Everyone, welcome to our digital day webcast, both here live as well as those of you tuning in online from all over the world. We're thrilled to have you here today and there are a lot of friends in the room and a lot of long time shareholders also. So the purpose of today was really for us to be able to take a step back and simply tell you our story. We had a lot of big news come out last week. And that news was wrapped maybe one headline was what we did with the acquisitions that we made.
But what gave us the ability to even make those acquisitions is the performance, what we always call and refer to as our scoreboard. And our scoreboard is strong. You look at quarter where we delivered net revenues up 31% in the 4th quarter, 32% for the full year, our 5th consecutive quarter of 30 plus percent top line revenue growth. Put that on top of our 19th consecutive quarter of 20 plus percent top line revenue growth. Add that with 21 quarters of 20 plus percent growth in our largest business, which is our apparel business, and then also with our growth engines that we've talked about for years that finally started paying for us.
And you got to see and feel the credit of that, 96% growth in our international business, 44% growth in our footwear business. When we invest, we believe we're making these investments in the right place. Today is absolutely no different. But even with the success that we felt and I think that we've drawn as a company, we still find ourselves with this mantra, this approach. It's the name of the cafeteria at Under Armour.
It's called the humble and hungry. And that mentality is something that drives us each and every day and something that I want to take just about 90 minutes of your time today and walk you through what we think is the introduction. The introduction to what is going to be and is today the largest connected fitness community in the entire world. So the agenda we're going to take you through today is a few things we want to cover. 1st, I want to give you some data.
And I just want to talk about the market as a whole, where is it going, some of the things that we're seeing anecdotally as well as some of the facts that are happening out in the world. Secondly, I want to take you through and tell you about our journey, the journey that we've been on to get here today, because this wasn't one quick decision that we made in just a few moments last week on Wednesday. This decision has been something that's been building up for literally close to the last decade. Then I want to explain our platform and I'm going to bring some friends in to help me because most importantly, I want you to meet the leadership team that I'm so incredibly excited about, the team that I believe is what allows us to make that claim as being not just the largest, but frankly the best and more importantly the best position going forward. And then I'm going to ask Brad to come up and take you through some of the financials and the things that will lead you up to getting us from now into our financial day that we'll have later in the fall.
And then we're going to stand up and we'll have a little Q and A for you. So let me begin with just some of the basic topics. So first of all, the major trends that are happening in the world, what we see, the way that consumers are making purchasing decisions, more importantly, what they expect from brands that they trust. And over the last 19 years, that's what Under Armour has been doing. That's what we've been investing in, is building and becoming that brand that the consumer can trust.
And as we say with our universal guarantee of performance, it's our job to dictate what the consumer should like. But it's our job to do that in a way that comes from an understanding of listening to what the consumer is telling us. Brands are about point of view. That's what I mean when I say dictate. Dictating the tempo is a mentality for Under Armour that comes through in everything we do.
But the consumer is expecting something from brands they trust. So let's talk about some of the things that consumers are expecting right now. First of all is the maybe overly cliche world of the Internet of Things, a $7,000,000,000,000 marketplace. And again, if you look at some of the stats and think about how many things are connected in the world, In 2009, it was thought that there was about 1,000,000,000 connected things, 1,000,000,000 things with chips in them. The estimates are that by 2020, there will be somewhere between 25,000,000,000 to 50,000,000,000 things will have a chip.
It will be connected. And it basically means that everything is going to live in this ecosystem in this world. So what we are left ourselves to think and what brought us really to part of this decision is what's the role that we will play for that. Beyond just making shirts and shoes, while that is our core business, I think we have a bigger and a broader responsibility to the consumer. And that's I believe what we're answering today.
So you think about what that means, if everything is connected, if everything has a chip. And coming out of CES just a few weeks ago that was one of the biggest takeaways we have is that, wow, the connected home, the connected car, the driverless, all these pieces and what that means. But look at that second piece of this is what does that changing landscape look like? How does it affect media? Think about the way that people used to engage when you talked about marketing.
Today, you have to watch the same commercial 7 times to have the same impact as one view would do for someone just 15 years ago. We can no longer depend on just this traditional medium. We must find new ways to attract and to speak to the consumer. And that attention is moving to digital platforms. And the first part of this presentation is going to be incredibly maybe almost cliche because you've heard it, but let me put it in the context of the facts that are shaping the decisions that we're making today.
Our core consumer is spending more and more time across different screens, platforms, networks and content providers and it's our job to answer them. What you see up here is a panel of 16 to 24 year olds that we asked were asked the question, what would you miss most? 57% of them said their smartphone, 22% said going online, 16% said watching television, 5% said listening to the radio and absolutely no one said reading a newspaper. 79% of them would miss a digital product and no one in the world would miss a newspaper, if you're between 16% to 24%. The 3rd major trend that we see is the importance of data and doing something with this big data that's being consumed and being processed.
What do we do with it? And how do we synthesize it? Make it easy and make better decisions and for us make better product to make the athlete better. All these mobile and connected devices are generating massive, massive amounts of data. And the best brands in the future that we believe are the ones that know how to provide actionable insight, things that we can actually do with it.
So let me use 2 companies, maybe help me explore this example that I think are in the media and that really get a lot of play. 1st of which would be Amazon. 40% of Amazon sales are due to its recommendation engine based on a consumer's past views, likes and purchases. They're basically taking what you've bought in the past and anticipating what you're going to want in the future. And from that, that's getting the simplistic seamless process that the consumer goes through.
And everyone says, this is great, I've got Amazon Prime. So what's our role with that? Let me give you one other example, Netflix. Netflix had this amazing idea with this show House of Cards, which I'm a big fan of as well. But the way they got to this show wasn't let's just read a script and see if we go for it.
They used data to help make the decision to build the show. And the pieces when you look at the bubbles in the show that happened, they began with a director who is incredibly popular and they use science and data and measure and statistics to come to that answer. Then they took this already popular show that existed in Britain and worked. And then they took the actor, Kevin Spacey, that people wanted to see. They just didn't know the context they wanted to see him.
And those three pieces alone is what allowed that crossover, allowed those concentric circles to meet in the middle with this U. S. Incredible behemoth they have in House of Cards. That idea of what that means in a similar fashion is what we are talking about today. How can we take these pieces of science, these pieces of big data?
How can we be the ones to synthesize that and aggregate that in the most simplistic and seamless way to make decisions that will help us be a better brand for our consumer to make the athlete better. So think about what that means. You may have heard me use this analogy before, but I believe it in my soul. The fact is, is that you know more about your car today than you do about your own personal health and fitness. And you wonder why is that?
I know how much gas. I know how much oil. I know how much tire pressure. I can pull a diagnostic from sitting in the front seat of my car. But ask me about my body, how many people in this room who are not O positive know their blood type?
I dare you. Okay. 1, 2, 3. There's like 100 people here. How many people know how many days they were sick last year?
Want to call HR and find out? How many people know how much you exercise, how much you sleep, how well you're managing your diet, what's going into your machine. And all this data is something that we rely on going to see the doctor every 6, 12, 18 or 24 months, getting weighed, having our blood pressure taken, pulling out a manila folder and having them talk about the data that they received the last time I was there 12 months ago. A lot happens in that time frame. And what we want to do is we want to shorten that window.
And that's going to be part of the leak that we will provide. And what you're hearing about all this excitement around wearable technology and the energy that that alone is creating. So today, this information, it exists literally in a handwritten Manila folder. And there are systems that are synthesizing this, but not real time, not real time with what is happening with your world. So how do we get here?
Like why do we have a role here? Let me begin with simply our journey. Our journey for Under Armour, it always comes back to this, but it goes back to 1996. It goes back to that first T shirt. It goes back to that mentality when as an athlete running around on a Maryland football field, I couldn't understand why no one had ever made a better alternative to a short sleeve cotton T shirt in the summer and a long sleeve cotton T shirt in the winter.
And I'm looking and going no one has addressed this, these soaking wet T shirts, dry that weighs 6 ounces, saturated that weigh up to £3, why has no one innovated here? That opportunity, that white space was something for me that felt incredibly unique and I knew we just had to go. I must be honest with you, is that looking at this space is something that gave me an incredibly similar feeling. Is that wondering what it was like when you look and say, why don't we have better information? Who should be providing that?
And we believe the people that should provide that are the brands that trust. And that is something that we never ever compromise. Trust is one of those things that is built in drops and it is lost in buckets. And we take great pride in the buckets that we've built and our ability to maintain that for a long time. So let me keep going with our journey.
It was that first shirt that you see in our first ad here, and I thought it was an incredibly slick piece of marketing material that we use. And it was this ad that when going all the way back to 2,008, as our company was growing from 'ninety six to 'eight and we were 12 years in, we just got into footwear, we're doing these things. And for some reason, this world of consumer electronics, this world of big data, I knew we had to be involved, but I didn't know how. So my answer to that was basically to take our 1st shirt, our 1st Style 39 Heat Gear full T shirt, And I handed it to my partner, Kip, who was running product at the time, and I said, Kip, I want you to make this shirt electric. And I didn't even know what it meant at the time.
But we knew there was more data that we could be providing for athletes than just keeping them cool in the summer and keeping them warm in the wintertime. And so from that, the genesis began and we introduced this product called ARMOUR 39 at the NFL Combine in late February of 2011. The first athlete to wear ARMOUR 39 was our own Cam Newton. You saw this progress as we've had this incredible relationship with the NFL over the years, where this is a place where there are literally 32 grown men sitting at the 40 yard line with a hand stopwatch, clicking as an athlete crosses the line, about to invest and spend 1,000,000 and 1,000,000 of dollars to bake your bet on which athlete is best. We're wondering can't we provide a more complete picture for the consumer?
Can't we provide a more complete picture for the athlete themselves? And with that, with the genesis and the growth of the ARMOUR 39, we realized that this was a terrific product, but it was difficult and hard to put in a shirt. And so our journey along this road of consumer electronics then led us to what we had with the evolution to the next version of Armor 39, which then was built into a strap, because we learned that we would always be better. There would always be this other better place. So as we went into 2012 and we saw this and at this time we saw wearables begin to pick up.
In order to build this product, which was a better product than the first one we built, we were using 13 different outside parties to build this product, literally on 5 different continents to build this product. And the thing that occurred to us, which was many people come to is that it is incredibly difficult. And so it was for us that we came and our thesis became solid in understanding that the value for us, for Under Armour specifically, was not in the hardware and there's enough good people that are doing that with the latest mousetrap, with the latest innovation that will be coming out every 6, 9 or 12 months. And that was not the role or the place for us to play. The opportunity that we had to play was a very different relationship and that we saw the value quite simply in the community.
You look at this picture, which reminds you of a time before like what does it mean to be a part of a community? What does it mean to be connected? And yes, that is a flip phone in the bottom right hand corner, if you can't see that on the screen. So what does a similar photograph look like today and you've all been to live events? Exactly.
People are more interested in recording the information, their own lousy recording than actually just stopping and enjoying it. And you wonder what does that mean? It means that the role of big data is something that will only increase more and more. So this understanding of the value being in the community is what led Under Armour to map my fitness. And frankly, more personally, it led me to Robin Thurston, the leader that I'll introduce today that is going to take this effort for Under Armour and will drive it for us going forward.
And with that, we saw that there was this opportunity. I remember trying to translate to Robin what we were doing, and I was explaining him to things like ARMOUR 39 and Electric 39 and biometric measurement and data and accelerometry and willpower and all these traits that we put into our product before. And I was trying to say that we are a digital company too. But the problem is we're a digital company that doesn't have a lot of engineers. And we need to think more digital about our company.
And the idea being a user since August of 2012, my first conversation with Robin was in August of 2013, and then we consummated a deal in December of 2013 of that year. And that entire process was something that led to saying that the value for us was in the community. And what we bought, what we got with that acquisition is that like many of these things. 1st and foremost, we've got a leader. We've got a leader and we have a leadership team.
