Wearable device maker Fitbit Inc 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 colorful wristbands that monitor heartrate, tracks sleeping patterns, steps count and calories - were up 4.7 percent at $5.31 in extended trading.

Once the market leader in wearables, Fitbit has recently struggled with fierce competition from companies such as Apple Inc 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 percent 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 percent to $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 $1.55 billion to $1.7 billion, from $1.5 billion to $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 $58.2 million, or 25 cents per share, compared with a profit of $6.3 million, or 3 cents per share, a year earlier.

Excluding items, the company posted a loss of 8 cents per share, much smaller than analysts' average estimate of 15 cents.

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