How does Fitbit make money?

Fitbit sold over 13 million devices in the first nine months of 2015 alone

2015 was a big year for wearables. In all, 39.5 million adults in the United States used at least one wearable, including a smartwatch or a fitness tracker, in 2015. In 2016, there are expected to be 63.7 million wearable users, or nearly 30% of Internet users and 25 percent of all adults in the United States.

By 2019, over a third of all U.S. adults will either wear accessories or clothing at least once per month that have Internet-connected electronics and exchange data with a manufacturer.

One of the biggest beneficiaries of this boom has been Fitbit, the wearables manufacturer that went public in 2015.

Founded in 2007, Fitbit currently sells six connected health and fitness trackers, which track users’ daily steps, calories burned, distance traveled, floors climbed, and active minutes and display real-time feedback to encourage them to become more active in their daily lives.

Its devices are Zip, One, Flex, Charge, Charge HR, and Surge. Zip is the cheapest, selling for $59.95, while Surge is the most expensive, at $249.95. The company also sells a smart scale, called the Aria, for $129.95. 

Fitbit sells accesories to go with its devices, including bands that range from $29.95 to $129.95. 

In addition to its hardware, Fitbit also sells a premium service for $49.99 a year that allows Fitbit user sto "get more insights and additional stats to reach your goals faster and train toward better results." That includes letting them compare data against the entire Fitbit community; food reports, which analyze calorie intake; activity reports, which show trends and long-term goals; sleep reports, with stats and trends; and a personalized 12-week fitness plan.

In the third quarter of 2015, Fitbit saw revenue of $409.3 million, up from $153 million in the same quarter a year before. In the first nine months of 2015, Fitbit made $1.1 billion in revenue.

The company also saw its net income rise to $59.2 million in the quarter, up from $27.1 million in Q3 2014. For the first nine months net income was $167 million.

In its S-1 form with the SEC, Fitbit revealed that is had, by of the end of March 2015, sold over 20.8 million devices since its inception. More than half of those devices, 10.9 million, were sold in 2014, up from 4.5 million in 2013 and only 1.3 million in 2012.

In Q3 2015 alone it sold 4.8 million, and 13.1 through the first nine months of the year. 

Fitbit raised $731 million in IPO, to be valued at $4.1 billion, more than 10 times its $300 million valuation after raising $84 million in venture capital. That made it was the largest wearables IPO ever, beating out GoPro, which exited at a valuation of $3.1 billion in 2013.

Before its IPO, company had raised just under $84 million in venture funding, from investors that included Qualcomm Ventures, SAP Ventures, SoftBank Capital,  Foundry Group and True Ventures.

(Image source: fitbit.com)