Under Armour prior to this, and I'll show you a slide toward the end of this, had less than a dozen engineers working in our company. In one fell swoop, we bought nearly 70 with a team of more than 100 that was supporting this effort and initiative for us. We had already made connected fitness team. We took basically what was a disbanded group and we gave them energy and purpose. And with that, we gave them a platform, a platform that came with a community.
And that community of nearly 20,000,000 people in December of 2013 stands proudly at more than 31,000,000 today. The growth rate that we're seeing is extraordinary, is that people are opting in, they're using the app. They want to be a part of this community that we've built. And also and importantly, we got great talented engineers and app developers. So the impact of Map My Fitness, the impact of Austin, the engineers around our core business, more importantly, working toward our mission of making all athletes better, because that was the reason that we got involved with this to begin with.
So what did we learn? We learned that we like community, but we also learned what made NotMyFitness unique and that was our approach to it was that the approach was completely open, meaning that they are completely agnostic, meaning that there's not a single device in the planet that does not work with the Map My Fitness platform, Meaning that whether the latest and the greatest new wearable is from Jawbone or Fitbit or Suunto or Garmin, whoever the brand that comes out with it, there is no distinction. They all work within our platform. Whether it is Android, whether it is iOS, it all works within our platform. We don't have competitors in this world.
We have partners. And it's our job to make this most seamless way for them to connect with the Under Armour brand. More than 400 different devices that work with Map My Fitness and Under Armour Record and as you see with the 2 partners that we brought on in the last few days. So as much as you learn what you like when you bring on a new partner, you also learn the things that you frankly don't have. And what we recognize we didn't have with Map My Fitness is, first of all, we didn't have a lot of scale.
And so what we wanted and we said scale is that we have we believe scale that can grow from North America, but like most things in America, it typically ends up being centered here. And so the first decision we made was to buy that global scale. And that's why with bringing on having the addition of Endo Mondo and Meta and her team joining the Under Armour family, it gave us that global view that we thought was necessary for Connected Fitness to truly have the impact that we wanted. Secondly, what we recognize is that these legs of the stool when you think about evaluating how is my body, how is my health, how is my sleep, how is my activity level, how is my fitness, how is my nutrition. And we contemplated and said, should we build this engine?
Should we try to find out? Because without food pouring into your body and understanding what that means, you'll never have an accurate picture. And then frankly, meeting Mike, his brother Albert and the team at MyFitnessPal actually led us to a much, I think, more perfect solution. And that's what brought us to today. And with that, the existing business of Map My Fitness, the creation and the announcement we had a few weeks ago at CES with introducing Under Armour Record, bringing onboard Endo Mondo based in Copenhagen, bringing on board MyFitnessPal based in San Francisco and giving us those anchor beachheads as well.
We've now created the world's largest digital health and fitness community with more than 120,000,000 unique members and growing every moment. We want to be the ones to lead the path of synthesizing all this data and tracking and make it easy and digestible for them to get a complete view of them and selves in terms of activity, sleep, exercise and nutrition. Activity, what am I doing during the day? Sleep, how long did it happen? Exercise, did I work out or didn't I?
And if so, how hard? In nutrition, what went in my body? Understanding that gives you the picture. That's not waiting for 12 months to be read to from a manila folder in the doctor's office. So I ask the question.
And you say, well, who should own this? When I think about the nobody ever made a short sleeve T shirt for summertime, just a gray cotton T shirt, that's it. And the thing that I look at when I think about community, I think about the power of that and what that means. And one thing that I know is that if Facebook is social, if LinkedIn is business, who owns health and fitness? And not owns it, but who participates in it?
Who's helping? Who's synthesizing? And frankly, that is what we believe is our opportunity. And frankly, with 120,000,000 registered users and from the lead, we like our positioning and we very much like where we're going. And when I say that from a geographic standpoint, EndoMondo was obvious.
That community of 20,000,000 users, most of whom are based in Europe, it provided us a great opportunity for us to learn from and interact with a consumer who is still relatively new to us. And just like we came down with Robin, at Under Armour, culture is so important. Culture, culture, culture. And what it means is how the leaders and the partners that we bring on will work and interact with that culture. We're incredibly lucky to allow that to happen.
And meeting Meta and her team was one of the most important days that we had bringing on that approach. Secondly, it was with Mike Lee and what MyFitnessPal could actually provide and bring to the Under Armour platform, a complete picture of our athlete in totality, providing the most informed and personalized input on our users' health and fitness from a nutritional standpoint. But MyFitnessPal was always so much more than that too. They were loosely doing what we were doing. Map My Fitness was loosely doing what that MFP was doing.
Endo was loosely doing what each other was doing. And that's where I think the combined, the aggregated communities are so much more powerful. So think about the 80,000,000 registered users that Mike and MyFitnessPal then brought to us. Think about the power that we have in this community. This is not people sitting back doing Weight Watchers.
This community includes professional athletes. On the whole, this community is more fit than the United States population. They are younger, more active and more fitness focused as a whole. And when you think about the scale that we've now put in place with these, and I want to be clear is that we expect all three of these platforms to continue to exist as verticals, to continue to serve their communities, to do a great job. And MFP users, you will only have an enhanced experience.
EndoMondo users will find the same thing. Map My Fitness users will have it as well. But as we think about it internally, we believe there's a longer term play that our job as I continue to use the word aggregate to bring these communities together to provide a bigger and a better product. And so we believe that the brand, the trust that Under Armour has taken 19 years of building is something that we can continue to articulate as we develop these 3 individual platforms into a bigger idea. Think about the scale, the scale at which Wix's community is growing.
136,000 registrations a day in the month of January. 40,000,000 people combined in 2014, 1 in 5 Americans has one of our 4 apps now on their phone or on their desktop, 85,000,000 of which are under the age of 40, 62% of which or 75,000,000 of which are women, 43% or 53,000,000 of which live outside of North America. And more importantly, we've now skimmed the planet of $7,000,000,000 and we've come back and delivered you the $120,000,000 that have demonstrated the greatest proclivity to actually want to measure themselves in some way, shape or form. That is a unique population. And think about the scale that we talked about since this presentation began how many minutes ago, Carrie?
20 minutes.
26 minutes. How many people have joined one of our 4 apps? 2,408. 2,408. And that's happening in a real time, 94 people every single minute.
That is growth in scale. One thing that we know and saying, all right, so how does this translate? We keep talking about our core. How do we bring this back to our core? One thing that we know of our 120,000,000 person universe.
In the month of January alone, more than 100,000,000 workouts were logged in one of our 4 apps. And one thing we know is that the more that someone exercises, the more that someone participates in physical fitness, the more that someone works out, the more shirts and shoes they're ultimately going to buy. This is not the introduction of a new growth driver for Under Armour. This is supplementing our existing 5 growth drivers and I'll get into that in just a little bit. So as we say with record, now with the world's largest digital health and fitness community, we can provide the most complete measure of a person's activity: activity, sleep, exercise and nutrition, bar none.
So let me tell you about Record and what that is. We launched UA Record last month, the pinnacle destination on your phone and a dashboard of your health. Connected Fitness provides us with the opportunity to build strong relationships and ultimately to sell a lot more shirts and shoes. What that means for us is that we have a different opportunity. I'd like to maybe take a minute and give this to Robin.
But before I do, Truman, I wonder if you can help me and go back before I bring Robin up on stage. I'd love for us to show the inspiration that I gave to Robin prior to convincing him to be a part of our company and be a part of our brand. And it was a vision and a commercial that we'd made a couple of years before this. The name of this commercial, we affectionately call Future Girl. And as you'll notice in this video, it's a woman who wakes up in the morning and she grabs this monochrome top, this monochrome bottom, she puts it on and she begins to do yoga in her studio.
And you watch her through nothing more than the swipe of her wrist as she modifies the color of her top, the color of her shoes, the color of her bottoms. She adjusts the thermostat that controls the microclimate that lives between her apparel and her skin. And with Future Girl and what that means and that opportunity, we look and we say this day is going to happen. If we believe that our future is going to be defined by these hard pieces of glass or plastic that sit in our back pockets, you're crazy. It is going to convert into apparel.
It is converting to the things we wear and the things that are most easy. And so as Robin comes up here on stage to take you through what our new product record is that we launched last month, let me begin by showcasing for you, I think, the video that really started it all.
Thanks, Kevin. So I want to tell you a little bit about how we got to record and certainly the acquisitions that we just made. I'll never forget, Kevin and I were sitting in a little tiny conference room the first time he showed me this video that video and he was like, I made that video for you. And I was like, man, this guy is really serious about getting into this connected fitness space, but the fact that they've made a commercial almost a year before. So after our acquisition, I had a chance to come into the company.
It was actually a much more seamless process than I had expected because Under Armour really wasn't a technology company. We were a small startup in Austin, Texas. As Kevin mentioned, very few engineers. But there was a real desire, I think, internally for them to understand digital at really every area of the company. So in marketing, certainly in product, in the sales channels, because partners were working and thinking about digital in a new way.
And so as I started to meet with everybody inside the company, the various sports categories, the product people, it was clear to me that Under Armour had amazing assets, but they weren't really leveraging them from a consumer perspective. And so I'm going to show you a quick video and then I'll step through the core functionality, but it was really important to try to figure out a way to leverage all of those core assets. You want to run the video?
It. For it. It.
So, Matt My Fitness is really good. Map my run, map my ride, very, very good in the vertical sports category. So we have 18,000,000 runners, runners using it every day to understand pace, speed, all of the metrics and see that map. It's the really simple idea was start, stop and save. Just make it really frictionless for the consumer to get that information quickly.
But there were some gaps in the product and we realized that very, very early after getting to Under Armour and things that were really important to the brand. So the first one was, let me use this essentially the wheel on the left here. So we had focused a lot on this area. So really looking at the maybe the 1 hour a day or the 30 minute run that you might have done. Matt My Fitness did that well, but we didn't really give you a complete picture of everything that you were doing.
So how much activity during the day, how much sleep. And that was we wanted to present that in a new way, not only from a time over time perspective, but also just what does that daily view look like? What's a really quick way for you to understand? Did you kind of have a good day, bad day from an activity perspective? Did you work out today?
What did that look like? And then how do you de duplicate all of that data? The problem with a lot of the platforms that are out there right now is if you go for a run and you have your jawbone on, you wear your Garmin or you upload from Map My Run that you have duplicate data. And so we had to build and engineer a framework for record that de duplicated the data. That was very important.
But then the second part of it was, is once you have this daily view that's deduplicated, what does that look like over time after connecting to devices? So when you look at, again, open was really important, connect to over 400 devices on the platform. If you look, here's an example of iPhone motion sensing Jawbone, Withings, MyFitnessPal from a nutrition perspective and our own device, of course, 839, as well as hundreds of other heart rate monitors that are Bluetooth that you can connect directly into the platform and other third party devices. But we need to be able to look at that in some context. So what happens over time?
Did you sleep better last month? Did you work out better last month versus the month before that? Did you how did you year over year? I personally probably have the most data of anyone in the system. I probably have about 35,000 miles and about 7 years worth of data in Map My Fitness.
And as you start to look at this, you start to realize some major trends like you can see from 1 year to the next, maybe what happens, a job change, a child, all kinds of things that happen in the context of really your life and how much effort you can put into your activities. But more importantly, you can start to give the athlete or the athletic person the opportunity to improve by seeing that data. So the historical views here are really important. How does your sleep relate to your workouts? How does your sleep relate to your steps each day?
And then starting to trigger things that can change that. So how do we start to give you suggestions around maybe taking a few extra steps today or sleeping a little bit extra because we know it's going to impact your workout for that day or suggesting the right type of workout? All of those things in the context of helping the athlete improve and work out more. The other part that was we certainly had to add activity tracking in here, major component that we're is important here is that the gym tracking really on to par and our goal here is really to create a platform for the gym that we have the best tracking inside the gym that will live on record, as well as being able to track other things. Social, social, social in the context of these platforms because we know that the more social people are, the more activity that they do and it motivates them.
