Good morning and welcome to Catapult's first half financial year 2023 results. This morning, I'm joined by Will Lopes, Catapult's CEO, and Catapult's CFO, Hayden Stockdale. I'm Andrew Keys, and I'm facilitating this morning's earnings call. At the end of Will's recap on the results, we will be taking questions. Participants can either drop your questions in the Q&A function or raise your hand in Zoom, and we'd be delighted to bring you into the call. For the first time in a couple of years, I'm delighted to throw to Will, who is joining us in Melbourne today. Welcome, Will.
Thank you, Andrew, and good morning to all of you here in Australia and good evening for those of you listening in the U.S. Last night we released our results and that included a video recap of our slides. We won't cover the entire set of results here, but I thought before we actually kick off with a Q&A session, I just highlight some of the key elements of our presentation that we released last night. Let's kick that off. I think first and I think foremost is just the quality of the revenue and sort of the transformation that we have been here Catapult in transitioning to a full SaaS model. That really stood out, I think, in this half year set of results.
You know, following that transition to a successful SaaS model, subscription revenue today represents 89% of revenue. Subscription revenue now is really underlying our full revenue growth going forward. We are now a consistent growth in terms of leading KPIs from a SaaS perspective at a very attractive level. Since FY 2020, we have been growing ACV above 20% with an ACV churn below 6%. As a matter of fact, in the first half of this year, ACV growth was 21% and churn actually improved and came down to 4%. Really, we continue to drive that leading indicator, which is, you know, a leading indicator for future subscription revenue. Because that's underpinning our total revenue, we're incredibly pleased where we left off at the end of the half.
Another component from the transition of SaaS is really sort of the amazing transformation that is having on the underlying aspect of their business. For the first time, we gave the market here a one-time peek under our hood, what's happening with our future revenue and growth. That actually is outpacing our ACV growth, and this past 12 months grew at 28% and crossed over $109 million , or AUD 167 million. What that means is that as we're adding ACV, we're incrementing that ACV at a higher average in terms of length.
Compared to subscription revenue, we incremented this past year ACV at a 2.1-year average versus 1.4 at this point last year. We're not only growing the top line of the business, but we're growing with future length in terms of contracts. Very pleasing as well. That really starts to show the quality and I think the predictability of our revenue stream going forward. Second highlight in the presentation was that from a leading SaaS KPIs, they continued to expand incredibly well. As I mentioned, overall ACV grew 21%. But on a per capita basis, average ACV on our pro customer base, pro customer segment, was up 18%.
Not only are we growing the large pie as a whole, but on a per capita basis, we're growing our customer average ACV by 18%. And that's happening across all lifetime durations, truly highlighting, I think, the quality that we've been able to do in terms of upsell and cross-selling our products. But specifically, I think the leading KPI of our core growth engine, which is our wearable segment, so what we call our P&H, within the pro space this past half grew 26% year-on-year. That's following growth from all global regions, but in particular, the Americas continues to be really our highlight, which grew 32% year-on-year in this past half.
Now a year ago, we went through an acquisition of a company called SBG to really start to improve the quality of our video solutions. Our video solutions are really the underpinning of our segment of tactics and coaching or T&C. We're right on target, I think, where we expect it to be with our video solutions. Our T&C segment had an 11% annualized ACV growth, and that's up from 6.5% at the end of FY 2022. That means that we're doubling the growth rate of our video solutions just within a year. Quite honestly, if we look at this, it was really eight months because we only brought our new video solutions to the market with soccer and rugby at the beginning of this calendar year.
Another really pleasing component from the video aspect is that the number of customers now utilizing our video solutions has doubled. They grew over 100% this past half. That was really underpinned by the cross-sell progress that we had. Cross-sell into multi-vertical customers. That means customers who are utilizing wearables and video grew 33% this past half, but 66% of that growth came from wearable customers taking on a video solution, and 21% of that growth came from customers who were taking both solutions outright as they joined Catapult. Really pleased with the progress that we've seen in video thus far.
