Uwi mona fitbit_cfa_challenge_2017

CFA Institute Research Challenge
Hosted by
Jamaican Association of Investment Professionals
University of the West Indies, Mona – Jamaica

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Consumer Electronics Industry
New York Stock Exchange (“NYSE”)
Fitbit Inc.
Date: 27/01/17 Current Price: US$7.22 (27/01/2017) Recommendation: Hold
Ticker: NYSE: FIT (Bloomberg) Target Price: $8.70
Executive Summary
Fitbit a US based company that produces wearable health devices and fitness trackers.
Investment Recommendation
We issue a Hold recommendation on Fitbit Inc. with a 52-week target price of $8.70. This is supported by the
following:
Considerations for Recommendations
 Growing Industry- Fitbit, as a wearables market competitor, currently benefits from the fast pace industry
which has products that are regularly upgraded or replaced. The market is expected to expand within the
United States of America and other countries such as China.
 Growth Indicators- Fitbit has possibilities of new and increasing revenue streams due to the introduction of
new products, higher pricing and entry into new markets. One of the leading indicators for Fitbit’s
performance is the availability of disposable income which is spent on discretionary items.
 Investment Risks- included the risk of loss of market share, product quality issues and incapability of meeting
customer demands. Market Risk which accounts for the consumers’ discretionary spending Rates.
 Valuation- the valuation method used was the Discounted Cash flow Method which resulted in the target price
of $8.70 per share. This analysis involved the probability of possible outcomes if Fitbit continue the same
approach of addressing its issues or solving all or some of its problems currently faced.
 Competitive Positioning- Fitbit currently falls within several industries namely; specialized industry,
traditional health and fitness as well as traditional watch and broad based consumer electronics industry. As
the market Leader within the industry of health and Fitness, Fitbit benefits from positive responses to its
innovations.
Recent News
 New Products, International Market are Targets for Fitbit Sales - 11/04/16: Fitbit is trying to expand into
Europe, the Middle East and Africa as well as markets in the Asia-Pacific region to mitigate slowing growth
and dependence on North America, which accounts for more than 75% of sales.
 Fitbit’s Holiday Outlook Disappoints - 11/02/16: Based on a 43% decline in the third quarter net income,
Fitbit sharply lowered its projected holiday- season sales sending shares down 30%
 Fitbit, Changing Pace, Launches Software at Hardware Show- 01/05/17: Fitbit announced software
updates and new app features for its fitness trackers and smart watch at CES, the Consumer Electronics Show.
Business Description
Incorporated in Delaware, USA, Fitbit has proven to be a pioneer, connecting the health and fitness market since
2007. With corporate headquarters located in San Francisco, California, as well as subsidiaries in 63 countries, Fitbit
concluded its initial public offering (IPO) in June 2015. The company aims to help people live healthier, more active
lives by empowering them with data, inspiration and guidance to reach their fitness goals. Fitbit boasts facilities
comprising of 1,101 employees, approximately 255,628 square feet of space pursuant to several leases that are not
expected to terminate until July 2024.
Through customized fitness plans and interactive workouts, Fitbit is able to combine health and fitness devices with
software services (See Appendix B3). Its core platform comprises of eight wearable health and fitness trackers. These
wearables are “clip able” wrist-worn devices which automatically track users’ daily activities such as steps taken,
calories burnt, distance travelled, active minutes, sleep duration and quality. Real- time feedback is then displayed to
encourage users to be more active. Their more advanced products track heart rate and GPS based information, with
several featuring deeper integration with smartphones, for example, receiving call and text notifications and
controlling music.

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Fitbit’s products are primarily designed in California and production is then outsourced to contract manufacturers,
likewise, packaging and fulfilment to third-party logistics providers worldwide. The sale of devices is facilitated
through several distributors, over 54,000 retailers, a corporate wellness offering and Fitbit.com.
Company Strategies
The company is geared mainly towards growth, which is dependent on the adoption and sale of their products and
services in international market. In order to drive demand for products and services globally, the company intends to
continue investing significant resources in sales, marketing, advertising and brand management efforts. Approximately
26% of the firm’s revenue was derived from sales outside of the United States. Fitbit has also indicated continuous
interest in making acquisitions, such as FitStar in March 2015, to further drive growth. Additionally, research and
development is likewise seen as a growth factor, allowing the company to create and enhance new and existing
products and services.
Product Introductions
As Fitbit aims to keep enhancing existing products and releasing new ones, operating results are expected to be
impacted. Quarters following the introduction of a new product have led to a significant positive impact on operating
results, primarily due to increases in revenue associated with sales. Six new connected health and fitness devices,
including the Fitbit Charge and Fitbit Charge HR which were released in early 2013 and the Fitbit Surge in 2014, were
the primary drivers of revenue growth in 2015. It is expected that the impact of new products such as the Fitbit Blaze
in January 2016 and the Fitbit Alta in February 2016 will have a cannibalising effect over time.
International Expansion
It is expected that once the company is able to alleviate threats such as complex distribution logistics, uncertain
enforcement of intellectual property rights, increased competition and the complexity of compliance with foreign laws
and regulations then international expansion will be promising. To address this global opportunity Fitbit intends to
continue investing in sales and marketing efforts, distribution channels, infrastructure and personnel to support
international expansion, including establishing additional sales offices globally. However, growth will depend on the
adoption and sales of products and services in international markets.
Expand Corporate Wellness presence
Likewise, building relationships with employer and wellness providers fosters a great channel for the corporate
wellness market. However this market is subject to a variety of challenges including whether employers will continue
to invest in such programs, long sales cycles, and substantial upfront sales costs. As a result the company has derived
less than 10% of revenue from the corporate wellness offering for the past three years. However with the increases in
healthcare cost and the greater effort of employers to keep their employees engaged, productive and active more
employers are likely to implement or enhance their corporate wellness programs. Therefore Fitbit intends to expand
the focus of the sale team to this market in order to grow their corporate wellness presence.
Management and Governance
The director and management team of Fitbit consists of seven (7) members, of which James Park and Eric Friedman,
who are the co-founders of the company, are members. The management team, though not experienced in managing a
publicly traded company, consists of experts within various fields who have in the past, managed to guide other firms
to success. Fitbit operates under a dual class share structure, that is, Class A and Class B shares. Class A stocks are
valued at one vote per share while Class B has ten votes per share. After the closing of their IPO, only redeemable
preference shares and warrants were converted into Class B common stock and warrants. By the end of December
2015, directors, executive officers and holders of more than 5% of the common stock, and their respective affiliates,
held a substantial majority of the voting power of capital stock (See Appendix : B1). Therefore, based on the voting
rights of Class B holders collectively, they control a majority of the combined voting power of common stock,
highlighting the difference between both classes. Class B common stock consequently controls all matters submitted
to stockholders for approval until June, 2027 or the date the holders of a majority of the class choose to convert their
shares. Due to their effective control, this also indicates that a hostile takeover from an outsider would be difficult to
implement, and even acceptance of an offer to be acquired or merge are left to the discretion of the Class B holders.
After careful consideration of all the aforementioned factors in accordance with the SEC Corporate Governance
Guidelines, their corporate governance risk could be said to be of medium threat to shareholders. Additionally, their
QuickScore rating, as issued by The Institutional Shareholder Service (ISS), indicated slightly above average risk to
shareholders (See Appendix C3).

