Catapult (ASX:CAT) hits Rule of 40 with ACV up 28% and EBITDA finally compounding

Variable costs now sit two points above target as Perch and IMPECT plug into the SaaS engine

Catapult Sports (ASX:CAT) delivered its FY26 result today and the headline that matters is the Rule of 40 score of 46. That number is the sum of constant currency ACV growth and EBITDA margin, and crossing 40 is the threshold institutional SaaS investors actually care about.

Annualised contract value finished the year at US$133.8 million, up 28% in constant currency. Strip out the acquired ACV from Perch and IMPECT and organic growth still came in at 18%, which is a healthier underlying number than the headline alone suggests.

Management EBITDA jumped to US$24.7 million from US$14.8 million, a 67% lift on revenue growth of 21%. That gap between revenue growth and profit growth is the operating leverage story the company has been promising for two years, and FY26 is the year it showed up in the numbers.

The skeptical read is that acquisitions are flattering the top line and that NPAT is still negative at US$24 million. We think the more useful frame is whether the underlying SaaS engine is now self-funding profitable growth. On this print, it is.

Why the variable cost line is the single most important number in this result

Variable costs (cost of goods sold, sales and marketing, delivery) fell from 51% of revenue in FY25 to 47% in FY26. The long-term target is 45%. Catapult is now two percentage points away from the structural margin the company has been pointing at since the Will Lopes era began.

That matters because incremental profit margin on new revenue came in at 41%, and at 48% if you strip out acquisition drag. Every new dollar of revenue is converting to profit at a rate that should compound as the cost base stops growing.

The fixed cost line told the same story, dropping from 37% to 35% of revenue despite absorbing two acquisitions. The denominator is doing the work, which is what scale is supposed to look like in a SaaS business.

Multi-solution adoption is the cross-sell signal that turns customers into compounders

1,328 pro teams now use more than one Catapult solution, up 62% on FY25. Multi-solution teams as a share of total pro teams climbed from 23% to 32%. ACV per pro team crossed US$30,000 for the first time, a 10% lift year on year.

This is the metric that determines whether the path to US$1 billion ACV is credible. Management’s framework requires ACV per team to climb from US$30,000 today to US$100,000 to US$150,000 over time. A 10% annual lift gets there slowly. The 62% jump in multi-solution adoption suggests the cross-sell motion is accelerating, not stalling.

Churn at 3.9% is below the 5% internal target and is the kind of retention number that lets you compound. The combination of low churn and rising wallet share is the engine that produces SaaS multiples.

Free cash flow is positive but the working capital tells you to wait one quarter

Free cash flow excluding transaction costs landed at US$6.5 million, ahead of the US$5 to US$6 million guidance. Cash on hand is US$53.4 million with no debt, comfortably funding the FY27 plan without another raise.

Our concern is the accounts receivable balance, which almost doubled to US$20.1 million from US$10.4 million. Management says this is timing, with collections slipping into early FY27. If that is right, the H1 FY27 cash flow print will look unusually strong. If it is not, the working capital build is something to watch.

Either way, the cash position takes a balance sheet risk off the table that has shadowed this stock for years.

The organic ACV number is the next test for this thesis

FY27 guidance is qualitative rather than numeric, with management pointing to continued strong ACV growth, further cost margin improvement, and higher free cash flow excluding transaction costs. The absence of a hard number gives them room, but it also means the market will price the stock on what the prints actually look like rather than a guidance anchor.

We think the central debate from here is whether organic ACV growth can hold above 18% without Catapult needing to bolt on another deal. The Perch and IMPECT contributions will roll into the comparable base through FY27, and from that point the underlying T&C and P&H engines have to carry the number on their own.

Investors looking for more coverage of ASX SaaS names with improving unit economics can find our other work at stocksdownunder. The H1 FY27 result in November is the print that tells you whether the Rule of 40 was a milestone or a destination.