So we created certainly a way for you to follow our athletes, for you to follow our trainers, and they'll be providing content on the platform as well as your friends. So we have both a friends model, typical, you have to invite someone in to share something with them as well as a follow model for people like our trainers and the athletes that are on the platform, truly leveraging the assets of Under Armour. And these new micro challenges, these small micro challenges that we've created, a way for you just to compete with up to 20 people, maybe your family, maybe your friends, maybe a running group, maybe a gym group, all at the same time. So you can run multiple small challenges where we saw the most impact that under-twenty number in people wanting to engage at a really high level and creating a little bit of that back and forth like I know you can do it, I beat you today, that really drove people to increase workouts. And as Kevin said, in the platform, it's all about for us getting people to even work out one more day a week will have such a massive impact on the business.
So who was the product targeted at? I'll give a couple of just high level personas here. It is all about actionable data. Ultimately, for the consumer, it's all about providing them a picture that truly changes the outcome of their performance in one way or another. So we targeted, what I would call a traditional Under Armour customer for the male persona.
I'm going to give you the hypothetical male persona. 17 year old Eric is a high school basketball player, super competitive, trains all the time, wants to be recruited to play at college, trains before school, after school, logs all his training, his game stats, everything from what he's playing. Well, before, we really just knew what Eric purchased really. We didn't have a way to help Eric improve. Today, through an application like this, we can I mean, many of you, if you played high school sports or you have kids in high school sports, you don't know if they're fatigued?
The coach doesn't even know if they're fatigued. You don't know if they're over training. You don't know if their training plan should be a little bit different because most of the time, all of the energy is focused just on the court or on the field. We have the opportunity to provide that feedback through this framework to ensure that Eric stays on track. 2nd persona we use, and this really started out of our I will what I want campaign was the athletic female.
So example, Kelly, 31 years old, very athletic, but doesn't consider herself an athlete. She wants to be fit, staying very active. She tracks her nutrition. Big challenge for Kelly is she gets bored. She tries much different classes.
She's not sure what she wants to go to. We have to provide a way through the data to give her new ideas of things that she can do or others in the community might be doing that she could participate in to keep that drive behind this. Those are 2 of the cores. There's obviously thousands of different personalities of people that are using record already that were are different types of personas, but these were the big ones that drove how do we really help these individuals in their daily lives. So Kevin, back to you.
Well done, Remy. It's all right. Give him a round of applause. Good job. Thank you.
So driving value. We keep talking about these platforms that we have, these platforms that have now been created and how they fit back into our growth drivers as a company. And the growth drivers that we talk about are the same 5 growth drivers that we spoke about on our roadshow all the way back in 2,005. And what we talked about then was there are 5 key engines that we had: men's apparel, women's apparel, footwear, international and direct to consumer. Those 5 key growth drivers are something that we stay true to at Under Armour year after year, being consistent, making investments and sometimes asking you to help us make long term investments with them.
So to sell this idea and seeing how we don't have to build a new or 6th growth driver, but how the acquisitions and how this new voice and this new face for Under Armour actually fits into the entire world and the entire community that we have. Having the world's largest digital health and fitness platform is going to be meaningful in each and every one of these silos and segments. Data is one of the key ingredients that we see in each one of these businesses for us as we drive. And we know that it's critical for us to have an open platform that will actually help us drive making those great decisions. So as you said, all these acquisitions, they support our growth drivers.
And more importantly, let me help you and let me go through each one of them, how we see this effect happening. Let me begin with our men's business. We have a platform to address the needs of men's because we have something in training and generating quantifiable data that athletes can actually use to make good hard decisions about what can they do to improve their performance. Think about our core consumer. Think about just right here in the U.
S, think about the 15 year old high school football player, who all they want to do is they want to make varsity. They want to play on the team, they want to crack the starting lineup. And they're probably still today measuring themselves in a door jam in their bedroom with a pen over their head saying, did I grow an inch this year or not? And you're wondering saying, isn't there a better way for us all to measure ourselves? We believe that happens.
And there's no coincidence that we're using Tom Brady to help us illustrate this. So go to our Women's business. How does these decisions the last few weeks actually infect and help our women's business? Today, right now, there are 75,000,000 women on our connected fitness platforms with 1 of our 4 apps on their phones. Last year, Under Armour had an amazing year telling our story about women's really breaking through.
And we did that by articulating it with the voice of this big, tough, hungry North American athletic company, and we used a ballerina. And we used a supermodel. And we asked them to help us, help us articulate our voice. And we had this amazing campaign called I Will What I Want. What you see behind me is the Giselle campaign that broke.
And between Giselle and Misty Copeland, the ballerina spot we had, we had 13,000,000 views on YouTube. It was massive. The approach, the reception, everything. But still at the end of the day, you have to scratch your head and ask yourself, like is one of the top trending topics of the year of 2014, yet we still only had 13,000,000 YouTube views, the power of an audience of 75,000,000 is something that we can absolutely work with. And then as we talk about our men's business and women's business, I'm going to stay with the Brady thing.
Super Bowl is still fresh in our mind, and I'm going to talk about their kids because Giselle posted this online as well. Yes, we have children as well, as they were preparing for the parade in Boston to celebrate the Super Bowl. So when you think about our opportunity to tell and communicate and convey great stories, we believe in that. Our footwear business, nearly 300,000 users, let me give you this stat. Nearly 300,000 users on just the Map My Fitness platform today, nearly 300,000 people voluntarily log in when they buy a new shoe, the brand of shoe, the style.
They then voluntarily log in all the runs that they're doing, whether they're on a trail, whether on the street, and they're telling us and giving us this information because this information can help them. What we have the ability to do with that information is to anticipate what happens at mile 300 with that shoe, what happens at mile 400 and can we help you make a suggestion. We can track the wearability lifespan and gain insights on our most importantly, what our core mission is, is to make an athlete better by making better product. Everything we will do with this new direction is about informing ourselves to make better product for the athlete. Did you know things like factoids or the fact that the average person when they go for a run, they run for 3.1 miles?
Most of us would probably guess the average run would be about 3 miles. But the fact is some people run 5, some people run 1, but we actually empirically know that the average run based on the universe of just from Map My Fitness of $31,000,000 that it's $3,100,000 International, we talk about our international business, because outside of North America alone, which is a massive initiative for the company, it's still relatively small on an overall basis, roughly 9% of our total business. But international is something where we our expectation is to be a global brand. And our definition of being a global brand is that someday, more than half our revenues will come from outside of our home country. And with 53,000,000 people on this platform, there's an incredibly high likelihood that the first handshake that Under Armour shares with this new consumer may very well be coming from a digital capacity.
And frankly, we embrace that. But it must be core to our brand and it must be us. And that's what you'll see from the integration that we'll talk about. It will be our global handshake. And finally, the 5th driver that we have, our direct consumer channel, where we see the potential obviously for the greatest effect.
Let me define the Under Armour community prior to the events of the past couple of weeks. Our community as we assessed it before, we had roughly 40,000,000 people in North America and we only had we had less than 100 stores outside of North America before this. But roughly 40,000,000 people would go in and out of Under Armour outlet stores. Countless numbers more would go into our wholesale partners, our key partners we had, like Dick's and Sports Authority and Foot Locker and Finish Line, Academy, all these great, great partners we have. We have 31,000,000 people on Map My Fitness.
We'll sell roughly 200 ish 1000000 units of gear. And we have roughly 5,000,000 names that are part of Under Armour e Commerce globally. And you look at all those different minor ecosystems, but the one thing in common is that they all want to participate with the Under Armour brand. Well, frankly, we know that with this community that we now have of a combined $120,000,000 we believe the opportunity for us to find great synergy to actually make the athletes' life better by having this information is something that can be incredibly constructive to us living up to that mission statement that we talk about. Now we can take all those data points that we have, what they're doing, where they come from.
And just like Netflix did with House of Cards, we believe we can make a better solution for the consumer. So driving it back to the core. What does this mean for us? This is not a new driver for us. But as I said, these acquisitions, they impact every part of our business and run through us.
So again, the first question people ask is that how are you going to drive value? We gave a little indication that as we talk about our growth drivers, but we think there's more. So let's talk about and get the cliche ones out there. So beginning with people say, what are you going to do for advertising? And again, each one of the platforms today has a model that has advertising.
But before we tell you that we're going to drive massive advertising revenue, I'm not sure that's the best use today. We'll figure that out. We'll make those determinations in time. But as we stand here 5 minutes into this, I think that we have the ability to maybe take a breath. There's also the opportunity that we have with subscriptions and frankly premium subscriptions, things like the super users on MyFitnessPal and better elite services that we can offer and charge a premium or a monthly membership fee.
And so there's a revenue model that's there. There's also the opportunity for new platforms. We say new platforms, it's a way of how can we take the data that we now have and how can we pull that together and make better decisions. New business models have been created around selling products to you based on your past purchase history. The thing that makes what we have now very different is, yes, we'll have a history of how you've interacted in our store, how you've interacted online, the way that you've communicated and what you've done purchasing.
But what makes Under Armour a bit different is that we also can help you make better decisions, not just based on what you've bought, but more importantly, based on what you do. So you think about that idea. Is that having the information that someone does, they run 60 miles a week or someone exercises 4 times a week or they don't sleep enough and understanding what our communities are opting in to do for us to synthesize and make easy and better for them, we believe we'll have the ability to create a better long term experience for our core consumer. Again, that example that I use, this feature called gear tracker that exists on Map My Fitness today, Imagine what we can do and we can actually anticipate that. Congratulations, you just run your 300 mile.
Unfortunately, this shoe happens to deemphasize at 350 miles, would you like us to send you a new pair? Things that are not invasive, but things that are substantive and things that actually help and are additive. So finally, we also see the opportunity when we think about monetizing. We don't like the word monetizing as much as we like the word driving value. So we see driving value for the overall brand to ensuring some of those growth drivers.
Our recent investor outlook talk about being a $4,000,000,000 company by 2016. We believe these are the things that would drive that down with us. Licensing is another one of these opportunities. We announced recently a partnership with HTC, which let me explain this partnership, which is frankly HTC is building this product. Under Armour is saying this is a product that we believe is worthy of our brand.
And of course HTC would only build product worthy of their brand as well. But we're validating that with our universal guarantee of performance, with our stamp on top of that product. And once we do that, what HTC has done is there is no app from HTC. There is no launch to track the information on their wearable device. The only place this wearable device will launch into is into UA record.
And frankly, if we build the greatest functionality, frankly, if we can apply predictive analytics across the field of 120,000,000 other registered users, why would you want your data anywhere else? Again, our encouragement that whatever the flavor of the month with the next great wearable device is and we believe HCC has a terrific product. But as the next one gets invented, where does your data go? Is it lost at fitbit.com? Or is it lost on the job bone off?
And so these are all great partners of ours, but we want to be the destination for these partners. And we want to take this back end off of their hands, and we want to make it simple and better for the consumer. So bringing it back to the core. Again, as I mentioned and gave you some of the stats earlier, one thing that we know and we understand is that everything about our consumer is rapidly changing. And the brands that do not evolve and offer something more than just a product will get left beyond and we are frankly not willing to concede to anyone.
We are investing in connected fitness because we believe it's the future, because we believe that there is this match. We believe there is technology on one side and there's trusted brands on the other. We weren't willing to concede our brand or our capability of being the world's leading innovators of apparel, footwear for the world to anybody in Silicon Valley or any place else. And we hear consumer electronics companies talking about when the consumer wears their product or wears their brand, we're looking and saying, if it's to be worn, if it's to be made, why are we not entitled? Why should it not be us?
So the fact is that we are not entitled and so we have to earn it. So we believe the steps that we made in the last few weeks are things that drive that down. So coming back to our growth, providing our consumers with again this idea of the complete picture of the athlete, aggregating information, presenting to them in a personalized and meaningful way, driving commerce and long term value for our shareholders, of course, but doing it all with the heart and the soul and the understanding of the consumer, of the athlete and of the athletic consumer, as we continue to evolve as a brand. So to do this, I've got one final video I'd like to show you and then I'm going to take you through and tell you about our team and I'd like to introduce who we have from Under Armour and what exactly we've done. With that, let's watch one last video.