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Industry Overview and Competitive Positioning
Industry Overview
There has been a steady rise in the US economy since the 2008 recession, with a GDP growth rate of 3.5 % in the last
quarter of 2016 .Through government actions such as the quantitative easing program there has been a 3.6% increase in
personal consumption expenditures nationwide since 2015 and an unemployment rate of 4.6% as at November 2016.
Growth of the Consumer Electronic industry is strongly influenced by these macroeconomic factors:
Growth in Consumer Electronics industry
Globally, according to Future Market Insights, the consumer electronics market is expected to grow at a Compounded
Annual Growth Rate (CAGR) of over 15% by 2020. This fast moving industry with a shelf-life of usually no more than
a year, pushes companies within the industry to adapt quickly to the continued demand in updates. This industry, like
others, has its fair share of challenges such as increased regulations and the need to continually lower prices to increase
product sales. The industry is considered to be large and technologically diverse, therefore products and services offered
by Fitbit are classified as being a part of the wearables devices market.
Job growth
The rate of employment and job turnover is positively affecting the consumer electronics industry, as consumer spending
on the wearable devices market is growing faster than any segment in the global consumer electronics market. The
amount of disposable income that is available determines spending practices. The decrease in unemployment has
increased individuals’ spending power, that is personal consumption expenditure increased by 1.5%, which gives access
to the purchasing of more discretionary items such as wearable devices produced by Fitbit.
Competitive Positioning
Many companies are beginning to connect the fitness and health market, to create a competitive and evolving arena.
Fitbit competes among various groups including; specialized electronics such as Garmin, Jawbone, and Misfit,
traditional health and fitness companies which includes Adidas and Under Armour, traditional watch companies such
as Fossil and Movado and broad based consumer electronics companies such as Apple, Google, LG, Microsoft and
Samsung. Manufacturers of lower cost device such as Xiaomi and its Mi Band device have also found a place on the
market map. Additionally, Fitbit has to continually compete with a wide range of substitutes such as personal trainers
and stand-alone health and fitness-related mobile apps that can be purchased or downloaded through mobile app stores.
As a result, consumers are constantly exercising their negotiating power (See Porter’s Five Forces Appendix C2).
Fitbit has managed to maintain a lead position in the market and global brand, through its broad range of connected
health and fitness devices. They are able to compete favourably with competitors through advanced, purpose-built
hardware and software technologies, broad mobile compatibility and open Application Programming Interface (API).
Additionally, by offering a broad and differentiated go-to-market strategy, the demand for the product can be
consistently met globally. A key competitive advantage of the company is its direct relationship and continuous
communication with users. It is with these competitive strengths the company is capable of empowering a wide range
of individuals with different fitness routines and goals that are difficult for other competitors to address.
Notwithstanding, though Fitbit is considered the pioneer and leader in the health and fitness market platform, the
company faces high competition with supply and distribution channels. Fitbit product supplies are primarily controlled
by independent third parties, which also supplies to Fitbit’s main competitors.
Investment Summary
We issue a Hold recommendation on Fitbit Inc. with a 52-week target price of $8.70. We derived our target price using
a Discounted Cash Flow (DCF) Method, with the aid of the following methodology: Growing Industry, Growth
Indicators, Base Case Valuation, loss of market share, product quality issues and market risk.
Past Growth Rate of the Firm
With a year on year (YOY) 3Q Growth of 11.0% in 2016, Fitbit remains the market leader for the wearables industry
as the market YOY 3Q grew by 3.1%. Fitbit fared well which was attributable to an increase in market share, from
21.4% in 3Q 2015 to 23.0% in 3Q 2016 and, also, an increase in unit shipments from 4.8 in 3Q 2015 to 5.3 in 3Q 2016.
With the wearables market expected to grow to a value of $34 Billion by 2020, if Fitbit remains market leaders and
solves most of their current issues they have in for a good slice of the fortune that is ahead of them

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Growth Indicators
Fitbit has prospective growth attributable to higher pricing, new product lines, and entrance into new markets. With a
growing market, Fitbit continue to introduce new products with its two latest being the Flex 2 and Charge 2 which come
at a higher average price than earlier products released by the wearables giant firm. There is also an indication of growth
as Fitbit plans to enter into China, Japan, South Korea, and Australia. These are the top four (4) APAC countries based
off GDP.
Base Case Valuation
We assume that Fitbit will remain a stock to watch which is illustrated by our base case pro-forma and valuation
methodology, through the use of the DCF. Fitbit is expected to face a relatively smaller warranty and recall cost with
growth in revenue falling due to competition, however, not growing negatively as it is expected to feed off the predicted
supernormal industry growth being market leaders.
Loss of Market Share
With a high probability and a high impact on our risk matrix, loss of market ranks as a very high risk. The industry is
highly competitive which requires a lot of capital to survive with the added broad-cased consumer electronics companies
that exist, creates a very high risk of losing market share.
Product Quality Issues
With a high probability and a high impact on our risk matrix, product quality issues also create a high risk to our
investment recommendation. As seen with the Fitbit Force Recall in in 2013-2014, this can severely reduce the
company’s net income as it was reduced by $84,650,000 in 2013 and by $22,840,000 in 2014.
Market Risks
Also scoring very high on our risk matrix is the market risk which has a high probability and high impact. Fitbit’s
operating results are very dependent on economic condition with its being a discretionary product. This is visible as a
chunk of their revenue is earned in the 3rd
and 4th
quarter as the Christmas season arrives.
Financial Analysis
Favourable results in line items, despite decreased margins
Revenue increased $1,113 million, or 149%, from $745.4 million for 2014 to $1,858 million for 2015. A substantial
majority of the increase was due to an increase in the number of devices sold from 10.9 million in 2014 to 21.4 million

