I'll upload the recording shortly, but just wanted to get some key thoughts down while they are still fresh.
- I very much got the sense that Will is playing the long game, and is (rightly) not afraid to make investments where needed -- even at the cost of near term profitability.
- The SBG acquisition and re-tooling of the full product set to use that as the underlying platform is a great case in point. As discussed, that couldn't have been an easy sell given the financial profligacy of the former management and the demands of the market at the time, but it has established a firm technological foundation for the business that will enable more efficient product management and enhancement
- To be clear, that investment is largely done now.
- There remains a lot of opportunity in other adjacencies, but Will said that for the next 2-3 years the focus is on prosecuting the existing opportunity which is showing strong traction.
- fwiw, he reckons Catapult could be a billion dollar revenue company in time (a 10x from here) -- although wise to take that with a grain of salt. It has the potential, but there's a lot of work ahead to get there.
- He's not competing on price, and that seems to be how StatSports tries to differentiate itself (according to WIll). He mentioned some teams that had left Catapult for the cheaper solution, but had since returned to Catapult.
- Since he started he's been very consistent in his vision and strategy -- shifting to subscription, building a firmer base and a more holistic offering and (importantly) ensuring some operating leverage is realised. The company now retains a 46% of every incremental dollar of sales. So, in theory, we should see profit growth exceed revenue growth. The medium term target is a 30% profit margin.
- In wearables, he thinks the company can, in the medium term, win 5,000 teams (out of an estimated 20k globally) and that each team pays US$20k per year just for wearables. So that's a US$100m revenue opportunity in wearables alone. They've said elsewhere that 50% of these should also adopt the video solution.
All told, a great product in a fast growing and under-penetrated market where they remain the dominant player, with lots of future optionality and (finally, hopefully) a robust and scalable business model. Importantly, the company looks to be sustainably past the breakeven inflection point
Shares are on ~3x revenue, but on a 15% net margin (they are targeting 30% operati8ng margin in the medium term) you'd be looking at a PE of ~20.
[Held]
