Cover Page
Cover Page - shares | 3 Months Ended | |
Apr. 04, 2020 | Apr. 29, 2020 | |
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Apr. 4, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-37444 | |
Entity Registrant Name | FITBIT, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 20-8920744 | |
Entity Address, Address Line One | 199 Fremont Street, | |
Entity Address, Address Line Two | 14th Floor | |
Entity Address, City or Town | San Francisco, | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 94105 | |
City Area Code | 415 | |
Local Phone Number | 513-1000 | |
Title of 12(b) Security | Class A Common Stock, $0.0001 par value | |
Trading Symbol | FIT | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001447599 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Common Class A | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 237,659,049 | |
Common Class B | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 29,316,945 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Apr. 04, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 251,997 | $ 334,479 |
Marketable securities | 175,699 | 184,023 |
Accounts receivable, net | 182,284 | 435,269 |
Inventories | 105,745 | 136,752 |
Income tax receivable | 139,827 | 573 |
Prepaid expenses and other current assets | 56,694 | 28,656 |
Total current assets | 912,246 | 1,119,752 |
Property and equipment, net | 76,218 | 82,756 |
Operating lease right-of-use assets | 70,137 | 70,225 |
Goodwill | 64,812 | 64,812 |
Intangible assets, net | 12,717 | 16,746 |
Deferred tax assets | 4,066 | 4,111 |
Other assets | 9,458 | 9,684 |
Total assets | 1,149,654 | 1,368,086 |
Current liabilities: | ||
Accounts payable | 90,801 | 194,626 |
Accrued liabilities | 376,530 | 513,530 |
Operating lease liabilities | 21,832 | 23,511 |
Deferred revenue | 32,466 | 32,307 |
Income taxes payable | 1,700 | 636 |
Total current liabilities | 523,329 | 764,610 |
Long-term deferred revenue | 6,176 | 8,535 |
Long-term operating lease liabilities | 66,234 | 67,902 |
Other liabilities | 32,860 | 39,776 |
Total liabilities | 628,599 | 880,823 |
Commitments and contingencies (Note 6) | ||
Stockholders’ equity: | ||
Class A and Class B common stock | 26 | 26 |
Additional paid-in capital | 1,140,280 | 1,126,827 |
Accumulated other comprehensive income | 233 | 188 |
Accumulated deficit | (619,484) | (639,778) |
Total stockholders’ equity | 521,055 | 487,263 |
Total liabilities and stockholders’ equity | $ 1,149,654 | $ 1,368,086 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Apr. 04, 2020 | Mar. 30, 2019 | |
Income Statement [Abstract] | ||
Revenue | $ 188,158 | $ 271,890 |
Cost of revenue | 133,236 | 182,437 |
Gross profit | 54,922 | 89,453 |
Operating expenses: | ||
Research and development | 81,589 | 77,039 |
Sales and marketing | 56,961 | 68,616 |
General and administrative | 42,041 | 26,692 |
Total operating expenses | 180,591 | 172,347 |
Operating loss | (125,669) | (82,894) |
Interest income, net | 1,293 | 3,466 |
Other income (expense), net | (4) | 1,273 |
Loss before income taxes | (124,380) | (78,155) |
Income tax expense (benefit) | (144,674) | 1,310 |
Net income (loss) | $ 20,294 | $ (79,465) |
Net income (loss) per share: | ||
Basic (in dollars per share) | $ 0.08 | $ (0.31) |
Diluted (in dollars per share) | $ 0.07 | $ (0.31) |
Shares used to compute net income (loss) per share: | ||
Basic (in shares) | 265,661 | 253,124 |
Diluted (in shares) | 276,946 | 253,124 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 04, 2020 | Mar. 30, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Net income (loss) | $ 20,294 | $ (79,465) |
Other comprehensive income (loss): | ||
Change in unrealized gain on investments | 45 | 162 |
Net change, net of tax | 45 | 162 |
Comprehensive income (loss) | $ 20,339 | $ (79,303) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders’ Equity - USD ($) $ in Thousands | Total | Common Stock | Additional paid-in capital | Accumulated other comprehensive income (loss) | Accumulated deficit |
Beginning balance (in shares) at Dec. 31, 2018 | 252,362,841 | ||||
Beginning balance at Dec. 31, 2018 | $ 735,938 | $ 25 | $ 1,055,046 | $ (66) | $ (319,067) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock (in shares) | 2,381,188 | ||||
Issuance of common stock | 931 | 931 | |||
Stock-based compensation expense | 20,669 | 20,669 | |||
Taxes related to net share settlement of restricted stock units | 6,422 | 6,422 | |||
Net income (loss) | (79,465) | (79,465) | |||
Other comprehensive income | 162 | 162 | |||
Ending balance (in shares) at Mar. 30, 2019 | 254,744,029 | ||||
Ending balance at Mar. 30, 2019 | 671,813 | $ 25 | 1,070,224 | 96 | (398,532) |
Beginning balance (in shares) at Dec. 31, 2019 | 264,883,426 | ||||
Beginning balance at Dec. 31, 2019 | 487,263 | $ 26 | 1,126,827 | 188 | (639,778) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock (in shares) | 1,923,573 | ||||
Issuance of common stock | 458 | 458 | |||
Stock-based compensation expense | 18,863 | 18,863 | |||
Taxes related to net share settlement of restricted stock units | 5,868 | 5,868 | |||
Net income (loss) | 20,294 | 20,294 | |||
Other comprehensive income | 45 | 45 | |||
Ending balance (in shares) at Apr. 04, 2020 | 266,806,999 | ||||
Ending balance at Apr. 04, 2020 | $ 521,055 | $ 26 | $ 1,140,280 | $ 233 | $ (619,484) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 04, 2020 | Mar. 30, 2019 | |
Cash Flows from Operating Activities | ||
Net income (loss) | $ 20,294 | $ (79,465) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||
Provision for doubtful accounts | 6,486 | 32 |
Provision for excess and obsolete inventory | 9,845 | 1,478 |
Depreciation | 10,589 | 13,373 |
Non-cash lease expense | 1,524 | 7,713 |
Accelerated depreciation of property and equipment | 13 | 0 |
Amortization of intangible assets | 4,029 | 2,060 |
Stock-based compensation | 19,727 | 20,544 |
Deferred income taxes | 46 | (20) |
Other | 5 | (50) |
Changes in operating assets and liabilities, net of acquisition: | ||
Accounts receivable | 246,499 | 163,592 |
Inventories | 20,301 | (50,958) |
Prepaid expenses and other assets | (28,073) | 12,554 |
Increase (Decrease) in Income Taxes Receivable | (139,254) | 40 |
Fitbit Force recall reserve | (41) | 46 |
Accounts payable | (104,378) | (81,656) |
Accrued liabilities and other liabilities | (143,692) | (69,962) |
Lease liabilities | (4,756) | (4,972) |
Deferred revenue | (2,200) | (2,259) |
Income taxes payable | 1,064 | 257 |
Net cash used in operating activities | (81,972) | (67,653) |
Cash Flows from Investing Activities | ||
Purchase of property and equipment | (3,556) | (6,096) |
Purchases of marketable securities | (59,735) | (111,615) |
Maturities of marketable securities | 68,191 | 128,309 |
Net cash provided by investing activities | 4,900 | 10,598 |
Cash Flows from Financing Activities | ||
Payment of financing lease liability | 0 | (597) |
Proceeds from issuance of common stock | 458 | 931 |
Taxes paid related to net share settlement of restricted stock units | (5,868) | (6,422) |
Net cash used in financing activities | (5,410) | (6,088) |
Net decrease in cash and cash equivalents | (82,482) | (63,143) |
Cash and cash equivalents at beginning of period | 334,479 | 473,956 |
Cash and cash equivalents at end of period | $ 251,997 | $ 410,813 |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 3 Months Ended |
Apr. 04, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | Basis of Presentation and Summary of Significant Accounting Policies The accompanying condensed consolidated financial statements of Fitbit, Inc. (the “Company”) are unaudited. The condensed consolidated balance sheet at December 31, 2019 has been derived from the audited financial statements of the Company. The accompanying condensed financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information, and in management’s opinion, includes all adjustments, consisting of only normal recurring adjustments, necessary for the fair statement of the Company’s financial position, its results of operations, and cash flows for the interim periods presented. The results of operations for the three months ended April 4, 2020 are not necessarily indicative of the results to be expected for the full fiscal year or any other period. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the Securities and Exchange Commission (“SEC”) on February 27, 2020. The Company’s fiscal year ends on December 31 of each year. The Company is on a 4-4-5 week quarterly calendar. There were 95 and 89 days in each of the three months ended April 4, 2020 and March 30, 2019, respectively. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated. Use of Estimates The preparation of condensed consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the condensed consolidated financial statements and accompanying notes. The primary estimates and assumptions made by management are related to revenue recognition, reserves for sales returns and incentives, reserves for warranty, valuation of stock-based awards, fair value of derivative assets and liabilities, allowance for doubtful accounts, inventory valuation, fair value of goodwill and acquired tangible and intangible assets and liabilities assumed during acquisitions, the recoverability of intangible assets and their useful lives, contingencies, and income taxes. Actual results could differ from those estimates, and such differences may be material to the condensed consolidated financial statements. Google Acquisition On November 1, 2019, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Google LLC, a Delaware limited liability company (“Google”), and Magnoliophyta Inc., a Delaware corporation and wholly owned subsidiary of Google (the “Merger Sub”). Pursuant to the terms of, and subject to the conditions specified in, the Merger Agreement, the Merger Sub will merge with and into the Company, and the Company will become a wholly owned subsidiary of Google (the “Merger”). If the Merger is completed, Google will acquire all the shares of the Company’s Class A common stock and Class B common stock (together, the “Shares”) for $7.35 per share in cash, without interest (the “Merger Consideration”). All Shares underlying vested stock options and vested stock-based awards will be converted into the right to receive the Merger Consideration (or, in the case of stock options, the difference between the Merger Consideration and the applicable per share exercise price), less any applicable tax withholdings. Unvested stock options and stock-based awards will generally be converted into cash-based awards with an equivalent value based on the Merger Consideration and vesting schedule. The Merger is expected to close in 2020, subject to customary closing conditions, including approval by the expiration or termination of any waiting periods or receipt of any requisite consents under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, approval under the antitrust laws of the European Union and other jurisdictions agreed by the parties, and satisfaction of other closing conditions. The Merger was approved by the Company’s stockholders on January 3, 2020. Risks and Uncertainties for COVID-19 The recent outbreak of the novel virus COVID-19, which was declared a global pandemic by the World Health Organization in March 2020, adversely impacted our business in the first quarter of 2020. The outbreak and associated containment measures have caused disruptions in the development, manufacture, shipment, and sales of our products. During the first quarter of 2020, the Company’s operating results began to be negatively impacted by decreased retail activity and retail store closures due to COVID-19, primarily in the Asia Pacific region. Operating results were also impacted by additional reserves for product returns, rebates and promotions, and price protection on certain products, primarily based on increased channel inventory levels as a result of declining demand due to COVID-19. Additionally, operating results were impacted by allowances for credit losses as a result of COVID-19 and its potential impact. The current circumstances are dynamic and unprecedented, and the impacts of the COVID-19 pandemic on our business operations, including the duration and severity of the effect on overall consumer demand, are highly uncertain and cannot be predicted. However, these impacts have had, and we expect will continue to have, a significant adverse effect on our operations, revenue, liquidity, financial conditions, and financial results. For further information regarding the impact of COVID-19 on the Company, see Part I, Item 2, Management’s Discussion and Analysis, and Part II, Item 1A, Risk Factors in this Quarterly Report on Form 10-Q. Significant Accounting Policies There have been no significant changes in the Company’s accounting policies from those disclosed in its Annual Report on Form 10-K filed with the SEC on February 27, 2020. Recent Accounting Pronouncements Accounting Pronouncements Not Yet Adopted In December 2019, the Financial Accounting Standards Board (the “FASB”) issued ASU 2019-12, Simplifying the Accounting for Income Taxes. This guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the impact this guidance may have on its consolidated financial statements and related disclosures. Accounting Pronouncements Recently Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments–Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 provides for a new impairment model which requires measurement and recognition of expected credit losses for most financial assets and certain other instruments, including but not limited to accounts receivable and available-for-sale debt securities. In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments–Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. This ASU clarifies and corrects guidance related to Topic 326, Topic 815, and Topic 825. In May 2019, the FASB issued ASU 2019-05, Financial Instruments-Credit Losses (Topic 326): Targeted Transition Relief. This ASU provides an option to irrevocably elect to measure certain individual financial assets at fair value instead of amortized cost. The Company adopted Topic 326 utilizing the modified retrospective method. Prior periods were not retrospectively adjusted. The cumulative effect upon adoption on the opening accumulated deficit balance was zero. In January 2017, the FASB issued ASU 2017-04, Intangibles–Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 simplifies the subsequent measurement of goodwill by eliminating the second step of the goodwill impairment test. The second step measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Under ASU 2017-04, a company will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. ASU 2017-04 became effective for the Company on January 1, 2020. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework–Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 modifies the disclosure requirements on fair value measurements and became effective for the Company on January 1, 2020. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Apr. 04, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The carrying values of the Company’s accounts receivable, accounts payable, and accrued liabilities approximated their fair values due to the short period of time to maturity or repayment. The following tables set forth the Company’s financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands): April 4, 2020 Level 1 Level 2 Level 3 Total Assets: Money market funds $ 89,166 $ — $ — $ 89,166 U.S. government agencies — 63,854 — 63,854 Corporate debt securities — 164,917 — 164,917 Derivative assets — 36 — 36 Total $ 89,166 $ 228,807 $ — $ 317,973 Liabilities: Contingent consideration $ — $ — $ 1,889 $ 1,889 Derivative liabilities — 10 — 10 Total $ — $ 10 $ 1,889 $ 1,899 December 31, 2019 Level 1 Level 2 Level 3 Total Assets: Money market funds $ 107,708 $ — $ — $ 107,708 U.S. government agencies — 77,364 — 77,364 Corporate debt securities — 207,137 — 207,137 Total $ 107,708 $ 284,501 $ — $ 392,209 Liabilities: Contingent consideration $ — $ — $ 1,889 $ 1,889 Derivative liabilities — 748 — 748 Total $ — $ 748 $ 1,889 $ 2,637 The fair value of the Company’s Level 1 financial instruments is based on quoted market prices in active markets for identical instruments. The fair value of the Company’s Level 2 financial instruments is based on observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data. In addition, Level 2 assets and liabilities include derivative financial instruments associated with hedging activity, which are further discussed in Note 3. Derivative financial instruments are initially measured at fair value on the contract date and are subsequently remeasured to fair value at each reporting date using inputs such as spot rates, forward rates, and discount rates. There is not an active market for each hedge contract, but the inputs used to calculate the value of the instruments are tied to active markets. There were no Level 3 assets as of April 4, 2020 and December 31, 2019. The Company's Level 3 liabilities measured and recorded on a recurring basis as of April 4, 2020 and December 31, 2019 consist of contingent consideration related to an acquisition. Subsequent changes in the fair value of this obligation will be recorded within the Company’s consolidated statements of operations. The Company estimated the fair value of the acquisition-related contingent consideration using a probability-weighted discounted cash flow model. As the fair value measure is based on significant inputs that are not observable in the market, they are categorized as Level 3. There were no transfers between fair value measurement levels during the three months ended April 4, 2020 and March 30, 2019. |
Financial Instruments
Financial Instruments | 3 Months Ended |
Apr. 04, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Financial Instruments | Financial Instruments Cash, Cash Equivalents and Marketable Securities The Company’s marketable securities are classified as available-for-sale as of the balance sheet date and are reported at fair value with unrealized gains and losses reported, net of tax, as a separate component of accumulated other comprehensive income (loss) in stockholders’ equity. Because the Company views marketable securities as available to support current operations as needed, it has classified all available-for-sale securities as current assets. Realized gains or losses and other-than-temporary impairments, if any, on available-for-sale securities are reported in other income (expense), net, as incurred. Investments are reviewed periodically to identify potential other-than-temporary impairments. No impairment loss has been recorded on the securities included in the tables below because the Company believes that the decrease in fair value of these securities is temporary and expects to recover up to, or beyond, the initial cost of investment for these securities. The following table sets forth cash, cash equivalents, and marketable securities as of April 4, 2020 (in thousands): Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Cash and Cash Equivalents Marketable Securities Cash $ 109,759 $ — $ — $ 109,759 $ 109,759 $ — Money market funds 89,166 — — 89,166 89,166 — U.S. government agencies 63,643 211 — 63,854 24,643 39,211 Corporate debt securities 164,960 33 (76) 164,917 28,429 136,488 Total $ 427,528 $ 244 $ (76) $ 427,696 $ 251,997 $ 175,699 The following table sets forth cash, cash equivalents and marketable securities as of December 31, 2019 (in thousands): Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Cash and Cash Equivalents Marketable Securities Cash $ 126,293 $ — $ — $ 126,293 $ 126,293 $ — Money market funds 107,708 — — 107,708 107,708 — U.S. government agencies 77,316 48 — 77,364 30,375 46,989 Corporate debt securities 207,063 85 (11) 207,137 70,103 137,034 Total $ 518,380 $ 133 $ (11) $ 518,502 $ 334,479 $ 184,023 The gross unrealized gains or losses on marketable securities as of April 4, 2020 and December 31, 2019 were not material. There were no available-for-sale investments as of April 4, 2020 and December 31, 2019 that have been in a continuous unrealized loss position for greater than 12 months on a material basis. The following table classifies marketable securities by contractual maturities (in thousands): April 4, 2020 December 31, 2019 Due in one year $ 172,056 $ 173,827 Due in one to two years 3,643 10,196 Total $ 175,699 $ 184,023 Derivative Financial Instruments The Company operates in foreign countries, which exposes it to market risk associated with foreign currency exchange rate fluctuations between the U.S. dollar and various foreign currencies. In order to manage this risk, the Company may hedge a portion of its foreign currency exposures related to outstanding monetary assets and liabilities as well as forecasted revenues and expenses, using foreign currency exchange forward or option contracts. In general, the market risk related to these contracts is offset by corresponding gains and losses on the hedged transactions. The Company does not enter into derivative contracts for trading or speculative purposes. Cash Flow Hedges The Company at times enters into foreign currency derivative contracts designated as cash flow hedges to hedge certain forecasted revenue and expense transactions denominated in currencies other than the U.S. dollar. The Company’s cash flow hedges consist of forward contracts with maturities of 12 months or less. The Company periodically assesses the effectiveness of its cash flow hedges. Effectiveness represents a derivative instrument’s ability to generate offsetting changes in cash flows related to the hedged risk. The Company records the gains or losses, net of tax, related to its cash flow hedges as a component of accumulated other comprehensive income (loss) in stockholders’ equity and subsequently reclassifies the gains or losses into revenue when the underlying hedged transactions are recognized. If the hedged transaction becomes probable of not occurring, the corresponding amounts in accumulated other comprehensive income (loss) would immediately be reclassified to other income (expense), net. Cash flows related to the Company’s cash flow hedging program are recognized as cash flows from operating activities in its statements of cash flows. The Company had no outstanding contracts that were designated as cash flow hedges for forecasted revenue as of April 4, 2020 and December 31, 2019, respectively. Balance Sheet Hedges The Company at times enters into foreign exchange contracts to hedge certain monetary assets and liabilities that are denominated in currencies other than the functional currency of its subsidiaries. These foreign exchange contracts are carried at fair value, do not qualify for hedge accounting treatment, and are not designated as hedging instruments. Changes in the value of the foreign exchange contracts are recognized in other income (expense), net, and offset the foreign currency gain or loss on the underlying net monetary assets or liabilities. The Company had outstanding balance sheet hedges with a total notional amount of $26 thousand and $83.4 million as of April 4, 2020 and December 31, 2019, respectively. Fair Value of Foreign Currency Derivatives The foreign currency derivative contracts that were not settled at the end of the period are recorded at fair value, on a gross basis, in the condensed consolidated balance sheets. The following table presents the fair value of the Company’s foreign currency derivative contracts as of the periods presented (in thousands): April 4, 2020 December 31, 2019 Balance Sheet Location Fair Value Derivative Fair Value Derivative Liabilities Fair Value Derivative Fair Value Derivative Liabilities Hedges not designated Prepaid expenses and other current assets $ 36 $ — $ — $ — Hedges not designated Accrued liabilities — 10 — 748 Total fair value of derivative instruments $ 36 $ 10 $ — $ 748 Financial Statement Effect of Foreign Currency Derivative Contracts The following table presents the pre-tax impact of the Company’s foreign currency derivative contracts on the condensed consolidated statements of operations for the periods presented (in thousands): Three Months Ended Income Statement Location April 4, 2020 March 30, 2019 Foreign exchange balance sheet hedges: Gain (loss) recognized in income Other income, net $ 3,077 $ (359) As of April 4, 2020, there were no net derivative gains related to the Company’s cash flow hedges to be reclassified from other comprehensive income (“OCI”) into revenue within the next 12 months. Offsetting of Foreign Currency Derivative Contracts The Company presents its derivative assets and derivative liabilities at gross fair values in the condensed consolidated balance sheets. The Company generally enters into master netting arrangements, which mitigate credit risk by permitting net settlement of transactions with the same counterparty. The Company is not required to pledge, and is not entitled to receive, cash collateral related to these derivative instruments. The following tables set forth the available offsetting of net derivative assets under the master netting arrangements as of April 4, 2020 and December 31, 2019 (in thousands): April 4, 2020 Gross Amounts Offset in the Condensed Consolidated Balance Sheets Gross Amounts Not Offset in Condensed Consolidated Balance Sheets Gross Amounts Recognized Gross Amounts Offset Net Amounts Presented Financial Instruments Cash Collateral Received Net Amount Foreign exchange contracts assets $ 36 $ — $ 36 $ 10 $ — $ 26 Foreign exchange contracts liabilities 10 — 10 10 — — December 31, 2019 Gross Amounts Offset in the Condensed Consolidated Balance Sheets Gross Amounts Not Offset in Condensed Consolidated Balance Sheets Gross Amounts Recognized Gross Amounts Offset Net Amounts Presented Financial Instruments Cash Collateral Received Net Amount Foreign exchange contracts assets $ — $ — $ — $ — $ — $ — Foreign exchange contracts liabilities 748 — 748 — — 748 |
Balance Sheet Components
Balance Sheet Components | 3 Months Ended |