It. For for it. It. For for So that's an idea of the vision that we think that we can paint. So ask me, I mean, the one question is, are we ready for this?
Are we ready for this next step? If you'd asked me that question 2 years ago, I would have had to probably say no, because we just didn't have the assets. And most importantly, we didn't have the team. So Amit, I want to invite the team up here to introduce you and to meet the entrepreneurs who literally 3 of the entrepreneurs who literally have invented the entire category of connected fitness and what that means. I won't let them talk, but first, let me just show you some geography to give you some context if you think about the way we'll see the world going forward.
1st of all, it begins with what will happen with these businesses. As these businesses will stay intact And we believe, again, we will drive these verticals. They will continue to drive their communities, drive their sign ups. But we believe we're creating an anchor. We're creating a recruiting anchor unlike any other.
And that first of all, that Meta and her team will stay in Copenhagen. Our world headquarters will remain in Baltimore. Robin and the Connected Fitness headquarters will stay in Austin, Texas. And then we've also established a beachhead. Something we contemplated and saying, how can we open an office in the Valley?
How do we open an office in San Francisco? So Mike will continue to run our efforts from North America from San Francisco. Secondly is emphasizing the idea of team that comes with us. Again, what's been built? Our Austin headquarters, the photo that you see there, which actually these guys are moving into this week.
When I talked about 2 years ago, what did Under Armour Connected Fitness look like? Frankly, it was small. Was a community of roughly less than 60 combining our e commerce teams with our connected fitness or digital teams, less than 60 people. With the acquisition of Map My Fitness with renewed vigor Jason LaRose and his team of what we've built out with Under Armour E Commerce in general, that number then exploded and it grew to nearly 200 by 2014. Today, as we sit with these recent additions to the Under Armour family, we now have nearly 400 and we'll add another 100 at least this year.
But the investment is something we think that we'll pay, and we believe that it will reward us in the right ways. The breadth of experience that we have is frankly unparalleled, and without question, an incredibly distinct advantage of Under Armour over anyone else who's trying to compete in this space. And quite frankly, it's one that will be difficult for anyone to replicate, let alone catch. Combined, think about our Connected Fitness team, which you'll meet here in a minute with Robin, who you saw and then Neda and Mike. We have close to 30 years of combined experience in this space.
We just came up with a name, Connected Fitness, about 8 months ago. So we believe we are in front of, if not driving, the 8 ball right now. The strategic acquisitions have given us leadership position, but most importantly, they've also given us leaders. We've got 3 of the best minds, I think, in the world. And so now I'd like to invite up Robin, Mehta and Mike, and let me let you all introduce and meet the team.
Thank you. Hi, guys. How are you? Good. Exciting day.
Yes. Yes, absolutely.
Yes, it's great when it all comes together too. We've been talking about these pieces for a long time. So finally, getting the cat out of the bag actually feels good. It's been a long time coming. So let me begin maybe if I just let each of you introduce yourselves to the audience and seeing them for the first time.
And so Robin, we started this thing 15 months ago or so or 2016, I guess, when we started 18 months, long road getting here. But tell everybody about yourself and why your authenticity is something that bleeds through with everything that you have at MMF and more? Sure.
So as you know, I spent most of my younger years, I started bike racing in 1981. I grew up in Denver, Colorado, spent years on the U. S. National team and racing really all of my youth. I went to Europe in 1990 and raced for a Swiss professional team and unfortunately had a pretty bad accident in 1994 that cut my cycling career short and was lucky enough to sort of Woah.
You went through the back of a pace card 40 miles an hour face first.
That's true. That's true. I had 150
I tell people that and they're scared what they're going to see when they meet you, but you look handsome.
I was lucky. There was a good surgeon that day, plastic surgeon in the ER in France. So I was lucky enough. I went back to school for finance and did my undergrad and graduate degree, but it was a small company at the time, Lipper, that was eventually bought by Reuters that was in Denver, Colorado. And I was an analyst there for sort of first part of my career.
Really spent almost 15 years in the finance business. And when I was at Wellington Management last in Boston, I was on a cycling trip in Europe with some friends, some Americans, some Europeans, and we were riding all of these small go path roads in 2,005. And somebody said, oh, next year, I'd really like to come back, and I know you can't come, but it would be great if I know all these roads without you being here. And it just really kicked off this idea that I was like, I think there's a really big opportunity to share that story, my 30 years of cycling with my friends in a way that they could basically use it. It would be useful information, not a guidebook or but something they actually could print out, take with them at the time.
There was no mobile phones yet. And so we I was working on this with a couple of friends of mine in Boulder, and I had this other friend at a company called Market that or was called Wall Street on Demand and purchased by Market, but he was sitting one day with lunch with him and he said he was a big runner and he's like, what's the name of your website? And I was like, map my ride. And he goes, it's weird, I think there's a map my run. And I was like, So I reached out to Kevin Callahan, the other co founder.
He was living, he's Beachbond living in San Diego and he had built this. He couldn't afford a GPS device and he didn't have a car. So he had no way to know how far he was running his miles. And he almost actually called the site poor man's GPF. Luckily, he didn't because I would have never found him.
But he called him at my run and I said one of my developers quit. I was doing it still as a project. And I called Kevin, I said, hey, do you want to move to Denver? And he was like, yes, sure, I hate my job. So he picked up, we moved the whole thing to Denver and kind of off and away.
And we were lucky, we had 2 of the first 200 iPhone apps. The use case for running with your phone, I think a lot of people were like, that's never going to happen. No one's ever going to do that. And we were like, no, I think there's going to be a few people to do that. Yes, 31,000,000 people later.
Yes, plus 20, yes. So that was sort of the genesis of the whole thing. And then obviously, you reached out to me because you were one of those 20,000,000 people. Yes.
And I called you complaining the first time. Yes. You should do, we should do.
Let's do this, we should add this, yes.
But so anyway, so we gave you a reason to actually listen to some of the input that we give. But so we're going to do bigger and better than that. So authenticity, I think, is the one thing that comes through with Robin's story more than anything is that everything Under Armour, it comes from a place of how do we make the athlete better and that never stops, especially in Meta You. You're an athlete, you're competitive and you wanted to help the people in your homeland when you started. So give everyone a little story.
Yes. So I'm Meta Loeger. I'm Co Founder and CEO of EndoMundo. My family has been running a chain of stores since 1947. So I actually started working in retail when I was 12 years old.
I have a background with 10 years as a competitive horseback rider. Then while I was at university during the end of my studies, I was recruited to join Mackenzie and Company as a management consultant. And then when I joined them close to 2 years into it, I started talking to 2 of my colleagues about how we missed working in sports. We all had a background in sports. We had all been active in organizing events and competitions and stuff like that.
So we started talking about why don't we just create research that 80% of all people would like to work out more than they do today. And it was like, okay, that's the problem we're going to solve. We want to fix that. And we thought the one way to make sure people actually work out is to make it fun. Because they lack the motivation you have to make it fun.
That's the only way they're going to do it. So we started talking about technology and what was going on at that time. And as for Robin, it was very early days. There were a couple of Nokia phones that had GPS and no app stores yet. But it really felt like at least for us it was a very motivating product and we just decided to go for it.
So that was back in 2007.
Awesome. Awesome. So that motivation, it also Mike that led to you is you had motivation when you started MFP. It's like everything else it
was as simple as Yes, I had a lot of motivation. So I'll tell you about that in a second. So I'm Mike Lee, I'm the Co Founder and CEO, I guess, former CEO of My Fitness Pal. And so my I'm a long time Valley vet. I've been working in the Valley for almost 20 years.
I love technology. I've always since I was a kid, I've been programming since I was 10 years old. So the way I got started, my motivation was actually my wedding. So the way the company got started was I was getting married. We were going to have a beach wedding.
And before the big day, my wife and I said, well, we better lose some weight before we do this. And so I went to see a trainer. Trainer told us, if you want to lose weight, you have to count calories. So we were supposed to track everything that we're reading in this paper book, and there was just no way I was going to do this on pen and paper. So I looked for a website, I looked for an app.
I was working at Palm at the time, so I had a lot of experience in mobile and that was mobile back then, was Palm OS. And I literally tried dozens of websites and apps, but they were all terrible. They were all actually harder to use than just writing it down on pen and paper. So I was looking for something to build, really just more for fun, and that's how MyFitnessPal was born, and here I am today. Awesome,
man. Well, welcome. If we don't mind, you mind welcoming the first collection of the UnArmored Connected Fitness team? Thank you. So I know there's a couple of burning questions from the audience and hopefully we can cover the majority of those but I think the first one is, okay, great.
Now we have 3 companies. So how do we merge that and how do we merge the cultures and the personalities and the people most importantly, how do we merge them in? So probably the best way and I think I know it was so comforting to both Meta and Mike as we went through this process was, I can promise you all day long, but just talk to Robin. Like we're we follow through on what we said we were going to do. And so Robin, maybe you've given us a scorecard and how's the 1st year or so been with Under Armour?
And frankly, what can these guys have in store for them and to expect?
Yes, sure. It was a lot easier than I expected, frankly. I mean, being having that sort of first impression of not really being a technology company and us being a small start up, I think there were frankly all of the from a logistical perspective, the organization took incredibly good care of the people and the team and really helping them sort of meld into the Under Armour world. But I think there was also a real strong alignment on what we were doing as a company and the fact that while Under Armour is $3,000,000,000 it still actually feels like a startup. And so there was this I think some concerns are when things like this happen that you're actually going to slow down and that's not necessarily good for that startup culture.
I frankly would say things sped up a little bit, but it wasn't we were already moving fast, but and that those things happening together provided, I think, a great venue for our team to really integrate. There's obviously trips a lot of trips back and forth and people getting organized around different areas of the business that I think we paved the way for this to go a little bit smoother with these guys. And we're certainly not underestimating it. There's a lot of resource on how to get this figured out. But again, I think there's a good foundation now for this to happen.
Right.
So with that go ahead, Mike.
Well, I was just going to say, definitely talking to Robin about his experiences when we first started talking was really comforting. But our decision was about a lot more than that. We didn't need to sell. We had a great business. It was growing like crazy, still is, and we weren't looking to sell at all when you guys approached us.
And I think as we got to know Under Armour, the company, the culture, to see how important the commitment on the business around digital and the vision around that. I think if it wasn't Under Armour, then this deal was important, the commitment on the business around digital and the vision around that. I think if it wasn't Under Armour, then this deal wouldn't have happened. I think we it really mattered to us to find a good home, and I can tell you a lot more about that. I mean, if we were ever going to sell, it needed to be to the right partner.
And we found that underarm. We're pretty excited.
That was certainly important for me too that we really found a brand that understood sportsmen and really understand people who work out. And then I also think when you look at the different visions we have that it was a very good match because Ondama wants to make all athletes better. We just want to make more athletes.
We
really want to make fitness fun. And I saw how that could we could help each other doing just that. And then it was funny in some of the first dialogues we had, I kept saying that I felt like we were only just getting started. And I was told that that's your line.
It's our line, yes. Yes. When we are just getting started. So Mike, let me go back to you for a second. So one of the things that you said and it's amazing when you meet people, like as we went through and had all the dialogue, you're so focused on the consumer.
You're so focused on the product, so focused on the interaction and that are the same conversations we have. But the one thing that sticks out to me is where it's the word love, where it's just like people love your app. Like how do you build love, like that's for Under Armour. There's a little kid, I used a story of a little kid that believes they can do more because they have Under Armour. But what's that experience like with MFP and how does that translate?
Yes. So one of the things that we always talk about at MyFitnessPal is our number one goal our mission our most important thing for us is to help our users succeed. If our users are succeeding at reaching their health and fitness goals, then we'll succeed. And so that's kind of the genesis of everything and that focus has led to customers just love MyFitnessPal. It's actually kind of crazy how much they love it.