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in 2015, including $1,427 million in revenue in 2015 from new products introduced in the fourth quarter of 2014. All
earnings margins increased in 2014 due to Fitbit regaining profitability which saw a move from net loss of ($51,622,000)
in 2013 to net profit of $131,677,000 in 2014. This is mostly attributable to introduction of new products and higher
prices. 2015 saw a slow in earnings due mainly to the Fitbit Force Recall which negatively affected the firm’s income
with a resulting net income of $175,677,000. Gross margin rose from 22.23% in 2013 to 47.98% (~48%) in 2014 which
is similar to that of 2015 which is 48.50%. Growth in Gross Profit YoY reduced significantly from 494% in 2014 to
152% in 2015. Other factors included the negative impact of FX rates on product pricing. The EBITDA Margin was
slowed from 22.5% in 2014 to 19.2% in 2015. It must be noted that EBITDA is significantly affected by increased
marketing cost and Research and Development. Similarly NI Margin moved from 17.7% in 2014 to 9.5% in 2015
respectively.
Prospective Revenue Growth Attributable to Higher Pricing, New Product Lines, and Entrants into New Markets
The wearables market is expected to increase in volume globally (see Appendix A4). It is estimated that Fitness and
activity trackers will account for more than 50% of unit sales in 2019. It must be noted that Fitbit, due to its recent IPO,
is currently experiencing a supernatural growth period. With a revenue growth rate YoY of 175% from 2013 to 2014
and a revenue growth rate YoY of 149% from 2014 to 2015 it is visible that revenues growth rates have decreased. Fitbit
therefore plans to tackle the downtrend by creating new products, pricing higher and entering new markets.
New Product Lines
In 2015, the Fitbit Surge and Charge HR were highly anticipated due to their interactive user interface and ability to
track the heart rate in a simpler manner. With the introduction of the Flex 2 and Charge 2 in 2016, Fitbit planned on
gaining more revenue in the Christmas period; however, failed in doing so due to underestimating the initial demand
and complex manufacturing processes. The Charge 2 did not take off as expected given that the Flex 2 was the more
demanded product. The Flex 2 was ready for New Year’s resolution, however, which is expected to boost their first
quarter revenues in 2017.
Higher Pricing
Also, Fitbit, as was previously done in 2014, would benefit from the increase in average selling price of products (from
2014-$66/unit to 2015-$85/unit). With the introduction of innovative products due to intense R&D, Fitbit is able to
capitalize on this by having higher starting prices. With Fitbit’s device sales increasing yearly, one of its strategies is to
steadily increase prices so has to gain higher margins off each product sold which is visible as their revenue continues
to rise from $271.1 million in 2013 to $745 million in 2014 followed by a jump to $1 858 million dollars in 2015. This
however may be challenged due to myriad of competitors and other risks which may pose a threat.
Entrants into New Markets
Fitbit aspires to enter the APAC wearables market which will lead to an increase in revenues as well. With plans to enter
into China, Japan, South Korea, and Australia, four (4) of the top 5 countries in APAC based off GDP, Fitbit can see a
huge jump in their revenues when they undertake and maintain such operations. It must be noted that regulations in the
future may hinder the ease of entry and maximizing profits. For example, in Australia, Fitbit is having a challenge which
resulted in the firm closing its retail outlet and dismissal of Amazon’s sales. To tackle such a challenge, Fitbit has turned
to Target Corp, a general merchandise discount store, to do its retailing for the firm. Fitbit recognizes revenues when
the products are shipped to Target Corp.
Consistency in Liquidity
The liquidity of the firm has been maintained. However, there is a high level of idle cash as indicated by the increase
from 0.9x to 2.2x in its Quick Ratio over 2014 and 2015. Compared to other competitors such as Apple and Garmin,
Fitbit has a very high quick ratio, which is above its competitors’ average of 1.9x. Over the last quarter of 2016 to
January 2017 however, Fitbit has been making use of its idle cash by purchase of Pebble Technology Corp. and Vector
Watch UK Limited, accordingly there may be an expected fall in liquidity. Uncertainty exists because the method and
acquisition cost were not fully undisclosed.

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Figure 2: ROE Decomposition Ratios ROE Decomposition
Fitbit’s ROE has declined from 2014 159.1% to 2015 30.8%, by as much as
128 percentage points. This questions Fitbit’s efficiency in maximizing
shareholder’s wealth. Using the Du Point decomposition of the ROE, which
takes into account profitability, efficiency and financial leverage, the major
factor causing the significant declines in the ROE is attributed to its
profitability. The Net profit margin has consistently declined from 17.7% in
2014 to 9.5% in 2015.
Fitbit's ROA has been declining over the last 3 years, however, more drastically towards the latter. Since their IPO, the
ROA has declined by approximately 12%, in comparison to a 3.8% drop from the previous period. In Fitbit’s scenario
consistent decrease in ROA is attributed to them growing their asset base at a greater magnitude than their income
growth. The company had an asset growth rate of 174.3% and 140% for the 2014 and 2015 financial years respectively.
However, when comparing its income growth- using the EBITDA growth rate- the significant difference in growth
magnitudes is seen. The EBITDA growth has decreased from ~167.5% in 2014 by 112.6% in 2015.
Valuation
Price Target Range: $15 $3
Recommandation: Hold
Valuation Price Target: $8.70
Methodology
The primary valuation methodology utilized in deriving a target price for Fitbit was the Discounted Cash Flow (DCF),
as well as the P/E Multiple Relative Valuation. Due to the nature of the company and the lack of substantial time-
series data, basic statistical methods and underlying assumptions were incorporated to create a tailored method. A
range of prices was obtained from a series of scenario analysis. From this, we deduced that under the ‘bull case’
scenario, where Fitbit solves all its existing problems, it will
have an expected price of approximately $15, while under the
‘bear case’, its expected price will fall to approximately $3 over
the next 52 weeks. Furthermore, we predict an overall expected
price of approximately $8.70 per share.
Assumptions
The following assumptions were made for ease of calculation and analysis:
1. Fitbit’s financing will remain 100% equity over the next 5 years, therefore, all interest related expenses and
differences in levered and unlevered values are negligible.
2. There will be no dividend payments to common shareholders within the next 5 years as Fitbit is still in its
growth stage.
3. There is a 5% chance that Fitbit will experience bull case which will result in a 15% growth in FCF.
Considering a bull case, we believe that Fitbit’s expenses as a percentage of sales will decline towards a
steady rate from 2017 onwards, indicating improved efficiency in operations. Sales and marketing will follow
this trend initially, then face moderate declines as Fitbit gains global brand awareness and acquire market
share. In addition, spending on R&D will increase significantly to maintain industry competitiveness, limiting
Fitbit’s exposure to the product defects and the resulting risks of product recalls and legal issues. From these,
we devised a pro-forma statement which forecasts the 2017 period and saw a growth in FCF from $-20.1
million in 2016 to 85 million in 2017 (Please See Appendix: A1, Bull Case Cash Flow). However, this growth
in FCF was estimated as calculations using these figures do not produce meaningful results.
Fitbit is currently a leader in its subcategory of the consumer electronics industry which is expected to
experience a super normal growth of approximately 30% over the next 5 years. Assuming bull case, Fitbit can
reap a growth rate similar to that projected for the industry. However, this rate will be lower- at about 15% in
the short-medium term. Given Fitbit’s 2016 setback, we anticipate that 2017 will be a transition year towards
the industry standards. Despite this, recent setbacks make Fitbit increasingly vulnerable to the loss of market
share to competitors. Fitbit may also face manufacturing constraints as it depends on one main manufacturer
Hold
Buy
Sell
“BULL Case”
Price: $15.00
“BASE Case"
Price: $10.81
“BEAR Case”
Price: 2.94