Apr. 04, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Balance Sheet Components | Balance Sheet Components Deferred Revenue Deferred revenue relates to performance obligations for which payments have been received by the customer prior to revenue recognition. Deferred revenue primarily consists of deferred software, or amounts allocated to mobile dashboard and on-line apps and unspecified upgrade rights. Deferred revenue also includes deferred subscription-based services. The deferred software and deferred subscription-based service performance obligations are anticipated to be recognized over the useful life or service periods of twelve to seventeen months. Changes in the total short-term and long-term deferred revenue balances were as follows (in thousands): Three Months Ended April 4, 2020 Beginning balances $ 40,842 Deferral of revenue 12,098 Recognition of deferred revenue (14,298) Ending balances $ 38,642 Revenue Returns Reserve Revenue returns reserve activities were as follows (in thousands): Three Months Ended April 4, 2020 March 30, 2019 Beginning balances $ 101,326 $ 104,001 Increases (1) 33,104 31,259 Returns taken (57,189) (59,262) Ending balances $ 77,241 $ 75,998 (1) Increases in the revenue returns reserve include provisions for open box returns and stock rotations. Inventories Inventories consisted of the following (in thousands) April 4, 2020 December 31, 2019 Components $ 1,461 $ 5,397 Finished goods 104,284 131,355 Total inventories $ 105,745 $ 136,752 Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following (in thousands): April 4, 2020 December 31, 2019 Tariff receivable $ 28,854 $ — Prepaid expenses 10,616 11,219 Prepaid marketing 2,796 3,347 Derivative asset 36 — Other 14,392 14,090 Total prepaid expenses and other current assets $ 56,694 $ 28,656 Property and Equipment, Net Property and equipment, net, consisted of the following (in thousands): April 4, 2020 December 31, 2019 Tooling and manufacturing equipment $ 105,753 $ 103,177 Furniture and office equipment 20,249 19,922 Purchased and internally-developed software 28,401 27,424 Leasehold improvements 60,087 59,926 Total property and equipment 214,490 210,449 Less: Accumulated depreciation and amortization (138,272) (127,693) Property and equipment, net $ 76,218 $ 82,756 Total depreciation expense related to property and equipment, net was $10.6 million and $13.4 million for the three months ended April 4, 2020 and March 30, 2019, respectively. Goodwill and Intangible Assets, Net The carrying amount of goodwill was $64.8 million as of April 4, 2020 and December 31, 2019. The carrying amounts of the intangible assets as of April 4, 2020 and December 31, 2019 were as follows (in thousands): April 4, 2020 December 31, 2019 Gross Accumulated Amortization Net Gross Accumulated Amortization Net Developed technology $ 37,813 $ (26,450) $ 11,363 $ 37,813 $ (23,910) $ 13,903 Customer relationships 3,918 (2,564) 1,354 3,790 (991) 2,799 Trademarks and other 1,150 (1,150) — 1,278 (1,234) 44 Total intangible assets, net $ 42,881 $ (30,164) $ 12,717 $ 42,881 $ (26,135) $ 16,746 Total amortization expense related to intangible assets was $4.0 million and $2.1 million for the three months ended April 4, 2020 and March 30, 2019, respectively. The estimated future amortization expense of acquired finite-lived intangible assets to be charged to cost of revenue and operating expenses after April 4, 2020 is as follows (in thousands): Cost of Revenue Operating Expenses Total Remaining 2020 $ 4,199 $ 1,620 $ 5,819 2021 5,037 56 5,093 2022 1,488 56 1,544 2023 — 56 56 2024 — 56 56 Thereafter — 149 149 Total finite-lived intangible assets, net $ 10,724 $ 1,993 $ 12,717 Accrued Liabilities Accrued liabilities consisted of the following (in thousands): April 4, 2020 December 31, 2019 Accrued sales incentives $ 117,428 $ 156,839 Sales returns reserve 77,241 101,326 Product warranty 48,851 52,403 Employee-related liabilities 23,282 37,355 Accrued manufacturing expense and freight 18,972 35,112 Accrued research and development 18,470 19,232 Accrued co-op advertising and marketing development funds 17,880 40,689 Accrued legal settlements and fees 14,041 8,854 Accrued sales and marketing 11,640 26,781 Sales taxes and VAT payable 10,218 19,603 Inventory received but not billed 5,493 1,669 Finance lease liabilities 1,384 1,384 Derivative liabilities 10 748 Other 11,620 11,535 Accrued liabilities $ 376,530 $ 513,530 Product warranty reserve activities were as follows (in thousands): Three Months Ended April 4, 2020 March 30, 2019 Beginning balances $ 52,403 $ 45,605 Charged to cost of revenue 6,974 8,238 Changes related to pre-existing warranties 1,027 4,747 Settlement of claims (11,553) (10,556) Ending balances $ 48,851 $ 48,034 |
Leases
Leases | 3 Months Ended |
Apr. 04, 2020 | |
Leases [Abstract] | |
Leases | LeasesThe Company leases its principal facilities located in San Francisco, California. The Company also leases office space in various locations. Both the Company’s principal facilities and leases in various locations have expiration dates between 2020 and 2024. The lease agreements often include leasehold improvement incentives, escalating lease payments, renewal provisions and other provisions which require the Company to pay taxes, insurance, maintenance costs or defined rent increases. The Company’s leases are primarily accounted for as operating leases. Operating lease ROU assets and short-term and long-term operating lease liabilities are included on the face of the condensed consolidated balance sheet. Finance lease ROU assets are presented within other assets, and finance lease liabilities are presented within accrued liabilities. The Company has no leases that have not yet commenced as of April 4, 2020. Total lease cost consists of the following (in thousands): Three Months Ended April 4, 2020 March 30, 2019 Finance lease costs: Amortization of ROU assets $ 169 $ 573 Interest on lease liabilities — — Operating lease costs (1) 6,643 7,574 Variable lease costs 891 1,315 Sublease income (598) (1,966) Total lease costs $ 7,105 $ 7,496 (1) includes short-term leases, which are immaterial. Supplemental cash flow information related to leases was as follows (in thousands): Three Months Ended April 4, 2020 March 30, 2019 Cash paid for amounts included in the measurement of lease liabilities: Financing cash flows from finance leases $ — $ 597 Operating cash flows from finance leases — — Operating cash flows from operating leases 6,539 5,512 ROU assets obtained in exchange for lease obligations: Finance lease liabilities $ 1,384 $ — Operating lease liabilities 4,497 288 Supplemental balance sheet information related to leases was as follows (in thousands): April 4, 2020 December 31, 2019 Finance leases: Other assets $ 1,215 $ 1,384 Accrued liabilities $ 1,384 $ 1,384 Operating leases: Operating lease ROU assets $ 70,137 $ 70,225 Operating lease liabilities $ 21,832 $ 23,511 Long-term operating lease liabilities 66,234 67,902 Total operating lease liabilities $ 88,066 $ 91,413 Weighted-average lease terms and discount rates are as follows: April 4, 2020 December 31, 2019 Weighted-average remaining lease terms (in years): Finance leases 0.3 0.5 Operating leases 4.0 4.2 Weighted-average discount rates: Finance leases — % — % Operating leases 5.5 % 5.5 % Maturities of lease liabilities as of April 4, 2020 were as follow (in thousands): Finance Leases Operating Leases Remaining 2020 $ 1,384 $ 25,262 2021 — 24,894 2022 — 24,390 2023 — 21,769 2024 — 9,525 Thereafter — — Total minimum lease payments $ 1,384 $ 105,840 Less: amount representing interest — (17,774) Total lease liabilities $ 1,384 $ 88,066 |
Leases | LeasesThe Company leases its principal facilities located in San Francisco, California. The Company also leases office space in various locations. Both the Company’s principal facilities and leases in various locations have expiration dates between 2020 and 2024. The lease agreements often include leasehold improvement incentives, escalating lease payments, renewal provisions and other provisions which require the Company to pay taxes, insurance, maintenance costs or defined rent increases. The Company’s leases are primarily accounted for as operating leases. Operating lease ROU assets and short-term and long-term operating lease liabilities are included on the face of the condensed consolidated balance sheet. Finance lease ROU assets are presented within other assets, and finance lease liabilities are presented within accrued liabilities. The Company has no leases that have not yet commenced as of April 4, 2020. Total lease cost consists of the following (in thousands): Three Months Ended April 4, 2020 March 30, 2019 Finance lease costs: Amortization of ROU assets $ 169 $ 573 Interest on lease liabilities — — Operating lease costs (1) 6,643 7,574 Variable lease costs 891 1,315 Sublease income (598) (1,966) Total lease costs $ 7,105 $ 7,496 (1) includes short-term leases, which are immaterial. Supplemental cash flow information related to leases was as follows (in thousands): Three Months Ended April 4, 2020 March 30, 2019 Cash paid for amounts included in the measurement of lease liabilities: Financing cash flows from finance leases $ — $ 597 Operating cash flows from finance leases — — Operating cash flows from operating leases 6,539 5,512 ROU assets obtained in exchange for lease obligations: Finance lease liabilities $ 1,384 $ — Operating lease liabilities 4,497 288 Supplemental balance sheet information related to leases was as follows (in thousands): April 4, 2020 December 31, 2019 Finance leases: Other assets $ 1,215 $ 1,384 Accrued liabilities $ 1,384 $ 1,384 Operating leases: Operating lease ROU assets $ 70,137 $ 70,225 Operating lease liabilities $ 21,832 $ 23,511 Long-term operating lease liabilities 66,234 67,902 Total operating lease liabilities $ 88,066 $ 91,413 Weighted-average lease terms and discount rates are as follows: April 4, 2020 December 31, 2019 Weighted-average remaining lease terms (in years): Finance leases 0.3 0.5 Operating leases 4.0 4.2 Weighted-average discount rates: Finance leases — % — % Operating leases 5.5 % 5.5 % Maturities of lease liabilities as of April 4, 2020 were as follow (in thousands): Finance Leases Operating Leases Remaining 2020 $ 1,384 $ 25,262 2021 — 24,894 2022 — 24,390 2023 — 21,769 2024 — 9,525 Thereafter — — Total minimum lease payments $ 1,384 $ 105,840 Less: amount representing interest — (17,774) Total lease liabilities $ 1,384 $ 88,066 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Apr. 04, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Purchase Commitments The aggregate amount of open purchase orders as of April 4, 2020 was approximately $443.4 million. Of the aggregate amount, $171.3 million related to the Company’s migration to a third-party hosting provider, of which $15.2 million was accrued for as of April 4, 2020. The Company cannot determine the aggregate amount of such purchase orders that represent contractual obligations because purchase orders may represent authorizations to purchase rather than binding agreements. The Company’s purchase orders are based on its current needs and are fulfilled by its suppliers, contract manufacturers, and logistics providers within short periods of time. During the normal course of business, the Company and its contract manufacturers procure components based upon a forecasted production plan. If the Company cancels all or part of the orders, or materially reduces forecasted orders, it may be liable to its suppliers and contract manufacturers for the cost of the excess components purchased by its contract manufacturers. As of April 4, 2020, $12.9 million was accrued for such liabilities to contract manufacturers. Letters of Credit As of April 4, 2020 and December 31, 2019, the Company had outstanding letters of credit of $24.8 million and $24.6 million, respectively, issued to cover the security deposit on the lease of its office headquarters in San Francisco, California, and other facility leases. Legal Proceedings Jawbone. Aliphcom, Inc. d/b/a Jawbone (“Jawbone”) and the Company each initiated civil lawsuits against each other in 2015. These included a complaint filed by Jawbone in California state court alleging the misappropriation of certain trade secrets by six former Jawbone employees who had joined Fitbit and who were also named as defendants. On December 8, 2017, the parties announced the global settlement of all of the outstanding civil litigation on confidential terms, and all of the cases were dismissed with prejudice. In February 2017 and February 2018, the Company received subpoenas from the U.S. Attorney’s Office for the Northern District of California requesting documents regarding certain of the Company’s confidential business information that appeared to be related to Jawbone’s allegations of trade secret misappropriation, and the Company produced documents in response. On June 14, 2018, the six former Jawbone employees who were named as individual defendants in the state trade secret case were charged in a federal indictment with being in possession of certain Jawbone trade secrets. Charges were dismissed against one individual in December 2019. On February 3, 2020, a jury returned a not-guilty verdict on all counts in favor of the first individual to be tried. On February 14, 2020, the government dropped all charges against the remaining individuals. Sleep Tracking . On May 8, 2015, a purported class action lawsuit was filed against the Company in the U.S. District Court for the Northern District of California, alleging that the sleep tracking function available in certain trackers does not perform as advertised. Plaintiffs sought class certification, restitution, unspecified compensatory and punitive damages, and reasonable costs and expenses including attorneys’ fees. On January 31, 2017, plaintiffs