I mean, it's amazing. It's such a cherished thing at the company.
You should try people pulling their underwear out.
We haven't had that happen yet. But and so as we started thinking about, again, we weren't looking to sell. We never really thought about being acquired. As we started to take think about this a little more seriously, one of the things that we wrote down as being important to us in an acquirer is our members love MyFitnessPal. If we're going to be part of another company, it has to be another company that people also love.
And honestly, I think one of the few companies in the world that people love maybe more than MyFitnessPal, our members love more than MyFitnessPal is Under Armour. Arm. I got this nephew who's 12 years old, and I was talking with him over Christmas and I asked him, what do you want for Christmas? And I thought he'd say video games or whatever and or drone or something and right? And all he wanted was Under Armour.
I mean, literally, that was the only thing he wanted on his Christmas list. He wanted head to toe Under Armour. And that's when I knew that, wow, this is something special.
I'm paying for his college education.
I love to tell the story that right after our acquisition, Kevin called me like 2, 3 weeks into it and he goes, how's the culture thing going? What's it feel like down there in Austin? And I was like I was standing there and then we have like these rows where all the developers are lined up. And I took this picture and every single developer had an Under Armour logo on their shirt. And I just sent him back a message with the thing and I said, I think it's going pretty well.
Yes.
Good. I
think people are doing it right.
Yes. It's part of the drinking the Kool Aid for sure. That's the way it goes.
They don't need RSUs, RT, and they just need the discount, 50% discount is Yes.
Yes, that's very generous. So like, the rubber hits the road.
So thanks, Mike. But that is,
I think, probably the thing that we're most proud of and just answering that is that we're hyper concerned about maintaining these teams and more importantly, driving and growing these teams. And something that I think we did a really great job, if you look at I can't think of a handful of people that actually left MMF, it's been people coming and joining the business. And so the same thing that got, I think, these 3 founders and their respective teams and their communities here are frankly the same things that will drive into this collective vision that we all believe is much bigger than any single one of us. So Meta, let me turn to you for a second because international is such a big story for Under Armour since Charlie has joined our team, what an amazing leader and driver for us, 94 growth in the year, 123% in the last quarter. But if you can maybe just tell us about your team, tell us about international and how you can help take this very American, North American company and help us think globally and not just what you're doing in Europe, but frankly how that formula will translate to any new market that we go
to? So just on EndoMondo alone, we have 20,000,000 registered users and 82% of them are outside the U. S. So it really is a very global community that we have. When and being frankly being based in Denmark a small country forced us to think global from day 1.
So what that translates to is for example that out of 40 people on the team we have 12 different nationalities. Our app works in 22 different languages. And we just with all these nationalities on the team, we have a good understanding of what it really takes to enter a new market. And we're building up this network of agents across countries
where
they can really go in and do the groundwork and we're ready to scale that now.
So speaking of that Robin, so synergy wise, so how much duplication is happening across the businesses right now? How are you going to be able to streamline and take our translation services and combine that with Meta and make this merge happen? I mean, how are we thinking about that?
Yes. I mean, I think from a core technology perspective, one of the big advantages of having in house development teams versus, say, agencies, a lot of brands are having agencies build things for them or outside third parties is that you have the ability, we have the ability now to start thinking about a synchronized platform, a user experience, a single sign on that brings all of that together. So one thing that we'll get scale out of from our infrastructure teams to our core engineering teams is that scale to then be able to build services on top of that, that we then can either test in 1 or several of the communities at once, like gear tracker would be an example of that, where once you have it built on the platform, another application like Endomondo could roll that out. We'll get advantages from that. I certainly think we have the breadth of functionality that no one else has that will get scale out of.
So I use the story that Map My Fitness tried nutrition for a partner, and we built a very kludgy, not very well done nutrition component of Map My Fitness that we have some users on. But when we put this service in front of them, I think it'll be clear that it's obviously the best in the world and give them a much better experience. So we get a lot of leverage out of that. And importantly, like anyone going to the App Store today for health and fitness, the scale of the network is impressive. And think right now, we have 6 apps in the top 10 in health and fitness on the announcement.
So today. Today. In the app store right now in health and fitness.
In health and fitness.
Under Armour Connected Fitness has 6 of the top 10.
In the U. S. Market and certainly globally we're moving up too. So that network effect or scale is really, really important to, I think, our ability to provide those amazing services to the users.
So when we talk about that, one of the things is there's so much information, there's so much data coming in as well, like just what are we doing with the data? And Mike, first of all, I know that big data analysis is something where you're incredibly proud of your team because you're passionate. And how good is your team?
I think they're one of the best engineering teams in the valley. I think of all the things that the company that we've done, the team we've built is probably the thing we're most proud of.
And the size is roughly 100 or so right now?
Yes, it's about 100 people. It's engineers from all the best companies in the valley. We got guys from Apple, Google, LinkedIn, Facebook. When we make recruiting offers, the kinds of people that we're trying to hire, we're competing with Airbnb, Dropbox, all the hottest startups in the valley, and we're winning those battles because we have this amazing team and this amazing mission that the team is so passionate about. I think Ram was saying earlier about how brands a lot of other brands will use agencies to try to build their products.
And no offense to agencies, but I just don't believe you can build a world class product with an agency. You have to have your own team. To me, it's really obvious that digital is going to play more and more of a role in athletic performance. And so Under Armour's mission is to make athletes better. This is a core competency we just have to have.
And I think now we've got the team to do that.
Yes. I mean, and the other thing on the big data side, I mean, I think what if you look at what we all created in the space and what sort of happened, the last 5 to 7 years has really been about data collection, right? I mean, it's basically if I mean, I me personally, I spent 15 years of my life writing everything down from 1981 to 1994. I mean, I wrote down what I ate for breakfast, how much I weighed, everything was in a book for a coach to look at. As an elite athlete.
You're an elite level U. S. Team. Exactly. It cost 100 of 1,000 of dollars at that time to do that, like the monitoring everything that they did.
And so then you kind of progress through the '90s and people move to spreadsheets and they're still putting things in journal. Like I'll often joke on Map My Run, still our biggest competitor is an Excel spreadsheet of people just writing and how far they went. I think that's changing rapidly. But so there's sort of 2 evolutions, I think, that are happening. The first is that really the athletic person for free can now get the same type of analysis that an elite athlete could only get with spending 100 of 1,000 of dollars 10, 15 years ago.
And on top of that, the last 5 years have been about data collection. Now it's going to be about predictive analytics. Now it's going to be about making that athlete truly better.
Meta, you're consumed with the athlete, what happens in the gym, that experience, that personal training experience that comes through in EndoMondo, one of your, I think, elite and premium functions too, how does this translate to you?
Yes. I very much agree. It has to be about the so what now. Now we have all this data then what good does it really do? So one of the things we've been working on with our premium subscription solution is personal training plans, not just creating 20 training plans and putting the consumer into one of those boxes, but actually creating a truly personal plan.
And that's part of our subscription and very popular with our users.
I mean, I think what's going to happen is it's going to feel like you have a coach in your pocket, right? Literally something that knows everything about you from how active you've been, your diet, your goals, your health requirements, your dietary restrictions. I mean, we'll be able to do things like if you ate a bigger breakfast, recommend a longer workout for you in the afternoon. That's just a really simple, but again, it'll simple example, but there'll be more and more of these use cases, highly personalized, highly contextualized recommendations that the data and the power of a smartphone in your pocket will be able to provide. I just think it will be a game changer in terms of performance.
So that's your take on where it's going as well. Meta, what's your take? What's the world going to look like? Let's get some predictions.
Well, first of all, I think what we think of as wearables today, 3 years from now, we're going to call that apparel. But also I think we have to continue working on the social dimension alongside all of this technology because that's truly what makes it sticky and that's what's motivating. And that's one reason I'm excited about this is that for us going from 20,000,000 to 120,000,000 users, the likelihood of you having a friend on the platform just increased significantly.
Right.
And you're more active. The more friends you have, the more you work out and the more shirts and shoes you're going to buy.
Mike, build it.
Well, yes, I just I think that social element that Matt is talking about is really key. I think these are digital products, but we always remind our team and really emphasize to our team that there are people on the other end, that people that have to make these behavior changes. And one of the things that we're really excited about by combining with Under Armour is Under Armour brings the will, right? So as an example of this, when I told our team and I announced it to our team and literally when I announced that it was Under Armour, that was acquiring us, everybody cheered and the team was pretty jazzed. And so I was talking to this engineer afterwards and he said, Man, I love Under Armour.
He said, I love their commercials. Every time I watch one of their commercials, I immediately go work out, right? And it's that but that I joke about a little bit, but that inspiration is key. Again, the kinds of changes that our users are trying to make to improve their performance, they're not easy changes to make. You have to have that willpower.
That's an expertise that we just didn't have at the company that I think we're really excited about being able to get from Under Armour.
Yes. There's a soul cycle right around the corner for everyone in the room as well. Dig in. Robin, bring us home. So tell us what does all this mean and where are we going?
Record is this platform, again, supporting and enhancing, I think, these distinct communities and making sure that your communities know that too. Our job is to embolden and make you stronger and give you the assets and resources to allow you just develop and build a great product. But collectively, it's where we're asking for, I think, the horsepower that's here on stage and on full display of look at what we've assembled and imagine the collective product that we can build that they all came from a different vertical that we think there's a bigger idea within Under Armour Record that frankly can translate to something real time to make an athlete's life better, to make a consumer's life better and healthier.
Yes. I mean, 2015 is going to be obviously a lot about bringing that together, testing some ideas that we've been working on over the last 12 months as well now in these communities. But I think it does go back to ensuring that these products that people really have a connection with that we continue to develop them as well as building that layer, which is record to aggregate this information up into and leverage the assets of Under Armour. So that's really what 2015 I think beyond that, it's going to be about it's I mean, I still the one thing I took away, I'll never forget this presentation that I had very early on at Under Armour about it was about a basketball shoe and it was our internal shoe team talking about it and it was product, product, product and the time and energy they were putting into it. And that's what I feel like in these communities, These leaders, these teams, that's what they've done, and we just want to continue that as we move forward.
Awesome. Ladies and gentlemen, Under Armour Connected Fitness.
Thanks, guys.
Next up, we're going to have Brad's going to join us on stage and take us through some of the financial impact. And then both Brad, Robin and myself will wait and have a conversation as well. Thanks, Brad.
All right. That is a lot of IQ for a person like me to follow. I'll do my best. So last week, last Wednesday night, we gave our earnings call out. And as typical, we gave a lot of detail out last Wednesday night.
So this isn't about really reiterating any of those conversations. This isn't about talking about the strength of the U. S. Dollar, the timing of our SG and A investments. We're here today to talk about Connected Fitness and the impact to our business overall.
So the focus today is really going to be about Connected Fitness, how does it impact our current year financial statements, but probably more importantly, what's our view going forward as far as how it impacts us and the expectation of where we drive value. So there are going to be a couple of interesting slides, I think you're going to find interesting, some new way of looking at information. And this first one is going to be one of those. So let's take a look at our connected fitness investments and how they've impacted our income statement over the last few years and in the current year. So this first line here represents our historical reported operating margin from 2012 to 2014 and obviously in 2015, this is the midpoint of our $397,000,000 to $407,000,000 operating income guidance that we gave last week at 10.7%.
The second line here represents the guidance we gave back at the end of October, our preliminary view of 2015 where we talked about operating income and top line both growing at 22%. This was obviously before the impact of the acquisitions of Endymundo and MyFitnessPal. 3rd line, I think is going to be really interesting and this is the first time you're going to see this. But going forward, as we release our financial information, because the size of the investment over $700,000,000 in the balance sheet in the space and obviously the impact to our P and L, we're going to start to break this out going forward. This is going to be a really interesting view I think for you guys here today.
