Catapult Group International ((CAT)) enjoyed a target price upgrade from Canaccord Genuity after releasing a robust FY25 earnings report.
Annual contract value rose 18% to US$101m with Performance and Health generating US$65m, up 17%, and Tactics and Coaching at US$33m, a rise of 18%.
Tota l revenue advanced 19% year-on-year, closely tracking growth in annual contract value, while lower-margin Media revenue capped gross profit margins at 81%, flat on the previous year, with a slight rise in other variable costs.
Management handled operating expenses well, rising by 6% only.
Canaccord believes the company generates "best-in-class" metrics that reflect the quality of Catapult. Cross-selling activity included more sporting teams adopting new video solutions.
A lightly elevated churn rate at 4.3% and a slightly softer annual contract value retention were attributed to the cessation of the Russian operations.
Positively, management is expanding into new sports and regions, with wins in soccer across EMEA and LatAm markets, alongside a pick-up in baseball and basketball in North America.
The launch of next-gen Vector 8 platform, with an April rollout, is expected to drive more exposure into new and existing sports.
Tactics and Coaching, including video solutions, evidenced annual contract revenue growth for New Video Solutions of 42% with the latest video product suite.
The latter division is flagged as the bulk contract revenue driver for the company to US$200m, with vertical teams anticipated to experience accelerated growth.
Cash flow generation is expected to continue to grow, with management flagging "higher free cash flow" over FY26, paving the way for bolt-on acquisition opportunities.
Management at Catapult has a rule-of-40 as its north star aim and achieved a rule-of-21 in FY25.
Canaccord maintains a Buy rating with an upgraded target price to $5 from $4.20, incorporating a compound average growth rate in revenue of 19% and longer-term earnings before interest and tax margins of 30%.
CAT Price at posting:
$5.33 Sentiment: Hold Disclosure: Held
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