Another great leading indicator for us is that the prosumer segment continues to show healthy, although early growth, and ACV in that segment grew about 560%, year-on-year. That's following our Catapult One soft launch, late in the first half of FY 2022. Really good, I think, in terms of the leading indicators, for future revenue growth here. I think another highlight of our presentation last night was really our focus to return to generating positive cash in FY 2024. In September of this year, we announced that we were reprioritizing our accelerated investment, and our focus was to really concentrate on our key product verticals that are really providing our near to mid-term, you know, growth and profits.
We made reductions to our cost base, and we anticipate that those reductions will deliver about AUD 12 million of annualized savings. Given the improvement of revenue quality, as you see from our fees and revenue under contract, as we shifted into a SaaS model, the operational leverage that we have within our business and this reduction in cash burn, we are expected to return to positive free cash in FY 2024, in similar fashion as we were before we began our accelerated investment.
I think one of the other highlights of our announcement here is that as our credit has improved because the quality of revenue continues to improve, we've received multiple debt offers and terms, but in particular, we've been able to receive a credit-approved unconditional offer from our existing bank today, Western Alliance Bank, for an upsized AUD 20 million revolving debt facility. We anticipate to sign this facility before the end of the year, and this really helps us assure that our cash reserves continue to improve while we're returning to free cash flow positive. Overall, we are absolutely delighted where we ended the first half of the year.
You know, the shift and the transition to a SaaS model has been just amazing. I think the quality of the revenue that we have now is the best we've ever seen here at Catapult. The leading indicators for future subscription revenue continues to expand in the right direction. We, with this upsized facility, feel strong and confident that our cash reserves are exactly at the right place at this stage. I think, you know, all of this has been consistent with, I think, our, you know, our previous remarks, in particular, that we are fully funded to return to cash flow positivity, and that we do not anticipate any requirement for additional equity funding. With that, I'm gonna throw it back now to Andrew, to kind of open up for Q&A. Andrew, the floor is yours.
Thank you, Will. A reminder for participants, please, you can send through questions via Q&A or raise your hand. Second reminder for all participants, if you're not aware, Will and Hayden pre-recorded a page turn of the presentation, and we provided the link to that video presentation in our ASX media release last night. If you don't go there, you can also go to the investor center on the Catapult website and you'll see the video on the homepage there. Okay. Owen Humphries from Canaccord. Owen, we'll bring you into the call. Please unmute your line.
Can you guys hear me okay?
Yes.
Yes.
Good one, team. Well done on the results. Just a couple questions. Maybe I might just ask. Sounds like you guys are getting a bit of traction with the video products. Obviously, there's been some heavy investment in that product. Can you maybe just touch on, with the cross-sell, what the ARPU kinda is? Sounds like you've had a cohort of 50 or almost 60 to 80 customers in that business. Can you maybe just talk on what the ARPU has been with the cross-sell?
Yeah. I think we had about probably around close to 100 customers you know in that in the new solutions last year. We you know clearly have about I think overall in video altogether probably closer to 600 customers. But in the new solutions we have about 100 customers at the end of last year and we're obviously growing at about over 100% this past year. Really pleased on that. We're not breaking down the ARPU but I think what we're seeing Owen is kind of in line with what we anticipated in terms of you know ACV on that front.
I think as a reminder, you know, in the last full year presentation, what we presented to the market was that the average ACV on a wearables customer was around AUD 25,000, and the average ACV on a video customer was around AUD 50,000. You know, we're basically in line with that. I think the other aspect that I think we saw this past half is that we are seeing ourselves inch into new teams with typically one or two, you know, sort of starting licensing to utilize the product, and then very quickly expanding those license as the solution starts to get used by the rest of the coaching staff, the front office. You know, the strategists and the team and beyond.
We're finding great success, very similar to, I think, what we found with wearables early days, right? Where, you know, you typically are bringing wearables to just a set of the team, and then it starts to expand beyond sort of your core team, and ACV starts to grow as you add more and more solutions to it. But it's been in line to our expectations of what we presented in terms of average ACV per customer.
Good one. Just on the free cash flow positives, obviously some changes to the cost base in the last half. Just to kinda clarify, the FY 2024 free cash flow, is that through the period or is that for the period?
