CAT offers technology and software solutions to sports teams, providing meaningful data to athletes and coaches regarding tactical decisions and conditioning levels. The NRL is an example with the packs that sit below the neck of a player supplied by Catapult. The space has seen significant investment over the last decade as the importance of data in professional sports becomes critical, with the market expected to grow ~20% a year to over $125b in 2026. After multiple years of investment and some clear disappointment along the way, Catapult is just starting to hit its stride now.
The company has been working on an offering that combines their wearables and data points with video, and like any new advancement in tech, there have been some teething problems along the way, however feedback from their current iteration has been more positive. This has led to strong growth driven by vertical integration supporting revenue which increased by more than 20% in the June quarter. As a result, they now expect positive free cash flow (FCF) in the current year (March year-end) with ongoing expansion in margins as customers extend and expand deals to include additional product lines. Most importantly, the business is diversifying away from lower-margin hardware into higher-margin software which generates better returns. We have seen a similar shift play out in Audinate (AD8) which reported exceptional results this week.
- We bought CAT yesterday following recent positive commentary and trading updates.
MM is long and bullish CAT
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