Pinned straw:
Sports tech. firm $CAT reported their 1H FY25 results.
My overall assessment - good, steady progress. 1) Good revenue growth 2) Importantly, $CAT achieved incremental profit margin of 75% (which I think is what Will has consistently said the goal is.) and 3) Ongoing innovation, particularly with the sideline video product. Video in T&C is growing very strongly, with strong ACV gains being a leading indicator that this will drive ongoing revenue growth.
Their Highlights
• Annualized Contract Value (ACV), Catapult’s leading indicator of future revenue, grew 20% on a constant currency (CC) basis year-on-year (YoY) reaching US$96.8M (A$143M)
• Revenue increased to US$57.8M (A$85M), +19% (CC) YoY
• The profit margin on the incremental revenue generated reached 75% YoY; delivering Free Cash Flow (FCF) of US$4.8M (A$7M)
Catapult delivered another strong performance from its core SaaS verticals, with ACV growth of 20% (CC) YoY. This reflects the addition of US$10M of incremental ACV half-on-half (HoH), the largest incremental dollar ACV increase in any previous half year period. Catapult’s core SaaS metrics continue to demonstrate the embeddedness of Catapult’s product solutions into team workflows, with:
• ACV Retention consistently strong at 96.2%
• Customer Lifetime Duration increasing 7% YoY to 7.6 years
• Pro Team Customers increasing 7.9% YoY to 3,470 Teams
My Quick Assessment on Cashflows
Continuing good progress. 5th consecutive positive operationing cashflow and 3rd consecutive FCF.
Operating leverage showing through in cash flows: Receipts +21.6% to pcp, Payments +17.4% to pcp, leading to OpCF +34% to pcp.
Investment continues to fall as a % of Revenue.
What's good to see in the chart below is that costs continue to be well-managed, while top-line growth continues. (look at the relative slopes of the dotted blue and orange lines)
$CAT took the opportunity in the period to pay down $6m of debt.
Disc: Held in RL and SM
Congrats to all those who kept the faith. Having sold above $2 some years ago before the big drawdowns, I considered buying back in several times without really making it a priority, most recently in the 1.70s - it has doubled in short order!
What stands out to me is the cost control. For many of us, we're searching for companies that are hitting the profitability inflection point. But the holy grail are the rare companies that that can explode out of profitability inflection. Although Catapult hasn't quite reached profitability inflection at the statutory level, it's clear they'll get there soon and will likely explode out of it.
Employee costs have been relatively flat over the past 3 years while revenue has grown 54%. While one can make the case some of the employee costs might have been shifted into capitalised dev and SBC - it's still clear they're scaling very well taking into account these adjustments.
I'll second all of that @mikebrisy
Will has been very impressive -- consistent and clear messaging, which he's largely delivered on. All while the sales pace continues at a very attractive clip.
I need to dust off my valuation, but despite the strong run it still feels close to fair value.