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Catapult bullish on growth despite loss

AAP logoAAP 31/08/2016 Prashant Mehra

Sports technology firm Catapult Group expects its recent acquisitions to fuel revenue growth in 2016/17 and help turn over a profit, as it looks to cross-sell products to sporting team customers.

The Melbourne-based maker of performance tracking wearable tech splashed out $84 million in July to buy US-based sports video analytics company XOS Technologies and Ireland-based analytics software firm PlayerTek.

Catapult, whose tech is used by top teams in the NRL, NFL, NHL and English Premier League, is targeting a wider market that includes school and college teams.

"Our near-term outlook is very encouraging given the expected impact of our recent acquisitions," chief executive Shaun Holthouse said.

"XOS in particular provides significant cross-selling opportunities in the strategic North American market. With PlayerTek we greatly expand our addressable market."

Catapult estimates a cross-sell opportunity of about 4,500 devices to XOS' elite sporting team customers. It also expects the PlayerTek acquisition to spearhead the group's entry into the global market for junior clubs, sub-elite and semi-professional athletes.

The company reiterated on Wednesday it expects to deliver positive earnings and free cash flow in the 2017 fiscal year.

It had previously forecast that the XOS acquisition will deliver $27 million in annualised recurring revenue, and help the group become earnings positive over 2016/17.

It did not provide a specific guidance but said the recent acquisitions would further boost revenue growth.

Subscription business already secured in 2015/16 would contribute a minimum revenue of $13.5 million for the new fiscal year, it said.

Catapult posted a 59 per cent jump in revenue to $18.7 million in 2015/16, driven largely by a shift in sales mix to longer-term subscriptions. It also met its recently-upgraded guidance for total contract value of $29.4 million during the year.

However, its net loss widened to $5.9 million on the back of costs related to the acquisitions and expansion into the US and European markets.

The company had funded the two acquisitions through a $100 million equity raising in July.

Catapult shares dropped 12 cents, or three per cent, to $3.88.

CATAPULT'S LOSS WIDENS

* Net loss of $5.9m vs $4.4m loss in prior year

* Total income up 58.5pct to $18.7m

* No dividend, unchanged

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