The shares of leading wearable and video performance analytics company Catapult Group International Ltd (ASX: CAT) could be one to watch today after the release of a trading update late yesterday.
According to the release group level annualised run rate (ARR) increased to $44.7 million as of December 31 2016. This is a 13% increase on the pro forma ARR of $39.5 million at the end of June, and a massive 391% over the last 12 months.
For those unfamiliar with the term, ARR is loosely defined as a company's quarterly sales annualised.
Driving the growth has been its Elite team wearable sales. During the December quarter 1,731 units were ordered, up 28% on the prior corresponding period.
New clients include sporting teams such as West Ham United, RSC Anderlecht, Netball New Zealand, and the Argentina rugby team.
Whilst the sale of wearables is a lucrative business in itself, I believe the real driver of growth for the company in the future will be the monetisation of data.
Pleasingly Catapult is making great strides in this regard. One such development is with the Australian National Basketball League which has started to display Catapult's in-game data through live on-screen graphics.
The company believes the partnership acts as a global showcase for the opportunity to work with leagues and monetise data for fan engagement.
Catapult has also provided real time player performance data for the Senior Bowl in the United States. Its wearable solutions delivered athlete profiling and ranking across key performance metrics which include maximum velocities, player workload, and high intensity movements.
What's next?
Despite the progress the company has made, management has held firm with its FY 2017 guidance. It still expects revenue in the range of $61 million to $65.5 million, representing pro-forma growth of 21% to 30% on FY 2016.
Overall I believe this was another solid update from the company. Whilst its shares are still reasonably expensive even after a 35% drop in the last six months, I believe patient buy and hold investors could be rewarded handsomely over the next few years.
Right now Catapult would be up there with Appen Ltd (ASX: APX) and Altium Limited (ASX: ALU) as my preferred long-term picks in the information technology sector.
