Fitbit is set to announce cuts of between 5 to 10 percent to its workforce later on Monday amid lower-than-expected fourth quarter results.
According to The Information, the job cuts are expected to affect between 80 and 160 people across multiple departments and save the company $200 million in costs. The Q4 results will be the second consecutive quarter in which Fitbit has missed its earnings guidance.
Fitbit is expected to blame the slowdown on a sluggish market, despite Market research data from September that showed a split in the wearables market, with Fitbit's "basic wearables" gaining popularity, and "smart wearables" like the Apple Watch seeing stalled growth.
Despite a portion of the market stalling out, the overall wearable device market was said to have grown 26.1 percent in comparison to the year ago quarter, with Fitbit the leading brand. Additionally, Fitbit's stock rose 7.4 percent on December 27, after reports that its app had become one of the most downloaded in the App Store on Christmas Day.
Fitbit's recent acquisition of Pebble and Vector Watch – along with its rumored interest in Jawbone – suggested the company was increasingly aligning itself with software rather than relying solely on hardware sales, and the reported layoffs could be another part of that plan. Indeed, one source told The Information that Fitbit is aiming to develop its own App Store and open up devices to third-party developers.
Whether Fitbit is planning to launch a more traditional smartwatch with a dedicated app store as part of those plans remains unclear.