filed a motion for class certification. Plaintiffs’ motion for class certification was granted on November 20, 2017. On April 20, 2017, the Company filed a motion for summary judgment, which the court denied on December 8, 2017. The parties subsequently agreed to a settlement, and on August 1, 2018, the plaintiffs filed a motion for preliminary approval of the class action settlement. At the hearing on September 13, 2018, the court denied preliminary settlement approval without prejudice and ordered revised settlement papers be filed. On November 29, 2018, the court granted preliminary settlement approval and the final approval hearing was scheduled for August 1, 2019. On May 10, 2019, the plaintiffs filed a request for attorneys’ fees and expenses. The Company opposed that request. At the hearing on August 1, 2019, the court asked the parties to submit a re-notice plan in order to achieve a higher claims rate. On the fee request, the court offered the plaintiffs alternative conditions, and on August 18, 2019, the plaintiffs filed their fee election, opting for a 90% reduction of challenged fees and expenses. The re-notice plan was approved on October 16, 2019, and the re-notice resulted in approximately 80,000 more claims, for a total of approximately 141,000 claims. The court granted final approval of the settlement on February 6, 2020, in an amount that is not material to the Company. On March 20, 2020, the Court ruled on plaintiffs’ request for attorneys’ fees and costs and awarded $6.9 million in attorneys’ fees and $0.2 million in costs. On April 20, 2020, the Company filed a notice of appeal. Securities Litigation I. In 2016, putative class actions were filed in federal and California state court against the Company and other defendants alleging violations of the federal securities laws based on alleged materially false and misleading statements about the Company’s PurePulse® heart rate tracking technology. The parties agreed to settle the lawsuits for $33.3 million, which the Company accrued for as of December 31, 2017. Following court approval of the settlement, the federal and state class action cases were dismissed with prejudice in May 2018. During 2016 and 2017, seven derivative lawsuits were filed in various federal courts and in the Delaware Court of Chancery naming the Company as nominal plaintiff and certain of the Company’s officers and directors as defendants. The federal cases are all stayed. The three cases filed in the Delaware Court of Chancery were consolidated and a second amended complaint was filed in which plaintiffs allege breach of fiduciary duty and insider trading against certain defendants who sold shares in the Company’s initial public offering and/or a secondary offering. On April 26, 2017, the Company filed a motion to dismiss the Delaware cases for failure to state a claim. On December 14, 2018, the court denied the motion to dismiss. The Company filed a motion for interlocutory appeal, which was denied on January 14, 2019. The Company then filed a Notice of Appeal in the Delaware Supreme Court, which was denied on January 30, 2019. On February 10, 2020, the parties agreed to a tentative settlement of all of the derivative lawsuits, which is subject to approval by the court. Securities Litigation II. On November 1, 2018, a putative securities class action was filed in the U.S. District Court for the Northern District of California naming the Company and certain of its officers as defendants. The complaint alleges violations of Sections 10(b) and 20 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) arising out of alleged materially false and misleading statements about the Company’s guidance for the fourth quarter of 2016 and full fiscal year 2016 that was provided during the third and fourth quarters of 2016. On November 15, 2018, a second putative securities class action was filed in the same court alleging similar claims against the same defendants. On April 25, 2019, the two actions were consolidated, and a consolidated amended class action complaint was filed on June 24, 2019. The consolidated complaint also alleges violations of Sections 10(b) and 20 of the Exchange Act against the Company and certain officers relating to the Company’s 2016 guidance, on behalf of a putative class of stockholders who purchased Fitbit stock from August 2, 2016 through January 30, 2017. Plaintiffs seek class certification, unspecified compensatory damages, and reasonable costs and expenses including attorneys’ fees. On August 23, 2019, the Company filed a motion to dismiss. On March 23, 2020, the court granted the motion to dismiss with leave to amend. On April 28, 2020, the Court entered judgment after plaintiffs indicated that they did not intend to file an amended complaint. Koninklijke Philips and Philips North America Patent Litigation. On December 4, 2017, Koninklijke Philips N.V. filed suit in Germany in the Regional Court of Mannheim alleging infringement of its European patent (“EP”) by certain of Fitbit’s products of the German part of EP 1 247 229 B1 (“EP229”). In October 2018, the case was stayed pending an appeal of a January 2014 decision by the European Patent Office (“EPO”) to revoke EP229. On May 31, 2019, the EPO Board of Appeal dismissed the appeal, affirming the decision to revoke EP229. Koninklijke Philips appealed the EPO Board of Appeal decision on July 30, 2019. On May 30, 2018, Koninklijke Philips filed a second patent infringement suit in the Regional Court of Mannheim alleging infringement by certain of Fitbit’s products of the German part of EP 1 076 806 B1 (“EP806”). In October 2018, the case was stayed pending the decision in a parallel nullity proceeding challenging the validity of EP806. On July 22, 2019, Philips North America LLC filed a patent infringement suit in U.S. District Court for the District of Massachusetts alleging infringement of U.S. Patent Nos. 6,013,007, 7,088,233, 8,277,377, and 6,976,958 by certain of Fitbit’s products. On November 13, 2019, the Company filed a motion to dismiss. On November 27, 2019, Philips filed an amended complaint. On December 10, 2019, the Company filed a motion to dismiss the amended complaint. No hearing date has been scheduled. On December 10, 2019, Philips North America and Koninklijke Philips filed a complaint for patent infringement in the International Trade Commission (“ITC”) naming Fitbit, Garmin International, Inc., Garmin USA, Inc., Garmin Ltd., d/b/a Garmin Switzerland GmbH, Ingram Micro Inc., Maintek Computer (Suzhou) Co., Ltd., and Inventec Appliances (Pudong) as proposed respondents. The complaint asserts that all proposed respondents infringe U.S. Patent Nos. 7,845,228, 9,820,698, and 9,717,464(the “ITC Patents”), and requests that the ITC institute an investigation and thereafter issue a limited exclusion order and cease and desist orders. On January 10, 2020, the ITC instituted the investigation, titled “In the Matter of Certain Wearable Monitoring Devices, Systems, and Components Thereof.” On January 21, 2020, the administrative law judge set key dates for the case, including an evidentiary hearing for October 5-9, 2020, the initial determination by January 14, 2021, and the target date for completion of the investigation as May 14, 2021. On April 2, 2020, the Company filed a complaint for declaratory judgment against Koninklijke Philips in the U.S. District Court for the Northern District of California requesting that the Court declare that Fitbit’s products do not infringe the ITC Patents. On March 20, 2020, Koninklijke Philips filed a patent infringement lawsuit in Germany in the District Court of Dusseldorf alleging infringement by certain of Fitbit’s products of the German part of EP 2 224 366 B1. The Company has not yet been served. On April 8, 2020, the Company filed a lawsuit against Philips North America and Koninklijke Philips in the U.S. District Court for the Northern District of California alleging infringement of U.S. Patent Nos. 7,145,462 and 8,868,377 by certain of Philips’ products. The Company believes that the plaintiffs’ allegations are without merit and intends to vigorously defend against the claims. Because the Company is in the early stages of these litigation matters, the Company is unable to estimate a reasonably possible loss or range of loss, if any, that may result from these matters. Wynit. In September 2017, Wynit Distribution LLC (“Wynit”) filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. Wynit was previously the Company’s largest customer. The Company ceased to recognize revenue from Wynit, which totaled $8.1 million during the third quarter of 2017. Additionally, the Company recorded a charge of $35.8 million during the third quarter of 2017 comprised of cost of revenue of $5.5 million associated with shipments to Wynit in the third quarter of 2017 and bad debt expense of $30.3 million associated with all of Wynit’s outstanding accounts receivables. The Company maintains credit insurance that covers a portion of the exposure related to its customer receivables. The Company recorded an insurance receivable based on an analysis of its insurance policies, including their exclusions, an assessment of the nature of the claim, and information from its insurance carrier. As of September 30, 2017, the Company had recorded an insurance receivable of $26.8 million, included in prepaid expenses and other current assets, associated with the amount it had concluded was probable related to the claim. The $26.8 million insurance receivable allowed the Company to recover $22.7 million of bad debt expense and $4.1 million of cost of revenue, resulting in a net charge of $9.0 million in the consolidated statement of operations comprised of net bad debt expense of $7.6 million and net cost of revenue of $1.4 million. The Company received $21.4 million of the insurance receivable during the fourth quarter of 2017 and the remaining $5.4 million in the first quarter of 2018. During 2018, the Company released $12.4 million in product return and rebate reserves related to Wynit, as it believed the possibility of future claims associated with these reserves was remote. This reserve release resulted in a $12.4 million increase in revenue during the year ended December 31, 2018. On September 4, 2019, plaintiff Nauni Manty, as the chapter 7 trustee of the bankruptcy estate of Wynit Distribution, LLC, et al, filed a complaint in U.S. Bankruptcy Court in the District of Minnesota. The complaint sought: (1) avoidance and recovery under 11 U.S.C. §§ 547, 550, and 551 against Fitbit; and (2) avoidance and preservation under 11 U.S.C. §§ 547, 551 of a second lien granted to Fitbit on substantially all the debtors’ assets. On March 30, 2020, the bankruptcy court approved a settlement of the trustee’s claims in an amount that is not material to the Company, and the case has been dismissed. Other. The Company is and, from time to time, may in the future become, involved in other legal proceedings in the ordinary course of business. The Company currently believes that the outcome of any of these existing legal proceedings, including the aforementioned cases, either individually or in the aggregate, will not have a material impact on the operating results, financial condition or cash flows of the Company. With respect to existing legal proceedings, the Company has either determined that the existence of a material loss is not reasonably possible or that it is unable to estimate a reasonably possible loss or range of loss. The Company may incur substantial legal fees, which are expensed as incurred, in defending against these legal proceedings. Indemnification |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Apr. 04, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Equity Incentive Plans In May 2015, the Company’s board of directors and stockholders adopted and approved the 2015 Equity Incentive Plan (the “2015 Plan”). The 2015 Plan became effective on June 16, 2015 and serves as the successor to the Amended and Restated 2007 Stock Plan (the “2007 Plan”). The Company ceased granting awards under the 2007 Plan upon the effectiveness of the 2015 Plan. However, any outstanding stock options and restricted stock units (“RSUs”) granted under the 2007 Plan remain subject to the terms of the 2007 Plan. As of April 4, 2020, 30.4 million shares of Class A common stock were reserved and available for future issuance under the 2015 Plan. Stock Options Stock option activity under the equity incentive plans was as follows (in thousands, except per share amounts): Stock Options Outstanding Number of Weighted– Aggregate Intrinsic Value (1) Balance—December 31, 2019 12,871 $ 3.51 Granted — $ — Exercised (220) $ 2.08 Forfeited or canceled (6) $ 7.37 Balance—April 4, 2020 12,645 $ 3.53 $ 40,349 Stock options vested and expected to vest—April 4, 2020 12,645 $ 3.53 $ 40,349 Stock options exercisable—April 4, 2020 12,645 $ 3.53 $ 40,349 (1) The aggregate intrinsic values of stock options outstanding, exercisable, vested and expected to vest as of April 4, 2020 were calculated as the difference between the exercise price of the stock options and the fair value of the Class A common stock of $6.40 as of April 4, 2020. Restricted Stock Units RSU activity under the equity incentive plans was as follows (in thousands, except per share amounts): RSUs Weighted- Unvested balance—December 31, 2019 18,932 $ 5.68 Granted 8,799 $ 6.41 Vested (2,609) $ 6.48 Forfeited or canceled (399) $ 5.72 Unvested balance—April 4, 2020 24,723 $ 5.86 Stock-Based Compensation Expense Total stock-based compensation expense recognized was as follows (in thousands): Three Months Ended April 4, 2020 March 30, 2019 Cost of revenue $ 2,179 $ 1,430 Research and development 11,119 11,988 Sales and marketing 2,775 3,138 General and administrative 3,654 3,988 Total stock-based compensation expense $ 19,727 $ 20,544 As of April 4, 2020, the total unrecognized stock-based compensation expense related to unvested stock options and RSUs was $130.5 million, which the Company expects to recognize over an estimated weighted average period of 2.1 years. |
