CAT - Catapult Group International

[System]

Catapult Group International is a leading global sports analytics company that uses proprietary technology to provide elite sporting organisations and athletes with detailed, real time data and analytics to monitor and measure athletes' fitness and skill levels; responses to specific training techniques; tactical performance; and risk of injury and safety and to assist with rehabilitation.

http://www.catapultsports.com

 

[McLovin]

Anyone follow these guys? I'd never heard of them until earlier this year, but they were voted the 12th most innovative company in the world. They seem to be constantly picking up contracts to NBA/NFL/EPL teams. What I like about the business model is that they are moving from being a seller of the hardware (their own) to offering data. The blow up in the AFL about changing from CAT's product to Champion Data's shows just how potentially powerful a moat these guys have/could have. All AFL teams currently use CAT's product. I was speaking to someone who works at an AFL team and he said CAT are a real bunch of c**ts to deal with. Why? They have a great product and they know we want it so they don't negotiate on price. Not a bad spot to be in.

 

[Ves]

Anyone follow these guys? I'd never heard of them until earlier this year, but they were voted the 12th most innovative company in the world. They seem to be constantly picking up contracts to NBA/NFL/EPL teams. What I like about the business model is that they are moving from being a seller of the hardware (their own) to offering data. The blow up in the AFL about changing from CAT's product to Champion Data's shows just how potentially powerful a moat these guys have/could have. All AFL teams currently use CAT's product. I was speaking to someone who works at an AFL team and he said CAT are a real bunch of c**ts to deal with. Why? They have a great product and they know we want it so they don't negotiate on price. Not a bad spot to be in.

Far out. Never heard of these guys, but their results presentation and some of their customers are very impressive. Recurring revenue is a big bonus too. Will have a decent look at some stage, thanks for the heads up.

 

[skc]

Anyone follow these guys? I'd never heard of them until earlier this year, but they were voted the 12th most innovative company in the world. They seem to be constantly picking up contracts to NBA/NFL/EPL teams. What I like about the business model is that they are moving from being a seller of the hardware (their own) to offering data. The blow up in the AFL about changing from CAT's product to Champion Data's shows just how potentially powerful a moat these guys have/could have. All AFL teams currently use CAT's product. I was speaking to someone who works at an AFL team and he said CAT are a real bunch of c**ts to deal with. Why? They have a great product and they know we want it so they don't negotiate on price. Not a bad spot to be in.

I follow the NBA quite closely and big data and sports analytics are huge in that league. Mark Cuban, billionaire owner of the Dallas Mavericks and a tech investor, is a shareholder in CAT. Mark is a pretty hands-on owner so his endorsement is probably a good guide to the quality of CAT's products and services.

I casually read about them some time ago but didn't really take a position or anything. Investing in tech stock requires a very different mindset... I wouldn't be buying Amazon or Netflix ever yet the returns have been good for anyone who took a position...

 

[omac]

Been following these guys (luckily) and it will be interesting to see how the change to the subscription model goes.
The transfer to a SaaS business model is value adding as I guess not much of a barrier exists with the units (GPS +accelerometers etc). The expertise they have is helping a team identify the useful data from the noise, different sports also have specific variables. hopefully that means their first mover advantage into a number of sports gives them some resiliency when others start with competing units (already a couple of others out there)

As far as uptake goes I think the ubiquity in the aus sports market gives a good indication of the uptake potential, sports is cutthroat, so any edge you can get, you take. FIFA also now allows wearables in matches as of june, showing that acceptance is increasing.

 

[McLovin]

Been following these guys (luckily) and it will be interesting to see how the change to the subscription model goes.
The transfer to a SaaS business model is value adding as I guess not much of a barrier exists with the units (GPS +accelerometers etc). The expertise they have is helping a team identify the useful data from the noise, different sports also have specific variables. hopefully that means their first mover advantage into a number of sports gives them some resiliency when others start with competing units (already a couple of others out there)

As far as uptake goes I think the ubiquity in the aus sports market gives a good indication of the uptake potential, sports is cutthroat, so any edge you can get, you take. FIFA also now allows wearables in matches as of june, showing that acceptance is increasing.

I think you're on the money about CAT being able to assist in identifying the bits of data that matter for their customers. Champion Data don't even have GPS units, they'll be using them under license from a company that has no experience in providing AFL data, so it's no wonder the AFL teams are not happy about the potential change. They will also lose all their data during the change.

