Catapult Group International

About the author:

Ivor Ries
Author name:
By Ivor Ries
Job title:
Former Senior Analyst
Date posted:
06 September 2016, 10:31 AM
Sectors Covered:
Information Technology, Online Media

Key points

  • Catapult's (CAT) FY16 earnings result – now largely a sidshow following the acquisition of XOS – was largely as expected.
  • Underlying revenue was slightly below our forecast. The underlying EBITDA loss of A$4.4m was higher than our estimate of A$3.5m, mostly explained by the timing of new subsciptions.
  • All key metrics and drivers of future cash generation – especially subscriber annualised revenue rate and the sales pipeline – are as strong as ever.

Result in line

Catapult Group International (CAT) easily exceeded unit sale forecasts in FY16, with sales of 8,354 units up 66% on the previous corresponding period and 4% ahead of forecast. However the mix shift to subscriptions and late timing of sales caused a small shortfall on our revenue forecasts. Subscription annualised revenue run rate ended FY16 at A$13.5m, up 85%. For the first time subscription revenues have overtaken capital sales as the primary revenue driver. Cash generation in H2 was inline with our forecast. Overall there was nothing in the FY16 result that caused any significant changes to our FY17 revenue and opex forecasts. 

The company remains on track to record a modest operating profit in FY17.

Risks and catalysts

Risks faced by Catapult include:

  1. slower-than-expected signings of new clients in FY17;
  2. encountering difficulties in merging with with recently-acquired XOS; and
  3. loss of a major customer to a rival systems provider.

Potential positive catalysts include:

  1. strong new client signings in FY16;
  2. early success in achieving cross-sell opportunities with XOS clients; and
  3. signing of a major league-wide deal.

Investment view

Catapult offers investors exposure to the fast-growing global marketplace for elite athlete performance monitoring and analytics systems. We expect that the company will be able to achieve more league-wide supply deals in 2017. 

We retain our Add recommendation.

More information

Morgans clients can login to view our latest detailed report and share price target for Catapult Group International (CAT). Alternatively, please contact your nearest Morgans office for access.

Disclaimer(s): Morgans Corporate Limited was a Lead Manager to the placement for Catapult and received fees in this regard.

The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents (“Morgans”) do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.

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