And it's really just looking at what does our operating margin look like if you add back the impact of our connected fitness investments over the course of the last couple of years when we started to invest. First time you're kind of seeing this view. I think there's a couple of really good conversation points in here. First, the magnitude of the level of investment in connected fitness. This didn't start overnight.
Back in 2012, Kevin talked about the ARMOUR 39 product and we started to invest a little bit then. In 2013 specifically towards the end of the year bringing Map My Fitness on board. As we again started to invest in connected fitness during the course of 2014, you can see through 2014 that there was actually a 70 basis point impact to our operating margin just focused on the investment of connected fitness. So you look at 2012 to 2014, the interesting thing I think there is a lot of conversations that I've had with many of you in the audience is questions coming to me is when are you going to leverage your business, when are you going to leverage your business on one side and the other side was you need to invest more, you need to invest more. I think there's a really cool balance that Kevin and I talk about a lot is how do we balance that out.
And there's an expectation that parts of our business should be leveraging right now while we invest in other parts of our business. And the cool thing about this slide is we look again that top line there from 2012 to 2014, our core business ex Connected Fitness went from 11.5% to 12.2%. We are leveraging in the places you would expect us to leverage in our more mature businesses, in our corporate service functions, all the while still investing in growth drivers like footwear and international. I think the important thing to note in that top line too is that those investments in footwear and international didn't start in 20122013. They started way back in 2,009, 2010, maybe even before then.
And we always talked along the way that investing ahead of the curve in those businesses and they would pay off at some point in time down the road and we started to see those things pay off in 2013 2014. We talked about the growth of our international business being 96% in 2014 or 44% in 2014. That didn't come from investments in 2013 2014. That came from investments back in 2009, 2010, 2011. So I think this is a really great big takeaway on this is the leverage of our core business.
And I think the other big takeaway is connected fitness, although a complete different kind of technical space than our core business, it's going to look a lot like some of the things we did in footwear and international, investing way ahead of the curve and the expectation of the benefit well in advance. This is a long term investment. We're going to paint the picture and talk a little bit more about that later on. So first, let's talk about the impact specifically to 2015. First on the income statement, many of these things we talked about last Wednesday night.
So first on the revenue side. We talked about revenue for Endymando and MyFitnessPal combined being approximately 1% of our growth in revenue, kind of offsetting some of the currency headwinds we talked about last week. It's about $25,000,000 to $30,000,000 in top line revenue, mostly coming through advertising and subscription services like Kevin talked about before. We also talked about the impact of the bottom line and operating margin. So we talked about one time deal costs that will happen in the Q1 as we closed Endymando earlier in the year and we'll be closing MyFitnessPal in the coming month, about $7,000,000 of one time cost or about 20 basis point dilution to operating margin.
On the existing business, this is really just on boarding the existing business models of Endymundo and MyFitnessPal and their expectation of their numbers in 2015, which are dilutive of our model. It's about a $15,000,000 impact or 40 basis point dilution to our operating margin. And lastly, we talked about the post acquisition intangibles and the valuation of those and the amortization of those over the course of the next few years such as non cash amortization being about $12,000,000 impact to this year or about 30 basis points. Below the operating income line, we're going to have additional funding and debt. We're going talk a little bit about that in one second here.
And that will be about an extra $8,000,000 of interest expense below the operating income line in 2015. On the balance sheet side, so what are the use of cash and source of funds here? So the use of cash obviously in the acquisition of EndoMondo again earlier in the year, the acquisition coming up as we close it in the next month with MyFitnessPal, the use of cash, there'll be some tangible assets that come with those business. There'll be some intangible assets. I talked about post acquisition that we'll have a non cash amortization of.
There'll obviously be some goodwill on the balance sheet as we get through that. So the combined value of those purchases and acquisitions is about $560,000,000 that you'll see coming on board to our asset side of our balance sheet in the Q1. On the source of funds, really we brought the source of funds in for the EndoMongo transaction before the end of 2014. We actually drew an additional $100,000,000 on our term debt back in Q4 of 2014. So the funds are already in place for the EndoMundo transaction.
But as we go through the Q1 and close the MyFitnessPal deal, we'll also look at our excess cash balance. We're going to expand our revolver and also probably expand some term debt in order to fund the acquisition. So that will be kind of the impact to the balance sheet side. So next, let's take a look at beyond 2015. That's more focused on 2015.
But the one good thing about 100 Armor is we don't look at our business in 1 year increments and we especially don't look at our opportunities in 1 year increments. So let's take a look a little bit beyond the current year and expand I guess a little bit on my comments last week on how maybe 2016 2017 how beyond 2015 looks like after these acquisitions. So again, I don't want you to take this away as specific long term guidance. We're going to owe you that later on this year when we get to our Investor Day. This is more directional context of kind of the conversation what the expectation would be when we give that specific guidance later on.
So first, before we go forward, let's go backwards a little bit. And the last time that we gave long term guidance was our Investor Day back in 2013. And in this long term guidance, what we basically said in this first line here you're going to see is that from the results we had of operating income at the end of 2012 through 2016 that we would have approximately a 23% CAGR in bottom line. And what that resulted in was a $480,000,000 operating income number at the end of 2016. If we just took that same CAGR that we gave through 2016 and just kind of added it on for 2017, get approximately 23% ks.
We get to $591,000,000 of operating income, okay, just using the kind of the simple math. So now let's take a look. Secondly, let's bring our actual results in for 2013 2014. You see the overachievement to the story we told back in June 2013 at our Investor Day. So our core business exceeded our expectations from Investor Day.
Some of that was just our core business in North America. Some of that was things like international footwear really start to kick in, in places like 2014, we started to exceed our numbers. So now if you just take those actual results of being the 354,000,000 dollars in 2014, let's take a look at our preliminary guidance that we gave back in October before any conversation on these two acquisitions. And we said we're going to grow the top and bottom line 22% going forward. Let's just take that 22% forward through 2015, through 2016, through 2017, a 22% CAGR and you get to $643,000,000 of operating income.
Now what we said last week and an important point for today is we still see ourselves getting to that number eventually in 2017. It's just going to look a little different. So a little bit more dilutive in 2015, but as we start to really get these acquisitions on board, integrate, strategize, continue to invest in businesses, maybe leverage in some of our other core businesses you'd expect us to leverage in, the ability to get back to that kind of 22% -ish CAGR over the course of the next 3 years. There's a couple of really, really important things to note on the screen. First, many of you and I have these conversations and challenges around operating margin versus operating income and we really do try to stay away from operating margin guidance.
Even though we put operating margin in this presentation, it's more for context. So I really want to keep going back to being very consistent around operating income guidance. A lot of you like to imply margin, but really here what we're talking about is growth in operating income dollars and the expectation of growth in dollars and balancing that with the investments needed and not getting us focused on the 10 or 20 basis points of operating margin. That's a really important thing to take away. And obviously, we'll expand more of that in our Investor Day later in the year.
I think the second big takeaway here really is this is not specific guidance. So I don't want you to walk away and say, okay, Under Armour is guiding to $643,000,000 in 20.17. This is really the context of the ability for us to deleverage a little bit and be dilutive in 2015 with these acquisitions, but really offset that in future years in 2016 and 2017 and get right back to the same trajectory of operating income. So it's really important to take that in context also. Now the last conversation here is return on investment, something our financial people obviously really like to talk about.
And again, this is not going to be new information based on the conversations we've had earlier in a lot of the presentation material, but I really want to focus again on the expectation of what you should see and when you should see it. So later this year, a lot more detail on this, a lot more detail of where the investment is going to be in connected fitness going forward, a lot more on the expectation of where we're going to see that upside and benefit. But 2015 is really about onboarding these companies, integrating these companies into our culture and our business, strategizing and finding the right direction forward, how are we going to add value long term. Kevin had a great statement before, monetize does not necessarily equal long term value. So we focus on long term value and not just monetization.
So in 2015, less focused on where's the return, more focused on strategy and direction for the return longer term. We will onboard the advertising and subscription services that come with these companies, but really this is more of an investment year and a strategization year. If you look at as we look at 2016, obviously, now you would expect as we get to Investor Day later this year that you're going to have some kind of conversation and context around where do we see the benefit of these investments. Kevin really articulated it very well earlier in driving it back to the core. Where should we see the best benefit to these acquisitions longer term for Under Armour is driving right back to the core.
So the expectation would be how do we paint that picture and the natural matching of our 5 growth drivers to these investments over the longer term, obviously with again continuing kind of the stable advertising subscription service business, maybe even get some licensing business coming on board to get into 2016. And then obviously in 2017, again, kind of just accelerating that, escalating that, expecting a little bit more. The big key takeaways here, there's a consistent message of investment across all the years. This is not about investing just in 2015 and then seeing the return in 2016 2017. Just like the conversation around international footwear, I said earlier, this is about getting ahead of the curve, investing ahead of the curve for a long term value.
So you're going to see kind of this consistent picture of investment the next few years. And then lastly, it's about driving to the core. It's about men's, women's apparel. It's about footwear, international, direct to consumer. That's where we see the best connection, the most natural connection of where we'll see value longer term in this.
So finally, before I bring Kevin and Robin back up to join me for questions, again, this was a big step today in getting a lot more color and flavor of our Connected Fitness business. We're going to go into a lot more detail later this year at our Investor Day around not just the Connected Fitness business, but also our core business. What's going to be happening in men's and women's apparel? What's going to happen in footwear? What's going to happen in our channels of business, North America, international, retail, e commerce, wholesale?
All those conversations will come later in the year along with more detail around connected fitness. So as we look to Investor Day later this year, we're targeting a September 16, 2015 date in Baltimore at our corporate headquarters. It's a Wednesday. That will be our Investor Day that we're targeting right now. So I hope to see all of you or many of you there.
Again, we will outline more specifically our longer term view of our businesses and our goals. So with that, I'd like to bring Kevin and Robin back up on stage.
Where we want to begin, if we've got a microphone in the audience as well. So if you just want to flag down Shane, I think there should be 2. You can start on this side. Yes.
Yes. Sean McGowan from Needham. I have a couple of questions, probably more for Brad. Can you give us a time frame on the amortization of the intangibles and how much what the ballpark
is about? Yes, we're still working through that right now truthfully because we haven't officially closed the deal yet with MyFitnessPal and that's where the bigger part of the is going to be. These tend to range around a 5 year term plus or minus a year. So it's probably going to be around a 5 year.
When you're drawing that line on kind of where the operating income would have been, you've taken out all the investments made into the connected fitness over that time. But can you talk a little bit about whether those if you hadn't made those investments, they might have been made somewhere else. So how incremental is that?
I think that's probably the big takeaway here is the balance of our need to drive long term success and long term growth is that we are going to take advantage of that and invest in businesses, whether it be footwear, international or connected fitness. There's going to be investment. And that investment is really going to support sustainable and hopefully even better long term growth for our brand.
That's a constant push and pull with Brad and I on again, all we what you do as management in any company is how to deploy the resources, time, people and money. There's only so much of any one of them. And so we struggle with that. We're back and forth and saying, is this something we're taking away from footwear by putting it in connected fitness? And hopefully, what I wanted to illustrate, I think, in my presentation, particularly as I talked about our 5 growth drivers, absolutely was not it absolutely is additive to everything we do instead of being it's not an either or.
It's frankly, it's a must have as we viewed it.
Maybe the only other thing I'd add on that is that it's part the one thing when I came to these guys and said is that the one thing about digital is it's still an area that's nonlinear. So there's this opportunity in the marketplace right now that exists in this category that is simply not like buying another shoe business, right? And that's where I think as a team, we really talked about that a lot over the last year.
Buying Rockport?
Congratulations on your Rockport acquisition. When you look at joining when you look at the revenue driver here, when you think about in the longer term, where do you see the connection really kicking into the revenue? Is this like 3 to 5 years? Is this when you may do apparel as a wearable? I assume you're working on something in one of your secret rooms down in Baltimore.
Yes. Well, I think we're certainly positioned for it more than anything. There's another version of that commercial I showed you with Future Girl in it. And in the other rendition of it, it actually ends when where she says the voiceover says, this product is not available yet, but it's being built at Under Armour right now. And it's never been more true than today.
