Welcome to Catapult's FY2023 results. This recording will be followed by a live conference call where I will be joined by Catapult's current CFO, Hayden Stockdale, and our incoming CFO, Bob Cruickshank, where we will host a Q&A session related to these numbers. Before we get to those numbers, I'd like to start by pointing out that Catapult continues to be the standard for data analytics in professional sports. In the past year, we have worked with over 3,800 elite teams in more than 100 countries, playing over 40 different sports. Our clients include teams in the most demanding of leagues, such as the NFL, the NBA, the AFL, Formula One, and many of the national teams that competed in this past year's World Cup, just to name a few. FY 2023 was an incredibly important year for Catapult.
It was the year where we saw the leverage that our SaaS model has created. We're on plan to be free cash flow positive in FY 2024. During the second half of FY2023, we delivered $2.2 million of EBITDA, a $15.4 million improvement from the first half. We saw a gross margin rebound to 81% in the last half, up from 71%. We lowered our operating cost by more than $12 million during the period. This resulted in an operating cash flow increase of 40% from FY2022. We were also able to maintain growth while reducing cost. Our SaaS business grew 22%. We had record sales in the second half with ACV growing 20.2%, and our largest vertical of P&H was up 28% this year.
All while we continued to see record low levels of churn. FY 2023 was just not about the numbers. During the year, we continued to grow our league-wide deal portfolio with the expansion of the NRL and the signing of the XFL. We welcomed some iconic new logos such as McLaren F1 and FC St. Pauli. We also continued to see the power of expanding across multiple sports within universities by working directly with their athletic department, such as Princeton University. We also had an amazing product launches that are now beginning to accelerate following our investment program. We introduced new devices such as our new indoor device, Vector T7, aimed at basketball. Using the same technology, we're also able to introduce a smart football for American football. We continue to expand the integration of video and wearables, bringing that to ice hockey and basketball.
We continued to improve our wearable solutions with a number of new features. To understand how the transformation to a SaaS business model has created incredible leverage, it is key that we review how our margins work. First, let's discuss how we think about cash generation here at Catapult. We have been laser-focused at growing ACV, and that is because ACV allows us to create a very predictable revenue stream. Internally, we are focused on two cost structures as we grow future revenue. The first is our variable cost. These costs typically rise line-linearly with revenue growth. However, at Catapult, we have lots of opportunities to improve our variable cost. Our long-term target here is to be around 45% of revenue. The second is our fixed cost. Typically, these costs do not grow with your revenue growth.
As a company is scaling, it requires initial investment to reach a level of maturity that could support its business at scale. Our long-term goal is that our fixed cost should be approximately 25% of our revenue, and that we are ultimately generating 30% of operating margin. Catapult has reached a level of maturity that we no longer need to invest heavily in our fixed cost and we continue to improve our focus on our variable costs as we scale. Let's review how we're doing in FY 2023. As we stopped our accelerated growth investment plan, you can begin to see this leverage at play. During the second half, our variable cost improved by AUD 8.3 million, and we are already at 56% of revenue, the lowest we've been in the trailing four reporting periods.
We are confident that our variable costs will continue to improve from here as we focus on building efficiencies of go-to-market, improving our support cost and our product sales mix. Secondly, our fixed costs have also dramatically improved during this past half as we were able to reduce expenses by AUD 3.6 million. The most important aspect, however, is that our absolute cost of G&A and R&D are now at a level that can support our business at scale and are expected to grow very modestly from here. What this means is that during this past half, we saw cash outflows drop by AUD 12 million. As a matter of fact, we would have been borderline cash flow positive in the first half with our cost bases of the second half. This is important because our business has a strong seasonal cash flow.
Despite the seasonality, the second half of the year had multiple months that were positive in free cash flow. As such, given these dynamics, we expect to be free cash flow positive in FY2024, particularly because our cash inflows have grown in line with our SaaS growth and our cost basis is now extremely well contained. Important point, however, is that this cash increase is not a singular event. We anticipate that every additional dollar of revenue we add going forward will come with an approximately 30% of profit margin. To illustrate this point, we have taken our second half and annualized it and added about $14 million of incremental revenue to it. What you notice is that our fixed cost base will no longer growth at the rate of the new revenue being added, but our variable cost will grow at a linear pace.
This is without improving that variable cost rate. You can see that we deliver approximately 30% of profit margin for the additional AUD 14 million of revenue. Now, remember that we can still improve this profit margin further as we actually improve the efficiencies and drive our variable costs down. Given this, let's discuss our growth since now we could deliver profitable growth from here. As mentioned before, SaaS is key to our revenue growth. Our SaaS business is driven by two main verticals, that is Performance & Health and Tactics & Coaching. Our SaaS business today has approximately AUD 73.4 million of annualized contracts. We also have a very powerful recurring business in licensing. That is our media business. Combined, we are generating about AUD 40 million of recurring revenue. However, our internal focus is to accelerate our SaaS business.
