Fitbit Presentation PDF

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  • ADDRESS 405 HOWARD STREET

    SAN FRANCISCO, CA 94105

    WEBSITE WWW.FITBIT.COM

    SECTOR ACTIVITY TRACKER

    INDUSTRY CONSUMER ELECTRONICS

  • TABLE OF CONTENTSI. Introduction

    Summary.

    3

    Company History

    II. External Analysis............................................................................................................................................................................................ 5

    Industry Overview

    Porters Five Forces

    III. Internal Analysis...................................................................................................................................................................................................... 8

    Most Important Executives

    Product Diversification

    Patents

    Other Resources and Competencies

    IV. Financial Analysis..................................................................................................................................................................................................... 13

    Rising Revenue

    3 Year Projection

    Operating Analysis

    Stock Analysis

    V. Recommendation...................................................................................................................................................................................................... 18

    Selling Fitbit

    Increasing Spending on R&D

    Smart Watch & More Features

  • INTRODUCTION

    SUMMARY

    3

  • 4

    INTRODUCTION SUMMARY: COMPANY HISTORY

    Jul 2007:

    Inspired by the advances in

    sensors and wireless technology,

    Eric Friedman and James Park

    created Healthy Metrics

    Research Inc.

    Where does Fitbit go from here?

    Sep 2009:

    Fitbit launched its first

    product, the Fitbit for $99.

    Oct 2011:

    Launched its first iPhone

    app, Fitbit Ultra. The app

    measures vertical steps with

    a built-in altimeter.

    Jun 2012:

    Fitbit went international and

    released new products such as

    Aria Scale, Fitbit One, and Fitbit

    Zip.

    May 2015:

    Fitbits IPO valued at $4.3

    billion.

    29 million

    devices sold34% of market share 45,000 retail stores 50 countries

    15 million

    registered users

    SOURCES: DMR STATS, WIKIPEDIA, MOBILE HEALTH NEWS

  • EXTERNAL

    ANALYSIS

    5

  • EXTERNAL ANALYSIS: INDUSTRY OVERVIEW

    SOURCES: WALL STREET JOURNAL, MORNINGSTAR, THE FEDERAL RESERVE BANK, SEC, MORNINGSTAR

    18.8%

    13.5%

    39.6%

    12.9%

    15.3%

    0% 10% 20% 30% 40% 50%

    0- 14 Years

    15- 24 Years

    25- 54 Years

    55- 64 Years

    65 and Over

    2015 POPULATION AGES DISTRIBUTION (U.S.)

    CURRENT STATE

    Activity tracker is a sub-set of the Industry Consumer Electronics.

    Activity tracking is a relatively young innovation, emerging in the late1980s and comping to prominence in the late 1990s and mid 2000s.

    Substitution has become a greater challenge to industry participants

    than competition.

    Industry is reaching a mature stage, in which the growth has slowed

    down and not everybody is guaranteed success.

    The current owners of wearable devices are young, with nearly half

    (48%) between 18-34 years old.

    6

    Activity Tracker

    Wearable Stationary

    ACTIVITY TRACKER INDUSTRY SUMMARY CHART

    MAJOR ACTIVITY TRACKING PLAYERS

    American. Launched in 1989.

    Operates internationally.

    Offers wide range of consumer electronics.

    Launched in California during 1999.

    Solely domestic operations.

    Early member of activity tracking industry

    Launched in 1984. Largely American operations.

    Acquired smaller activity tracker companies,

    including Misfit.

    https://en.wikipedia.org/wiki/File:Jawbone_logo.svghttps://en.wikipedia.org/wiki/File:Jawbone_logo.svg

  • 7

    EXTERNAL ANALYSIS: PORTER FIVE FORCES

    INTENSITY OF RIVALRY

    (HIGH)

    THREATS OF NEW ENTRY

    (MEDIUM)

    THREAT OF SUBSTITUTION

    (HIGH)

    Industry growth has seen reductions in

    growth, with some predicting a decline .

    The number of competitors is slowly

    decreasing, intensifying rivalry.

    Differentiation also continues to reduce in

    some facets, and prices have become

    accordingly competitive.

    The activity tracker industry competes

    against smartwatches, smartphones, and the

    more traditional pedometer.

    Switching costs are low or nonexistent.

    Smartphones and smartwatches continue to

    become more popular and offer increasingly

    identical functions as activity trackers, in

    addition to the wide variety of functions

    already performed by these devices.

    Barriers to entry are prevalent in this industry

    In order to manufacture goods, significant

    capital is needed, both monetary and human;

    access to distribution channels is a necessity

    .

