Fitbit shares fell 30 percent in after-hours trading on Wednesday after the wearables maker posted disappointing third quarter revenues and and low expectations for the fourth quarter, which falls over the critical holiday season.
The company reported non-GAAP net income of $45.7 million, or 19 cents a share -- down from $59.2 million a year prior. It posted revenue of 503.8 million, up 23 percent year over year.
Wall Street was looking for earnings of 19 cents a share on revenue of $506.9 million.
The US accounted for 72 percent of Fitbit's revenue in Q3 and grew 33 percent year over year. However, the company saw a steep decline in the Asia Pacific region, where revenue fell 45 percent year over year.
For the fourth quarter, Fitbit expects revenue between $725 million and $750 million, representing growth of 2 percent to 5 percent, with non-GAAP earnings per share in the range of 14 cents to 18 cents. Analysts, however, had forecast earnings of 75 cents a share on revenue of $985 million.
Meanwhile, the company is forecasting full fiscal year 2016 earnings in the range of 55 cents to 59 cents on revenue between $2.32 billion and $2.35 billion. Three months ago, the company forecast full year revenue between $2.5 billion and $2.6 billion. Analysts had forecast earnings of $1.18 a share on revenue $2.58 billion for the year.
The company's operating expenses increased significantly as it hired more people to bolster its R&D, as well as marketing and sales. Its non-GAAP sales and marketing costs rose 23 percent, while non-GAAP R&D spend grew 91 percent.
Fitbit highlighted that its new products -- including the Blaze, Alta, Fitbit Charge 2, and Fitbit Flex 2 -- comprised 79 percent of Q3 revenue. By comparison, new products comprised 54 percent of revenue in Q2 2016.
CEO James Park said in a statement that he was pleased to see the positive reception of Fitbit's new products but acknowledged that the company is not growing "at the pace previously expected".
He added, "We are focused on improving the utility of our products and integrating more deeply into the healthcare ecosystem and believe we can leverage our brand and community to unlock new avenues and adjacencies of growth."
The company's disappointing performance comes as Fitbit faces growing competition in the wearables market. However, IDC reported in September that sales of Fitbit's fitness trackers surged in the second quarter, while Apple's Apple Watch actually saw its market share decline. Shipments of basic wearables -- fitness bands with no third-party applications, such as Fitbit devices -- actually climbed 48 percent year over year in the second quarter.
Meanwhile, as Park noted, innovations continue to develop in the area of health-related wearables -- spanning everything from wristbands that help people with epilepsy to tattoos that deliver blood-alcohol level readouts.
Fitbit made some headway in the wellness area in Q3, signing a partnership with corporate wellness company Virgin Pulse.