The Catapult Group International Ltd (ASX: CAT) share price has fallen (again) following news of its latest acquisition.
Who is Catapult?
Catapult is a $321 million Melbourne-based sports analytics business which creates the GPS devices you will often see underneath the back of jerseys of AFL and rugby players, cricketers and more. The devices can be used by coaches, sports management staff and the players themselves to monitor gameplay, endurance and injury.
Despite its size, Catapult is one of the leaders in the field. It has made some complementary acquisitions (read: 'bolt-on technology'), which has enabled its devices to be used in many more situations, and also by different users.
It also made one large acquisition, called XOS, which is now the Group's "Video Analytics" division. It enables broadcasters and coaching staff to view gameplay in real time and opens the door for Catapult's technology to a much wider audience.
Catapult has also made in-roads into the 'prosumer' market, including aspiring or semi-professional athletes, which is much larger than the professional market. However, its success in this field is unchartered.
What happened today?
Earlier today, Catapult announced another acquisition, for a total cost of just under $2 million. It revealed that it will acquire the SportsMed Elite and Baseline athlete management system product and clients from SMG Technologies Pty Ltd.
SportsMed Elite is a cloud platform which brings together player and team data and analytics, and Baseline is the solution for the sub-elite market (read: fewer bells and whistles).
"The products already have a highly engaged global user base spanning elite clubs, leagues, colleges, universities, and high schools," Catapult's Head of Corporate Development, Bevin Shields, said.
"We think there is an exciting opportunity to leverage our existing channels and roll out a uniquely integrated Catapult AMS solution that benefits both our growing customer base and the broader market."
Foolish Takeaway
Catapult has a good product and a large potential market. Unfortunately, it is burning through cash and still making acquisitions (for one reason or another). While I understand its business model and strategy I would like to see its cash position improve in the near future.
Although it is a high-risk high-reward investment idea now, I think an improved cash flow position would make it a medium-risk high-reward investment idea.