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for its products, posing limitations on its ability to significantly improve its products quality issues. As such,
the likelihood that Fitbit will experience Bull case is estimated to be only 5%.
4. There is a 65% chance that Fitbit will experience Base case which will result in a 2% growth in FCF.
Considering a base case, Fitbit will face relatively smaller warranty and recall costs. Growth in revenue will
gradually fall due to competition. However, we do not anticipate a negative growth in revenues over the
forecasted periods, as Fitbit, being a market leader, is expected to feed off the predicted supernormal industry
growth, even under base case. In addition, operating expenses will gradually consume a larger share of
revenues indicating inefficiency (Please See Appendix: A1, Base Case Income Statement). Fitbit invested a
significant amount in R&D during 2016 which we believe is likely to continue in 2017 and prove effect in
subsequent years. Using these assumptions, we devised a pro-forma statement which saw a growth in FCF
from 2016 to 2017 of 2.38% (please see appendix, figure?). This estimate is close to the industry’s normal
growth rate of approximately 4%.
There is a higher probability that Fitbit will experience a base case when compared to the other cases because
of the constraints it now faces. These include a single supplier, product quality issues, and inability to expand
in certain regions. While these constraints may position Fitbit in a bear case, their recent cash acquisitions,
investments and increased spending on research and development is expected to have a positive spin off going
forward. Taking these into consideration, we estimate a 65% chance that Fitbit will experience a base case.
5. There is a 30% chance that Fitbit will experience bear case which will result in a -35% growth in FCF.
We forecast a 35.18% annual decline in FCF for 2017 (Please See Appendix: A1,Base Case Cash Flow). The
prior year saw a significant fall in FCF to a negative value which is likely to continue if business operations
worsen. While Fitbit’s reputation among investors is likely to deteriorate in the bear case, its recent
partnerships and acquisitions will have cushioning effects for its market share in 2017, limiting the extent of
the anticipated fall in FCF. We believe that revenues will face a slight increase up to 2018, however, will
begin to decline thereafter due to an exhaust of business capacity and a loss of market share. This will have
dire implications for operating income as we anticipate that expenses will consume an increasing portion of
revenue.
Fitbit’s recent setbacks including the unsuccessful expansion in the APAC region, numerous product recalls
and inability to meet consumer demand, will require some time to fully recover. However, during this
transitory period, the company will be prone to various investment risks. This increases the likelihood of a
bear case than a bull. The fact that Fitbit relies on a single supplier for the majority of its products, many of
which require materials that are hard to source, is an indicator that Fitbit is prone to shortages, products recalls
and the associated lawsuits going forward. This, coupled with the anticipation that similar fitness devices will
be launched by major competitors, has negative implications on Fitbit’s market share for 2017. For these
reasons, we believe that there is a 30% chance that Fitbit will experience a bear case.
6. Inflation will remain relatively stable throughout the 2017 financial year.
Decomposition-Abnormal vs Normal Growth Period
Fitbit is experiencing an abnormal growth and inconsistent growth pattern. For greater accuracy, a clear identification
of and distinction between its normal and abnormal growth periods were made and incorporated into the model. On
average, abnormal growth periods do not exceed 5 years and it is estimated that Fitbit will continue to experience this
growth for the next 2-3 years. After this period, Fitbit is expected to grow at a constant rate of 4% in line with the
industry. This rate is slightly higher than the overall growth experienced by the US economy-an average 3% per year
since the 1990’s, as proxied by GDP growth. While there is much talk surrounding the potential of an industry to grow
above the economy, the consumer electronics industry is believed to possess the capacity to exceed this rate as it is
highly competitive and driven by constant research and development.
IPO 2016 2017 2018 2019
Abnormal Growth Normal Growth
Figure 4: Fitbit’s Business Cycle

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Cost of Equity
Since Fitbit is financed by 100% equity the WACC is an inappropriate measure of its cost of capital. Instead, this was
derived using the CAPM formula. We obtained a risk-free rate, Beta and market risk premium of 2.55%, 1.44 and
6.25% respectively, giving a cost of equity of 11.55%.
Negative Free Cash Flow (FCF) proxied by Free Cash Flow to Equity (FCFE)
FCFE was used as a proxy for FCF because of the 100% equity assumption made above. In order to estimate Fitbit’s
FCFE for 2016, it was necessary to exclude the previous year’s negative figure. A growth rate applied to such a value
would result in an entirely negative series for subsequent years and a negative price. Instead, by scaling the figures of
FCF and preference share dividends as at the third quarter, 2016, to arrive at an estimated annual figure, it was
possible to calculate a positive FCFE. At this time, Fitbit had a FCF of $34.9 million which was scaled up by 33% to
arrive at an estimated annual figure of $46.5 million. The same was done to the preference share dividends of $8.8
million to arrive at an annual value of $11.7 million. Due to supply constraints experienced by the company in its
fourth, usually most profitable, quarter, the FCF was reduced by an average $5 million to reflect this. The estimated
annual preference share dividends was then subtracted from the estimated annual FCF to derive an annual estimate for
the FCFE of $29.8 million for 2016. Finally, various growth rates were applied to this value in order to estimate the
FCFE for the subsequent abnormal growth periods and consistently at 4% thereafter.
Terminal Value
The DCF model was finalized using the terminal growth method in order to estimate the terminal value of Fitbit after
the abnormal growth period. It was estimated by extending the FCFE inflow at the beginning of the normal growth
period through subsequent years into perpetuity. This reflected a consistent, terminal growth rate of 4%, matching the
general forecasts of the industry’s growth rate. Specifically, we divided the estimated FCFE inflow at the beginning of
the normal growth period by the difference between the derived cost of equity and the constant normal growth rate of
4%. By using these inputs, a fair representation of Fitbit’s value at the date was possible to estimate (Please See
Appendix: A2).
Relative Valuation
Fitbit’s value was also estimated through the use of a relative valuation methodology, with an emphasis on the P/E
multiple. However this figure can be seen as unreliable due to a few factors such as:
1. Scarce availability of close competitors – The companies which operate in the wearables industry are all
specialized and unique. This poses a problem for direct comparisons.
2. Inclusion of other operations - The available competitors that were selected also include operations that
aren’t directly related to the target industry. That is, a company such as Garmin has various other departments
not directly related to fitness tracking and Misfit is a part of the Fossil Group portfolio.
3. The inclusion of generalized consumer electronics companies – For a comprehensive understanding of the
industry, it was necessary to include broad-based consumer electronics companies such as Apple which is
now entering the industry. However it would be foolhardy to consider it a close comparison.
The analysis (see appendix A3) resulted in an intrinsic value of $8.37, which is an approximately 16% premium on
Fitbit’s current trading price. While this figure is fairly reasonable and may be considered as support for our current
target price of $8.70, there are too many uncertain factors for a valid comparison. Therefore reliance was placed on the
DCF valuation.

