Under Armour Buys Apps in Bid to Become Top Fitness TrackerMatt Townsend
Under Armour Inc., the maker of athletic clothing and gear, is acquiring the MyFitnessPal and Endomondo applications for a total of about $560 million in a bid to become the world’s biggest tracker of fitness information.
The two apps will complement the company’s current software -- MapMyFitness and UA Record -- giving it a total of 120 million users, according to a statement Wednesday. The company also reported better-than-projected results for the fourth quarter.
The move is part of Under Armour’s efforts to lock in customers with technology and services -- rather than just shoes and T-shirts. It bought MapMyFitness Inc. for $150 million in 2013, playing catch-up with competitors like Nike Inc., which was a pioneer in activity tracking.
“There is an overall halo effect,” for the Under Armour brand, Chief Executive Officer Kevin Plank said in an interview. The applications also generate revenue with premium versions and advertising, he said.
Under Armour shares gained 1 percent to $73.57 at the close in New York. The stock increased 41 percent during the past 12 months, outpacing the 16 percent rise in the Standard & Poor’s 500 Index.
MyFitnessPal, based in San Francisco, offers a program that helps monitor fitness goals. Under Armour agreed to pay $475 million for the business, which has more than 80 million registered users. Endomondo is a Copenhagen-based social network with its own mobile app devoted to fitness with 20 million members -- mostly outside the U.S. Under Armour completed its acquisition of that company last month for $85 million.
Both apps, along with MapMyFitness, will automatically sync to UA Record, so users can track all their performances and data from one place. Plank said he envisions UA Record, which has a mobile application and was announced last month, as a daily health dashboard.
Nike has a similar digital platform under the Nike+ brand. Over the years, it has ranged from mobile applications to watches that track a user’s runs to the Fuelband bracelet. Now Nike looks like it’s shifting away from hardware.
After trying to build digital products on its own, Under Armour realized it would be easier to look for acquisitions, Plank said. These deals also helped the company acquire tech talent, he said.
Under Armour has no plans to make its own wearable devices because it’s too difficult and costly, Plank said. The company has made three acquisitions in its history and they’ve all been to help it build an online following through digital tools.
“It’s incredibly difficult” to keep trying to make a “better mousetrap every six months,” he said.
Under Armour announced a licensing deal with HTC Corp. last month in which HTC devices will exclusively use UA Record to track activity, Plank said. The first HTC device under this agreement is expected to be a smartwatch, a person familiar with the matter said last month.
Plank founded Under Armour as an apparel company in the 1990s, making workout shirts from synthetic materials that soaked up sweat better than cotton. After the idea took off, Under Armour maintained growth by pushing into categories such as shoes and casual wear. The company, now the largest U.S. sporting-goods maker after Nike, also has expanded distribution overseas.
That’s helped Under Armour double sales about every three years. The company expects the rate of growth to slow to 22 percent this year as it enters fewer international markets, its lowest rate since 2009. The slowdown is putting more pressure on the company to expand its customer base with products such as the mobile apps.
In the fourth quarter, net income rose 37 percent to $87.7 million, or 40 cents a share, from $64.2 million, or 30 cents, a year earlier. That topped the 39 cents that analysts had estimated on average, according to data compiled by Bloomberg.
Revenue climbed 31 percent to $895.2 million, beating the $848.7 million estimated by analysts.
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