With sports beginning to start back up it is going to be very interesting to see whether the COVID-19 shutdown of sports worldwide is just a bump on the road or there are more significant long term effects on the business.
BEAR CASE: while sports are beginning to resume across the world (to empty stadiums) there has been huge financial losses to all sporting codes and clubs wolrdwide. These massive losses in revenue could well lead to significant cuts (short & long term) and it may take a lot longer than expected to get back to where we were pre COVID. Locally, you can see the effects on our football codes with huge cuts in spending in the short term and potential winding back and cost cutting for the longer term. While many customers are on long term subscription contracts the bear in my thinks there are big risks in the short/medium term growth prospects of the company when sporting clubs all over the world are looking at how they can cut back spending, not looking to increase it by purchasing one of CAT's products.
BULL CASE: just a bump in the road. As mentioned, most of CAT's clients are on long term subscription contracts and they have a very sticky product and improving churn. Given the hugely valuable information CAT's products provide it will be hard for clients to cut this product as they have become reliant on the information it provides in supporting their players. Growth wise, if sport resumes as expected and crowds are allowed back ASAP then revenue losses will be minimised leading to greater $$$ to spend going forward.
I have always been a big fan of their tech and the opportunity CAT has in the growing sports science/high performance landscape. From their last update, it was postive to see their cash reserves are still over 30m (factoring in loan they've drawn down on) which is what they had at their HY presentation, meaning they aren't leaking cash through this challenging period (so far). Expecting little to no growth in H2, but FY21 is going to be a close watch to see if we can pick up any indications as to any long term effects of spending throughout the sporting landscape.