Fitbit is to cut more than 100 jobs as it looks to create “a more focused and efficient operating model”, having fallen short of its Q4 revenue target.
The company expects to report revenue of $572 million to $580 million for the period, as opposed to earlier guidance of $725 million to $750 million.
In a statement, co-founder and CEO James Park said the company is “confident this performance is not reflective of the value of our brand, market-leading platform, and company’s long term potential”.
Park continued: “While we have experienced softer-than-expected holiday demand for trackers in our most mature markets, especially during Black Friday, we have continued to grow rapidly in select markets like EMEA, where revenue grew 58 per cent during the fourth quarter.”
The cost cuts come as the company faces what it described as a “temporary slowdown and transition period”.
It intends to realign its sales and marketing spend, optimise R&D investments and make job cuts equivalent to 6 per cent of its global workforce.
Fitbit also warned the start of 2017 is likely to be tough given the first half of 2016 saw sales driven by new product introductions. It also enters the year with a higher expense base, and higher channel inventory levels than previously expected.
It expects its financial performance to stabilise in the second half.
The company made several acquisitions recently in the smart watch space, taking on assets from Pebble and Vector Watch. It also bought payment tech from Coin.
“We believe the evolving wearables market continues to present growth opportunities for us that we will capitalise on by investing in our core product offerings, while expanding into the smart watch category to diversify revenue and capture share of the more than $10 billion global smart watch market,” Park said.
Fitbit is due to report its earnings on 22 February.