Under Armour continues to grow its membership base for what it's calling its Connected Fitness business -- the three apps the company acquired in the past two years as well as its existing UA Record app -- even as the company explores its new acquisitions and plots a course forward, according to the company's first quarter earnings call. Under Armour bought MapMyFitness for $150 million in November 2013 and spent an additional $560 million to buy MyFitnessPal and Endomondo in February.
The company's balance sheet shows that the company's Connected Fitness revenue, at $8.4 million, is a tiny portion of its total revenue, but is growing faster than any other segment. It's more than double the 2014 Q1 revenue from Connected Fitness. On the call, CEO Kevin Plank was more interested in reporting user data than financials. Since the initial investment call about the acquisitions in February, the various apps have added 10 million unique users for a total of 130 million, Plank said, and an average of 130,000 people per day downloaded an Under Armour app in the first quarter of 2014.
"There was a bit of concern and trepidation on our part, speaking about how we define victory, that are people gonna say 'Now they've have been bought by a company, I’m not going to use it anymore'," Plank said. "We haven't seen any signs of that. We just see them now having a higher expectation of the product that we're going to deliver. And I can tell you that everyone, we're closing on 500 people working in our Connected Fitness and digital space, [is] focused on working towards that."
He said the company is still getting a sense for the strengths of the three different companies and what they have to offer Under Armour. The first step will be to expand Under Armour's partnership with German company SAP to integrate its retail backend with the three apps. The company will spend around $330 million on this effort in 2015.
"Between our own e-commerce, the ... close to 50 million people walking into our retail stores in North America this year, and the 130 million unique users that we have on the platform, finding a way to synthesize all this information is where the SAP integration really comes from," Plank said. "So we're looking for this single view of the consumer that will give us a much better picture and easier understanding of our consumer. I think it's going to make us a lot smarter ultimately in the long run, to be able to anticipate the needs of our athletes and of our consumers."
Plank stressed that it's still early days for the new acquisitions, and that learning to work with three new companies in three different locations is a process that takes time. He told investors to expect a big announcement about Connected Fitness in September, and mentioned that three of the four apps in the ecosystem have Apple Watch apps coming out.
"At the end of the day, we're still finding out exactly what we have," Plank said. "Meanwhile, we're going to continue to grow what we have, we're going to be thoughtful about the investments that we make there, and we're going to continue to encourage things as they come to us."