This article is worth a read...Professional sport is a massive business and anything that can reduce player injuries means big $$$ for teams.

International scouting recently drew an NFL general manager to Melbourne, Australia, for a few days of rugby. During a lull in the action one evening, his eyes drifted to the sideline. The head coach was walking to the end of the bench, where a team employee sat holding a laptop computer. The two conferred for a moment before the coach returned to his post and ordered a series of player substitutions.

The next morning, the telephone rang in the Arizona offices of Catapult Sports, one of several Australian-based companies that compile live data on athletic exertion. The general manager was brimming with questions for Gary McCoy, the company's senior sports scientist.

"He wanted to know," McCoy said, "what the hell had just happened."

The general manager will remain anonymous because he did not give Catapult permission to reveal his identity. What he had witnessed, however, was the use of a widely accepted supplement to Australian sports training -- an approach that is beginning to gain traction in the United States.

The coach had viewed a live digital display of each player's exertion and conditioning levels as recorded by a GPS machine embedded in jerseys. The technology added precise data to a decision coaches otherwise make by feel. Who is truly gassed? Who should have the most remaining energy? Who is nearing a danger zone for wear-and-tear injuries?

Rugby coaches in Australia and nearly 400 other sports leagues around the world have incorporated such data into their programs, informing decisions like game rotations, playing time and practice schedules. The goals: maximizing performance and minimizing injuries.
...


The idea, as Florida State's Fisher said, is to take the guesswork out of practice scheduling and player maintenance. NFL coaches often change workout routines based on their perception of the team's condition, but this technology offers objective information. (Consider it the difference between feeling the hood of a race car and measuring its engine temperature.)

A player's profile might suggest that a load score of more than, say, 500 for a given week would put him in danger of pulling a muscle or straining a calf. If he has already reached 490 by the end of Thursday's practice, the coach would be well advised to rest him Friday and find a slower pace the following week.

Jaguars coach Gus Bradley embraced the technology after taking over one of the NFL's most injury-plagued teams, in terms of players placed on injured reserve, in 2013.

"So we did the GPS, and we really tried to stay true to it," Bradley said. "If I got the information back from [strength and conditioning coordinator Tom Myslinski] that said, 'Hey, this guy has gotten so many yards in the last two days and it's above what he normally does,' then we taper it back for him. Instead of four out of four reps, he'll get two out of four reps, and we try to stay pretty strict with that."

http://espn.go.com/nfl/story/_/page/hotread140326/gps-technology-nfl-game-changer

 

[Ves]

Champion Data don't even have GPS units, they'll be using them under license from a company that has no experience in providing AFL data, so it's no wonder the AFL teams are not happy about the potential change. They will also lose all their data during the change.

It's actually worse than that, the Herald Sun today claimed that the GPS company that Champion Data will be working with haven't been involved at the elite level of sport since 2013, because the device they are using is inaccurate and has frame-rate issues when used live. In other words; it's crap.

With all 18 of the AFL clubs voting for Catapult that is a very strong recommendation. Do you really see this agreement with Champion Data being finalised? Is there legal grounds for the clubs even breaking away from the AFL agreement?

edit: link here http://www.news.com.au/sport/afl/co...-afls-gps-switch/story-fnelctok-1227509985113

 

[omac]

Yeah, definitely a good thing that the clubs don't want to change, also I believe there was a unanimous decision by a 4 person panel to keep current system.

In addition to the data analysis, there was an article (on CAT site) interviewing a NHL coach who was saying at the start of using it the data was almost overwhelming and figuring out which metrics to use and the resultant effect on players took a while. Obviously that is now known by CAT but gives a bit of an idea that it takes time to figure out each sport. you may have plenty of data by figuring out which specific metric best works for the specific sport seems less straight forward than i originally thought.

AFL case definitely worth keeping an eye on as will give a good indication of potential moat.

Edit: the talk of the afl wanting to show more data during games it interesting too, as CAT alluded to it in prospectus, but you never know how or if these things will develop. maybe AFL know how lucrative it could be and want to keep more cash in house.

 

[McLovin]

It's actually worse than that, the Herald Sun today claimed that the GPS company that Champion Data will be working with haven't been involved at the elite level of sport since 2013, because the device they are using is inaccurate and has frame-rate issues when used live. In other words; it's crap.

