The Catapult Group International Ltd (ASX: CAT) share price was out of form on Wednesday and tumbled lower.
The sports analytics and wearables company's shares fell 4.5% to end the day at $1.70.
Investors will be hoping for better from the Catapult share price tomorrow following the release of its half year result after the market close.
How did Catapult perform in the first half?
For the six months ended 31 December, Catapult reported a 4% reduction in revenue to US$33.3 million. This decline was driven by challenges in closing new business due to COVID-19 and its decision to prioritise high-margin subscription sales over capital sales.
In respect to the latter, Catapult's subscription revenue business model was resilient, declining just 1.5%. It now accounts for 78.5% of total revenue. Management notes that the small decline was attributable to the fall in demand for content licensing due to COVID-19, and two one-time deals recorded last year.
Positively, recurring subscription revenue across the company actually rose during the half. At the end of the period, the company's annualised contract value (ACV) metric had grown 8.3% to US$44.5 million. This was driven by an increase in ACV across short-, medium-, and long-term customers. Catapult also reported a reduction in ACV churn to 4.5%. This was despite the severe COVID-19 challenges
Pleasingly, the company's free cash flow was positive at US$8.8 million. This left it with a cash balance of US$$24.6 million and no debt.
Management commentary
Catapult's CEO, Will Lopes, was pleased with the half. He commented:
"Our goals during this unprecedented period were to prioritise high-margin subscription sales over capital sales, drive multi-solutions adoption among our existing customers, keep churn low, generate cash, and continue to improve the position of Catapult for growth when this pandemic is behind us. We feel, despite this difficult climate, we delivered on these objectives very well."
"I am also very pleased to have seen how essential our solutions were to our customers. Despite the difficult period for our customers with slashed budgets and staff retrenchments, our ACV retention was the best we have ever seen. These results continue to demonstrate how resilient our business is and I am very bullish that we are well positioned to return to accelerating growth when this pandemic is behind us."
Outlook
No guidance has been given for the remainder of the year. However, management appears positive on its prospects. It commented:
"The Company believes, that with a vaccine being rolled out and the industry's hard lessons learnt, the impact of the pandemic on global sport was at its worst during 1H21, and that Catapult has never been in a better position to capitalise on its strengths and industry-leadership position. The Company exited 1H21 with confidence and improved momentum against its key SaaS metrics."
The company also revealed that it is reviewing its portfolio of global brands, this includes approximately $4 million of acquired brands. It may consider rationalising some of them following the review.
