Under Armour Inc (0R2I.L) QQ2 2025 Results Analysis: Revenue Resilience Amid Working-Capital Headwinds and Margin Momentum
Executive Summary
- In Q2 2025, Under Armour reported revenue of $1.399 billion, down 10.7% year-over-year but up 18.2% quarter-over-quarter. Gross margin held steady at roughly 49.8%, delivering a gross profit of $696.1 million and contributing to an operating income of $173.1 million and a net income of $170.4 million (EPS $0.39). The quarter demonstrates tangible margin resilience despite revenue contraction, supported by disciplined cost management and a favorable product mix.
- Notable cash-flow dynamics: operating cash flow was negative at $-321.4 million and free cash flow was negative at $-367.2 million, driven by a substantial working-capital outflow of about $505.3 million. Ending cash was $549.8 million with total debt of $1.332 billion and net debt of $801.1 million, signaling solid liquidity but a cash-flow headwind from working-capital needs that investors should monitor as inventory normalizes.
- The balance sheet remains robust: total assets of $4.495 billion and stockholders’ equity of $1.985 billion, with a current ratio of 2.18 and a quick ratio of 1.24. The company maintains a moderate leverage profile (debt to equity ~0.67; debt ratio ~0.30) and a cash-rich liquidity stance that supports near-term obligations while continuing to invest in growth initiatives.
Overall, the QQ2 2025 print reflects a bifurcated narrative: durable profitability on a leaner cost base and steady gross-margin discipline, yet cash conversion remains pressured by working-capital dynamics. Investors should focus on inventory normalization, direct-to-consumer acceleration, and international expansion as key catalysts for a more favorable free-cash-flow trajectory and earnings durability going forward.
Key Performance Indicators
Revenue
1.40B
QoQ: 18.19% | YoY:-10.70%
Gross Profit
696.13M
49.76% margin
QoQ: 23.72% | YoY:-7.00%
Operating Income
173.08M
QoQ: 157.75% | YoY:24.10%
Net Income
170.38M
QoQ: 155.79% | YoY:62.72%
EPS
0.39
QoQ: 155.71% | YoY:56.00%
Revenue Trend
Margin Analysis
Key Insights
$549.848M; Beginning Cash - $903.161M
Balance Sheet: Total Assets $4.495B; Total Liabilities $2.510B; Total Equity $1.985B; Cash & Equivalents $530.701M; Total Debt $1.33178B; Net Debt $801.079M
Liquidity/Leverage: Current Ratio 2.18; Quick Ratio 1.239; Debt/Equity 0.671; Debt Ratio 0.296; EV/EBITDA 22.26; P/E 5.65; Price/Sales 2.75; Price/Book 1.94; Dividend Yield 0%
Financial Highlights
Revenue: $1.399B (YoY -10.70%; QoQ +18.19%)
Gross Profit: $696.132M; Gross Margin ~49.76%
EBITDA: $209.027M; EBITDA Margin ~14.94%
Operating Income: $173.080M; Operating Margin ~12.37%
Net Income: $170.382M; Net Margin ~12.18%
EPS: $0.39 (Diluted $0.39); Weighted Avg Shares ~432.225M
Cash Flow: Operating Cash Flow -$321.384M; Free Cash Flow -$367.206M; Net Change in Cash -$353.313M; Cash at End - $549.848M; Beginning Cash - $903.161M
Balance Sheet: Total Assets $4.495B; Total Liabilities $2.510B; Total Equity $1.985B; Cash & Equivalents $530.701M; Total Debt $1.33178B; Net Debt $801.079M
Liquidity/Leverage: Current Ratio 2.18; Quick Ratio 1.239; Debt/Equity 0.671; Debt Ratio 0.296; EV/EBITDA 22.26; P/E 5.65; Price/Sales 2.75; Price/Book 1.94; Dividend Yield 0%
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
1.40B
-10.70%
18.19%
Gross Profit
696.13M
-7.00%
23.72%
Operating Income
173.08M
24.10%
157.75%
Net Income
170.38M
62.72%
155.79%
EPS
0.39
56.00%
155.71%
Key Financial Ratios
currentRatio
2.18
grossProfitMargin
49.8%
operatingProfitMargin
12.4%
netProfitMargin
12.2%
returnOnAssets
3.79%
returnOnEquity
8.58%
debtEquityRatio
0.67
operatingCashFlowPerShare
$-0.74
freeCashFlowPerShare
$-0.85
priceToBookRatio
1.94
priceEarningsRatio
5.65
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Notes: No earnings call transcript data provided in the dataset. As a result, there are no management quotes available within this dataset to cite or quote directly. The following highlights are based on the quantitative results and typical themes management discusses in this sector: (1) Focus on direct-to-consumer growth and digital monetization through MapMyRun/MapMyRide platforms; (2) Inventory normalization and regional mix improvements as key near-term drivers of cash conversion; (3) Cost discipline and ongoing marketing efficiency to sustain margins amid revenue volatility; (4) International expansion and product innovation as long-term growth vectors.