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Investment Risks
[B1] Execution Risk for International Expansion| Dealing with
trouble in the APAC Region (Probability: Medium, Impact:
Medium)
There has been a notable decrease in growth rates in their Asia-Pacific
revenue which highlights the likelihood of failure in exploiting new
markets in order to drive revenue growth.
Mitigant: Other regions have and may continue to positively contribute
to revenue growth. This diversification reduces the risk of any one
expansion effort.
[B2] Meeting Consumer Demands| Forecasting and filling
fluctuating consumer demands (Probability: Medium, Impact:
High)
The Fitbit Flex 2 faced significant challenges in the manufacturing
process due to a highly compact design and resulted in insufficient
supply and $50 million in unseized revenue in their most vital quarter,
illustrating the difficulty in filling demand (See Porter’s Five Forces
Appendix C2).
Mitigant: Research and development spending will possibly result in designs
that require less stringent manufacturing specifications and supply
constraints.
[B3] Loss of Market Share to Competitors| Maintaining its competitive
position as market leader (Probability: High, Impact: High)
The industry is highly competitive, requiring vast amounts of spending on
marketing and brand development, and with the entry of broad-based
consumer electronics companies with more pervasive brands and resources
there is a risk of losing market share.
Mitigant: Sustained spending in sales and marketing to maintain an
established brand presence and keep market share.
[B4] Product Quality Issues| Potential losses in revenue, reputation and future performance (Probability: High,
Impact: High)
In the past the company has experienced issues as it relates to product quality. The Fitbit Force Recall alone resulted
in a reduction of net income by $84,650,000 and $22,840,000 for the years of 2013 and 2014 respectively.
Mitigant: Increased spending in research and development should yield positive results as it relates to product designs
and hopefully reduce any product quality issues.
[M1] Market Risk – Discretionary Spending Rates| Sustaining demand and growth | (Probability: High,
Impact: High)
The company’s operating results are very dependent on economic conditions due to the fact that their product is a
discretionary spending item and seasonal.
Mitigant: Sustaining a brand in order to capitalize on their most productive quarter.

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Appendices
Section A: Valuation & Financial Analysis
Appendix A1: Financial Statements Forecasts.
Forecasts were done to determine future growth rates under three (3) cases in order to compute an expected price. Brief
descriptions of forecasting techniques used to assess the base case are given below:
Revenues- average YOY growth from previous years.
Research and Development: % of previous year’s revenue.
Change in Contingent Consideration: Negligible
Other Expenses: % of current year’s revenue.
Taxes: US Corporate Tax rate applied to EBT.
NOTE: For the BULL and BEAR cases, we utilised the valuation assumptions to assess the impact it had on the base case thus
generating the figures.
Bull Case DCF
Income Statement E E E E E
For the Fiscal Period Ending 12 months
Dec-31-2012
12 months
Dec-31-2013
12 months
Dec-31-2014
12 months
Dec-31-2015
12 months
Dec-31-2016
12 months
Dec-31-2017
12 months
Dec-31-2018
12 months
Dec-31-2019
12 months
Dec-31-2020
Currency USD USD USD USD USD USD USD USD USD
Units Millions Millions Millions Millions Millions Millions Millions Millions Millions
Revenues
Revenues 76.40 271.10 745.40 1,858.00 2,335.21 3,133.33 4,060.78 4,933.47 5,658.08
100% 100% 100% 100% 100% 100% 100% 100% 100%
% Grow th 254.84% 174.95% 149.26% 25.68% 34.18% 29.60% 21.49% 14.69%
Expenses
Cost of Revenues 49.70 210.80 387.70 956.90 1,256.79 1,597.58 2,028.63 2,439.18 2,797.44
65.05% 77.76% 52.01% 51.50% 53.82% 50.99% 49.96% 49.44% 49.44%
Sales and Marketing 10.24 26.85 112.01 332.74 463.03 687.74 862.25 1,000.47 1,079.92
13.40% 9.90% 15.03% 17.91% 19.83% 21.95% 21.23% 20.28% 19.09%
General and Administrative 3.97 14.49 33.56 77.79 137.14 187.43 246.88 306.23 356.69
5.19% 5.34% 4.50% 4.19% 5.87% 5.98% 6.08% 6.21% 6.30%
Research and Development 16.21 27.87 54.17 150.04 292.67 443.06 643.24 838.26 992.11
21.22% 10.28% 7.27% 8.08% 12.53% 14.14% 15.84% 16.99% 17.53%
Interest Income/expense-net 0.18 1.08 2.22 1.02 (2.40) (2.54) (2.57) (4.10) (4.96)
0.23% 0.40% 0.30% 0.05% -0.10% -0.08% -0.06% -0.08% -0.09%
Other Income/expense-net 0.03 3.65 15.93 59.23 (0.08) (0.12) (0.18) (0.26) (0.39)
0.03% 1.35% 2.14% 3.19% 0.00% 0.00% 0.00% -0.01% -0.01%
Change in Contingent Consideration - - - 7.70 - - - - -
- - - 0.41% 0.00% 0.00% 0.00% 0.00% 0.00%
Total Expenses (80.32) (284.74) (605.58) (1,585.42) (2,147.16) (2,913.15) (3,778.25) (4,579.78) (5,220.81)
105.13% 105.03% 81.24% 85.33% 91.95% 92.97% 93.04% 92.83% 92.27%
% Grow th 254.52% 112.68% 161.80% 35.43% 35.67% 29.70% 21.21% 14.00%
Earnings before Taxes (3.93) (13.69) 139.77 287.95 188.05 220.18 282.53 353.69 437.27
-5.14% -5.05% 18.75% 15.50% 8.05% 7.03% 6.96% 7.17% 7.73%
Taxes and Other Expenses
Provision for Income Tax 0.29 37.94 8.00 112.27 89.10 85.85 110.16 137.90 170.49
0.38% 13.99% 1.07% 6.04% 3.82% 2.74% 2.71% 2.80% 3.01%
Net Income (Loss) (4.22) (51.62) 131.78 175.68 98.95 134.33 172.37 215.79 266.78
-5.52% -19.04% 17.68% 9.46% 4.24% 4.29% 4.24% 4.37% 4.71%
% Grow th N/M N/M 33.31% -43.67% 35.76% 28.31% 25.19% 23.63%
FITBIT
Pro-Forma Income Statement
BULL CASE

12 | P a g e
Bull Case DCF (continued)