    Product differentiation is relatively important,

    and customer loyalty does exist for several

    members of the activity tracker industry.

    Government policy can limit claims of product

    attributes.

    SOURCES: WALL STREET JOURNAL, BARRONS

    BUYERS POWER (HIGH)

    Switching costs are low or non existent.

    Customers have shown willingness, and even preference, for purchasing

    substitutes.

    Industry sales are heavily reliant upon retail sales, increasing the power

    of individual consumers.

    SUPPLIER POWER (MEDIUM)

    Suppliers goods are critical to necessary manufacturing components,

    but raw materials are widely available and occasionally substitutable.

    Component quality is generally less valued than device function, though

    it is still important to consumers.

  • INTERNAL

    ANALYSIS

    8

  • 9

    INTERNAL ANALYSIS: MOST IMPORTANT EXECUTIVES

    JAMES PARK

    (CEO)

    ERIC FRIEDMAN

    (CTO)

    WILLIAM ZERELLA

    (CFO)

    EDWARD SCAL

    (CRO)

    ANDY MISSAN

    CEO and Co-Founder.

    Earlier in his career he worked for CNET and Morgan Stanley.

    Attended Harvard for Computer Science but dropped out.

    CTO and Co-founder.

    Previously worked at CNET and Epsei Technologies.

    Graduated from Yale with a degree in Computer Science.

    CFO of Fitbit since 2014.

    Worked as CFO of other publicly traded companies such as Vocera Communications.

    Graduated from New York University.

    Has served as Chief Revenue Officer since 2010.

    Before Fitbit, he worked at Avanti Growth Partners, a private equity and consulting firm.

    Graduated from the Stanford Business School.

    VP of General Counsel since 2013.

    Served as VP for other Tech Firms as well as Senior Legal Counsel at Sony.

    Graduated from Northwestern University School of Law.

    SOURCES: THE MOTLEY FOOL

  • 10

    INTERNAL ANALYSIS: PRODUCT DIVERSIFICATION

    Zip One Flex 2 Alta Charge 2 Blaze Surge

    $49.99 $79.99 $79.99 $129.99 $129.99 $159.99 $199.99

    Steps, Calories

    Clock

    Sleep Tracking

    Alarm

    Active Minutes

    Multi Sport

    Continuous Heart Rate

    Text/ Call Notification

    Music Control

    GPS Tracking

    Swim-proof

    SOURCES: FITBIT

  • 11

    INTERNAL ANALYSIS: PATENTS

    SOURCES: GOOGLE PATENTS

    DESCRIPTION PICTURE

    Provides a wearable fitness monitoring device which

    includes a photoplethysmograhphic sensor.

    Allows the device to measure one or more characteristics of

    a heartbeat waveform.

    Combines two types of data collection to increase accuracy

    of GPS travel distance and location.

    Takes into account steps and length of strides of individual

    as well as GPS coordinates.

    Provides more accurate step count for user.

    Reduces GPS power for increased battery life.

    PATENT

    Wearable Heart

    Rate Monitor

    GPS Accuracy

    Refinement

    & GPS Battery

    Usage

    Reduction

    Sedentary

    Period Detection

    Provides an advanced method of determining sedentary

    state of the user(inactivity).

    Measures Metabolic Equivalent of Task (MET).

    If MET exceeds a determined threshold value, the user is

    deemed sedentary.

  • 12

    INTERNAL ANALYSIS: OTHER RESOURCES AND COMPETENCIES

    SOURCES: SMART COMPANY

    DESCRIPTION COMPETENCIES

    Provides an international recognition

    Is known for reliable products

    An edge on their competition

    Direct to consumers from online website

    Diverse retailers such as Costco, BestBuy and Wal Mart

    Sells directly to companies with corporate wellness

    programs.

    Costly to imitate

    Rare

    Valuable

    RESOURCES

    Brand

    Recognition

    Business Model

    Not a Competency

    Other Companies use same model

    Has led to Strong Year over Year positive revenue growth

    First Mover

    Advantage

    First to Introduce Wearable Fitness Devices

    Captures loyalty customers from the beginning

    Possesses Patented Technology

    Has a strong loyal consumers base

    Can set the trend within the industry

  • FINANCIAL

    ANALYSIS

    13

  • 14SOURCES: FITBIT

    FINANCIAL ANALYSIS: RISING REVENUE

    Q3 REVENUE GROWTH

    YTD REVENUE GROWTH

    $409.3

    $503.8

    $0

    $100

    $200

    $300

    $400

    $500

    $600

    Q3' 2015 Q3' 2016

    $1,146.4

    $1,595.7

    $0

    $300

    $600

    $900

    $1,200