I'll say that was for the period. We have a very seasonal business. You know, there are some months that we know will be cash flow positive and some that we know will be cash flow negative. With the selling seasons of the teams and that type of thing, it's for the 12 months, the FY.
Good one. All right, thank you.
Okay, our next question will bring Josh Goodwill from Shaw and Partners into the call. Josh, you'll have to unmute your line.
Morning, team. Can you hear me okay?
Yep.
Yeah, great. Thanks for taking my question and, yeah, well done. Just in light of the cost reductions that you've announced, would you just be able to expand on your thinking around your ability to maintain your growth trajectory with that leaner cost base?
Yeah. I think that, you know, the bulk of the cost reduction was really focused around the lower side of our customer segments or really around the prosumer bit. We really pulled costs back down on marketing for generating leads in that segment. Our inside sales group that, you know, are basically closing the leads on that marketing is driving. Some of the operational components to support that part of the business. Given that, you know, our professional side of the house, both on wearables and now on video, continue to grow, you know, around 20%-25%. We feel pretty confident that the reduction in costs will not have a significant impact on the near-term growth or the near to midterm growth actually, particularly around professional sports.
Okay, that's great. If I could just ask one more, just on the plans to expand the debt facility to AUD 20 million, and lining that up against your commentary around free cash flow breakeven in FY 2024. You know, do you view that as more of a sort of a margin of safety debt facility, or do you have, you know, if you plan to need to draw it further on that debt facility as we move through the year? Just some color on how you see that moving into that.
Yeah. It's really an improvement in the cash reserves ahead of us, you know, accelerating returns to cash flow positivity. I think it's, you know, given the macroeconomics, I think, that we're living in, we really wanna just make sure that, you know, sort of the buffer of safety is larger than I think we anticipated. That's really the focus on it. It's not a necessity for us to return to cash flow positive. Hayden, anything to add on top of that?
Yeah. Absolutely, it is not a necessity to get us to cash flow positive. Let me just underline that. One of the things we have done in the past is we've funded our working capital through equity. Given the seasonal nature of a lot of our customers and the revenue collections that go with that, it does make a lot more sense now just given the maturity of us as a business to be funding that more with debt and with equity. You know, we will be using it, but only really tactically in that sense.
I would just underline you the point that Will made as well, about the strong signaling effect here around the credit quality of the company. The fact that you know the term sheet we've got from our existing debt provider has not only been upsized, but the commercial terms on it are actually improved, despite you know the more difficult credit markets we find ourselves in. We're really pleased with that.
That's terrific. I'll jump back in the queue. Thank you.
A question came through the Q&A in relation to level of R&D expenditure, particularly as a percentage of revenue going forward. It has touched 20%, this half. What's the sustainable ratio there for a business like Catapult?
Yeah. This is probably at the very high end of that. I think we were, you know, obviously in an accelerated investment period with the focus of truly improving, you know, sort of the platform components, accelerating some of the video solutions, and actually working on our next set of generation hardware for wearables. Going forward, I think, you know, the way to probably think about from a sustainable goal is that, you know, we think as long as we're growing and growing sort of the levels that we're in, we think R&D should be somewhere between 14%-17%. Very in line with what I think we presented during our Investor Day presentation about a year ago.
Thank you, Will. Last call to participants for questions. Please drop them into the Q&A or raise your hand. We'll bring you into the call. All right. That's it for Q&A. I'm happy to throw to you, Will, to close out this morning's call.
Fantastic. Well, first of all, thank you for dialing in. I think, you know, I continue to, you know, thank our shareholders who have been supportive of us, particularly as we transition from a, you know, a capital business into a subscription business. I think it's been an absolutely fantastic journey, and I think we're really, really pleased of where we've landed, you know, in, since FY 2020, particularly with the quality, and the predictability nature of our revenue at this point. With that, it's been fantastic to do this here in Australia following, you know, many periods of COVID. I think I'm looking forward to meeting many of our shareholders this week, here in person. Thank you, and I wish all of you a great day.