13 | P a g e
Base Case DCF
Dec-31-2012
12 months
Dec-31-2013
12 months
Dec-31-2014
12 months
Dec-31-2015
12 months
Dec-31-2016
12 months
Dec-31-2017
12 months
Dec-31-2018
12 months
Dec-31-2019
12 months
Dec-31-2020
Revenues
Revenues 76.40 271.10 745.40 1,858.00 2,335.21 2,565.90 2,692.63 2,766.52 2,813.96
100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
% Grow th 254.84% 174.95% 149.26% 25.68% 9.88% 4.94% 2.74% 1.72%
Expenses
Cost of Revenues 49.70 210.80 387.70 956.90 1,256.79 1,385.58 1,521.34 1,568.62 1,603.96
65.05% 77.76% 52.01% 51.50% 53.82% 54.00% 56.50% 56.70% 57.00%
Sales and Marketing 10.24 26.85 112.01 332.74 463.03 534.43 560.83 548.55 548.72
13.40% 9.90% 15.03% 17.91% 19.83% 20.83% 20.83% 19.83% 19.50%
5.19% 5.34% 4.50% 4.19% 5.87% 4.59% 4.80% 4.82% 4.90%
21.22% 10.28% 7.27% 8.08% 12.53% 14.34% 12.39% 13.63% 13.76%
Interest Income/expense-net 0.18 1.08 2.22 1.02 (2.40) (2.41) (2.50) (2.62) (3.21)
0.23% 0.40% 0.30% 0.05% -0.10% -0.09% -0.09% -0.09% -0.11%
Other Income/expense-net 0.03 3.65 15.93 59.23 (0.08) (0.08) (0.08) (0.09) (0.09)
0.03% 1.35% 2.14% 3.19% 0.00% 0.00% 0.00% 0.00% 0.00%
- - - 0.41% 0.00% 0.00% 0.00% 0.00% 0.00%
Total Expenses (80.32) (284.74) (605.58) (1,585.42) (2,147.16) (2,403.14) (2,542.46) (2,624.76) (2,674.63)
105.13% 105.03% 81.24% 85.33% 91.95% 93.66% 94.42% 94.88% 95.05%
% Grow th 254.52% 112.68% 161.80% 35.43% 11.92% 5.80% 3.24% 1.90%
-5.14% -5.05% 18.75% 15.50% 8.05% 6.34% 5.58% 5.12% 4.95%
0.38% 13.99% 1.07% 6.04% 3.82% 2.47% 2.17% 2.00% 1.93%
Net Income (Loss) (4.22) (51.62) 131.78 175.68 98.95 99.29 91.62 86.48 85.01
-5.52% -19.04% 17.68% 9.46% 4.24% 3.87% 3.40% 3.13% 3.02%
% Grow th N/M N/M 33.31% -43.67% 0.35% -7.73% -5.60% -1.71%
FITBIT
BASE CASE

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Base Case DCF (continued)
8

15 | P a g e
Bear Case DCF
Dec-31-2012
12 months
Dec-31-2013
12 months
Dec-31-2014
12 months
Dec-31-2015
12 months
Dec-31-2016
12 months
Dec-31-2017
12 months
Dec-31-2018
12 months
Dec-31-2019
12 months
Dec-31-2020
Revenues
Revenues 76.40 271.10 745.40 1,858.00 2,335.21 2,506.58 2,529.57 2,471.56 2,370.23
100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
% Grow th 254.84% 174.95% 149.26% 25.68% 7.34% 0.92% -2.29% -4.10%
Expenses
Cost of Revenues 49.70 210.80 387.70 956.90 1,256.79 1,378.62 1,429.21 1,396.43 1,348.66
65.05% 77.76% 52.01% 51.50% 53.82% 55.00% 56.50% 56.50% 56.90%
Sales and Marketing 10.24 26.85 112.01 332.74 463.03 526.38 556.51 556.10 545.15
13.40% 9.90% 15.03% 17.91% 19.83% 21.00% 22.00% 22.50% 23.00%
5.19% 5.34% 4.50% 4.19% 5.87% 5.60% 5.50% 5.35% 5.20%
21.22% 10.28% 7.27% 8.08% 12.53% 14.68% 13.38% 13.31% 12.51%
Interest Income/expense-net 0.18 1.08 2.22 1.02 (2.40) 1.35 1.51 1.86 2.04
0.23% 0.40% 0.30% 0.05% -0.10% 0.05% 0.06% 0.08% 0.09%
Other Income/expense-net 0.03 3.65 15.93 59.23 (0.08) 24.36 27.71 32.36 39.25
0.03% 1.35% 2.14% 3.19% 0.00% 0.97% 1.10% 1.31% 1.66%
- - - 0.41% - - - - -
Total Expenses (80.32) (284.74) (605.58) (1,585.42) (2,147.16) (2,438.91) (2,492.45) (2,447.83) (2,354.94)
105.13% 105.03% 81.24% 85.33% 91.95% 97.30% 98.53% 99.04% 99.36%
% Grow th 254.52% 112.68% 161.80% 35.43% 13.59% 2.20% -1.79% -3.79%
-5.14% -5.05% 18.75% 15.50% 8.05% 2.70% 1.47% 0.96% 0.64%
0.38% 13.99% 1.07% 6.04% 3.82% 1.05% 0.57% 0.37% 0.22%
Net Income (Loss) (4.22) (51.62) 131.78 175.68 98.95 41.28 22.65 14.48 10.02
-5.52% -19.04% 17.68% 9.46% 4.24% 1.65% 0.90% 0.59% 0.42%
% Grow th N/M N/M 33.31% -43.67% -58.28% -45.14% -36.06% -30.81%
FITBIT
BEAR CASE

16 | P a g e
Bear Case DCF (continued)
Appendix A2: Discounted Cash Flow Terminal Valuation
Years Free CashFlowtoEquity Years Free CashFlowtoEquity Years Free CashFlowtoEquity
2017 $34,500,000.00 2017 $30,714,000.00 2017 $19,446,000.00
2018 $39,675,000.00 2018 $31,444,993.20 2018 $3,712,897.20
2019 $45,626,250.00 2019 $32,193,384.04 2019 $8,170,494.37
2020 $47,451,300.00 2020 $33,481,119.40 2020 $8,497,314.14
TerminalValue (2019) $628,494,039.74 TerminalValue (2019) $443,458,535.10 TerminalValue (2019) $112,547,207.15
Bull Case Base Case Bear Case

17 | P a g e
Appendix A3: Relative Valuation
* Industry P/E calculated as an average of companies
EPS = 99.29 million = $0.584
170.1 million
Intrinsic Value per share = ($0.584 * 14.34) = $8.37
Source: Bloomberg, Team Calculations
Appendix A4: Global Wearable Forecast
CCS Insight estimates that the Global Wearables Market will expand 3 times its size by 2019 in regards to number of
units sold. Also the value of the market should increase by 64% to result in approximately $25 billion.
Source: CCS Insight
Company P/E Multiple 2016
Fitbit 14.23
Garmin 18.81
Misfit 10.68
Apple 13.65
Industry P/E 14.34
Detail 2017
Net Income $99.29 Millions
Shares Outstanding 170.1 Millions
EPS $0.584
Industry P/E 14.34
Intrinsic Value per Share $8.37

18 | P a g e
Section B: Company Analysis
Appendix B1: Top ten shareholders
Source: S&P Capital IQ
Appendix B2: Fitbit’s Organizational Chart Appendix B3: Software Services
Source: S&P Capital IQ Source: Company‘s Filing
Holder Common Stock Equivalent Held
True Ventures 26,310,704
Friedman, Eric N. (Co-Founder, Chief Technology Officer and Director) 16,524,429
Park, James (Co-Founder, Chairman, Chief Executive Officer and
President)
14,744,595
Foundry Group 14,448,993
The Vanguard Group, Inc. 10,009,646
BlackRock, Inc. (NYSE:BLK) 9,442,902
SoftBank Capital 7,139,993
DNB Asset Management AS 5,718,526
Benioff, Marc R. 5,311,824
Murray CPA, Steven J. (Director) 5,139,993

19 | P a g e
Section C: Industry Analysis
Appendix C1: SWOT Analysis
The SWOT Analysis was created to establish a better understanding of Fitbit’s competitive position within the consumer
electronics industry. It is designed around a series of groupings within in each SWOT section, which are ordered
according to their expected impact on Fitbit. The points system was used to summarize and analyse the overall position
of Fitbit.

