Adidas buys Austrian fitness app Runtastic for $240 million

By Jonah Comstock

Runtastic OrbitApparently Under Armour isn't the only apparel company that can play the fitness app game. German athletic company Adidas has acquired Austrian fitness app and device company Runtastic for $240 million (220 million euros), according to a post on the Runtastic blog.

"With our new partner, we’ve found the perfect match when it comes to taking our business to the next level and ultimately serving our community members in even better and smarter ways," Runtastic CEO Florian Gschwandtner wrote. "At Runtastic, we already have a lot of knowledge when it comes to apps and digital technology – and with adidas Group as our trusted counterpart (and one of the most successful and most comprehensive sports companies in the world) there’s nothing we won’t be able to do when it comes to health and fitness offerings. Both companies firmly believe that together we can build a unique product portfolio and unparalleled customer journey for our existing community members and future users."

Runtastic will continue to operate as a brand and an independent business unit out of Linz, Austria, Vienna, and San Francisco, Gschwandtner wrote. All four co-founders will stay on board. He also promised a new app by the end of the year.

Runtastic is one of the early wave of fitness app makers, having been founded back in 2009. The Austrian company began branching into devices in recent years, hoping to be the major device player in the European market.

“There’s Fitbit in the US, there’s Jawbone in US, they do have big pockets and a lot of VC money, sure,” Gschwandtner told MobiHealthNews last July, when the company launched its Runtastic Orbit wearable. “But here in Europe … nobody has a clue about wearables. Whereas Runtastic, we have a really strong brand here in Europe, I would say we’re the known brand either in the running apps or the whole mobile health fitness, we’re the number one company here and we have a really good track record. And we think with our 85 million downloads, with our newsletter of 20 million people, we don’t start from scratch. We have finished distribution here in Europe, so we’re already on the shelves.”

Runtastic continues to invest in its hardware. The Orbit was updated last month to add some smartphone-like functionality: push notifications from the users smartphone. According to a statement from Adidas, Runtastic has more than 140 million downloads and 70 million registered users.

The acquisition obviously invites comparisons to Under Armour, which bought MapMyFitness for $150 million in November 2013 and spent an additional $560 million to buy MyFitnessPal and Endomondo in February, giving the company a major foothold in food, nutrition, and fitness tracking as well as in the European fitness app market. It later picked up Austin, Texas-based Gritness for an undisclosed sum.

In February, Gschwandtner sent MobiHealthNews an emailed statement in response to a request for his take on the Under Armour acquisition spree.

"The announcement of Under Armour’s acquisitions this week shows that in order for apparel companies to continue to evolve and succeed, they need to become more digital,” he wrote. “We see this as a validation for the entire digital health and fitness space.”

Adidas’ digital efforts in recent years have focused more on the sports team level -- including World Cup-level professional soccer -- than on the individual with its MiCoach system. It’s also had a fitness sensing shirt product in the market for many years.

But Adidas and Under Armour have had some friction related to their respective digital businesses. Shortly after Notre Dame ended its 17-year relationship with Adidas and signed a 10-year deal with Under Armour, Adidas sued Under Armour for patent infringement in a still-ongoing suit that alleges that Under Armour’s Armour39 system infringes on Adidas’s patents. MapMyFitness was also named in the suit.

In September, Under Armour surpassed Adidas to become the second largest sports and apparel company in the United States. Nike still holds the number one spot by a comfortable margin (it had done $8.9 billion in sales as of September to Under Armour’s $1.2 billion in the same period), but Under Armour is catching up, and Under Armour CEO Kevin Plank isn’t shy about calling out his competitors. He told CNBC that with his company’s digital strategy Under Armour will get ahead of the sports and fitness giant.

“That’s what really led to getting behind wearables,” he told CNBC. “For the first time we can say we’re No. 1 in the world. I want my team to know what it feels like to be the largest in the world, the largest health and fitness digital community in the entire world.”

In its statement, Adidas didn't position itself as playing catchup. In fact, it stressed that the digital world is nothing new for the company.

"The Adidas brand was the first in the industry to comprehensively bring data analytics to the athlete," they wrote. "With decades of continuous investment in sports science, sensor technology, wearables and digital communication platforms, there is no other sports company that has done more to innovate sports and change the game through technology.

"Combining Runtastic’s and the adidas Group’s capabilities brings the adidas Group in a prime position to unleash its knowledge of sport. Runtastic’s fast pace, dynamism and high energy will speed up the adidas Group’s ability to reach both partners’ combined vision to make sport inspiring and part of everyone’s lives – creating unexpected sports experiences that will resonate and clearly stand out in a crowded and constantly changing landscape."