Small Caps | 11:00 AM
Proprietary data, an expanding product suite and cross-selling offers earnings upside for Catapult Sports.
- Catapult Sports builds out an integrated performance platform
- Video Scouting completes the product suite
- Cross-selling also drives operating leverage
- Share price trading at significant valuation discount
By Mark Woodruff
The analysts at Bell Potter recently struggled to explain why global sports-technology leader Catapult Sports ((CAT)) had underperformed other high-quality technology companies such as Life360 ((360)), Pro Medicus ((PME)) and TechnologyOne ((ONE)), especially in light of a solid FY26 result in May.
Catapult shares many of these businesses’ attractive characteristics, the analysts explained, including global operations, market leadership, highly recurring revenue, positive free cash flow, proprietary data, low customer churn and a strong balance sheet.
Catapult is also seen as relatively well protected from AI disruption, given its difficult-to-replicate proprietary datasets and hardware-enabled solutions.
One possible explanation, Bell Potter suggested, is Catapult’s smaller size and lower market visibility: it is included in the ASX 300, whereas Life360, Pro Medicus and TechnologyOne are members of the ASX100.
Against this backdrop, new research from RBC Capital highlights management’s aim to increase the average annual subscription revenue generated per team fivefold by developing a unified performance-intelligence platform.
RBC sees Catapult as a global leader in performance-analytics tools for elite and professional sporting teams.
The business currently serves more than 4,000 teams across 40 sports, underpinning a highly recurring software-as-a-service model, with subscriptions generating 89% of revenue and customer retention of 96%.
Around two months ago, Moelis also commenced coverage of Catapult, noting the sports-technology market is growing at around 15% annually, supported by rising broadcast and media revenue, greater commercialisation of professional sport and increased investment in player performance.
Further tailwinds are seen via sports betting, injury prevention and the growing adoption of AI, computer vision and data-driven coaching tools.
Professional and elite teams benefit by improving athlete performance, coaching, scouting and decision-making through an increasingly integrated platform.
Moelis posits Catapult’s years of collecting on-field performance information have created valuable proprietary datasets that competitors cannot readily replicate.
Management can use this longitudinal data to improve algorithms, generate differentiated AI-driven insights and accelerate development of products that assist sporting organisations with complex decisions.
The business transformation and competition
Catapult has transitioned from upfront hardware sales towards a software-as-a-service-aligned subscription model, with equipment generally supplied under contracts lasting around three years.
This subscription model improves revenue visibility and reported gross margins, Moelis explains, because customer hardware is capitalised as subscription loan units (rather than expensed immediately through the cost of goods sold) and is subsequently depreciated over its useful life.
Management continues to invest heavily in research and development, customer support and sales capabilities to protect the platform’s competitive position and encourage broader adoption.
Moelis identifies privately owned US-based Hudl as Catapult’s main strategic competitor, alongside Teamworks and Sony’s sports-technology businesses, including majority-owned STATSports and wholly owned Hawk-Eye Innovations.
It’s believed Catapult remains differentiated from competitors through accurate athlete tracking, proprietary data, integrated workflows, embedded infrastructure and longstanding relationships with professional teams.
Moelis sees operating leverage as the primary driver of improving financial returns, although achieving it requires Catapult to balance ongoing product investment with disciplined cost control.
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