With all 18 of the AFL clubs voting for Catapult that is a very strong recommendation. Do you really see this agreement with Champion Data being finalised? Is there legal grounds for the clubs even breaking away from the AFL agreement?

edit: link here http://www.news.com.au/sport/afl/co...-afls-gps-switch/story-fnelctok-1227509985113

I always thought the clubs owned the AFL. I'm sure they can bring plenty of pressure to bear. It is an interesting question as to whether or not they are bound by the league. The wording of the agreement says they will become the "preferred partner" which seems a bit ambiguous as to whether or not a club must use the partner's product. The kickback really shows the the popularity of CAT's product.

 

[Ves]

I always thought the clubs owned the AFL.

I've never been able to find anyone who has been able to explain the ownership question with any certainty. The AFL commission runs the game. Each club has a vote, and 75% of them, can dismiss the AFL commissioners. The AFL commission has the power to add or revoke licenses. They also decide who gets what cash out of the TV rights deal and any other league revenue. Do the members then "own" the clubs since they can elect the boards? There's got to be a lot of assets involved here. What happens if the whole league is wound-up tomorrow and there is cash left over? NFI.

I assume they are all not-for-profits.

Either way it's a really tangled web, and much different than overseas clubs that are privately owned.

I'm sure they can bring plenty of pressure to bear. It is an interesting question as to whether or not they are bound by the league. The wording of the agreement says they will become the "preferred partner" which seems a bit ambiguous as to whether or not a club must use the partner's product. The kickback really shows the the popularity of CAT's product.

The clubs do have the power to overturn commission decisions AFAIK. Again 75% majority required. Good point re: preferred partner.

 

[skc]

Interesting article about study of wearables being done by the NBA, and some of the potential issues that isn't immediately obvious to the lay person.

https://grantland.com/the-triangle/from-bmi-to-tmi-the-nba-is-leaning-toward-wearable-tech/

 

[McLovin]

Nice guidance upgrade today. Minimum 56% unit sale growth, up from 30%-40% at FY results. My theory on this was that if the US took off it would cause explosive growth. I really like that competition is staying weak. Once they reach a critical mass in the US (with their subscription model) they will become the device of choice and it will be hard for new entrants. They had a great first quarter. Second highest on quarter on record despite Q1 being the quiet quarter. That may in part be explained by the shift to northern hemisphere comps.

 

[Ves]

Not surprised with the updated guidance; their announcements lately have all been positive, with a handful of new teams signing on. I'd say they would be really close to, if not already, profitable if you stripped out all of the expansion costs running through the P & L.

Little bit surprised however that they are raising capital. I guess in a sense it's a good thing, because the opportunity is there for rapid sales team expansion. However, I'm a bit weary that there hasn't been an SPP announcement for retail holders yet. Is management shareholder friendly?

Not holding yet; but keenly watching.

 

[Klogg]

I have been through a few presentations that have mentioned an average monthly revenue from the subscription based model of $600k. But I'm unable to find an average revenue per unit.

Seems like a basic ask, so I'm guessing I've missed it. Does anyone know if it's listed anywhere?

 

[McLovin]

Not surprised with the updated guidance; their announcements lately have all been positive, with a handful of new teams signing on. I'd say they would be really close to, if not already, profitable if you stripped out all of the expansion costs running through the P & L.

Little bit surprised however that they are raising capital. I guess in a sense it's a good thing, because the opportunity is there for rapid sales team expansion. However, I'm a bit weary that there hasn't been an SPP announcement for retail holders yet. Is management shareholder friendly?

Not holding yet; but keenly watching.

I think you're right about the profitability. Re the cap raising $5m raising for a ~$180m company, I'm not too concerned that they haven't made an SPP. It would be different if they were raising $20m-$30m Too early to judge how thy treat shareholders, imo.

I have been through a few presentations that have mentioned an average monthly revenue from the subscription based model of $600k. But I'm unable to find an average revenue per unit.

Seems like a basic ask, so I'm guessing I've missed it. Does anyone know if it's listed anywhere?

My chat with a few people in the industry is somewhere between $120-$160/unit/month. And I believe it's closer to the top end of that range.

 

[Ves]

My chat with a few people in the industry is somewhere between $120-$160/unit/month. And I believe it's closer to the top end of that range.

Pretty close to my back of the envelope calculations.

AGM presentation has a graph showing total unit sales and how they have grown over time. Also splits it into SaaS as a proportion of total unit sales.