And frankly, what we see by establishing, I think, the beachhead and beyond the geographic location, beyond the leadership that we now have for this. But with the community of 120,000,000 people, if you want to speak about biometric measurement or you want to speak about wearable technology, we know exactly of the 22,000,000 wearables that were sold last year that there's about half of that number at least is operating them on our systems, one of our 4 apps right now. So as we look at our ability to, I think, access that with people that are opting in and choosing to say, I choose to be measured, we think that's a great leadership position. So number 1, we believe we're working on the great idea right now. But frankly, if it happens to be coming from someplace else, one thing about Under Armour, it's an incredibly entrepreneurial company.
And the one thing I want to be famous for is not Under Armour to be famous for is not necessarily just being a great innovation company, but an amazing commercialization company. When I say that I want the entrepreneur or the innovator that has the big idea, I want them to think about bringing that to us and we do venues like Future Show, we invited entrepreneurs to bring us their big ideas. And so what I want to make sure that I articulate is that, A, we think we have some of the smartest people in the world developing the next big thing. But when I say humble and hungry and I kick our presentation off that way, I think we also demonstrate the humility to recognize when we don't. And that if someone else does that they will look and hopefully pick up the phone and call us first, because we've demonstrated that we're the best partner of doing it.
And we've done that through a number of different products. And I think this is frankly no different. So we believe that we have one of the important vehicles in order to access the community of health and fitness. And again, with 120,000,000 registered users, we're arguably more than 2, 3 or 4 times the size of our next closest competitor.
Hi, Lindsay Druckermann from Goldman Sachs. I wanted to ask if, number 1, if you think the current platform that you have lets you do what your ultimate goal is to do or are acquisitions in the future still on the table? And secondly, Brad, maybe as you talk about getting towards that next 2015 investment and a dilutive year, but getting back to the trajectory of operating profit CAGR you're on, is that expenses come out outside of the one time acquisition cost? Is that expenses come out? Or is that revenue sort of accelerate from the run rate in order to catch us up?
Why don't I take that piece first and I'll let these guys take the first piece? On that piece, I think the context there is that we should start to see some benefit from the investments. And I want to get and put the context of I'm not sitting here saying that specifically 2016 is going to be the year we say it or it's going to start in 2017, more the context of we are investing ahead of the curve, just like we did in Fullbright International. This takes time. And I think the thing that we're probably the most proud of in the conversation with Mike and Meta and Robin is that this is not focused on short term monetization.
This is focused on long term value. You could absolutely make a short term monetization decision that destroys long term value. So we are really focused on that and being very thoughtful, very deliberate at the right pace of how we do this. So the context of that conversation is should we start to see some benefit from this? Probably sometime in that timeframe of 2016 2017.
I think the other context there and that is going back to our core business of things that we're definitely leveraging in. We're leveraging in some of our more mature businesses. You would expect us to leverage there. We're leveraging corporate service functions at a $3,000,000,000 to $4,000,000,000 to $5,000,000,000 company down the road. You would expect us to start to leverage in places like that.
Even though footwear and international are still very, very much in investment modes, we've talked at length in the last earnings calls about international start to swing towards profitability. So even though they're still dilutive to our overall operating performance, They're getting more profitable year by year. So things like that I think are probably more of the drivers of how we kind of get back in that trajectory along with maybe some of the benefits starting
to kick in for this? Let me start and then let Robin go. So I'd say that the product that we have now, I'd call it an iterative process. And this process began back when we closed on MatMyFitness in December of 2013, very quickly the conversations with Robin and I went to not where are we, but where are we driving and where are we going toward. And we realized that there was the need for what MMF is a terrific product for those on a run and those on a bike, but there was the opportunity to build a bigger platform.
And that's where I think opening up the aperture of what is Under Armour Connected Fitness from just being GPS tracking or what's happening in a gym to having the capacity to absorb things like nutrition, like what's really happening in the gym, truly the wearables and the agnostic approach. And so I frankly asked of the less than roughly 70 or so engineers that Robin had, we got together and we said, we're going to peel off of our existing team that we're hiring because we need to hire people just for the Matt MyFitness business to maintain that. And we're going to peel off and build this new product called Record. And so I think what we have now is this platform that is the it's the beginning. And again, it's part of our first conversation.
It's a product that we're incredibly proud of because all the functionality is there. But when you now take the combined and leverage resources of the 3 experts that we have in the room and their respective teams, we believe that the product that we have is excellent and the best in market today. But what we're going to build and the way it will look in the next 2 3 years will be revolutionary. Can I say that? I think it will change the way people live.
That's, I think, why Mike signed up, why Meta signed up, and frankly, I know it's why Robin and I got together to begin with.
I'd just add to that, that I think we filled in a puzzle to a certain extent. The team is, at this point, the largest connected fitness team in the space, really bar none. I mean, even the biggest technology companies don't have a team this big working on it. So I think the things that we potentially are missing or that the consumer, that customer might feel like could be a little bit better.
Now they could. We're not declaring war.
Yes, we're not.
I just
want to say like we're agnostic. We're different in our space too.
But we can fill those in with this size of team, this size of engineering team, product team. I mean, we have a massive design team to be able to help. But again, to me, ultimately, it all goes back to product, product, product. How good we listen to those customer experiences and build on top of that is going to be the difference between where we're at right now and what we think we can grow to over the next 3 to 5 years.
Okay. Hello. Eric Tracy, Janney Capital. I guess, first, if you could maybe just talk about the timing in terms of the integration of the 3 platforms into one single UA record when it ultimately goes under one app. And then a follow on to that.
One of the biggest benefits has been the open sort of platform environment. But it sounds like as you layer in licenses, that gets a little bit closed. Am I thinking about that correctly? And what are the challenges?
There's 2 things there that I would maybe line out for you. First, we see record kind of a horizontal approach to the platform. So MFP is going to continue, Map My Fitness is going to continue, Endo is going to continue. Really, it's the sort of high touch and aggregator of those for people that want that aggregation, right? There's still going to be people that might just be in MFP over time.
But one goal is to create a single sign on so that all of those environments work together, friends, social, all of that stuff sort of fits between the environments. I think the way that we've always talked about the device integrations and where licensing fits in, to some extent, Matt My Fitness has done some of this before, is really two terms. One is we integrate with everyone, like we'll connect to their APIs, they'll often connect to our APIs. We will integrate with everyone. It's very, very critical to creating a truly social fitness community is to be able so anyone in this room, you probably all have had or tried different devices over time.
We have to make it possible for all of you to interact together, whether again, as Kevin said, that's iOS, Android, Fitbit, Jawbone, whatever it is. There are partners we're going to optimize for. And I think those are the licensing deals where essentially we have a little bit deeper integration with them. We've worked on the experience a little bit more with them, but again, with the goal of making it the best possible outcome for the consumer around those devices.
It's one thing I'd just add to that as well as we're getting the microphone over there. It's different from the space where we come from. It's very clear that we have a very clear competitive set. And what makes us a little bit unique and what makes us a little bit different, I think, here is that we're working in a world where we can't succeed unless we enable and we help our partners. And frankly, that's a two way street where we think they won't be able to succeed unless they're helping us.
And so it's a very different mindset, a very different bit of the world that we're approaching. But it's one that I can't emphasize enough how important it was as we looked at making the first decision to move into the space with Robin was the leadership and was the people and the culture fit and all those things. But the approach of being agnostic is one thing when we said the value we saw was in the community. There's no way to approach that with a closed mindset. And that literally we work with every brand on the planet when it comes to being able to fit into whether it's NMF, MFP, endo or frankly the new product we just rolled out with record.
And so that is a place for us that we encourage it. And again, whoever has the best device, because we think they will continue to be additive and moving on and evolving into what is the best product out there, we encourage that product to be fully situated on our platform. And ideally, we'd be the destination platform for them when anyone turn that device on.
Great. Thanks. Erinn Murphy at Piper Jaffray. Maybe just building on Eric's question on kind of the open platform. How do you see the reaction from a lot of the device companies thus far now that you've aggregated the largest health and wellness platform?
I mean, how is Fitbit or Jawbone or Garmin thinking, particularly given that they have their own proprietary app? And then just secondly, do you have an opinion of Apple Health? And then as the Apple Watch launches, what that does potentially further create the conversation in the ecosystem?
Sure. So I'll take the first question. So far, I think all of the responses have been to continue the partnership. So we haven't seen anyone certainly pull back. We've been having ongoing conversations with all the biggest partners in from a wearables perspective in the space.
I would say that the immediate reaction is we've had a whole bunch of new people reach out to us realizing that we're the largest, right? So smartwatch is going to be a massive category. It's going to be hard not to be integrated, I think, in the platform this size, specifically for the social and the underlying functionality that we'll be able to provide. I mean, if you look at, there's really only one company, in my opinion, in the world who's been able to do software and hardware really well together. I think most of the wearables guys are going to struggle with that.
They're going to struggle with doing software well, and we think we can certainly play in that. And with this scale, we can do very well for them in powering those devices. So if anything, we've seen, certainly no one has pulled back. And obviously, it's early still. We'll know over the next couple of weeks, months.
We didn't see that with MATLAB Fitness when it happened a year ago, even with our most direct competitors. And so far, nothing. But if anything, we've seen a lot of uptick in new device manufacturers, carriers, etcetera, that are launching devices that now want to be part of the platform. Sorry.
You get the second question too.
On HealthKit and Google Fit and Samsung, I think they're really trying to be aggregators. I think the biggest distinction with these platforms, these communities is that they're very social, right? So our goal is simply and I think it is one of the reasons why I felt so strongly about selling the company Under Armour is we have a goal to just get people to work out a little bit more, right, to be and engage in their activity a little bit more, right? And those and social is a really big part of that. So it's instrumental to our platform as a whole working.
Those are partners of ours. So all of those channels are things that we will integrate with and that we will work with and that we're talking to regularly. We all have very strong relationships with Apple, Google and Samsung. And then on the watch, we certainly see it as a massive opportunity. I mean, 2 of the core businesses, Endo and Map My Fitness, it's a very strong use case, right, to run with a watch on instead of potentially your phone.
It's a great use case. It'll be another screen that we potentially allow you to log nutrition into and record will certainly be on there. So we're very, very hopeful that they're successful.
Maybe Mike or Meta, do you want to Yes, anything on that. Do you guys want to your mics are still on. Anything additive to that?
Exactly right that you're going to kind of think of HealthKit and Google Fit as the pipes, right, the data pipes that allow us access to all these different kinds of data and help us collect it. But what we're trying to build is a community on top of that. That's where we think the real value is. So they'll
be critical partners for us. Meta?
Yes. So just to add on that, we're very focused on supporting our users no matter what the use case is. So this obviously goes across devices. And the smartwatch use case is going to be bigger we think in the future. So we certainly want to have a good experience both for Android Wear and for the Apple Watch when that gets out.
Great. Thanks. It's Omar Saad from Evercore ISI. I got two questions. The first question is for Robin and then maybe Mike and Meta, if you can guess you guys are allowed to answer questions too.
As you before you went through this process and you're evaluating kind of the different opportunities with your companies and before you decided to sell to Under Armour and join that team, how did you think about kind of the different opportunities joining up and partnering with a kind of a physical world company versus staying as a pure digital play? And help us understand maybe how these types of digital and app companies think about that because clearly some are staying with their subscription models or pure digital plays versus going into the physical world and why this was a much better choice for you? And then my second question is more on the deal side. Maybe Brad and Kevin, could you talk about, as you're structuring these acquisitions, it seems like they're mostly pure cash and some debt involved. Why didn't you stock any stock in these transactions or earn out situations to make sure these three key managers stay hooked into the business, stay fully motivated and they're key players on their teams?
