With a market capitalisation of just over $60 million, Catapult Group International Ltd (ASX: CAT) is hardly what you would call a household name. The sports analytics group provides the software and hardware that is used to measure and evaluate the performance of elite sports men and women.
Indeed, early shareholders have been well rewarded with the shares gaining more than 156% since their December 2014 stock market debut. The company's products are currently being used all around the world by teams in the AFL, English Premier League, NFL and even cricket (notably, it has recently lost its contract with the AFL – although Catapult has contracts with individual teams that run for years).
According to a report in The Australian Financial Review this morning, however, there is a new business contending for a share in the market. Sports Performance Tracking (SPT) is a company that was founded by William Strange, an amateur footballer, who has reportedly won the backing of Tony Gandel and Brady Scanlon – the sons of Rich Listers John Gandel and Peter Scanlon.
What this means
Decades ago, AFL superstars could be found in the change-rooms at half-time drinking a beer and smoking a cigarette. Clearly, times have changed (a lot) since then, and clubs are all about getting the absolute most out of their athletes for optimum game-day performance.
The approach is very scientific nowadays where trainers, and the athletes themselves, need to know things such as their speed and distance covered, running habits and even whether they are at risk of injuring themselves. As such, it is clear there is a big market to be filled by companies such as Catapult.
But when it comes to big market opportunities, it would be unreasonable to expect Catapult would get to enjoy all the benefits. Competition has always been a key risk for Catapult Group and one that investors need to be mindful of as the company establishes itself in the global market place.
Although Sports Performance Tracking is predominantly focused on the "sub-elite" level of amateur football – and thus is not yet interested in competing with Catapult Group at the elite level – its success could limit Catapult's ability to expand into these niche markets. Other companies such as Adidas and Nike could also make a stand.
Still, the establishment of SPT is no reason to avoid Catapult Group's shares. Catapult recently reported revenues and unit sales which both exceeded its prospectus forecasts (by a considerable margin) while it also boosted its subscription sales, which is great for the long-term.
It's also important for investors to note that there is room for more than one company in this market. Catapult doesn't need to capture the entire thing to become successful – it just needs to keep increasing its sales and subscriptions and innovating its product offerings.
While it mightn't be a risk-free investment idea, it could certainly be a worthwhile one for investors focused on the long-term.
