Under Armour took a huge leap forward in the fast-emerging fitness technology market Thursday with plans for a $150 million acquisition of MapMyFitness, creator of the MapMyRun and MapMyRide mobile applications and websites.
What would be Under Armour's first acquisition opens a new frontier for the Baltimore-based sports apparel and footwear maker in online social networks and expands its toehold in fitness devices.
But what seems like a radical departure for a sports clothing company really is Under Armour rapidly closing the gap with its larger rival Nike on fitness technology.
- Under Armour unveils newest ad in I Will campaign
- Under Armour's Northwestern uniforms stir controversy
- Under Armour sales up 34 percent in second quarter
- Under Armour Brand House opens in NYC's SoHo district [Pictures]
- Johnny Manziel banners at Under Armour campus [Pictures]
- Athletes with Under Armour endorsements [Pictures]
See more photos »
- Under Armour launches biggest women's campaign with inspiring ad [Video]
- Under Armour's Kevin Plank on Sagamore Farm [Video]
Baltimore, MD, USA
"They're making a claim. … Don't count us out," said Camilo Lyon, a managing director and retail analyst with Canaccord Genuity, a Vancouver-based investment bank. "We're willing to commit capital to be a major player where those worlds are going to coincide, technology and athletics."
MapMyFitness, based in Austin, Texas, has more than 20 million registered users who map, record and share their workouts using GPS and other technologies. It calls itself the Internet's largest social network of fitness buffs. In August, Nike announced that it had about 18 million registered users in its Nike+ community, based on wristbands, sportwatches and mobile applications.
"The digital monitoring of performance and fitness is the next major wave in making athletes perform better," said Chip Adams, chief performance officer for Under Armour. "This is an innovation that we need to be in to stay at the forefront of serving athletes."
Under Armour plans to immediately integrate MapMyFitness applications into its performance-monitoring Armour39 devices, launched earlier this year. But it also plans to keep the application open to all devices, company officials said.
"Armour39, we hope, will be one of the shining products, but we will offer access to all products," Adams said.
The open-source nature of MapMyFitness, which is accessible on 400 devices, may help Under Armour expand its customer base faster than if it had to develop multiple products, Lyon said.
"If this is truly all about gaining mass and increasing that adjustable user base, this is a lot easier than to compel your consumer to go buy various gadgets," he said.
The acquisition also lets Under Armour tap into a 20 million-person-strong database of potential customers and use technology to anticipate consumer behavior, Lyon said.
Under Armour founder and CEO Kevin Plank said the brand aims to build on MapMyFitness's digital users and make it a destination for athletes who want to track their workouts.
"Now we are better positioned to design open, digital products for the athlete of tomorrow," Plank said in the company's statement.
Under Armour shares rose 89 cents to close Thursday at $83.53 each on the New York Stock Exchange.
The deal could also boost Under Armour's brand and position it as a leader in smart sports apparel to a customer base that cares about real-time feedback on performance, said Matt Saler, director of sports marketing at the Baltimore-based advertising firm IMRE.
"Data is important to this community, so I think if Under Armour can be seen as a leader, not only in their apparel but for this real-time data analysis, I think it could translate into a serious spike in sales," Saler said.
MapMyFitness started in 2007 after MapMyRide founder Robin Thurston and MapMyRun creator Kevin Callahan joined forces. Callahan created his website to help him map and record runs while training for his first marathon, while Thurston came up with the idea of charting and tracking rides while on a bike tour.
Thurston, now CEO of MapMyFitness, said he got a call over the summer from Plank, a user of the running application, who proposed the idea of merging. The executives quickly realized that their companies shared more than a common corporate culture.
"We hit it off and had a shared vision," Thurston said. "We come from a sports-driven background at our company. We're a development technology team at the core, but [one with] the idea of creating a great product for the consumer that helps them in their health and fitness in daily lives and creating a social environment to share."
The venture capital-backed private company, which has 100 employees and started online with websites, has seen enormous growth thanks to the introduction of the iPhone and growth of mobile devices, Thurston said.