20 | P a g e
Source: Team Analysis
Appendix C2: Porter’s Five Forces Analysis
Bargaining Power of Customers - MODERATE: The wearables industry has been confined as a discretionary
spending item where customers may reduce spending at will. There are a variety of products and substitutes for them to
choose from, and even longer-term corporate wellness packages can be modified. Also, while Fitbit has agreements
with retailers and distributors, they are not required to purchase any meaningful amount of their products. This means
that retailers can choose the manner in which products are displayed and offer their competitor’s products.
Notwithstanding all their advantages, Fitbit offers its products to a diverse variety of customers through varying
channels, meaning no single customer has high bargaining power. Therefore we assess the bargaining power of
customers to be MODERATE.
Bargaining Power of Suppliers - HIGH: Fitbit sources the majority of supplies through its contract manufacturer,
Flextronics, who is also responsible for the production of their devices. This is a substantial consolidation of power and
dependency on Flextronics, which means they have a high bargaining power. The industry as a whole, in its focus on
innovation is driven in part by the ability of a firm to contract a manufacturer with the capabilities to produce their
specific product or manufacture said product themselves. Since Fitbit is so reliant on Flextronics, and has limited
alternatives due to the complexity of the products, we assess the bargaining power of suppliers as HIGH.
Competitive Rivalry - HIGH: The wearables industry, especially in the fitness specialization, faces a high intensity
of competition due to its status as a discretionary product. All firms in the industry are forced to fight for market share
and retaining their standing or ranking in the industry. There is a high emphasis placed on research and development,
as well as sales and marketing so companies can present a brand of innovation that remains in their customers’ minds.
Fitbit is currently a market leader which gains it a few advantages, however it is still necessary for it to engage in
aggressive and consistent marketing campaigns in order to retain its position. Now that generalized consumer electronics
firms with stronger brands have entered the market, the risk is even greater. If a firm were to have its margins squeezed
and were unable to invest in research and marketing, they would lose market share rapidly. We have assessed the risk
from competitive rivalry as HIGH.
Threat of Substitutes - MODERATE: Even with the advent of the wearables industry and its various purposes, there
are still more traditional methods and products that may be used to substitute their functions. Fitness-wise there are
personal trainers and gyms which most individuals are more accustomed to using. Even the Fitbit Aria WiFi scale can
be substituted by a more traditional scale. Wearable-wise there are regular pedometers that measure steps taken and
indirectly the level of activity one has. Accessory-wise there are regular watches and timepieces which persons are much
more accustomed to wearing than more complex wearables. Although there are various substitutes to the wearables
industry, consumer sentiment is shifting and the culture has been adjusting to allow for more persons adopting cutting-
edge products in their fitness goals. Therefore we assess threat of substitutes to be MODERATE.
Threats of New Entry - MODERATE: The wearables industry has significant barriers to entry due to the necessity of
substantial research spending to develop a unique intellectual property platform on which to innovate and the difficulty
in developing a competitive brand presence as well as structuring agreements with suppliers, manufacturers, distributors
and retailers in order to form a cohesive production and distribution channel. A new entrant would require a significant
amount of capital to establish its presence, and may not be able to do so without infringing on the intellectual property
of other players in the market. However it is possible that a firm with a unique fitness wearable design could generate
enough interest from the market in order to rapidly find a place in the market, therefore we assess the threat of new entry
as MODERATE.

21 | P a g e
Overall Outlook: Fitbit faces moderate threats to its continued existence which can be mitigated by modifying its
strategy and shifting its focus. The most important of these is by discovering new ways in which it can manufacture its
product and source supplies in order to regain bargaining power from its supplier. It needs to maintain its research and
marketing spending in order to maintain a brand presence that is defined by innovation. It needs to continue developing
new distribution channels and retailer presence as well as defend its intellectual property rights. By doing this the
company can adequately prepare for the threats it faces in the industry.
Appendix C3: Corporate Governance
In order to determine an appropriate rating of Fitbit’s Corporate Governance, methodology in accordance with the U.S.
Securities and Exchange Commission guidelines were adopted. A rating scale from 1 to 5 was used as follows:
Disclosure and Transparency - 2
Investors are adequately informed on the operations of the company as well as the state of its key performance indicators
through earnings calls and press releases. The website has an investor relations page that displays financial report filings,
and also has newsletters for consistent release of information. However the company is relatively new, meaning
guidance and forecasts are more likely to be inaccurate.
Executive Management - 3
The management team is highly qualified however it is uncertain whether their skills and experience will be appropriate
to grow Fitbit into a stable company with a long-term future, especially as this industry is a young one and they operate
in very competitive environment. This rating could be modified as the management establishes a track record and has a
good history to support them.
Board of Directors – 4
The board of directors are highly qualified and experienced in their respective fields. However due to the majority of
independent directors, there is a risk that board decisions may not be perfectly aligned with shareholder and management
interests.
Rights and Obligations of Shareholders - 5
Currently shareholders with Class A stock do not have majority voting power, as Class B controls all matters placed
before stockholders with a 10-to-1 voting advantage. This means that until these shares are converted, the founders and
other Class B are able to make decisions that are not in accordance with the Class A holders’ preferences.
Takeover Defence – 1
The threat of a hostile takeover is extremely low. Any decisions as it relates to mergers and business combinations are
currently left to the discretion of Class B shareholders (such as the founders), and a raider would not be able to sustain
a majority of votes otherwise.
Score: 3/5
This is similar to the The Institutional Shareholder Service (ISS)’s Quickscore Rating of 7 (10 – Higher Risk).

