Release Date: November 13, 2023
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Catapult Group International Ltd (ASX:CAT, Financial) reported a 21% year-on-year growth in annualized contract value (ACV), reaching nearly USD 80 million.
- The company achieved a 25% growth in SaaS revenue over the past 12 months, driven by strong performance in its core SaaS verticals.
- Catapult generated positive free cash flow of $1.4 million, marking a significant $15 million improvement from the previous year.
- The launch of new products, such as the Vector Core and upgraded heart rate monitoring system, has expanded their market reach and improved product offerings.
- The company has maintained a high retention rate of 96%, indicating strong customer satisfaction and loyalty.
Negative Points
- There was some confusion regarding the reclassification of costs, which affected the reported contribution margin.
- Cash collection timing issues were noted, with some collections shifting from the first half to the second half of the fiscal year.
- Despite strong growth, the company acknowledged that some of the growth was driven by large, one-time deals, which may not be sustainable in the long term.
- The company faces challenges in maintaining the high growth rate of 41% in new video solutions, which may not be sustainable going forward.
- There were $6 million in one-time costs in the first half, which impacted the overall financial performance.
Q & A Highlights
Q: Can you explain the reclassification of some costs, as the contribution margin appears different from last year?
A: There hasn't been any reclassification of costs beyond a change in the capitalization of COGS at the end of FY23. The difference in contribution margin is due to the extraction of non-cash-based payments, making it a cash margin versus the previous statutory EBITDA margin. β Will Lopes, CEO
Q: Has there been any change in cash collection timing, as the first half is usually stronger?
A: There was some timing shift in collections to the second half. Additionally, about $6 million of one-time costs in the first half will not recur in the second half. We expect the second half to be free cash flow positive, with the $1.4 million generated in the first half being our floor for the full year. β Will Lopes, CEO
Q: What were the $6 million in one-time costs?
A: These costs were primarily inventory-based and included seasonal items like inventory and variable costs associated with delivery and sales, which are higher in the first half. β Bob Cruickshank, CFO
Q: When will we see traction from the new video product rollout, particularly in basketball?
A: Our new video solution grew by 41% year-on-year, with significant traction in motorsport and soccer. We also added many new customers in basketball, although specific numbers were not broken out. β Will Lopes, CEO
Q: How much of the 20%-plus growth was derived from pricing versus volumes?
A: The bulk of the growth came from upsell and cross-sell, with a typical 10% price increase during contract renewals. The expansion of our P&H vertical and new video solutions were significant contributors. β Will Lopes, CEO
Q: Are we expecting an acceleration in new video assets ACV growth?
A: Maintaining a 41% annual growth rate would be ideal, though we anticipate a slightly lower rate going forward. Even without motorsport, our new video solutions grew by 27%, which we aim to sustain. β Will Lopes, CEO
Q: When can we expect 30% to 50% of teams to adopt the new video product?
A: We haven't provided specific guidance, but we consider the midterm to be around three to five years. β Will Lopes, CEO
Q: Should we expect strong acceleration in video product adoption in the coming years?
A: Yes, we anticipate strong acceleration in the next couple of years. β Will Lopes, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
