hi @Hackofalltrades

I last did a valuation for Catapult 3 months ago (see here), and came up with $1.66. So it is still below my (very rough) estimate of fair value.

I think you could capture a lot of data just from a visual feed, but you wont get a lot of the data the wearables collect (eg. impact force, heart rate etc).

Thanks Strawman. I guess I was curious as to if your valuation had changed much given the recent result. Looking at your valuation, there was also this curious line ;) "As always, this is necessarily rather rough. But there's a very big margin of safety at the current price, and I could be tempted to use more bullish assumptions if they continue to execute (and visa versa!)"

I think with that last market report it seems like the company is headed in the right direction with good management, which makes me interested in buying, but there is now still that question over value.

Don't feel an obligation to respond in detail - these things take time, and I certainly haven't put it into CAT yet!

ah yes, I get what you mean @Hackofalltrades

My take is that management's claims of sustainably passing the profitability/cash flow inflection points are a lot more credible now -- they seem to have genuinely curtailed cost growth while sustaining good revenue momentum.

Another set of results which show that this is a reasonable perspective would likely prompt me to further raise the valuation. Any genuine operating leverage could see profit improve significantly from here.

Oh I missed that, thanks for sharing @Remorhaz

Also trying to line up a meeting with Will for our members.

oh man, surely they know another raise would evaporate any remaining management credibility at this point @BoredSaint.

They're really painting themselves into a corner with some of these claims -- unless (as I hope) they are genuine in their confidence of being self-funded going forward. Maybe it'll take another half of ongoing sales growth and FCF generation -- plus growth in actual cash balances -- for the market to really gain some confidence? I think Will and the team really do have the right focus now though.. we'll see!

To be fair to the company, the cash flow does look like it is quite strong, 18% increase in cash receipts with a decrease in outflows and only a small increase in capex:

Given that the company is at an inflection point, if they can increase receipts by a similar amount whilst maintaining outflows and capex at a similar level then I think they will be fine.

It looks like CAT is performing ahead of analysts expectations for both revenue and cash flow (4-5 analysts, Simply Wall Street data). The analysts also expect increasing cash flow from here on, and profitability from 2026.

Disc: not held

I wouldn’t include loan repayments in FCF, but would include interest and rent. They’re -$400k FCF for the half.

Also running roughly -$4m a year of share based payments excluding acquisition related SBC.

Assuming that FCF level (-$400k) is duplicated for the second half, so -$800k for the full year, with $10M in the bank, you'd think they'll avoid the need for a cap raise and can fund themselves to proper profitability.

Had a look at the cashflow statement as I coudn't work out the numbers in this thread:

• FCF of $1.4m seems to the Cash From Ops $15.4m (of which $15.2 was from Ops) less Cash Used in Investing Activities ($14.0m), so it seems clear that FCF excludes loan repayments
• Capex would have to rise as revenue rises, havent done the math but $0.7m seems small vs the increase in revenue
• Debt was repaid $5.2m
• Cash and Cash equivalent fell from $16.2m to $10.3m HoH - the debt repayment offset by positive FCF explains that

This makes sense, if I am reading it correctly. The repayment of debt is a big tick for me as it demonstrates confidence in the current and trajectory of ops cash flows. Also, as operational scale continues, CAT is flagging costs to fall, which if true, means this Half's FCF would be the lowest +ve amount going forward.

Can't see the need for a capital raise to fund operations. Acquistions would be another matter altogether.

Really liking what I am seeing on all fronts.

Discl: Held IRL and in SM

Great notes all, my sentiment is that this was a really good half for Catapult, they have turned this around really quite impressively and as promised in the last 12 months. Paying down debt is not somewhere I thought they'd be this quickly.

I was listening to one of the strawman's podcasts in the last week or two, either motley fool money or baby giants and they were discussing the protection that higher cost of capital provides for incumbent companies, those that have already made the investment and built out their market. Why, because without cheap money, it keeps the irrational competitors at bay.

I feel this applies really well to Catapult. They have built a market leading position over many (a few too many) years, with much investment in building out the product offering and the customer relationships. In my mind, if we assume higher for longer rates, it is now that much more difficult for this leading position to be undermined by some competitor undercutting on price, losing money year on year and dragging catapult's revenue and margins down with it. It gives Catapult pricing power that I think they could leverage (responsibly) to ensure the company finally makes a good return on all its investment - and at a ~A$250 market cap (~US$170m) I think that represents value buying.