22 | P a g e
Appendix C4: Key Executive Members
Source: Bloomberg, S&P Capital IQ, Company’s Filing
Name Title Career History Description
James Park,
39
Chairman President
CEO
Co-Founder Fitbit
Board Member
Fitbit 05/2015 – Present
Chairman/Pres/CEO/Co-Founder
Windup Labs PresentCo-Founder
At Only 39 years old, he is considered one of America’s
most successful entrepreneurs despite dropping out of
Harvard College where he studied Computer Science. He
co-founded Fitbit with Eric Friedman in April 2007 and
has also been the CEO of the publicly traded company
since 2015. He is also the co-founder of Windup Labs.
William Zerella
60
CFO Fitbit 06/2014 – Present Chief
Financial Officer(CFO) Vocera
Communications Inc.
CFO 10/2011-06/2014 Force10
Networks Inc. 7/2006-09/2011 VP:
Finance & Administration/ CFO
Mr. William ‘Bill’ Zerella has been Fitbit’s CFO since June
2014. He was also the CFO of Vocera Communications Inc.
from October 2011 to June 2014 and served as the CFO
and treasurer of Carrier Access Corporation since July
2006. He has in excess of 30 years of industry experience
and has led financial organizations at a number of public
and private technology companies. Throughout his
career, he has successfully raised or restructured over
$500 million of equity and debt capital. He Has an MBA in
Finance from Leonard N Stern School of Business and a
Bachelor’s Degree in Accounting from New York Institute
of Technology. He is Also a Certified Public Accountant
(CPA).
Eric Friedman
39
CTO/Co-Founder
Fitbit Board Member
Fitbit
Present CTO/ Co-Founder
Windup Labs
Present
Co-Founder
Friedman is a co-founder and Chief Technology Officer
and Director of Fitbit Inc. He is also co-founder of Wind-
Up Labs which was incorporated in 2002. In a feature
done on Fitbit, he tells the story of how a wooden box
became a $4 billion dollar company. He holds both a
Master’s and a Bachelor’s Degree in Computer Science
from Yale University.
Ronald Kisling
55
Chief Accounting
Officer
Fitbit
Present Chief Accounting Officer
Nanometrics Inc. 03/2011-09/2014
Chief Financial Officer
Saba Software Inc. 05/2002-
04/2004
Acting CFO
Mr. Kisling is currently the Chief Accounting Officer at
Fitbit Inc. From March 2011 to September 2014 he was the
Chief Financial Officer at Nanometrics Inc. Additionally,
he held the position of Acting Chief Financial Officer of
Saba Software Inc during the period May 2002 to April
2004. Ron also holds a Bachelor’s Degree in Economics
from Stanford University
Edward Scal
56
Chief Business Officer Fitbit 2015 – Present Chief
Business Officer 10/2010-2015
Chief Revenue Officer Camelbak
Products Inc
Former Executive VP
He holds an MBA from Stanford Graduate School of
Business and a Bachelor’s Degree in History from
Williams College.
Andrew Missan
54
Chief Business Officer
Exec VP
General Counsel
Fitbit Present Exec VP/General
Counsel Bytemobile Inc. 07/2009-
10/2012
VP/ General Counsel
He has a JD from Northwestern University School of Law
and a Bachelor’s Degree from Oberlin College.

23 | P a g e
Appendix C5: Fitbit Board Members
Appendix C6: Board Committee Positions
Name Background Tenure Independent
James Park
James Park is a cofounder and has served on the board of
directors since March 2007, has been Chairman since May
2015, and has been President and Chief Executive Officer
since September 2007. 2 Years No
Jonathan D. Callaghan
Jonathan D. Callaghan has served as a member of the board
since September 2008 due to his extensive experience with
technology companies and roles in various venture capital
firms. He is aDirector, Chairman of Compensation Committee
and Member of Nominating and Governance Committee
N/A Yes
Eric N. Friedman
Eric N. Friedman is a cofounder and has served as a member
of the board March 2007 and as an executive officer since
September 2007 including most recently as the Chief
Technology Officer due to his background in computer
science. 10 Years No
Steven J. Murray
Steven Murray has served as a member of the board since
June 2013 due to his extensive experience with technology
companies. He is a Director, Member of Audit Committee and
Member of Nominating and Governance Committee 4 Years Yes
Christopher B. Paisley
Christopher Paisley has served as a member of the board
since January 2015 due to his extensive experience in the
financial services industry and academia. He is a Director,
Chairman of Audit Committee and Member of Compensation
Committee 2 Years Yes
Glenda J. Flanagan
Glenda Flanagan has served as a member of the Board of
Directors since June 2016. < 1 Year Yes
Laura J. Alber
Laura Alber has served as a member of the Board of Directors
since June 2016. < 1 Year Yes
Audit Committee Title
Christopher B. Paisley Chairman
Steven J. Murray Member
Compensation Committee Title
Jonathan D. Callaghan Chairman
Christopher B. Paisley Member
Nominating and Governance Committee Title
Jonathan D. Callaghan Member
Steven J. Murray Member

24 | P a g e
Additional Sources
Bureau of Economic Analysis. (2017, January 27). National Income and Product Accounts Gross Domestic Product:
Fourth Quarter and Annual 2016 (Advance Estimate). Retrieved January 27, 2017, from Bureau of Economic
Analysis, https://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm
Bureau of Economic Analysis. (2016, December 22). PERSONAL INCOME AND OUTLAYS, NOVEMBER 2016.
Retrieved December 29, 2016, from https://www.bea.gov/newsreleases/national/pi/2016/pi1116.htm
Future Market Insight. (2016, December 26). Consumer Electronics Market: Global Industry Analysis and
Opportunity Assessment 2015 - 2020. Retrieved December 29, 2016, from
http://www.futuremarketinsights.com/reports/consumer-electronics-market
United States Department of Labor. (2017, January 06). Employment Situation Summary December 2016. Retrieved
January 13, 2017, from United States Department of Labor, https://www.bls.gov/news.release/empsit.nr0.htm
USA.gov. The Consumer Electronics Industry Overview. Retrieved December 29, 2016, from USA.gov,
https://search.usa.gov/search?affiliate=usagov&query=consumer%2Belectronics%2Bindustry
World Bank national accounts data, and OECD National Accounts data files. GDP per capita growth (annual %).
Retrieved January 06, 2017, from The World Bank.

25 | P a g e
Disclosures:
Ownership and material conflicts of interest:
The author(s), or a member of their household, of this report does not hold a financial interest in the securities of this company.
The author(s), or a member of their household, of this report does not know of the existence of any conflicts of interest that might bias the
content or publication of this report.
Receipt of compensation:
Compensation of the author(s) of this report is not based on investment banking revenue.
Position as an officer or director:
The author(s), or a member of their household, does not serve as an officer, director or advisory board member of the subject company.
Market making:
The author(s) does not act as a market maker in the subject company’s securities.
Disclaimer:
The information set forth herein has been obtained or derived from sources generally available to the public and believed by the author(s) to be
reliable, but the author(s) does not make any representation or warranty, express or implied, as to its accuracy or completeness. The information
is not intended to be used as the basis of any investment decisions by any person or entity. This information does not constitute investment
advice, nor is it an offer or a solicitation of an offer to buy or sell any security. This report should not be considered to be a recommendation by
any individual affiliated with Jamaican Association of Investment Professionals, CFA Institute or the CFA Institute Research Challenge with regard
to this company’s stock.
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