Help us understand how you think about that. Thanks. So
I guess the way that and in some ways, I would say there are similarities when we started to talk to the other companies. I'll let them Mike and Meta answer on their own. But I think the challenge that I was seeing was that in the we had started very early in advertising. So really even when Matt My Fitness first started in the end of 2006, like we were already basically selling local advertising, right? We were going to bike shops, running stores, etcetera.
And I think that and subscription didn't come that long after that. I mean, we really had a subscription play even before mobile got big. And the challenge was, I think, a couple of things. One is your ability to stay authentic for the consumer is a challenge because you just keep putting essentially more and more things onto the product that are essentially some of them are helpful. So like if you see a PowerBar ad at the right time, it's not a bad thing, right?
Or there's a cup of coffee down the street, it's not a bad thing. But that was a big dilemma for our internal teams, right? And I think that one of the things when I first started talking to Kevin was like, they have a product that actually helps you do what you're doing better. And if they start at an authentic point where it's about making the person actually perform better, like it's not originally about selling just shirts and shoes, but it's like they start from we just want to make them better, which is what their mission was. I just was like this is kind of a perfect scenario for the consumer because, yes, if they work out more and they train better, they don't get injured and we can get them to maybe get just get them to do a little bit more because of the social impact, they're going to buy more gear.
Absolutely, we can see it in all the data, right? So I think for me, it was just it was again combination of brand, authenticity and thinking about my core user on the platform and how like how that community was going to grow over time, I just felt like was the perfect scenario. I mean, can you imagine like an insurance company or something like I don't know how I would have been able to tell the user that. Right.
Give me your analogy about trying to drive subscription based business as well versus a cup of coffee versus
Yes. There's this I love this cartoon. It was very early on in the App Store days when paid apps started coming on board a lot, which was like, a guy basically like he's sort of going through his day and he's like goes and he lawyer calls and it's like $500 an hour and he goes and he has to get some office supplies $300 He walks into Starbucks $5 And then he gets he goes into the App Store and it's like $0.99 and the guy is breaking down like call my accountant, call my lawyer, I can't believe this is $0.99 So like in our early days, like we really it was a struggle to try to figure those pieces out. I mean, we certainly had and again, because revenue was a focus early on, we had more revenue as a core focus. But those businesses were also hard.
We've tried to go into the enterprise it was kind of the perfect marriage.
And I think that I saw when I looked and said if there was a flaw in the model at any point is that I didn't believe that they had anything to sell to consumer. I mean, just selling more services that were frankly available from competitors, anyone else for free. And so I think with Under Armour is that we have a tangible product that can actually sell them and be benefited. But I invite you guys, like I'm wondering if you have the want to help
answer Omar's question? Sure. So I can't speak for all entrepreneurs as to how they would think about this decision, but I can tell you how we thought about it. So a couple of things that we thought about, what we wanted in a potential acquirer. One was culture.
We want to make sure that there was a great culture fit. We feel like we've really built a special culture at MyFit. It's probably wanted to join a company that had an equally special culture and a great alignment there and we think we found that in Under Armour. Now there is just alignment on mission and vision. The fact that we're a missionary company.
We really passionately believe in creating a healthier planet, incredible alignment again with what Under Armour's mission is. Some specific things about Under Armour that we really liked, Clearly, the potential synergies in making actual products and how you can link that with software as Future Girl becomes a reality. There's some pretty interesting possibilities there. Also, the brand and the marketing expertise in the Valley, there's a real emphasis on digital marketing, less so on brand. But I think in our space, brand really matters.
And that was an expertise we just didn't have. And my personal opinion, I think Under Armour is probably the best marketer in the world today. I think that was something that we really wanted to be able to tap into. And the other thing I think for me personally and I think also for our team is that if we joined a big digital company, we would have just been another cog in the machine. And I think we wanted to go someplace that where we would matter, where there was a real commitment on the part of the CEO and the exec team to help us deliver our vision better, faster for our users.
And I think at Under Armour, we will matter. And that was important to us. I don't know, Brad can talk about the earn out piece and why or why not we didn't do that. But I can tell you that I personally, as part of the deal, am taking part of my proceeds and buying Under Armour stock, because we believe in the company. And it's going to be a great investment.
So I think hopefully that demonstrates some of our commitment to making this happen.
When I said that to Mike and I said, I'd like you to do this and I'd like you to do at least this amount, and Mike said, no. He goes, I'd actually like to do this amount. And I said, wow, that's incredible. It'll be our Board and George Bonheimer is in the room here as well. We'd love to hear that.
It'll be really exciting. And thanks very much for that, Mike. He goes, don't thank me. I think I'm going to make money. So I think that's what maybe we all think too.
Meta?
I
didn't know that. I actually sent a note to legal last week asking how does this work if I want to invest. No, I totally agree with Mike. When you start up a company, you spend pretty much every awake hour on it for years years. It's really important that you find a good home for it.
It is like selling your baby a little bit. And I'm very happy that we also get to stay on. The whole team stays on. We'll get an important mission now as well expanding internationally. For me it was certainly also about culture and the mission being very aligned.
On the funding piece Omar, I definitely wouldn't give us credit for any kind of high finance here in this process. We were really focused on just the pace of what's happening here. So I think Mike and Medikin appreciate the comment of the pace. Things happened pretty quickly from the first conversation forward. So we were really more focused on how do we integrate, what are the financials look like, what are the needs, how do we integrate culture.
Equity was obviously a big part of the conversation with the whole employee base of both the NIMundo and MyFitnessPal. And how do we over the course of time here get their employees into a similar path as the rest of our employees from an equity incentive perspective And even in the case of sometimes rolling some of the equity that existed with some of the employees into our equity going forward. So there's a lot of conversation around that. But it was more on the integration, the pace of getting things done. We have plenty of leverage room on our balance sheet.
So it was really more of the path to what was easiest at this point in time. Cost of debt as you all know is obviously very, very cheap right now. But the one thing we probably done over the last couple of years, I think we've refinanced our debt structure probably once every 2 years with the pace and has our business evolved. So I think this gave us more of a pause to focus on the right things and not the wrong things in the quick turnaround of these acquisitions. And then I think we have the ability longer term to figure out from a capital perspective how could this look.
And obviously in the short term, we can take advantage of low interest rates.
And I want to just drive home, when you look at this is obviously the communities that both entrepreneurs have established is extraordinary under any way you look at it. But we talk to everybody. We talk to every company out there of the way that we could create this roll up. And we looked at a lot of different strategies. At the end of the day, there were people that just frankly were not culture fits for our brand.
And when frankly, when I met Meta for the first time, when I met Mike and his brother Albert, the conversations like where it began with was not, I can't believe the size of your community, this is great. It was looking and going, I think you would be a great fit with our team. And I believe that we can build something much bigger because of that. And from that point, when we establish culture, you hire for competency and you fire for fit. And it's these things that we all live in and then through the many machinations that Under Armour has gone through in our evolution as a brand, we've learned that.
You're not always perfect, no matter how smart you think you are about it. But I've got to tell you is that I've learned a lot over the 19 years of this brand, and I know the things that will fit and the things that will work. And I believe that we'll have things legally that will say one thing or another. But unless I respect, I think, the trust that these entrepreneurs have put in our company, provide them something they want to be a part of and that they can see is a much bigger vision than anyone can do on their own. I think that comes down to what we've built here and what we've established.
So this was not happenstance. This was not a share acquisition that was done over the phone. This is multiple trips of our visiting offices and time in Copenhagen and time in San Francisco and San Francisco and Copenhagen, time in Austin and Austin visiting there and then visiting Baltimore. I mean, this has been a process that I think incredibly proud of. And I think that anything of this size and scale, it should be at that level.
It's personal. It's just personal.
Hi, thanks. Scott Krasek from Buckingham Research. First, the brand awareness factor domestically versus abroad, there's a huge disparity. So have you thought about how you use EndoMoto? And then I don't know if there are other connected fitness platforms in Europe or places where you'll really start to try and build the Under Armour brand and maybe strategies around that to create that awareness?
And then just secondly, as an outside observer, if you don't start to drive incremental revenues through these deals either in 2016 or 2017, do we view it as a disappointment or just the industry wasn't there yet? How do you think about that?
Let me start and I'll let Brad go. So to begin with, I think the screen that you see up here demonstrates the 4 apps that we now have that are a part of the UnArmour Connected Fitness ecosystem. And as I mentioned in my opening remarks was that with 120,000,000 people on the one of the 4 communities, That look with the Under Armour logo is now on roughly 120,000,000 phones or desktops. And so there's very good chance that of the 53,000,000 people that are outside of North America, a percentage of them, if not a large percentage of them, may be seeing our logo for the very first time. So this may very well be the first handshake that they have.
So when we say that, we believe we now have the ability to understand them and understand what makes them like, like the athletes we're selling to in North America. That will inform us to be a better and a smarter company and frankly, to hopefully allow us to inform our consumer and the athlete to be better and smarter at what they do as well. So we think it's an incredible quid pro quo. And I think the opportunity of just sheer scale of what this means. I gave you some stats.
The 3 collective apps, 4 collective in 2014 grew a combined 46 percent. So if you extrapolate the numbers on 46% growth on a universe of 120,000,000, by 2020, it's 380,000,000 users at 20% growth. At 30% growth, it's 580,000,000 dollars and at 40% growth, it's $900,000,000 I'm not making claims as to what it can be, but we're just simply highlighting what pure scale is all about in a way that we'll have the ability to impact and frankly find like minded consistent elements about individuals that can help inform us in new markets as well. So believe the data is going to be extraordinary. We think it's going to come down to our ability to attract great big data scientists and people who can help us make great decisions based on all the data that's being driven from this.
Yes. On the return side, obviously, the benefit of having Robin on board over the last year has given us a lot more insight into the business. And we spent a lot of time over the course of the last few months getting to know Meta and Mike and their teams and their financial models are much, much more obviously. Obviously, in this whole process and conversation, we wouldn't be making this investment if we didn't see a benefit in the return to this investment. I think from a credibility perspective, what we owe to you is being thoughtful and delivered on the approach and exactly what we do and when we're going to see it.
I think it's a little too early to do that right now. And I think as time goes by and we integrate the businesses, we'll get a better idea of how that's going to work. But absolutely, we expect a return from this. Absolutely, we expect it to be a long term return on this. We wouldn't have done it if we didn't think so.
And we absolutely think that there's some synergies there in our existing businesses in places like direct to consumer, wholesale, North America, international. Again, I think we've said this a lot, just the power and benefit of 19 years of building an e commerce platform that today we have a relationship with 5,000,000 people. We have 5,000,000 names in our e commerce platform and now we have an additional 120,000,000. We definitely think deliverateness of how we value, but the approach and the deliverance of how we do that's going to be probably the most strategic thing that we have to do more than anything.
And I think if you also look in DTC around what's happening in beacon technology, I think there's we Chicago will be our first example of this. We'll run a fairly large test in Chicago around beacons. Studies are suggesting that with putting the right information in front of the consumer, like one of the challenges we have when someone walks in the store and they walk up to a shoe, you'd really like to deliver them a technical video on what that shoe is about or showing an athlete in that shoe. Challenge most retailers are having right now is that they don't have a way to get the person to download the app that would deliver them that information, right? So we think we have a really big advantage here in DTC, not just for us, but also for our partners, right?
So the DICKs of the world, etcetera, we think that we have a way to help them through this channel. And if you look at the recent studies, dollars 1 in $4 in retail will be driven by beacons by the end of 2016, I believe
that. So with that, you've all been incredibly patient and generous with your time. We apologize about the short notice. Obviously, it was big news for us as a brand. If I could maybe just take a moment and thank all the people that led us to this, frankly, our second and third pure acquisitions as a company.
And we got to this point because of a lot of thoughtfulness by a lot of very smart people. And I want to thank my own executive team. I want to thank my Board of Directors. And I especially want to thank the teams of Mike and Meta as well, and frankly, to each of you for putting that trust in us. So we can do a good job with your companies.
We're going to make something bigger. It's going to make the world a better place. So we'll live up to that. Thank you all very much for joining us on ARMOUR Digital Day. Have a great day.