The Sports Technology business jumped on a strong 1H report yesterday, ticking the boxes of what we were looking for in the underlying business. Revenue was up 21% in constant currency terms to $US49.8m largely on the back of 20.6% growth in Annualized Contract Value (ACV). The core wearables business that provides important analytical data about athlete performance continues to grow at a consistently high rate, up 27% in the first half. The two key growth avenues for the company are the video and software products which feed into coaching and management staff decisions and planning. Software ACV was up 25% in the half while the new video solution grew 41%.
While these numbers paint a strong picture of momentum in the business, the thing that impressed us most was the swing into positive Free Cash Flow (FCF) which improved from -$US13.4m in 1H23 to +$US1.4m in the current half. Catapult managed to increase revenue and reduce costs. In our view, the sales growth across the board gives us more confidence in Catapult’s product, particularly in Video where they have faced technical and integration issues in the past.
- The CEO called this report an inflection point in the company’s earnings which should underpin a significant re-rate in the valuation of the business.
MM remains long & bullish CAT
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