Income Taxes
Income Taxes | 3 Months Ended |
Apr. 04, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company is subject to income tax in the United States as well as other tax jurisdictions in which it conducts business. Earnings from non-U.S. activities are subject to local country income tax. For the three months ended April 4, 2020, the Company recorded a benefit for income taxes of $144.7 million, for an effective tax rate of 116.3%. The effective tax rate for the three months ended April 4, 2020 was different than the statutory federal tax rate primarily due to the impact of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which enables the Company to carry back current year, 2018 and 2019 net operating losses into prior taxable periods. As a result, the Company released valuation allowance on deferred tax assets related to those net operating losses that can be carried back and benefited in the prior years at the U.S. tax rate of 35%. For the three months ended March 30, 2019, the Company recorded an expense for income taxes of $1.3 million, for an effective tax rate of (1.7)%. The effective tax rate for the three months ended March 30, 2019 was different than the statutory federal tax rate primarily due to the impact of a full valuation allowance on the Company’s U.S. and certain of its foreign deferred tax assets, the mix of income/ losses between the Company’s foreign jurisdictions, and pretax losses in jurisdictions for which no tax benefit will be recognized. On March 27, 2020, the CARES Act was signed into law. The CARES Act includes, among other items, provisions relating to refundable payroll tax credits, deferment of the employer portion of certain payroll taxes, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. The CARES Act allows losses incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding tax years and to offset 100% of regular taxable income in such years. Accounting for income taxes for interim periods generally requires the provision for income taxes to be determined by applying an estimate of the annual effective tax rate for the full fiscal year to income or loss before income taxes, excluding unusual or infrequently occurring discrete items (“Ordinary” income), for the reporting period. The Company anticipates that some of the net operating losses generated in 2020 as well all of the net operating losses carried forward from 2018 and 2019, can be carried back to prior taxable years, and recognizes the benefit in its effective tax rate. The Company recorded the anticipated benefit of the net operating loss carryback as a discrete tax benefit during the quarter. The Company will continue to evaluate the potential impact of the CARES Act. The U.S. Treasury Department has adopted regulations requiring related parties in an intercompany cost-sharing arrangement to share expenses related to share-based compensation in proportion to the economic activity of the related parties. On June 7, 2019, the U.S. Court of Appeals for the Ninth Circuit issued an opinion in Altera Corp. v. Commissioner upholding these regulations, which reversed the prior decision of the U.S. Tax Court. On November 12, 2019, the Ninth Circuit Court of Appeals denied the plaintiff’s request for an en banc rehearing. The plaintiff filed a petition for a writ of certiorari in the U.S. Supreme Court on February 10, 2020. The Company will continue to monitor developments in this matter. The Company accounts for deferred taxes under ASC Topic 740, “Income Taxes,” which involves weighing positive and negative evidence concerning the realizability of the Company’s deferred tax assets in each jurisdiction. In evaluating its ability to realize the net deferred tax assets, the Company considered all available positive and negative evidence, including its past operating results and the forecast of future market growth, forecasted earnings, future taxable income, and prudent and feasible tax planning strategies. As of April 4, 2020, the Company maintains a valuation allowance against all of its U.S. deferred tax assets and against certain of its foreign deferred tax assets. The Company will continue to assess the realizability of its deferred tax assets in each of the applicable jurisdictions going forward. |
Net Income (Loss) per Share
Net Income (Loss) per Share | 3 Months Ended |
Apr. 04, 2020 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) per Share | Net Income (Loss) per Share The following table sets forth the computation of the Company’s basic and diluted net income (loss) per share (in thousands, except per share amounts): Three Months Ended April 4, 2020 March 30, 2019 Numerator: Net income (loss) $ 20,294 $ (79,465) Denominator: Weighted-average shares of common stock—basic for Class A and Class B 265,661 253,124 Effect of dilutive securities 11,285 — Weighted-average shares of common stock—diluted for Class A and Class B 276,946 253,124 Net income (loss) per share: Basic $ 0.08 $ (0.31) Diluted $ 0.07 $ (0.31) The following potentially dilutive common shares were excluded from the computation of diluted net income (loss) per share for the periods presented because including them would have been anti-dilutive (in thousands): Three Months Ended April 4, 2020 March 30, 2019 Stock options to purchase common stock 12,645 15,774 RSUs 24,723 24,002 Warrant 230 230 Diluted impact of Employee Stock Purchase Plan — 1,287 Total 37,598 41,293 |
Significant Customer Informatio
Significant Customer Information and Other Information | 3 Months Ended |
Apr. 04, 2020 | |
Risks and Uncertainties [Abstract] | |
Significant Customer Information and Other Information | Significant Customer Information and Other Information Retailer and Distributor Concentration Retailers and distributors that accounted for equal to or greater than 10% of total revenue for the three months ended April 4, 2020 and March 30, 2019 were as follows: Three Months Ended April 4, 2020 March 30, 2019 C 12 % * * Represents less than 10%. Retailers and distributors that accounted for equal to or greater than 10% of accounts receivable at April 4, 2020 and December 31, 2019 were as follows: April 4, 2020 December 31, 2019 H 11 % * C 10 18 % D * 11 E * 10 * Represents less than 10%. Geographic and Other Information Revenue by geographic region, based on ship-to destinations, was as follows (in thousands): Three Months Ended April 4, 2020 March 30, 2019 United States $ 102,039 $ 135,091 Americas excluding United States 10,743 15,327 Europe, Middle East, and Africa 57,007 87,098 Asia Pacific 18,369 34,374 Total $ 188,158 $ 271,890 As of April 4, 2020 and December 31, 2019, long-lived assets, which represent property and equipment, located outside the United States were $24.0 million and $27.9 million, respectively. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Apr. 04, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Apr. 04, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | Basis of Presentation and Summary of Significant Accounting Policies The accompanying condensed consolidated financial statements of Fitbit, Inc. (the “Company”) are unaudited. The condensed consolidated balance sheet at December 31, 2019 has been derived from the audited financial statements of the Company. The accompanying condensed financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information, and in management’s opinion, includes all adjustments, consisting of only normal recurring adjustments, necessary for the fair statement of the Company’s financial position, its results of operations, and cash flows for the interim periods presented. The results of operations for the three months ended April 4, 2020 are not necessarily indicative of the results to be expected for the full fiscal year or any other period. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the Securities and Exchange Commission (“SEC”) on February 27, 2020. The Company’s fiscal year ends on December 31 of each year. The Company is on a 4-4-5 week quarterly calendar. There were 95 and 89 days in each of the three months ended April 4, 2020 and March 30, 2019, respectively. |
Principles of Consolidation | The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated. |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the condensed consolidated financial statements and accompanying notes. The primary estimates and assumptions made by management are related to revenue recognition, reserves for sales returns and incentives, reserves for warranty, valuation of stock-based awards, fair value of derivative assets and liabilities, allowance for doubtful accounts, inventory valuation, fair value of goodwill and acquired tangible and intangible assets and liabilities assumed during acquisitions, the recoverability of intangible assets and their useful lives, contingencies, and income taxes. Actual results could differ from those estimates, and such differences may be material to the condensed consolidated financial statements. Google Acquisition On November 1, 2019, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Google LLC, a Delaware limited liability company (“Google”), and Magnoliophyta Inc., a Delaware corporation and wholly owned subsidiary of Google (the “Merger Sub”). Pursuant to the terms of, and subject to the conditions specified in, the Merger Agreement, the Merger Sub will merge with and into the Company, and the Company will become a wholly owned subsidiary of Google (the “Merger”). If the Merger is completed, Google will acquire all the shares of the Company’s Class A common stock and Class B common stock (together, the “Shares”) for $7.35 per share in cash, without interest (the “Merger Consideration”). All Shares underlying vested stock options and vested stock-based awards will be converted into the right to receive the Merger Consideration (or, in the case of stock options, the difference between the Merger Consideration and the applicable per share exercise price), less any applicable tax withholdings. Unvested stock options and stock-based awards will generally be converted into cash-based awards with an equivalent value based on the Merger Consideration and vesting schedule. The Merger is expected to close in 2020, subject to customary closing conditions, including approval by the expiration or termination of any waiting periods or receipt of any requisite consents under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, approval under the antitrust laws of the European Union and other jurisdictions agreed by the parties, and satisfaction of other closing conditions. The Merger was approved by the Company’s stockholders on January 3, 2020. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Accounting Pronouncements Not Yet Adopted In December 2019, the Financial Accounting Standards Board (the “FASB”) issued ASU 2019-12, Simplifying the Accounting for Income Taxes. This guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the impact this guidance may have on its consolidated financial statements and related disclosures. Accounting Pronouncements Recently Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments–Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 provides for a new impairment model which requires measurement and recognition of expected credit losses for most financial assets and certain other instruments, including but not limited to accounts receivable and available-for-sale debt securities. In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments–Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. This ASU clarifies and corrects guidance related to Topic 326, Topic 815, and Topic 825. In May 2019, the FASB issued ASU 2019-05, Financial Instruments-Credit Losses (Topic 326): Targeted Transition Relief. This ASU provides an option to irrevocably elect to measure certain individual financial assets at fair value instead of amortized cost. The Company adopted Topic 326 utilizing the modified retrospective method. Prior periods were not retrospectively adjusted. The cumulative effect upon adoption on the opening accumulated deficit balance was zero. In January 2017, the FASB issued ASU 2017-04, Intangibles–Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 simplifies the subsequent measurement of goodwill by eliminating the second step of the goodwill impairment test. The second step measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Under ASU 2017-04, a company will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. ASU 2017-04 became effective for the Company on January 1, 2020. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework–Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 modifies the disclosure requirements on fair value measurements and became effective for the Company on January 1, 2020. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Apr. 04, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value of assets and liabilities measured on recurring basis | The following tables set forth the Company’s financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands): April 4, 2020 Level 1 Level 2 Level 3 Total Assets: Money market funds $ 89,166 $ — $ — $ 89,166 U.S. government agencies — 63,854 — 63,854 Corporate debt securities — 164,917 — 164,917 Derivative assets — 36 — 36 Total $ 89,166 $ 228,807 $ — $ 317,973 Liabilities: Contingent consideration $ — $ — $ 1,889 $ 1,889 Derivative liabilities — 10 — 10 Total $ — $ 10 $ 1,889 $ 1,899 December 31, 2019 Level 1 Level 2 Level 3 Total Assets: Money market funds $ 107,708 $ — $ — $ 107,708 U.S. government agencies — 77,364 — 77,364 Corporate debt securities — 207,137 — 207,137 Total $ 107,708 $ 284,501 $ — $ 392,209 Liabilities: Contingent consideration $ — $ — $ 1,889 $ 1,889 Derivative liabilities — 748 — 748 Total $ — $ 748 $ 1,889 $ 2,637 |
