Hello and welcome to Catapult's FY 2022 results earnings call. I'm Andrew Keys, and I am facilitating today's call. In a moment, I'll be handing over to Catapult's CEO, Will Lopes, who is in Boston. After Will's commentary, Will will be joined by Catapult CFO, Hayden Stockdale, to answer your questions. Good evening, Will, over to you.
Fantastic. Thank you, Andrew. Good morning to all of you in Australia, and good evening to all of you here in the U.S. I thought I'd do a little bit of a digest of our presentation. Before I get started, as a reminder, we have posted this presentation as well as a pre-recording of the results on our website, as well as it's been lodged with the ASX. I know we also have quite a bit of new interest in the Catapult story, and so I'm going to do a quick brief intro on what we're doing here. Our vision here at Catapult is that we believe we'll be the technology company that unleashes the potential of every league, athlete, and team on Earth.
We see us doing this by building the leading data and analytics platform for sports performance. Now, when we think of our platform, we think of our platform being driven by cutting-edge technology that is already in market. We start at the core of that being our athlete monitoring system, so our elite wearable solution. What this is a wearable solution that allows teams to track athlete performance. It allows them then to optimize development, manage injury risk, and expedite return to play. Now that solution coupled with software and analytics, and at the core of that software and analytics is our video analysis tool, or what we call internally here as tactics and coaching, and our athlete management tool.
The best way to imagine that is that it's an end-to-end platform design for teams to officially analyze and communicate the key insights of what they see live in game and post-match. By combining these two amazing set of solutions, we believe we'll be able to build predictive and prescriptive analytics in the future that will change the way the game is played. Now, we also have a side, arm of our business, which is focused on media and services to our clients. That includes content licensing, asset management, and broadcast enhancement services. I think it's important to note, for all of you who are new to the Catapult story, that this solution out there is already being utilized by the very best team and leagues across the globe.
Over 3,400 elite teams, over 40 sports, in over 100 countries are using Catapult's technology today. These include basketball champion, NFL champions, AFL champions, including Formula One, most recently. We're also working with some of the most demanding leagues across the world, from the NFL all the way down to the Formula One racing body. Let's talk about the results, I'll cover a few more slides before I open it up for Q&A. First, I want to say that after two years of leading the company, I couldn't be more excited by the point that we've reached. We are at a major inflection point here at Catapult.
Two years ago, we set out to turn this company into a full SaaS business, and I am excited to say that today we've completed that shift. 92% of our revenue today is contracted, and 98% of our revenue in our core business is now contracted. I will cover that in a bit more detail in a minute. Second, I came in to turn this company back into a high-growth business. Our core business, which our elite wearable solution, was growing somewhere between 15% and 20% before I arrived. I and my team have been able now to turn this business back into high growth gear, delivering 32% growth in the past fiscal year, with the Americas, our core region, growing at 51% this past year.
That means that our subscription revenue finally has aligned with our ACV growth, delivering 31% growth this year, coupled with a churn of 3.5%. Just an absolute stellar set of results. Probably the third bit of inflection point that I am most excited by here at Catapult is that since the acquisition of XOS back in 2016, Catapult has been promising the ability to integrate video and wearable data together. We've done quite a bit of start and stops here, but in just seven months of acquiring the SBG solution, we've been able to actually integrate their core technology of MatchTracker and Vector well ahead of time. In the single region where it was that benefited from this integration, which was APAC, we saw our ACV grow of video analysis by 29.7%.
We're incredibly excited by the fact that we have completed our shift into our full subscription business. We got our core business on high growth gear again. Now we have a new growth engine worthy of our market and our clients. I'm going to cover this a little bit in more details. As I mentioned, 92% of our revenue now is contracted and recurring. Now, what's incredible, though, is that we have moved that from just from 72% of contracted revenue in FY 2020 to 92%. Even more remarkable is that in our core business, we only had 65% of our revenue contracted in FY 2020, and we're now at 98%.
What this means, by the way, is that the drag that we've had in total revenue growth by switching subscription away from capital deals is now completely behind us. We saw that in this year, where our total revenue went from a declining 7.2% in FY 2021 to growing at 14.5% in FY 2022. Really an amazing set of change. This shift has actually had a really positive impact in our customer base. In the past year, our pro customers that contribute to ACV, that means they're under contract, has grown by 16.3%.
