Catapult (ASX:CAT) share price in focus following half year results

The Catapult Group International Ltd (ASX:CAT) share price will be one to watch on Thursday following the release of its half year results after the market close…

| More on:
catapult share price

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Catapult Group International Ltd (ASX: CAT) share price was out of form on Wednesday and tumbled lower.

The sports analytics and wearables company's shares fell 4.5% to end the day at $1.70.

Investors will be hoping for better from the Catapult share price tomorrow following the release of its half year result after the market close.

How did Catapult perform in the first half?

For the six months ended 31 December, Catapult reported a 4% reduction in revenue to US$33.3 million. This decline was driven by challenges in closing new business due to COVID-19 and its decision to prioritise high-margin subscription sales over capital sales.

In respect to the latter, Catapult's subscription revenue business model was resilient, declining just 1.5%. It now accounts for 78.5% of total revenue. Management notes that the small decline was attributable to the fall in demand for content licensing due to COVID-19, and two one-time deals recorded last year.

Positively, recurring subscription revenue across the company actually rose during the half. At the end of the period, the company's annualised contract value (ACV) metric had grown 8.3% to US$44.5 million. This was driven by an increase in ACV across short-, medium-, and long-term customers. Catapult also reported a reduction in ACV churn to 4.5%. This was despite the severe COVID-19 challenges

Pleasingly, the company's free cash flow was positive at US$8.8 million. This left it with a cash balance of US$$24.6 million and no debt.

Management commentary

Catapult's CEO, Will Lopes, was pleased with the half. He commented:

 "Our goals during this unprecedented period were to prioritise high-margin subscription sales over capital sales, drive multi-solutions adoption among our existing customers, keep churn low, generate cash, and continue to improve the position of Catapult for growth when this pandemic is behind us. We feel, despite this difficult climate, we delivered on these objectives very well."

"I am also very pleased to have seen how essential our solutions were to our customers. Despite the difficult period for our customers with slashed budgets and staff retrenchments, our ACV retention was the best we have ever seen. These results continue to demonstrate how resilient our business is and I am very bullish that we are well positioned to return to accelerating growth when this pandemic is behind us."

Outlook

No guidance has been given for the remainder of the year. However, management appears positive on its prospects. It commented:

"The Company believes, that with a vaccine being rolled out and the industry's hard lessons learnt, the impact of the pandemic on global sport was at its worst during 1H21, and that Catapult has never been in a better position to capitalise on its strengths and industry-leadership position. The Company exited 1H21 with confidence and improved momentum against its key SaaS metrics."

The company also revealed that it is reviewing its portfolio of global brands, this includes approximately $4 million of acquired brands. It may consider rationalising some of them following the review.

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Catapult Group International Ltd. The Motley Fool Australia has recommended Catapult Group International Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

A smiling businessman in the city looks at his phone and punches the air in celebration of good news.
Broker Notes

These ASX 200 shares could rise 50% to 60%

Brokers believe these shares could deliver big returns for investors.

Read more »

A girl is handed an oversized ice cream cone with lots of different flavours.
Best Shares

8 ASX All Ords shares that tripled in value in FY25

Just 8 out of the 500 companies making up the ASX All Ords achieved share price growth of 200% or…

Read more »

Broker written in white with a man drawing a yellow underline.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

Woman with a scared look has hands on her face.
Broker Notes

Bapcor shares fell more than 30% yesterday. Should investors buy in the dip?

Is this a value opportunity?

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Broker Notes

Broker raises price targets on 2 ASX 200 shares to buy

Ord Minnett has just upped its 12-month share price targets on 2 buy-rated ASX 200 stocks.

Read more »

Man with rocket wings which have flames coming out of them.
Share Gainers

Guess which ASX All Ords stock just rocketed 34% on strong earnings growth

Investors just sent this ASX All Ords stock surging 34%. Here’s what’s happening.

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why DroneShield, Gentrack, Metals X, and Northern Star shares are tumbling today

These shares are ending the week in the red. But why?

Read more »

A businessman looking at his digital tablet or strategy planning in hotel conference lobby. He is happy at achieving financial goals.
Share Gainers

Why Dimerix, Newmont, Regal Partners, and Titomic shares are storming higher

These shares are having a good finish to the week. Let's see why.

Read more »