(Photo by Twitter user @mindgrub)
Several months after reports indicated Under Armour was seeking a buyer for the app MyFitnessPal, the company announced a sale on Friday morning.
In a deal that could be worth $345 million, the Baltimore-based apparel company is selling MyFitnessPal to private equity firm Francisco Partners. At the end of the year, Under Armour is also planning to discontinue Endomondo, another app in its connected fitness platform.
Of the three apps it acquired from 2013 to 2015, that leaves MapMyFitness as the remaining app under UA’s purview. On a conference call to discuss Q3 earnings Friday morning, CEO Patrik Frisk said that MapMyFitness will be key to UA’s strategy of simplifying its connected fitness offerings and creating a “singular, cohesive UA ecosystem.” He added the company has seen growth in MapMyFitness during the pandemic. Pointing at where the strategy might be headed, Frisk said it reached a milestone of 1 million shoes connecting to the platform. This allows users to track data.
“The whole idea is really that as we get more and more focused and we get dialed into the focused performer, it was clear to us that the consumer that was on MyFitnessPal didn’t skew necessarily to the consumer we’re targeting as our other apps did,” he said, clarifying that the other apps in this case are the running and riding trackers on the MapMyFitness platform.
MyFitnessPal tracks diet and exercise, and Frisk’s statement implies that it seeks to reach more of a casual user than the performance-minded athletes that UA seeks to reach.
Under Armour acquired MyFitnessPal in 2015 for $475 million, so its selling price is more than $100 million less than the company paid five years ago.
The buy was part of a splashy entrance for the company into the digital arena. UA presented the three apps it acquired as links in a strategy to leverage data, and founder Kevin Plank made a splashy appearance at SXSW in 2016, where he declared that “data is the new oil.”
But there were signs of a shakeup two years later. The cofounders of MyFitnessPal, including former chief digital officer Michael Lee, left the company at the beginning of 2018. That year, the company also disclosed that the app faced a massive data breach that affected 150 million users.
Still, MyFitnessPal remains a sizable community. The company’s press release on Friday said that it has 200 million users, which is up from a reported 80 million at the time of the purchase in 2015. Now, it’ll return to being a standalone company.
“From a MyFitnessPal perspective, this move provides an excellent home for the brand and its passionate teammates that will holistically drive that business going forward,” said Frisk.
While it’ll create focus, the sale will create an immediate revenue gap for Under Armour. CFO David Bergman pointed out there will be an immediate impact on UA’s balance sheet, as MyFitnessPal represents the bulk of the revenue for UA’s connected fitness division. Fielding questions about the near future, Bergman pointed to that revenue loss as one thing that’ll affect the company’s outlook for 2021.
Under the terms of the deal, $215 million will be paid to Under Armour on closing, which is expected in the fourth quarter. There’s also a potential for the company to receive another $130 million in earnout payments over three years if certain milestones are met.
With the sale, a top executive is also exiting the company. In a filing with the SEC that wasn’t discussed in a press release or on the earnings call, Under Armour disclosed that Chief Experience Officer Paul Fipps will be leaving the company on March 1, 2021. The filing said Fipps has played a key role in overseeing the sale, and will stay on until its expected closing in the fourth quarter of this year. He’ll then remain in an advisory capacity until the departure. Fipps was hired in 2017 at Under Armour as chief technology officer, and his role grew to overseeing connected fitness, as well as the company’s digital and ecommerce strategies.
The news came as Under Armour released third quarter earnings that beat investor expectations, as it reported $1.43 billion in revenue, per CNBC. The company’s footwear revenue was up 19%. It also did better than expected with sales in North America, which has been a sore spot as similar earnings reports were met with disappointment in recent years.
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