Financial Instruments (Tables)
Financial Instruments (Tables) | 3 Months Ended |
Apr. 04, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of cash, cash equivalents and marketable securities | The following table sets forth cash, cash equivalents, and marketable securities as of April 4, 2020 (in thousands): Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Cash and Cash Equivalents Marketable Securities Cash $ 109,759 $ — $ — $ 109,759 $ 109,759 $ — Money market funds 89,166 — — 89,166 89,166 — U.S. government agencies 63,643 211 — 63,854 24,643 39,211 Corporate debt securities 164,960 33 (76) 164,917 28,429 136,488 Total $ 427,528 $ 244 $ (76) $ 427,696 $ 251,997 $ 175,699 The following table sets forth cash, cash equivalents and marketable securities as of December 31, 2019 (in thousands): Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Cash and Cash Equivalents Marketable Securities Cash $ 126,293 $ — $ — $ 126,293 $ 126,293 $ — Money market funds 107,708 — — 107,708 107,708 — U.S. government agencies 77,316 48 — 77,364 30,375 46,989 Corporate debt securities 207,063 85 (11) 207,137 70,103 137,034 Total $ 518,380 $ 133 $ (11) $ 518,502 $ 334,479 $ 184,023 The following table classifies marketable securities by contractual maturities (in thousands): April 4, 2020 December 31, 2019 Due in one year $ 172,056 $ 173,827 Due in one to two years 3,643 10,196 Total $ 175,699 $ 184,023 |
Schedule of derivative instruments in statement of financial position, fair value | The following table presents the fair value of the Company’s foreign currency derivative contracts as of the periods presented (in thousands): April 4, 2020 December 31, 2019 Balance Sheet Location Fair Value Derivative Fair Value Derivative Liabilities Fair Value Derivative Fair Value Derivative Liabilities Hedges not designated Prepaid expenses and other current assets $ 36 $ — $ — $ — Hedges not designated Accrued liabilities — 10 — 748 Total fair value of derivative instruments $ 36 $ 10 $ — $ 748 |
Schedule of derivative contracts on consolidated statement of operations | The following table presents the pre-tax impact of the Company’s foreign currency derivative contracts on the condensed consolidated statements of operations for the periods presented (in thousands): Three Months Ended Income Statement Location April 4, 2020 March 30, 2019 Foreign exchange balance sheet hedges: Gain (loss) recognized in income Other income, net $ 3,077 $ (359) |
Schedule of offsetting of foreign currency derivative contracts | The following tables set forth the available offsetting of net derivative assets under the master netting arrangements as of April 4, 2020 and December 31, 2019 (in thousands): April 4, 2020 Gross Amounts Offset in the Condensed Consolidated Balance Sheets Gross Amounts Not Offset in Condensed Consolidated Balance Sheets Gross Amounts Recognized Gross Amounts Offset Net Amounts Presented Financial Instruments Cash Collateral Received Net Amount Foreign exchange contracts assets $ 36 $ — $ 36 $ 10 $ — $ 26 Foreign exchange contracts liabilities 10 — 10 10 — — December 31, 2019 Gross Amounts Offset in the Condensed Consolidated Balance Sheets Gross Amounts Not Offset in Condensed Consolidated Balance Sheets Gross Amounts Recognized Gross Amounts Offset Net Amounts Presented Financial Instruments Cash Collateral Received Net Amount Foreign exchange contracts assets $ — $ — $ — $ — $ — $ — Foreign exchange contracts liabilities 748 — 748 — — 748 |
Balance Sheet Components (Table
Balance Sheet Components (Tables) | 3 Months Ended |
Apr. 04, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Deferred Revenue Balances | Changes in the total short-term and long-term deferred revenue balances were as follows (in thousands): Three Months Ended April 4, 2020 Beginning balances $ 40,842 Deferral of revenue 12,098 Recognition of deferred revenue (14,298) Ending balances $ 38,642 |
Schedule of accounts receivable reserves | Revenue returns reserve activities were as follows (in thousands): Three Months Ended April 4, 2020 March 30, 2019 Beginning balances $ 101,326 $ 104,001 Increases (1) 33,104 31,259 Returns taken (57,189) (59,262) Ending balances $ 77,241 $ 75,998 |
Schedule of inventories | Inventories consisted of the following (in thousands) April 4, 2020 December 31, 2019 Components $ 1,461 $ 5,397 Finished goods 104,284 131,355 Total inventories $ 105,745 $ 136,752 |
Schedule of prepaid expenses and other current asset | Prepaid expenses and other current assets consisted of the following (in thousands): April 4, 2020 December 31, 2019 Tariff receivable $ 28,854 $ — Prepaid expenses 10,616 11,219 Prepaid marketing 2,796 3,347 Derivative asset 36 — Other 14,392 14,090 Total prepaid expenses and other current assets $ 56,694 $ 28,656 |
Schedule of property and equipment | Property and equipment, net, consisted of the following (in thousands): April 4, 2020 December 31, 2019 Tooling and manufacturing equipment $ 105,753 $ 103,177 Furniture and office equipment 20,249 19,922 Purchased and internally-developed software 28,401 27,424 Leasehold improvements 60,087 59,926 Total property and equipment 214,490 210,449 Less: Accumulated depreciation and amortization (138,272) (127,693) Property and equipment, net $ 76,218 $ 82,756 |
Schedule of intangible assets (excluding goodwill) | The carrying amounts of the intangible assets as of April 4, 2020 and December 31, 2019 were as follows (in thousands): April 4, 2020 December 31, 2019 Gross Accumulated Amortization Net Gross Accumulated Amortization Net Developed technology $ 37,813 $ (26,450) $ 11,363 $ 37,813 $ (23,910) $ 13,903 Customer relationships 3,918 (2,564) 1,354 3,790 (991) 2,799 Trademarks and other 1,150 (1,150) — 1,278 (1,234) 44 Total intangible assets, net $ 42,881 $ (30,164) $ 12,717 $ 42,881 $ (26,135) $ 16,746 |
Schedule of estimated future amortization expense | The estimated future amortization expense of acquired finite-lived intangible assets to be charged to cost of revenue and operating expenses after April 4, 2020 is as follows (in thousands): Cost of Revenue Operating Expenses Total Remaining 2020 $ 4,199 $ 1,620 $ 5,819 2021 5,037 56 5,093 2022 1,488 56 1,544 2023 — 56 56 2024 — 56 56 Thereafter — 149 149 Total finite-lived intangible assets, net $ 10,724 $ 1,993 $ 12,717 |
Schedule of accrued liabilities | Accrued liabilities consisted of the following (in thousands): April 4, 2020 December 31, 2019 Accrued sales incentives $ 117,428 $ 156,839 Sales returns reserve 77,241 101,326 Product warranty 48,851 52,403 Employee-related liabilities 23,282 37,355 Accrued manufacturing expense and freight 18,972 35,112 Accrued research and development 18,470 19,232 Accrued co-op advertising and marketing development funds 17,880 40,689 Accrued legal settlements and fees 14,041 8,854 Accrued sales and marketing 11,640 26,781 Sales taxes and VAT payable 10,218 19,603 Inventory received but not billed 5,493 1,669 Finance lease liabilities 1,384 1,384 Derivative liabilities 10 748 Other 11,620 11,535 Accrued liabilities $ 376,530 $ 513,530 |
Schedule of product warranty reserves | Product warranty reserve activities were as follows (in thousands): Three Months Ended April 4, 2020 March 30, 2019 Beginning balances $ 52,403 $ 45,605 Charged to cost of revenue 6,974 8,238 Changes related to pre-existing warranties 1,027 4,747 Settlement of claims (11,553) (10,556) Ending balances $ 48,851 $ 48,034 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Apr. 04, 2020 | |
Leases [Abstract] | |
Lease, Cost | Total lease cost consists of the following (in thousands): Three Months Ended April 4, 2020 March 30, 2019 Finance lease costs: Amortization of ROU assets $ 169 $ 573 Interest on lease liabilities — — Operating lease costs (1) 6,643 7,574 Variable lease costs 891 1,315 Sublease income (598) (1,966) Total lease costs $ 7,105 $ 7,496 (1) includes short-term leases, which are immaterial. Supplemental cash flow information related to leases was as follows (in thousands): Three Months Ended April 4, 2020 March 30, 2019 Cash paid for amounts included in the measurement of lease liabilities: Financing cash flows from finance leases $ — $ 597 Operating cash flows from finance leases — — Operating cash flows from operating leases 6,539 5,512 ROU assets obtained in exchange for lease obligations: Finance lease liabilities $ 1,384 $ — Operating lease liabilities 4,497 288 |
Assets And Liabilities, Lessee | Supplemental balance sheet information related to leases was as follows (in thousands): April 4, 2020 December 31, 2019 Finance leases: Other assets $ 1,215 $ 1,384 Accrued liabilities $ 1,384 $ 1,384 Operating leases: Operating lease ROU assets $ 70,137 $ 70,225 Operating lease liabilities $ 21,832 $ 23,511 Long-term operating lease liabilities 66,234 67,902 Total operating lease liabilities $ 88,066 $ 91,413 |
Schedule of Weighted-Average Lease Terms and Discount Rates | Weighted-average lease terms and discount rates are as follows: April 4, 2020 December 31, 2019 Weighted-average remaining lease terms (in years): Finance leases 0.3 0.5 Operating leases 4.0 4.2 Weighted-average discount rates: Finance leases — % — % Operating leases 5.5 % 5.5 % |
Lessee, Operating Lease, Liability, Maturity | Maturities of lease liabilities as of April 4, 2020 were as follow (in thousands): Finance Leases Operating Leases Remaining 2020 $ 1,384 $ 25,262 2021 — 24,894 2022 — 24,390 2023 — 21,769 2024 — 9,525 Thereafter — — Total minimum lease payments $ 1,384 $ 105,840 Less: amount representing interest — (17,774) Total lease liabilities $ 1,384 $ 88,066 |
Finance Lease, Liability, Maturity | Maturities of lease liabilities as of April 4, 2020 were as follow (in thousands): Finance Leases Operating Leases Remaining 2020 $ 1,384 $ 25,262 2021 — 24,894 2022 — 24,390 2023 — 21,769 2024 — 9,525 Thereafter — — Total minimum lease payments $ 1,384 $ 105,840 Less: amount representing interest — (17,774) Total lease liabilities $ 1,384 $ 88,066 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Apr. 04, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of stock option activity | Stock option activity under the equity incentive plans was as follows (in thousands, except per share amounts): Stock Options Outstanding Number of Weighted– Aggregate Intrinsic Value (1) Balance—December 31, 2019 12,871 $ 3.51 Granted — $ — Exercised (220) $ 2.08 Forfeited or canceled (6) $ 7.37 Balance—April 4, 2020 12,645 $ 3.53 $ 40,349 Stock options vested and expected to vest—April 4, 2020 12,645 $ 3.53 $ 40,349 Stock options exercisable—April 4, 2020 12,645 $ 3.53 $ 40,349 (1) The aggregate intrinsic values of stock options outstanding, exercisable, vested and expected to vest as of April 4, 2020 were calculated as the difference between the exercise price of the stock options and the fair value of the Class A common stock of $6.40 as of April 4, 2020. |
Schedule of restricted stock unit activity | RSU activity under the equity incentive plans was as follows (in thousands, except per share amounts): RSUs Weighted- Unvested balance—December 31, 2019 18,932 $ 5.68 Granted 8,799 $ 6.41 Vested (2,609) $ 6.48 Forfeited or canceled (399) $ 5.72 Unvested balance—April 4, 2020 24,723 $ 5.86 |
Schedule of stock-based compensation expense | Total stock-based compensation expense recognized was as follows (in thousands): Three Months Ended April 4, 2020 March 30, 2019 Cost of revenue $ 2,179 $ 1,430 Research and development 11,119 11,988 Sales and marketing 2,775 3,138 General and administrative 3,654 3,988 Total stock-based compensation expense $ 19,727 $ 20,544 |
Net Loss per Share (Tables)
Net Loss per Share (Tables) | 3 Months Ended |
Apr. 04, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of basic and diluted net loss per share | The following table sets forth the computation of the Company’s basic and diluted net income (loss) per share (in thousands, except per share amounts): Three Months Ended April 4, 2020 March 30, 2019 Numerator: Net income (loss) $ 20,294 $ (79,465) Denominator: Weighted-average shares of common stock—basic for Class A and Class B 265,661 253,124 Effect of dilutive securities 11,285 — Weighted-average shares of common stock—diluted for Class A and Class B 276,946 253,124 Net income (loss) per share: Basic $ 0.08 $ (0.31) Diluted $ 0.07 $ (0.31) |
