Having done something similar for another one of my holdings...

Having done something similar for another one of my holdings Pushpay (PPH), I thought it would be a useful exercise to do the same for CAT.

Like many of my fellow shareholders, I'm really excited about the Catapult technology and think professional sports teams are utilising technology more and more to gain a competitive advantage. First glamorised by Daryl Morey and Peter Brand before him, data and statistics regarding player performance is here to stay. It's useful to know when a basketball player is a chucker or an efficient machine like the Round Mound of Rebound Charles Barkley. It's also becoming more a staple for player rehab and recovery routines. "By analyzing both the way the athlete moves, as well as the training volume and intensity, we provide what we believe to be an algorithm for minimizing the risk of injury or re-injury." link here.

Catapult is neither profitable nor does it have a huge TAM compared to a Xero (XRO) or Livetiles (LVT). Hence, the ARR multiple is reduced. However, factoring in the ARR growth of 66%, the current multiple starts to look quite low. In this case, the current ARR Multiple is sitting around 4.6x which is extremely conservative. With their current growth, an ARR of ~10x would be reasonable. I typically only use these kind of valuations to gauge if I'm paying approximately fair value, and then I take a long term outlook based on strong fundamentals. I usually look for a combination of quality management, unique product/market and being a market leader.

Note: Fair Value ARR Multiple factors in the ARR Growth, Total Addressable Market (TAM) and Profitability.