EPS of $0.00 decreased by 98.9% from previous year
Gross margin of 47.5%
Net income of 1.23M
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Under Armour Inc (UA) QQ3 2025 Earnings Analysis: Revenue Stabilizes QoQ but Profitability Remains Pressured in a Challenging Consumer Cyclical Environment
Executive Summary
Executive Summary (QQ3 2025): Under Armour reported revenue of $1.401 billion for the quarter, a QoQ increase of 0.14% but a YoY decrease of 5.72%. Gross profit totaled $665.2 million with a gross margin of approximately 47.48%. Operating income was $13.5 million, and net income came in at $1.23 million, yielding basic EPS of $0.0029. While top-line stabilization limited true margin erosion in the quarter, the company continues to grapple with meaningfully thin profitability as SG&A levels remain elevated relative to sales.
From a cash-flow perspective, Under Armour generated strong operating cash flow of $311.3 million and free cash flow of $262.9 million, contributing to a cash balance of about $726.9 million and a net debt position of roughly $578.3 million. The balance sheet remains solid with ample liquidity (current ratio around 2.01) and a diversified asset base, though the business carries a modest leverage profile (debt to equity ~0.66).
Looking ahead, the lack of explicit quarterly guidance in the data set means investors should weigh the ongoing margin pressures, inventory dynamics (inventory days around 134.6), and the pace of growth in the company’s direct-to-consumer and digital ecosystem initiatives. Relative to peers in the apparel and broader consumer cyclical space, UA’s earnings power remains a key question mark even as its cash generation supports financial flexibility. Management commentary is not provided in the data set, so this analysis emphasizes the reported results and qualitative market dynamics.
Key Performance Indicators
Revenue
1.40B
QoQ: 0.14% | YoY:-5.72%
Gross Profit
665.16M
47.48% margin
QoQ: -4.45% | YoY:-0.82%
Operating Income
13.51M
QoQ: -92.19% | YoY:-81.08%
Net Income
1.23M
QoQ: -99.28% | YoY:-98.89%
EPS
0.00
QoQ: -99.26% | YoY:-98.88%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $1.401B in QQ3 2025; YoY -5.72%, QoQ +0.14%
- Revenue: $1.401B in QQ3 2025; YoY -5.72%, QoQ +0.14%
- Gross Profit: $665.2M; Gross Margin ~47.48% (vs. 47.57% prior year)
- Operating Income: $13.5M; Operating Margin ~0.96% (YoY decline and margin compression)
- Net Income: $1.23M; Net Margin ~0.088%
- EPS: $0.0029; Diluted EPS $0.0028
- EBITDA: $90.9M; EBITDA Margin ~6.49%
- Cash Flow: Operating cash flow $311.3M; Free cash flow $262.9M; Net change in cash +$195.3M; Cash at period end $726.9M
- Balance Sheet: Total assets $4.631B; Total liabilities $2.646B; Total equity $1.984B; Cash & equivalents $726.9M; Total debt $1.305B; Net debt $578.3M; Current ratio 2.01; Quick ratio 1.19; Inventory $1.1005B; DSO 39.5 days; DIO 134.6 days; CCC 174.1 days
- Valuation/Leverage (selected): P/E ~652.5x; Price-to-Book ~1.62x; EV/EBITDA ~64.8x; Debt-to-Equity ~0.66; Debt-to-Capitalization ~0.40
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
1.40B
-5.72%
0.14%
Gross Profit
665.16M
-0.82%
-4.45%
Operating Income
13.51M
-81.08%
-92.19%
Net Income
1.23M
-98.89%
-99.28%
EPS
0.00
-98.88%
-99.26%
Key Financial Ratios
currentRatio
2.01
grossProfitMargin
47.5%
operatingProfitMargin
0.96%
netProfitMargin
0.09%
returnOnAssets
0.03%
returnOnEquity
0.06%
debtEquityRatio
0.66
operatingCashFlowPerShare
$0.72
freeCashFlowPerShare
$0.61
priceToBookRatio
1.62
priceEarningsRatio
652.51
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Note: The earnings transcript is not provided in the data set. As a result, there are no management quotes or highlighted commentary to quote directly. Based on standard industry dynamics for UA and the quarter’s results, expected themes would typically include commentary on direct-to-consumer growth, inventory management, margins recovery efforts, and progress on digital platforms (e.g., MapMyRun) if discussed in an earnings call. Until transcript content is supplied, quotes and speaker-specific insights cannot be stated.
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Forward Guidance
No explicit forward guidance is included in the provided data set for QQ3 2025. Investors should monitor: 1) Revenue trajectory and mix (wholesale vs. direct-to-consumer) to assess potential margin expansion; 2) Gross margin progression through product mix optimization, pricing strategies, and supply chain efficiencies; 3) Inventory dynamics given the elevated inventory days (DIO ~134.6) and their impact on working capital and cash conversion; 4) Cash flow resilience and capital allocation including any future share repurchases or strategic investments. Absent formal guidance, the line of sight to earnings improvement depends on topline stabilization, margin recovery, and efficient working capital management.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
UA Focus
47.48%
0.96%
0.06%
652.51%
LEVI
60.00%
2.00%
1.11%
91.32%
COLM
50.20%
12.10%
5.04%
13.33%
HBI
41.70%
11.00%
20.10%
21.40%
PVH
58.40%
7.21%
2.49%
10.62%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Investment Thesis (Balanced): Under Armour’s QQ3 2025 results show revenue stabilization QoQ but lingering profitability headwinds that weigh on earnings visibility. The company demonstrates meaningful operating cash flow generation and a solid liquidity position, which provides flexibility for strategic investments and potential capital returns if profitability improves. Relative to peers in the apparel and consumer discretionary space, UA faces margin compression and a thinner earnings profile, which is reflected in elevated valuation multiples. The key to a constructive investment stance is clear evidence of margin expansion driven by mix optimization (DTC growth and higher-margin digital revenue) and disciplined cost control, alongside inventory optimization to reduce working capital risk. Monitor: (1) progression of gross margin as product mix shifts and cost structures evolve, (2) DTC and international growth contributing to top-line resilience, and (3) cash conversion cycle improvements that free additional capital for strategic priorities. If UA demonstrates sustained margin recovery and revenue growth without compromising brand position, the stock could transition from a quality-of-cash-flow story to a higher-return growth story. However, in the absence of explicit guidance and given current profitability metrics, the default stance remains cautious with emphasis on execution and cash-flow-driven resilience.
Key Investment Factors
Growth Potential
Direct-to-consumer (DTC) and digital ecosystem initiatives (e.g., MapMyRun) offer upside through higher gross margins and better data-driven merchandising; potential international expansion and increased e-commerce contribution could diversify revenue beyond wholesale exposure.
Profitability Risk
Materially thin net income and near-term profitability pressure; extended inventory days indicating potential discounting risk; reliance on a competitive apparel cycle in a highly crowded market; macro consumer spending volatility and currency effects; high valuation multiples imply reliance on strong execution and margin restoration.
Financial Position
Strong liquidity with ~$726.9M cash and equivalents and robust operating cash flow ($311.3M). Net debt ~$578.3M with a current ratio ~2.01, supporting ongoing flexibility for capital allocation. Solid equity base (~$1.984B) provides a cushion for strategic investments; historical share repurchases indicate active capital management but should be evaluated against evolving profitability metrics.