Let's review how we're delivering on that. During the half year, we generated record SaaS sales and our contract values grew 20.2% during the period. This growth was strongly supported by our Performance & Health vertical. During the year, we generated growth of 28%. Our CAGR for the last 3 years in this vertical is approximately 30%. We continue to see success in greenfield opportunities, and we begin customer relationships here. During the second half, we were also very pleased with how we did with our video solutions within our T&C vertical. It's important to note that within video, we've had a large base of revenue that has been primarily driven from our business in North America for football and ice hockey. This business has been slow growth due to our high level of penetration in that market.
Following our acquisition of SBG, we are aiming to expand our video market in basketball, soccer, rugby, and motorsports. What you can see is that in markets where we don't have a large base of video customer, our growth rate is accelerating rapidly. As a matter of fact, sales growth for the products generated from the acquisition of SBG was up 27% versus 7% growth from our other video products. This expansion came primarily from cross-selling. Today, nearly 10% of our customers are using solutions from at least two verticals, and that is a growth of 45% in the past year. As mentioned in the top of the presentation, we continue to deliver great products and service, which makes our customers incredibly sticky.
In FY2023, we continued to see record low ACV churn. This past year, that number was 3.8%. In spite of our growth, we continued to increase the average customer lifetime while also increasing the average contract value of our pro customers, which was up by 7%. What all of these great inputs lead to is that our SaaS revenue had fantastic growth. During the year, our SaaS revenue was up 22% on a constant currency basis. It's significantly outpacing our overall revenue as our capital revenue continues to decline following our transition to a SaaS business. I will now hand it off to Hayden Stockdale, who will review the statutory P&L.
Thanks, Will. A big hello and welcome to everyone again for what will be my last time presenting these periodic financials before handing over the CFO reins to the very capable Bob Cruickshank, who's also joining us here today. A big welcome to Bob too. As everyone will have seen from Will's slides, these FY2023 financials are a really strong set of results with great organic growth at the top line and positioning us right at the inflection point, where in this FY2024 year that we've just entered, we expect to be free cash positive. Before I dive into that, on this first slide, I just want to clarify the last vestige accounting issue coming out of our move from capital to subscription sales.
That's the wearable hardware COGS costs relating to hot swap units, where those units, irrespective of whether they've been associated with a capital or subscription deal, have actually remained being expensed up front in full in the COGS line until now. From the half just gone, these costs are now treated the same as all other wearable hardware subscription costs, and that is they're recorded in depreciation. The result of this change is for our reported gross margin in the second half of FY2023 to rise from 79%-81%. Now, moving to the next slide, you'll see our year-on-year results that show really good improvement in every significant P&L line. For instance, at the revenue line, you can see this grew 14% on a constant currency basis.
This really hides the impact of the capital to subscription transition, where capital sales were a 20% drag on our results improvement. Excluding this, our true top line growth in our SaaS verticals was a very healthy 21.8%, which, as you'd expect, now mirrors our recent history in ACV growth. One of the features of FY2023 is that it was a tale of two halves, with the restructure that we implemented in September last year being a major bifurcation between a high investment and high cost first half and a trimmed back managed for efficiency second half. That's clearly evident on the next slide, showing the P&L for each half. Here you'll see gross margin improved to a record 81% for us in the second half.
Excluding that benefit of the hot swap COGS accounting change that I mentioned, this is still a massive lift of seven percentage points over the first half. This was the result of a stronger sales mix of high margin products in the second half, as well as the one-time nature of the supply chain cost issues that we encountered in the first half. The tale of two halves really becomes apparent in our costs. Here we achieved a 24% cut to variable costs, generating AUD three and a half million dollars of savings. An 18% cut to fixed costs generating AUD 4.1 million of savings.
Bringing all of this together, EBITDA was $15.4 million higher in the second half than the first, with EBITDA returning to positive territory just like we were before we embarked on the accelerated growth strategy two years ago. Turning to the next slide, we can see how the quality of our revenues has continued to improve. Here you'll see our core SaaS verticals of P&H and T&C were responsible for all of the revenue growth for the year, totaling almost $9.5 million, while capital and lower margin subscription revenues amounted to a $2 million drag on top line growth. It's important to note that the drag from lower capital revenues will lessen going forward as they ultimately shrink as part of our revenue mix.
On the next slide, we show a bridge of our free cash flow between the second half of this year versus the second half of last year, where you can see the very impressive turnaround we've had. With operating cash flow improving almost AUD 8 million. This improvement has come from growth in customer cash receipts of more than three and a half million AUD, as well as a fall of over AUD 4 million in cash payments for operating expenses. On that note, I'll hand back to Will. Thank you.
Thank you, Hayden. Before I continue, I'd like to take a moment to thank Hayden for his incredible support in the last three years. He has been instrumental in helping me turn Catapult around and get us to this amazing stage. Before I discuss outlook, let's recap. FY2023 was an incredible year where we displayed our SaaS leverage. We saw a reduction of expenses that it will put us on a path to be free cash flow positive. We were able to accomplish this reduction while maintaining high SaaS growth.
Looking ahead into FY2024, our objective is to deliver on our priorities with a focus on cash generation. For the coming year, we expect ACV growth to remain strong with low churn, improvements in our margins towards our long-term goal, and to be free cash flow positive in FY2024 without the need to raise equity capital. I'd like to thank you for listening to our results presentation, and I look forward to hosting you during our Q&A session. Thank you.