Under Armour's connected fitness business delivered a small operating profit in the third quarter to reverse a hefty loss in the year ago quarter. The connected fitness unit has delivered an operating profit dating back to the fourth quarter of 2017.
The company's connected fitness business is a small part of the overall revenue pie. Under Armour reported net income of $75 million, or 17 cents a share, on revenue of $1.4 billion. Non-GAAP earnings were 25 cents a share as the company became more efficient and boosted apparel sales by 4 percent. Wall Street was looking for third quarter non-GAAP earnings of 12 cents a share.
Under Armour raised its guidance and said it will delivered revenue growth of 3 percent to 4 percent for 2018 with adjusted earnings between 19 cents a share to 22 cents a share.
The company dove headfirst into connected fitness and apps with a series of acquisitions. Under Armour talked up its digital plans all through 2015 and 2016. And then Under Armour's core business slowed down. Since that slowdown, Under Armour has focused on inventory, marketing and building a direct-to-consumer business.
Here's a quick Under Armour connected fitness history lesson:
- Under Armour buys MapMyFitness in $150 million wearable computing play
- Will Under Armour's big data, app experiment pay off?
- Under Armour at CES highlights digital transformation efforts as clothing, wearables, apps, data merge
- Under Armour says digital revenue in Q1 nearly tops 2015 tally
- UA HealthBox: Connected fitness in a box from Under Armour and HTC
- Under Armour cites change management woes with SAP implementation as digital transformation stumbles
- Under Armour says 150 million MyFitnessPal accounts hit by data breach
Under Armour rolled out subscriptions for its MyFitnessPal app and that move to premium services appears to have helped the connected fitness bottom line.
Today, Under Armour barely mentions its digital business, but that doesn't mean there isn't significant progress. For instance, Under Armour's connected fitness unit delivered operating income of $1.91 million on revenue of $32.16 million in the third quarter, up 20.2 percent from a year ago.
A year ago, Under Armour's connected fitness business had an operating loss of $44.57 million. For the nine months ended Sept. 30, Under Armour reported operating income of $6.6 million on revenue of $90.1 million.
Under Armour's connected fitness business turned a small operating profit in the fourth quarter of 2017 and has been in the black since.