The Catapult (ASX: CAT) share price is up more than 8% after the company announced positive free cash flow in FY20.
What is Catapult?
Catapult Group International Limited is a global sports analytics company that provides elite sporting organisations and athletes with detailed, real-time data and analytics to monitor and measure athletes. Its products are now used by approximately 3,000 sporting teams from all around the world.
Catapult generates positive free cashflow
The sports analytics company said it generated net free cash of $9 million in FY20, an improvement of $24.1 million compared to FY19. Positive free cashflow was achieved a year earlier than forecast.
Catapult also said that revenue and EBITDA (click here to learn what EBITDA means) continue to grow despite the postponement of many professional sporting leagues around the work. That’s due to the subscription nature of most of Catapult’s revenue. The company expects to report total revenue in FY20 of between $100 million to $101 million. FY20 EBITDA is expected to be between $11.5 million to $12.5 million.
The company finished FY20 with $27.5 million of cash.
How did Catapult achieve this? Revenue growth obviously helped as it continued to win new customers and retain existing ones. But the company also said it adopted conservative cost control measures and managing working capital.
Catapult CEO Will Lopes said: “These results demonstrate that we can control costs and investment to generate cash, and the potential this gives the company as we grow. As I stated when presenting our 1H20 results, we will continue to invest in customer solutions with a lens that maximises long-term free cashflow. I am also pleased that many of our clients have returned to play and we assisted them with a number of innovations including in-home training and contact tracing solutions.”
Summary
It’s good that the company is finally cashflow positive. I’m not sure how much profit the company can generate in the future, so I’m not sure I could ever invest in Catapult shares due to that unknown. For more — daily — ASX growth share ideas and coverage, view our Growth Shares column here on Rask Media. I’ve written a piece about two ASX growth shares I’m interested in.
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