product roadmap and market conditions.”

Park’s sentiments echoed those of Apple’s on its own earnings call yesterday, as the company increasingly looks to services for revenue growth. In Fitbit’s case, the plan involves a premium offering launching later this year that will straddle the line between its consumer and growing healthcare business.

“At a very high level, the vision for our premium offering is a service that uses and gathers Fitbit data and data from other sources to screen and diagnose different disease and health conditions for users, that analyzes this data to give people richer and deeper insights about their health, and also provides coaching and guidance,” says Park. “Next steps are for people to address their health conditions or to reach their fitness and wellness goals.”