Whilst it's not an exact science looks like about 3,700 units are on Saas. $600k revenue per month. So very close to the top-end (if not slightly exceeding it).

 

[Klogg]

Pretty close to my back of the envelope calculations.

AGM presentation has a graph showing total unit sales and how they have grown over time. Also splits it into SaaS as a proportion of total unit sales.

Whilst it's not an exact science looks like about 3,700 units are on Saas. $600k revenue per month. So very close to the top-end (if not slightly exceeding it).

Sorry, just to confirm, I assume you mean subscription units when you say Software as a service (hence the recurring revenue)? Because the numbers I'm finding are a little different... (see below)

AGM figures from Page 29 for FY15(a) are:
Subscription units (actual): 4,447
Subscription Revenue/month = $600k
Therefore, revenue/unit/month = $134.92

Alternatively, if I use the more recent (Appendix 4C):
Total units 4,986
Subscription Revenue per month: $696k (assumes AUDUSD at 0.75)
Revenue/unit/month = $139.59


On a different note - if some consumers aren't going down the subscription route, then what are they using the unit for in particular?
I can only assume that the analytics (Saas) are available via subscription, so how would you make use of one otherwise?

 

[Klogg]

Nice guidance upgrade today. Minimum 56% unit sale growth, up from 30%-40% at FY results. My theory on this was that if the US took off it would cause explosive growth. I really like that competition is staying weak. Once they reach a critical mass in the US (with their subscription model) they will become the device of choice and it will be hard for new entrants. They had a great first quarter. Second highest on quarter on record despite Q1 being the quiet quarter. That may in part be explained by the shift to northern hemisphere comps.

I had a look at mCoach Elite (Adidas' solution) and InMotioTec... I've only started to look, but they're miles apart.
The Adidas solution was due in 2012 and never really took off. InMotioTec allow exports of data to Excel and MS Access (Who still uses Access?!). Contract this to the fact that CAT have their implementation on AWS and can scale up/down as they please, and there's a fair gap to close there.

Still have a lot more work to do on the competition, but the difference is fairly obvious so far.

 

[Ves]

Sorry, just to confirm, I assume you mean subscription units when you say Software as a service (hence the recurring revenue)? Because the numbers I'm finding are a little different... (see below)

AGM figures from Page 29 for FY15(a) are:
Subscription units (actual): 4,447
Subscription Revenue/month = $600k
Therefore, revenue/unit/month = $134.92

Alternatively, if I use the more recent (Appendix 4C):
Total units 4,986
Subscription Revenue per month: $696k (assumes AUDUSD at 0.75)
Revenue/unit/month = $139.59

Thanks Klogg, I had another quick look. I was using the graph and revenue figure on page 34. You're also right that it could be in USD.

But you're right the figures on page 29 are slightly different (same for the 4C). I guess the range that McLovin suggested is the only useful guide at the moment. Both of our calculations seem to fit somewhere within it.

On a different note - if some consumers aren't going down the subscription route, then what are they using the unit for in particular?
I can only assume that the analytics (Saas) are available via subscription, so how would you make use of one otherwise?

My understanding is that they can purchase the unit outright (much like you do with say a phone) but you would have to make another purchase if a new unit or software was released by the company. There's probably a few other benefits of being a SaaS customer, but would need to look it up. But my understanding is that SaaS customers get the upgrades as part of the ongoing monthly fee. I'd assume their website may have more details?

 

[Klogg]

My understanding is that they can purchase the unit outright (much like you do with say a phone) but you would have to make another purchase if a new unit or software was released by the company. There's probably a few other benefits of being a SaaS customer, but would need to look it up. But my understanding is that SaaS customers get the upgrades as part of the ongoing monthly fee. I'd assume their website may have more details?

That's what I thought, but I can't find much information on their website about pricing or product usage.
Given there's an Intangible for Distributor Relationships ($382.5k as at 1 July 2015) and another for Distributor Contracts ($48k as at 1 July 2015), I assume that I have to go through a distributor, although that could be as a result of the GPSports acquisition.

I would be curious to know what information you can get from the product without any analytics/software. I can't imagine a huge data dump from the device is exactly user friendly nor useful, except to those with the means to pick it apart (in which case, it'd be more economical to just subscribe and access the software platform).

I really need to see a demonstration of the product. Might check their Youtube clips for any useful info.