Catapult Group Ltd (ASX: CAT) is one of the few credible software-as-a-service (SaaS) businesses on the ASX not to trade on an outrageous valuation.
The shares have doubled over the past year to $2 today, but the market value still sits at only around $381 million.
That's just under 4x trailing FY 2019 revenue of $95.4 million.
Compared to other popular SaaS players like Xero Limited (ASX: XRO), Pro Medicus Limited (ASX: PME) or Wisetech Global Ltd (WTC), the sports data business looks a screaming bargain.
It also boasts an impressive 73% gross margin. That's not as high as some SaaS businesses, but still means the group has plenty of room for marketing, sales, and product development investments to grow organic market share.
Today the group held its AGM and told investors it expects more strong revenue growth, alongside a reduction in operating expense growth. As a SaaS business a lot of its revenue is subscription-based or recurring, which is what underpins its attractive economics.
It had cash on hand of $26.9 million as at September 30, 2019.
It's also sticking to a target to be free cash flow positive by FY 2021.
In fact I'm kicking myself for not taking the plunge on Catapult shares this time last year when sentiment around the business was weak. And the shares were cheap.
Fortunately, the shares are probably still cheap if Catapult delivers on its potential to be a market-leading software-driven sports analytics business.
