Awaiting Catapult Sports’ Fundamental Re-Rating

Small Caps | 10:30 AM

Following a stand-out FY26, analysts believe Catapult Sports' execution and growth trajectory suggest a re-rating should follow.

• Catapult Sports’ FY26 beat on most metrics
• Recent acquisitions performing well
• Ample headroom for further market penetration
• Re-rating expected following growth stock sell-off

By Greg Peel

Catapult Sports ((CAT)), according to its website, “exists to unleash the potential of every athlete and team on earth. Operating at the intersection of sports science and analytics, Catapult products are designed to optimize performance, avoid injury, and quantify return to play.

“Catapult has over 400 staff based across 24 locations worldwide, working with more than 5,000 elite teams in over 100 countries globally.”

Catapult is a global leader in sports technology with solutions for every element of the performance ecosystem from wearable tracking to athlete management and video analysis. The company services a large suite of different spots, from football codes to motor racing.

The Performance

Catapult last month released its FY26 result. While headline numbers had been pre-released in the late March trading update, Morgans was pleased to see the strong organic growth in the business maintained throughout the period, which augurs well for the company’s medium term aspirational targets.

Revenue rose 19% (constant currency) year on year, 2% ahead of consensus. Closing annualised contract value (ACV) rose 28% in line with consensus and guidance. Management earnings (17.6% margin), up 67%, were 20% ahead of consensus.

Free cash flow (ex-transaction costs) was marginally above the top end of the guidance range. Catapult closed the year with US$53.5m cash on the balance sheet and no debt.

A statutory loss of -US$24m widened from -US$9m a year ago, with the deterioration largely non-cash and acquisition-related.

Of particular note for Morgan Stanley was the pleasing progress made with bedding down the recent Impect and Perch acquisitions -- the first material acquisitions made by the company in some time.

Morgan Stanley believes the FY26 result demonstrated Catapult’s ability to integrate and scale acquisitions effectively, with both Imprct and Perch appearing to perform well post-acquisition and contributing positively to growth, product breadth and cross-sell opportunities.

This was achieved alongside organic growth in the core business.

Analysts highlight Catapult almost reached the “Rule of 40” -- a financial metric for SaaS companies in which the sum of revenue growth and profit margin should equal or exceed 40% to indicate a healthy balance between growth and profitability.

Catapult achieved a result of 36%, which excludes the impact of the Impect and Perch acquisitions (46% including).

The Parts

Segmentally, Performance & Health (P&H) ACV growth of 23% was largely organic and greenfield-driven, Morgans notes, with 460 new Pro P&H customers added.

Geographic expansion in soccer (EMEA, Central America) and continued US college sports growth remain the key growth drivers.

Tactics and Coaching (T&C) ACV growth of 40% was Impect-led, with Pro Video Suite contributing. Importantly, Morgans highlights, Impect is now live on the Catapult platform and entering the Northern Hemisphere selling season.

Total pro teams across both verticals now sit at 4,178, with multi-solutions teams representing circa 32% of these at period end.

The Future

Catapult provided its usual guidance for the year ahead of strong ACV growth, continued improvement in margins, and higher free cash flow.

Bell Potter has upgraded FY27 and FY28 management earnings forecasts, mostly driven by increases in margin estimates.

Upgraded FY27 and FY28 ACV forecasts are equating to ACV growth of 17% and 16% -- below the traditional 18-22% target but obviously getting more difficult as the number gets larger, Bell Potter notes.

Free cash flow of US$10m is now forecast in FY27 and US$14m in FY28, consistent with guidance.

Morgan Stanley is watching continued execution across the T&C segment and for evidence that recent acquisitions can sustain stronger growth over time. T&C ACV growth was driven by both organic growth and Impect.

While still early, Morgan Stanley believes the successful integration and growth of Impect and Perch de-risks Catapult’s M&A strategy, particularly given the potential to drive cross-sell opportunities across the company’s installed base of some 4.2k pro teams.

While expectations are for future growth to tilt towards cross-sell (60% price/mix, 40% teams), this analyst argues the FY26 result demonstrates Catapult continues to capture new logo opportunities despite deepening penetration.

Ord Minnett’s estimates suggest gross new pro team ACV was $34m, of which 62% was driven by new teams and 38% from upselling existing customers.

Ord Minnett forecasts Catapult reaching 5.5k pro teams by 2030 and an ACV/Team of $43.5k, underpinning a 16% ACV compound annual growth rate.

Importantly, 80% of FY26 new teams were organic (Impect/Perch only contributed 20% of additions), further strengthening Ord Minnett’s penetration assumptions and highlighting organic team growth remains strong despite acquisition contributions.

With evidence of increased sales in higher margin products and operating leverage driving management earnings margin expansion (41% incremental in FY26), Ord Minnett expects Catapult to achieve its maiden profit-positive year in FY29.

Canaccord Genuity remains of the belief Catapult is in the best financial and operating position since inception (2006).

The company is seen entering FY27 with an enhanced and broader product suite, with ample headroom for further pro-team penetration (FY26: 20% of industry total addressable market of some 20k pro-teams), cross-sell/up-sell momentum and a self-funded business model for potential accretive tuck-in acquisitions.