N/A
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N/A
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Forward Guidance
No explicit management guidance was provided in the supplied data for QQ2 2025. Given the results, investors should monitor: 1) Inventory normalization and its impact on working capital and cash flow; 2) The pace of Direct-To-Consumer (DTC) growth and its effect on gross margin and operating leverage; 3) International market expansion and currency/FX sensitivity; 4) SG&A efficiency and marketing spend discipline that could unlock further margin improvement. The near-term risk factors include macro demand softness in key regions, channel mix volatility ( wholesale vs. DTC), and potential supply-chain disruptions. If UA can sustain DTC growth while normalizing aging inventory, the FCF trajectory could improve meaningfully in the next several quarters.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
0R2I.L Focus
49.76%
12.40%
8.58%
5.65%
0QZS.L
90.70%
7.65%
2.80%
25.66%
0LJN.L
97.80%
90.80%
3.72%
6.25%
0JXD.L
42.30%
4.36%
3.49%
7.37%
0JU0.L
23.10%
14.10%
3.51%
11.44%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Under Armour’s QQ2 2025 results show a resilient profitability framework with a gross-margin-centric margin story, even as revenue declined YoY. The negative free cash flow and substantial working-capital outflows are the principal near-term headwinds, signaling a cash-flow profile that requires normalization of inventories and improved DTC mix to unlock sustainable FCF generation. The company’s valuation metrics (P/E ~5.65, EV/EBITDA ~22.3, P/S ~2.75) imply a market recognizing both the quality of the gross-margin backdrop and the risk from cash-flow volatility; the stock appears to be priced for modest growth with upside potential if DTC growth accelerates and inventory normalization accelerates cash-generation. The key upside levers are successful international expansion, continued digital monetization, and cost discipline that could convert gross-margin resilience into stronger operating leverage. Downside risk centers on macro demand weakness, currency headwinds, and any sustained delay in inventory normalization that prolongs negative FCF. Overall, the investment thesis rests on the successful execution of DTC and international growth, with a watchful eye on cash-flow recovery in the near term.
Key Investment Factors
Growth Potential
Direct-to-Consumer (DTC) acceleration and improved digital monetization via MapMyRun/MapMyRide; international expansion (EMEA/APAC) to diversify revenue mix; product innovation to raise average selling price (ASP) and expand repeat purchases.
Profitability Risk
Negative free cash flow in QQ2 2025 due to working-capital outflows; reliance on North America channel mix; currency headwinds; competitive pressure from peers; potential inventory markdowns if demand softens.
Financial Position
Solid liquidity with cash $530.7M and net debt $801.1M; manageable leverage (debt/equity ~0.67; debt ratio ~0.30); however, negative FCF and elevated working-capital needs require monitoring for sustainability in a volatile macro environment.
SWOT Analysis
Strengths
Strong brand recognition in the Consumer Cyclical apparel space