Schedule of antidilutive securities excluded from earnings per share | The following potentially dilutive common shares were excluded from the computation of diluted net income (loss) per share for the periods presented because including them would have been anti-dilutive (in thousands): Three Months Ended April 4, 2020 March 30, 2019 Stock options to purchase common stock 12,645 15,774 RSUs 24,723 24,002 Warrant 230 230 Diluted impact of Employee Stock Purchase Plan — 1,287 Total 37,598 41,293 |
Significant Customer Informat_2
Significant Customer Information and Other Information (Tables) | 3 Months Ended |
Apr. 04, 2020 | |
Risks and Uncertainties [Abstract] | |
Schedules of concentration of risk | Retailers and distributors that accounted for equal to or greater than 10% of total revenue for the three months ended April 4, 2020 and March 30, 2019 were as follows: Three Months Ended April 4, 2020 March 30, 2019 C 12 % * * Represents less than 10%. Retailers and distributors that accounted for equal to or greater than 10% of accounts receivable at April 4, 2020 and December 31, 2019 were as follows: April 4, 2020 December 31, 2019 H 11 % * C 10 18 % D * 11 E * 10 * Represents less than 10%. Revenue by geographic region, based on ship-to destinations, was as follows (in thousands): Three Months Ended April 4, 2020 March 30, 2019 United States $ 102,039 $ 135,091 Americas excluding United States 10,743 15,327 Europe, Middle East, and Africa 57,007 87,098 Asia Pacific 18,369 34,374 Total $ 188,158 $ 271,890 |
Basis of Presentation and Sum_3
Basis of Presentation and Summary of Significant Accounting Policies (Details) | Nov. 01, 2019$ / shares |
Agreement and Plant of Merger | Google LLC and Magnoliophyta Inc. | |
Organization, Consolidation and Presentation of Financial Statements [Line Items] | |
Fair value of the Class A common stock (in dollars per share) | $ 7.35 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) | 3 Months Ended | ||
Apr. 04, 2020 | Mar. 30, 2019 | Dec. 31, 2019 | |
Assets: | |||
Available for sale securities | $ 427,696,000 | $ 518,502,000 | |
Liabilities, Fair Value Disclosure [Abstract] | |||
Transfers between fair value levels | 0 | $ 0 | |
U.S. government agencies | |||
Assets: | |||
Available for sale securities | 63,854,000 | 77,364,000 | |
Corporate debt securities | |||
Assets: | |||
Available for sale securities | 164,917,000 | 207,137,000 | |
Fair Value, Recurring | |||
Assets: | |||
Money market funds | 89,166,000 | 107,708,000 | |
Derivative assets | 36,000 | ||
Total | 317,973,000 | 392,209,000 | |
Liabilities, Fair Value Disclosure [Abstract] | |||
Contingent consideration | 1,889,000 | 1,889,000 | |
Derivative liabilities | 10,000 | 748,000 | |
Total | 1,899,000 | 2,637,000 | |
Fair Value, Recurring | U.S. government agencies | |||
Assets: | |||
Available for sale securities | 63,854,000 | 77,364,000 | |
Fair Value, Recurring | Corporate debt securities | |||
Assets: | |||
Available for sale securities | 164,917,000 | 207,137,000 | |
Fair Value, Recurring | Level 1 | |||
Assets: | |||
Money market funds | 89,166,000 | 107,708,000 | |
Derivative assets | 0 | ||
Total | 89,166,000 | 107,708,000 | |
Liabilities, Fair Value Disclosure [Abstract] | |||
Contingent consideration | 0 | 0 | |
Derivative liabilities | 0 | 0 | |
Total | 0 | 0 | |
Fair Value, Recurring | Level 1 | U.S. government agencies | |||
Assets: | |||
Available for sale securities | 0 | 0 | |
Fair Value, Recurring | Level 1 | Corporate debt securities | |||
Assets: | |||
Available for sale securities | 0 | 0 | |
Fair Value, Recurring | Level 2 | |||
Assets: | |||
Money market funds | 0 | 0 | |
Derivative assets | 36,000 | ||
Total | 228,807,000 | 284,501,000 | |
Liabilities, Fair Value Disclosure [Abstract] | |||
Contingent consideration | 0 | 0 | |
Derivative liabilities | 10,000 | 748,000 | |
Total | 10,000 | 748,000 | |
Fair Value, Recurring | Level 2 | U.S. government agencies | |||
Assets: | |||
Available for sale securities | 63,854,000 | 77,364,000 | |
Fair Value, Recurring | Level 2 | Corporate debt securities | |||
Assets: | |||
Available for sale securities | 164,917,000 | 207,137,000 | |
Fair Value, Recurring | Level 3 | |||
Assets: | |||
Money market funds | 0 | 0 | |
Derivative assets | 0 | ||
Total | 0 | 0 | |
Liabilities, Fair Value Disclosure [Abstract] | |||
Contingent consideration | 1,889,000 | 1,889,000 | |
Derivative liabilities | 0 | 0 | |
Total | 1,889,000 | 1,889,000 | |
Fair Value, Recurring | Level 3 | U.S. government agencies | |||
Assets: | |||
Available for sale securities | 0 | 0 | |
Fair Value, Recurring | Level 3 | Corporate debt securities | |||
Assets: | |||
Available for sale securities | $ 0 | $ 0 |
Financial Instruments - Amortiz
Financial Instruments - Amortized to fair value (Details) - USD ($) $ in Thousands | Apr. 04, 2020 | Dec. 31, 2019 |
Debt Securities, Available-for-sale [Line Items] | ||
Cash and cash equivalents | $ 251,997 | $ 334,479 |
Marketable Securities | 175,699 | 184,023 |
Amortized Cost | 427,528 | 518,380 |
Gross Unrealized Gains | 244 | 133 |
Gross Unrealized Losses | (76) | (11) |
Fair Value | 427,696 | 518,502 |
U.S. government agencies | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cash and cash equivalents | 24,643 | 30,375 |
Marketable Securities | 39,211 | 46,989 |
Amortized Cost | 63,643 | 77,316 |
Gross Unrealized Gains | 211 | 48 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 63,854 | 77,364 |
Corporate debt securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cash and cash equivalents | 28,429 | 70,103 |
Marketable Securities | 136,488 | 137,034 |
Amortized Cost | 164,960 | 207,063 |
Gross Unrealized Gains | 33 | 85 |
Gross Unrealized Losses | (76) | (11) |
Fair Value | 164,917 | 207,137 |
Cash | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cash and cash equivalents | 109,759 | 126,293 |
Marketable Securities | 0 | 0 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Money market funds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cash and cash equivalents | 89,166 | 107,708 |
Marketable Securities | 0 | 0 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | $ 0 | $ 0 |
Financial Instruments - Contrac
Financial Instruments - Contractual maturity dates (Details) - USD ($) $ in Thousands | Apr. 04, 2020 | Dec. 31, 2019 |
Investments, Debt and Equity Securities [Abstract] | ||
Due in one year | $ 172,056 | $ 173,827 |
Due in one to two years | 3,643 | 10,196 |
Total | $ 175,699 | $ 184,023 |
Financial Instruments - Additio
Financial Instruments - Additional Information (Details) - USD ($) | Apr. 04, 2020 | Dec. 31, 2019 |
Derivative [Line Items] | ||
Available-for-sale, continuous unrealized loss position, 12 months or longer, accumulated loss | $ 0 | $ 0 |
Foreign currency exchange contract | Designated as hedging instrument | ||
Derivative [Line Items] | ||
Derivative, notional amount | $ 26,000 | $ 83,400,000 |
Financial Instruments - Financi
Financial Instruments - Financial Position, Fair Value (Details) - Foreign currency exchange contract - USD ($) $ in Thousands | Apr. 04, 2020 | Dec. 31, 2019 |
Derivatives, Fair Value [Line Items] | ||
Fair Value Derivative Assets | $ 36 | $ 0 |
Fair Value Derivative Liabilities | 10 | 748 |
Not designated as hedging instrument | Prepaid expenses and other current assets | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value Derivative Assets | 36 | 0 |
Fair Value Derivative Liabilities | 0 | 0 |
Not designated as hedging instrument | Accrued liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Fair Value Derivative Assets | 0 | 0 |
Fair Value Derivative Liabilities | $ 10 | $ 748 |
Financial Instruments - Stateme
Financial Instruments - Statement of Operations and Other Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 04, 2020 | Mar. 30, 2019 | |
Foreign currency exchange contract | Not designated as hedging instrument | Other income, net | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (loss) recognized in income | $ 3,077 | $ (359) |
Financial Instruments - Offsett
Financial Instruments - Offsetting of Foreign Currency Derivative Contracts (Details) - Foreign currency exchange contract - USD ($) $ in Thousands | Apr. 04, 2020 | Dec. 31, 2019 |
Offsetting Assets [Line Items] | ||
Gross Amounts of Recognized Assets | $ 36 | $ 0 |
Gross Amounts Offset in the Condensed Consolidated Balance Sheets | 0 | 0 |
Net Amounts Presented in Condensed Consolidated Balance Sheets | 36 | 0 |
Gross Amounts Not Offset in Condensed Consolidated Balance Sheets, Financial Instruments | 10 | 0 |
Gross Amounts Not Offset in Condensed Consolidated Balance Sheets, Cash Collateral Received | 0 | 0 |
Net Amount | 26 | 0 |
Offsetting Liabilities [Line Items] | ||
Gross Amounts Recognized | 10 | 748 |
Gross Amounts Offset in the Condensed Consolidated Balance Sheets | 0 | 0 |
Net Amounts Presented | 10 | 748 |
Gross Amounts Not Offset in Condensed Consolidated Balance Sheets, Financial Instruments | 10 | 0 |
Gross Amounts Not Offset in Condensed Consolidated Balance Sheets, Cash Collateral Pledged | 0 | 0 |
Net Amount | $ 0 | $ 748 |
Balance Sheet Components - Defe
Balance Sheet Components - Deferred Revenue (Details) $ in Thousands | 3 Months Ended |
Apr. 04, 2020USD ($) | |
Deferred Revenue [Roll Forward] | |
Beginning balances | $ 40,842 |
Deferral of revenue | 12,098 |
Recognition of deferred revenue | (14,298) |
Ending balances | $ 38,642 |
Balance Sheet Components - Reve
Balance Sheet Components - Revenue Returns Reserves (Details) - Revenue Return Reserve - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 04, 2020 | Mar. 30, 2019 | |
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | ||
Beginning balances | $ 101,326 | $ 104,001 |
Increases | 33,104 | 31,259 |
Returns taken | (57,189) | (59,262) |
Ending balances | $ 77,241 | $ 75,998 |
Balance Sheet Components - Inve
Balance Sheet Components - Inventories (Details) - USD ($) $ in Thousands | Apr. 04, 2020 | Dec. 31, 2019 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Components | $ 1,461 | $ 5,397 |
Finished goods | 104,284 | 131,355 |
Total inventories | $ 105,745 | $ 136,752 |
Balance Sheet Components - Prep
Balance Sheet Components - Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Apr. 04, 2020 | Dec. 31, 2019 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Tariff receivable | $ 28,854 | $ 0 |
Prepaid expenses | 10,616 | 11,219 |
Prepaid marketing | 2,796 | 3,347 |
Derivative asset | 36 | 0 |
Other | 14,392 | 14,090 |
Total prepaid expenses and other current assets | $ 56,694 | $ 28,656 |
Balance Sheet Components - Prop
Balance Sheet Components - Property and Equipment, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Apr. 04, 2020 | Mar. 30, 2019 | Dec. 31, 2019 | |
Property, Plant and Equipment [Line Items] | |||
Total property and equipment | $ 214,490 | $ 210,449 | |
Less: Accumulated depreciation and amortization | (138,272) | (127,693) | |
Property and equipment, net | 76,218 | 82,756 | |
Depreciation and amortization expense | 10,600 | $ 13,400 | |
Tooling and manufacturing equipment | |||
Property, Plant and Equipment [Line Items] | |||
Total property and equipment | 105,753 | 103,177 | |
Property and equipment, net | 76,218 | 82,756 | |
Furniture and office equipment | |||
Property, Plant and Equipment [Line Items] | |||
Total property and equipment | 20,249 | 19,922 | |
Purchased and internally-developed software | |||
Property, Plant and Equipment [Line Items] | |||
Total property and equipment | 28,401 | 27,424 | |
Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Total property and equipment | $ 60,087 | $ 59,926 |
Balance Sheet Components - Good
Balance Sheet Components - Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Apr. 04, 2020 | Mar. 30, 2019 | Dec. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Goodwill | $ 64,812 | $ 64,812 | |
Finite-Lived Intangible Assets [Line Items] | |||
Gross | 42,881 | 42,881 | |
Accumulated Amortization | (30,164) | (26,135) | |
Net | 12,717 | 16,746 | |
Amortization of intangible assets | 4,029 | $ 2,060 | |
Developed technology | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross | 37,813 | 37,813 | |
Accumulated Amortization | (26,450) | (23,910) | |
Net | 11,363 | 13,903 | |
Customer Relationships | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross | 3,918 | 3,790 | |
Accumulated Amortization | (2,564) | (991) | |
Net | 1,354 | 2,799 | |
Trademarks and other | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross | 1,150 | 1,278 | |
Accumulated Amortization | (1,150) | (1,234) | |
Net | $ 0 | $ 44 |
Balance Sheet Components - Esti
Balance Sheet Components - Estimated Future Amortization Expense (Details) - USD ($) $ in Thousands | Apr. 04, 2020 | Dec. 31, 2019 |
Finite-Lived Intangible Assets [Line Items] | ||
Remaining 2020 | $ 5,819 | |
2021 | 5,093 | |
2022 | 1,544 | |
2023 | 56 | |
2024 | 56 | |
Thereafter | 149 | |
Net | 12,717 | $ 16,746 |
Cost of Revenue | ||
Finite-Lived Intangible Assets [Line Items] | ||
Remaining 2020 | 4,199 | |
2021 | 5,037 | |
2022 | 1,488 | |
2023 | 0 | |
2024 | 0 | |
Thereafter | 0 | |
Net | 10,724 | |
Operating Expenses | ||
Finite-Lived Intangible Assets [Line Items] | ||
