Catapult shines: 20% sales growth propels ASX tech stock to new 52-week high

A strong annual result from this tech player has caught investor attention.

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ASX tech stock Catapult Group International Ltd (ASX: CAT) captured the spotlight in early trading on Thursday following its financial results for the year ending 31 March 2024.

At the time of writing, Catapult shares are trading 11.6% higher at $1.73 apiece after touching a 52-week high of $1.80 just after market open. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) has slipped 0.6% into the red.

Let's delve into the key highlights from FY 2024 that have investors buying this ASX tech stock today.

Catapult: ASX tech stock with high revenue growth

Investors are optimistic about this ASX tech stock's outlook following the company's annual results. Here are some of the highlights:

  • Annualised contract value (ACV), a key indicator of future revenue, grew by 20% in constant currency year over year.
  • The company's revenue hit a milestone of US$100 million, reflecting the strength of its software as a service (SaaS) strategy.
  • Earnings before interest, tax, depreciation and amortisation (EBITDA) of US$9.3 million, up from a loss of US$11 million last year.
  • Net loss after tax of US$16.7 million, an improvement from the $31.6 million net loss in the prior corresponding period.

Revenue growth was driven by new customers and increased ACV per team, boosted by the ASX tech stock's new video solutions.

Catapult's core SaaS metrics showed ACV retention improving to 96.5%, up 30 basis points year-on-year. Customer lifetime duration increased by 15.9% to seven years, and the number of pro team customers rose by 9.4% to 3,317 teams.

The company also hit its free cash flow targets of US$4.6 million, a US$26 million improvement year over year. This is after paying down US$4.7 million of debt during the quarter.

What did management say?

Catapult CEO Will Lopes was pleased with the company's numbers, saying:

FY24 was a historic year for Catapult. Our SaaS strategy delivered great ACV growth, driven by new customers but also buoyed by increases in ACV per team as cross-selling accelerated with our New Video Solutions.

This highlights the company's ability to leverage its technology to attract and retain clients, ensuring steady revenue growth.

Catapult's EBITDA margin improved by 125% year-on-year, resulting in US$4.6 million of free cash flow.

This marks a significant inflection point in the ASX tech stock's journey towards profitability and establishing a world-class SaaS business.

Lopes added, "FY24 was a major inflection point in our journey towards profitability and building a world-class SaaS business. We saw strong growth in our profit margin, accelerating us to improved levels on the Rule of 40."

The Rule of 40 is a key valuation metric for SaaS companies, indicating that the combined revenue growth rate and profit margin should exceed 40%. Catapult achieved a 43% rate.

What's next for this ASX tech stock?

For FY25, management aims to maintain strong ACV growth and high retention rates. The company plans to balance growth and profitability, aligning with the Rule of 40 to ensure cost margins move towards long-term targets.

Said Lopes: "In FY25, our objective is to deliver on our strategic priorities with a focus on profitable growth. Profitable growth is also anticipated to deliver higher free cash flow in FY25 as our business scales."

Catapult share price

The Catapult share price is up around 74% in the last 12 months of trade.

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Catapult Group International. The Motley Fool Australia has recommended Catapult Group International. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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