Catapult Group (ASX:CAT): Making fistfuls of dollars from the world’s elite sporting clubs

Sport is becoming more and more of a big business and the existence and success of Catapult Group (ASX:CAT) is a testament to that.

It works with over 4,400 elite teams in over 100 countries across several different codes. These include the Philadelphia Eagles and Kansas City Chiefs that have faced off in 2 of the last 3 superbowls and won 1 title each, several nations soccer teams including Argentina, Brazil and France; and even teams closer to home – the entire AFL has hired it as the performance technology supplier, meaning all teams use it. But just what does it have to offer?

Catapult Group’s (ASX:CAT) solution

Essentially, it is performance technology. It began nearly 2 decades ago as part of a partnership between the Australian Institute of Sport (AIS) and the Cooperative Research Centres (CRC) to maximise the performance of Australian athletes ahead of the Athens Olympics.

Catapult’s solutions include athlete monitoring – think wearables like watches and analytical sports bras – as well as video analysis. The tools enable analysis of the entire game, individual players, and it also enables for tactical planning (both tactics for games and for player recruitment, i.e. out of college). In addition, the company has a content management solution to ensure customers can quickly and efficiently access digital libraries and anything specific needed to be found amidst all the videos, photos or anything else in the library. It can even digitise old footage on ancient formats like VHSs.

Essentially, the company’s vision is to ‘unleash the potential of every team and athlete on earth’.

More to like than loathe, but it is not all perfect

Catapult has had a very successful run with its shares climbing from 60c to over $4 per share in just over 2 years. Investors spent a few years concerned about high R&D expenditure and a lack of profitability. The company pleaded for patience as its ‘Annual Contract Value’ (ACV) kept climbing and climbing, but its bottom line stayed red.

The reason we decided to talk about Catapult now is it released its FY25 results last week. The company delivered 19% revenue growth, to US$116.5/A$185m. The company delivered record high Free Cash Flow of US$8.6m (A$14m), compared to -$21.6m just 2 years ago, and it reached 31% on the Rule of 40 SaaS metric. It retained 96% of customers, and its Lifetime Duration of Customers was 7.8 years.

The company’s EBITDA was $18.1m, up 93%, but $26.9m of depreciation sent the bottom line $8.8m into negative territory. This was a significant improvement on the previous years’ $16.7m NPAT loss.

Catapult has its eyes on the future

Catapult thinks it is only just getting started. It claims that by 2030, its market size could nearly double from US$36bn to US$71.7bn. While it has just over 4k clients today, it reckons it has a market of 20k professional teams. Not just in major sporting leagues, but olympic teams, national teams, college sports and academies. In the longer-term it claims that adjacent markets could include high school and youth teams, along with medical and military markets.

Looking in the more immediate term, the company has given the following guidance for FY26:

• ACV growth to remain strong with low churn
• Continued improvement in cost margins ‘towards our targets’, and
• Higher free cash flow as the business scales.

Analysts covering the company call for 20% revenue growth to $182.2m and for EBITDA to more than double to $30.4m. That said, they have a mean target price of $5.04, below the $5.29 intraday price on Thursday.

Conclusion

Catapult has a big opportunity ahead of if it can capitalise. But of course, so this is the case with just about every company. No company will tell its investors,’ We’ll do our best but can give no promises’, or that,’ We don’t think any further growth can be achieved’ – obviously.

Of course, Catapult is a unique company on the ASX, in that no other company focuses on sports teams. And any company that can grow its customer base 4-5x will do well. The challenges for Catapult will be dealing with potential competition, and eventually getting to bottom line profitability.

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