Remaining 2020 | 1,620 | |
2021 | 56 | |
2022 | 56 | |
2023 | 56 | |
2024 | 56 | |
Thereafter | 149 | |
Net | $ 1,993 |
Balance Sheet Components - Accr
Balance Sheet Components - Accrued Liabilities (Details) - USD ($) $ in Thousands | Apr. 04, 2020 | Dec. 31, 2019 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accrued sales incentives | $ 117,428 | $ 156,839 |
Sales returns reserve | 77,241 | 101,326 |
Product warranty | 48,851 | 52,403 |
Employee-related liabilities | 23,282 | 37,355 |
Accrued manufacturing expense and freight | 18,972 | 35,112 |
Accrued research and development | 18,470 | 19,232 |
Accrued co-op advertising and marketing development funds | 17,880 | 40,689 |
Accrued legal settlements and fees | 14,041 | 8,854 |
Accrued sales and marketing | 11,640 | 26,781 |
Sales taxes and VAT payable | 10,218 | 19,603 |
Inventory received but not billed | 5,493 | 1,669 |
Finance lease liabilities | 1,384 | 1,384 |
Derivative liabilities | 10 | 748 |
Other | 11,620 | 11,535 |
Accrued liabilities | $ 376,530 | $ 513,530 |
Balance Sheet Components - Prod
Balance Sheet Components - Product Warranty (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 04, 2020 | Mar. 30, 2019 | |
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward] | ||
Beginning balances | $ 52,403 | $ 45,605 |
Charged to cost of revenue | 6,974 | 8,238 |
Changes related to pre-existing warranties | 1,027 | 4,747 |
Settlement of claims | (11,553) | (10,556) |
Ending balances | $ 48,851 | $ 48,034 |
Leases - Schedule of Lease Cost
Leases - Schedule of Lease Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 04, 2020 | Mar. 30, 2019 | |
Leases [Abstract] | ||
Finance lease costs: Amortization of ROU assets | $ 169 | $ 573 |
Operating lease costs | 6,643 | 7,574 |
Variable lease costs | 891 | 1,315 |
Sublease income | (598) | (1,966) |
Total lease costs | $ 7,105 | $ 7,496 |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flows (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 04, 2020 | Mar. 30, 2019 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Financing cash flows from finance leases | $ 0 | $ 597 |
Operating cash flows from finance leases | 0 | 0 |
Operating cash flows from operating leases | 6,539 | 5,512 |
ROU assets obtained in exchange for lease obligations: | ||
Finance lease liabilities | 1,384 | 0 |
Operating lease liabilities | $ 4,497 | $ 288 |
Leases - Supplemental Balance S
Leases - Supplemental Balance Sheet (Details) - USD ($) $ in Thousands | Apr. 04, 2020 | Dec. 31, 2019 |
Finance leases: | ||
Other assets | $ 1,215 | $ 1,384 |
Accrued liabilities | 1,384 | 1,384 |
Operating leases: | ||
Operating lease ROU assets | 70,137 | 70,225 |
Operating lease liabilities | 21,832 | 23,511 |
Long-term operating lease liabilities | 66,234 | 67,902 |
Total operating lease liabilities | $ 88,066 | $ 91,413 |
Leases - Weighted Average Remai
Leases - Weighted Average Remaining Lease Term and Discount Rates (Details) | Apr. 04, 2020 | Dec. 31, 2019 |
Weighted-average remaining lease terms (in years): | ||
Finance leases | 3 months 18 days | 6 months |
Operating leases | 4 years | 4 years 2 months 12 days |
Weighted-average discount rates: | ||
Finance leases | 0.00% | 0.00% |
Operating leases | 5.50% | 5.50% |
Leases - Maturity of Lease Liab
Leases - Maturity of Lease Liabilties (Details) - USD ($) $ in Thousands | Apr. 04, 2020 | Dec. 31, 2019 |
Finance Leases | ||
Remaining 2020 | $ 1,384 | |
2021 | 0 | |
2022 | 0 | |
2023 | 0 | |
2024 | 0 | |
Thereafter | 0 | |
Total minimum lease payments | 1,384 | |
Less: amount representing interest | 0 | |
Total lease liabilities | 1,384 | |
Operating Leases | ||
Remaining 2020 | 25,262 | |
2021 | 24,894 | |
2022 | 24,390 | |
2023 | 21,769 | |
2024 | 9,525 | |
Thereafter | 0 | |
Total minimum lease payments | 105,840 | |
Less: amount representing interest | (17,774) | |
Total lease liabilities | $ 88,066 | $ 91,413 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Thousands | Jan. 30, 2019lawsuit | Jun. 14, 2018defendant | Dec. 08, 2017defendant | May 31, 2018USD ($) | Jan. 31, 2018USD ($) | Apr. 04, 2020USD ($) | Mar. 30, 2019USD ($) | Sep. 30, 2017USD ($) | Sep. 29, 2018USD ($) | Dec. 31, 2019USD ($) | Aug. 18, 2019 |
Loss Contingencies [Line Items] | |||||||||||
Bad debt expense | $ 6,486 | $ 32 | |||||||||
Release of product return and rebate reserves | $ 12,400 | ||||||||||
Number of Lawsuits | lawsuit | 7 | ||||||||||
Letter of Credit | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Outstanding letters of credit | 24,800 | $ 24,600 | |||||||||
Purchase Commitment | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Remaining minimum amount committed | 443,400 | ||||||||||
Purchase Commitment | Accrued liabilities | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Remaining minimum amount committed | 12,900 | ||||||||||
Purchase Commitment to Third Party Hosting Provider | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Remaining minimum amount committed | 171,300 | ||||||||||
Purchase Commitment Accrual | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Remaining minimum amount committed | $ 15,200 | ||||||||||
Aliphcom, Inc. dba Jawbone | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Number of defendants | defendant | 6 | 6 | |||||||||
Sleep Tracking | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Reduction in challenged fees, percent | 90.00% | ||||||||||
PurePulse Class Action Lawsuit | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Settlement amount award to other party | $ 33,300 | ||||||||||
Wynit Distribution | Customer Concentration Risk | |||||||||||
Loss Contingencies [Line Items] | |||||||||||
Unrecognized revenue, net | $ 8,100 | ||||||||||
Accounts receivable charge recorded | 35,800 | ||||||||||
Unrecoverable inventory | 5,500 | ||||||||||
Accounts receivable for shipments made in the quarter | 30,300 | ||||||||||
Probable insurance proceeds | 26,800 | ||||||||||
Insurance proceeds receivable, accounts receivable | 22,700 | ||||||||||
Insurance proceeds receivable, inventory | 4,100 | ||||||||||
Charges offset by insurance recorded | 9,000 | ||||||||||
Bad debt expense | 7,600 | ||||||||||
Cost of revenue | 1,400 | ||||||||||
Proceeds from insurance settlement | $ 5,400 | $ 21,400 |
Stockholders' Equity - Narrativ
Stockholders' Equity - Narrative (Details) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended |
Apr. 04, 2020USD ($)$ / sharesshares | |
Stock options and RSUs | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized stock-based compensation expense related to unvested awards | $ | $ 130.5 |
Unrecognized compensation expense related to unvested awards, estimated weighted average period | 2 years 1 month 6 days |
Common Class A | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Share price (in dollars per share) | $ / shares | $ 6.40 |
Common Class A | 2015 Employee Stock Purchase Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Class A common stock reserved for future issuance (in shares) | shares | 30.4 |
Stockholders' Equity - Stock Op
Stockholders' Equity - Stock Option Activity (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended |
Apr. 04, 2020USD ($)$ / sharesshares | |
Number of Shares Subject to Stock Options | |
Balance, beginning of period (in shares) | shares | 12,871 |
Granted (in shares) | shares | 0 |
Exercised (in shares) | shares | (220) |
Forfeited or canceled (in shares) | shares | (6) |
Balance, end of period (in shares) | shares | 12,645 |
Stock options vested and expected to vest (in shares) | shares | 12,645 |
Stock options exercisable (in shares) | shares | 12,645 |
Weighted– Average Exercise Price | |
Balance, weighted average exercise price, beginning of period (in dollars per share) | $ / shares | $ 3.51 |
Granted, weighted average exercise price (in dollars per share) | $ / shares | 0 |
Exercised, weighted average exercise price (in dollars per share) | $ / shares | 2.08 |
Forfeited or canceled, weighted average exercise price (in dollars per share) | $ / shares | 7.37 |
Balance, weighted average exercise price, end of period (in dollars per share) | $ / shares | 3.53 |
Stock options vested and expected to vest (in dollars per share) | $ / shares | 3.53 |
Stock options exercisable (in dollars per share) | $ / shares | $ 3.53 |
Aggregate Intrinsic Value | $ | $ 40,349 |
Stock options vested and expected to vest | $ | 40,349 |
Stock options exercisable | $ | $ 40,349 |
Stockholders' Equity - Restrict
Stockholders' Equity - Restricted Stock Unit Activity (Details) - Restricted Stock Units (RSUs) shares in Thousands | 3 Months Ended |
Apr. 04, 2020$ / sharesshares | |
RSUs Outstanding | |
Beginning Unvested balance (in shares) | shares | 18,932 |
Granted (in shares) | shares | 8,799 |
Vested (in shares) | shares | (2,609) |
Forfeited or canceled (in shares) | shares | (399) |
Ending Unvested balance (in shares) | shares | 24,723 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |
Beginning Unvested balance (in dollars per share) | $ / shares | $ 5.68 |
Granted (in dollars per share) | $ / shares | 6.41 |
Vested (in dollars per share) | $ / shares | 6.48 |
Forfeited or canceled (in dollars per share) | $ / shares | 5.72 |
Ending Unvested balance (in dollars per share) | $ / shares | $ 5.86 |
Stockholders' Equity - Stock Co
Stockholders' Equity - Stock Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 04, 2020 | Mar. 30, 2019 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Total stock-based compensation | $ 19,727 | $ 20,544 |
Cost of revenue | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Total stock-based compensation | 2,179 | 1,430 |
Research and development | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Total stock-based compensation | 11,119 | 11,988 |
Sales and marketing | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Total stock-based compensation | 2,775 | 3,138 |
General and administrative | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Total stock-based compensation | $ 3,654 | $ 3,988 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 04, 2020 | Mar. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||
Income tax expense (benefit) | $ (144,674) | $ 1,310 |
Effective income tax rate | 116.30% | (1.70%) |
Unrecognized tax benefits | $ 30,000 | |
Unrecognized tax benefits that would impact effective tax rate | $ 26,500 |
Net Income (Loss) per Share - S
Net Income (Loss) per Share - Schedule of Basic and Diluted EPS (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Apr. 04, 2020 | Mar. 30, 2019 | |
Numerator: | ||
Net income (loss) | $ 20,294 | $ (79,465) |
Denominator: | ||
Weighted-average shares of common stock— basic for Class A and Class B (in shares) | 265,661 | 253,124 |
Effect of dilutive securities (in shares) | 11,285 | 0 |
Weighted-average shares of common stock— diluted for Class A and Class B (in shares) | 276,946 | 253,124 |
Net income (loss) per share: | ||
Basic (in dollars per share) | $ 0.08 | $ (0.31) |
Diluted (in dollars per share) | $ 0.07 | $ (0.31) |
Net Income (Loss) per Share - A
Net Income (Loss) per Share - Antidilutive Securities (Details) - 2015 Employee Stock Purchase Plan - shares shares in Thousands | 3 Months Ended | |
Apr. 04, 2020 | Mar. 30, 2019 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 37,598 | 41,293 |
Stock options to purchase common stock | Common Stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 12,645 | 15,774 |
RSUs | Common Stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 24,723 | 24,002 |
Warrant | Common Stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 230 | 230 |
Diluted impact of Employee Stock Purchase Plan | Common Stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share | 0 | 1,287 |
Significant Customer Informat_3
Significant Customer Information and Other Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Apr. 04, 2020 | Mar. 30, 2019 | Dec. 31, 2019 | |
Concentration Risk [Line Items] | |||
Revenue | $ 188,158 | $ 271,890 | |
Geographic Concentration Risk | Located outside the United States | |||
Concentration Risk [Line Items] | |||
Long-lived assets including property and equipment | $ 24,000 | $ 27,900 | |
Revenue | Customer Concentration Risk | Customer C | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 12.00% | ||
Revenue | Geographic Concentration Risk | United States | |||
Concentration Risk [Line Items] | |||
Revenue | $ 102,039 | 135,091 | |
Revenue | Geographic Concentration Risk | Americas excluding United States | |||
Concentration Risk [Line Items] | |||
Revenue | 10,743 | 15,327 | |
Revenue | Geographic Concentration Risk | Europe, Middle East, and Africa | |||
Concentration Risk [Line Items] | |||
Revenue | 57,007 | 87,098 | |
Revenue | Geographic Concentration Risk | Asia Pacific | |||
Concentration Risk [Line Items] | |||
Revenue | $ 18,369 | $ 34,374 | |
Accounts Receivable | Customer Concentration Risk | Customer C | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 10.00% | 18.00% | |
Accounts Receivable | Customer Concentration Risk | Customer H | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 11.00% | ||
Accounts Receivable | Customer Concentration Risk | Customer D | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 11.00% | ||
Accounts Receivable | Customer Concentration Risk | Customer E | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 10.00% |