Wearable device maker Fitbit Inc (FIT.N) reported a smaller-than-expected drop in quarterly revenue on Wednesday, and said it was on track to launch its much-awaited smartwatch for the holiday season.

Shares of Fitbit — which sells colourful wristbands that monitor heartrate, tracks sleeping patterns, steps count and calories — were up 4.7 per cent at US$5.31 in extended trading.

Once the market leader in wearables, Fitbit has recently struggled with fierce competition from companies such as Apple Inc (AAPL.O) and China's Xiaomi Inc.

The company has blamed a shift among consumers toward higher feature devices and smartwatches for the declines in revenue.

The fitness-focused Apple Watch, with which Fitbit's devices compete, reported a 50-per-cent surge in sales in the iPhone maker's latest quarter.

Fitbit is stepping up efforts to reduce operating costs as it looks to turn around the business and has called 2017 "a transition year."

The company is on track to execute that plan, Chief Executive James Park said on a post-earnings call.

The fitness-band maker's revenue fell nearly 40 per cent to US$353.3 million in the second quarter ended July 1, but came in above analysts' estimate of $341.6 million.

However, Fitbit slightly narrowed its full-year revenue forecast to a range of US$1.55 billion to US$1.7 billion, from US$1.5 billion to US$1.7 billion it forecast previously.

"The second-quarter results give us more confidence that Fitbit can actually achieve its full-year guidance," said Wedbush analyst Alicia Reese, adding that an important factor would be the upcoming smartwatch.

For the second quarter, Fitbit reported a loss of US$58.2 million, or 25 cents US per share, compared with a profit of US$6.3 million, or three cents US per share, a year earlier.

Excluding items, the company posted a loss of eight cents US per share, much smaller than analysts' average estimate of 15 cents US.

The company's shares had fallen about 31 per cent this year through Wednesday.