Fitbit should buy smart mat

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    15-Apr-2017
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Transcript of Fitbit should buy smart mat

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Fitbit is losing market share in growing marketSource: IDC.com3x Market Growth2014 Market Share2015 Market Share

Profits suffer from increased competition and limited products

Source: Fitbit Annual Report, www.fitbit.com

Fitbit can leverage its brand strength to enter large and growing yoga market Yoga market presents natural product line extension within Fitbits healthy living mission statement

yoga...80% more Yoga Practitioners now than 2012 21.6M practice weeklyGroup & individual activity75% crossover into other athletic activities

Launch interactive Smart Mat followed by Fitbit-branded apparel line

80%Source: http://www.yogajournal.com/yogainamericastudy/

Smart Mat Yoga Mats have pressure sensors to provide instant feedback and lessons through mobile devicesCompany about to launch productAffordable Acquisition (~$20M)Anticipated synergies from improved manufacturing and distribution yield $300M+ opportunityFitbit should acquire Smart Mat

Fitbit should then launch Yoga Apparel LineSmart Mat establishes Fitbit in Yoga marketFast growing, high margin, brand name, good entry point for apparelCross-selling opportunities: 75% of Yogis active athletes in other sports

Profit ForecastTotal 10 yr Profits (NPV) $ 749M

Shirt = $30 Good MarginsPants = $60 Growing Market TR = $90 Brand NameSource: http://www.yogajournal.com/yogainamericastudy/

Estimated Profits from Fitbit Yoga products are StrongSources: See Fitbit Yoga DCF model in AppendixProfit Forecast ($M)

Fitbit ApparelFitbit Smart MatSmart Mat provides bold entry point and strong profits through 2019 until product life cycle declineApparel Line follows, driving sustained profits through end of 10-yr plan

Fitbit should purchase Smart Mat, and enter the Yoga and Apparel MarketsFitbit has over $500 million in cashInvestment wouldnt require added debt or equityYoga is a natural additionHelps diversify Fitbit and provide strong profits

yoga

Appendix featuring DCFs