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Catapult (ASX:CAT) share price falls despite delivering solid Q3 growth

The Catapult Group International Ltd (ASX:CAT) share price is pushing higher today after reporting strong growth in key metrics…
The post Catapult (ASX:CAT) share price falls despite delivering solid Q3 growth appeared first on The Motley Fool Australia. –

catapult share price

The Catapult Group International Ltd (ASX: CAT) share price is trading lower today.

In morning trade, the sports analytics and wearables company’s shares are down 1.5% to $1.99.

Why is the Catapult share price trading lower?

The Catapult share price has come under pressure today despite the release of a positive trading update this morning.

According to the release, the company’s Software-as-a-Service (SaaS) metrics have been improving during the second half of FY 2021.

Management advised that the highlight was a $3.9 million increase in Annual Contract Value (ACV) over the three-month period ended March 31 2021. This equates to an annualised increase of 34.6%.

Catapult advised that this was achieved after sports gradually returned to play. Which is consistent with management’s belief that the short-term impact of COVID-19 would not lower medium-term growth rates.

The growth in ACV, the key SaaS metric used by Catapult to measure growth, over the 12-month period was 16.5%.

Where is its growth coming from?

The release explains that its ACV growth was driven largely by the core Performance & Health software solutions. This was predominantly in the EMEA and APAC regions, which grew 57% and 34%, respectively, on a year-on-year basis.

Management notes its overall growth was delivered despite the pandemic still proving a significant factor in the North American sports market. This restricted ACV growth in Catapult’s largest market to a very modest 5% over the 12 months. This could explain some of the weakness in the Catapult share price today.

Another positive from the update was that its ACV Churn has remained at “world-class SaaS levels” of 5.5%. Management believes this demonstrates the resilience of Catapult’s software products through the pandemic and how they remain critical to its customers’ daily workflows.

Finally, Catapult revealed that it has achieved a strong improvement in cross-selling during the March quarter. This led to the number of multi-solution customers increasing at an annualised rate of 18.3% since the end of December. Though, Lifetime Duration fell modestly, reflecting the increased ACV from recently signed new customers.

Management commentary

Catapult’s CEO, Will Lopes, said: “I was very pleased with the results of this past quarter. Catapult achieving an annualized ACV growth rate of 35% is in line with my expectation of a high-growth SaaS business. I have always been confident in our long-term potential of delivering ACV that is 10x our current size. The pandemic presented challenges to our growth rate, which will continue to impact us in the short term.”

“However, as sports return to play, as we’ve seen in EMEA and APAC, Catapult remains well-positioned to capitalize on its long-term potential. We see this quarter’s annualized ACV growth rate being in line with our sustainable medium-term ambitions, once the impact of the pandemic is behind us,” he concluded.

Depsite today’s decline, the Catapult share price is still up 75% over the last 12 months.

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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.

The post Catapult (ASX:CAT) share price falls despite delivering solid Q3 growth appeared first on The Motley Fool Australia.

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