One of the core reasons for us to want to be a subscription business was that it was going to allow us to bring new solutions to market and give us the potential of increasing the share of wallet that we got for team. In the past year, the average ACV of our pro customer has grown by 4.2%. Incredible feat in just a short amount of time. Hell, then we had in those two years a pandemic going on. I think we're incredibly proud of what we're seeing here. Now, I talk about the core business getting back to high growth. In the last year, we're up 32%. What you can see in that chart on the right there is that our subscription revenue growth has now aligned with our ACV, which is a leading indicator.
We anticipate this now to mimic each other going forward. We expect our total revenue to start to catch up to subscription revenue growth as well. What gets me more excited about getting our core business back into high growth is the numbers you see there on the left. We have a very attractive market. We presented this during our investor day. We have about 20,000 professional teams across the globe. Catapult, while the leader in the space, still have under 10% of market penetration. We know this market is an established subscription market. We've just created it. We know it's available for high growth. We've just delivered it. More important is that those customers are high value with low churn.
The average customer ACV in our wearables business gives us about AUD 20,000 a year, and they have a low average churn of 3.5%. Given our global footprint in 40 sports in 100 countries, we anticipate our ability to accelerate in penetrating the remainder of this market really, really bright. Now, as I mentioned, we now have a new catalyst for growth, and we see our leadership position in wearables or Performance & Health vertical providing ourselves the perfect launchpad to grow and expand the ACV of our video analysis business. We know this integration that we brought to market most recently is unique, and it's poised to achieve success. As I mentioned, you can see the growth rates on the right chart there. Video for us outside of North America has been mainly flat since the acquisition of XOS.
In just a short period of time of bringing that integrated product into APAC, we were able to see growth of nearly 30%. Similarly to the market that we see in our wearables business, in T&C, it's even more attractive. Still 20,000 professional teams, but here our market penetration is under 2.5%, and we have over 1,800 customers that we could cross-sell our integrated product to today. We know it's an established subscription market, but even more impressive is that it has improved unit economics. Gross margins tend to be over 90%. The value per customer tends to be 2x that value of our wearable business, and the churn of those customers is an incredibly low number of 1.5%.
Given the fact that we're now a full subscription business, given the fact that we have a platform that allows us to launch and continue to grow, and now we have a solution that allows us to expand ACV, leads me to this. We shared in Investor Day that we had a strategy to get to $400 million of ACV. What I see here today is that in the past fiscal year, we're starting to see that strategy deliver. We got our core business back and growing. We have the solution now that allows us to expand our ACV. We are seeing the expansion of ACV per customer come naturally as we brought new solutions into market.
Our ability to integrate SBG as quickly as we have. Some of the early signs we're seeing in mass market makes us incredibly confident that the strategy to get us to $400 million of ACV is the right one. I'm going to stop after this slide and open up for Q&A. From a company-wide SaaS metrics, all of these metrics are starting to converge incredibly well. Across the organization, we were able to grow our ACV by 23% on a constant currency basis. Again, core business up 32%. Our video business up 6.5%, but this excluded the key selling season in the Northern Hemisphere. Our prosumer ACV was actually up over 300% this past year. Now, it's starting from a smaller base, but still, the indication here is quite incredible.
Coupled with the growth is the fact that our customers are staying with our solutions longer than before and leaving us slower than ever. The average customer duration increased from 5.7 Years to 5.8 years, and the ACV churn dropped by 38%. I've been doing subscription business for 20 years. I don't think I've ever seen an annual churn of 3.4%. As a matter of fact, what you'll see in the remainder of our presentation is that if you account for run-off products, our ACV churn was actually 2.7%, and when we look at North America alone, our ACV churn was under 2%. Absolutely an incredible number.
What this means, by the way, is for every $10 million of ACV we acquire today, against those duration metrics and against the churn metrics, you're typically looking at a lifetime revenue that's worthy of $45 million-$50 million in the coming years. The last point I'll make is that our ability to become a strong cross-sell organization is really starting to prove itself out. Our ability to get cross-selling into multi-vertical customers grew by 27% this past year. And again, if you normalize that number for run-off products like Vision, which we are no longer selling, that number is actually over 50%. We anticipate this is only going to start to accelerate over the coming year with the integration now of wearables and video together. We couldn't be more proud of the results that I think we've achieved.
We look at what we've done in the past two years, and we really have turned this company around. We got our company now into a full SaaS business, the core product growing at over 30%, and now we have a video-integrated product that allows us to expand our ACV through cross-sell. With that, I'm going to hand it back to Andrew Keys, who's going to open it up for Q&A, and we'll answer questions. Again, I will remind everyone that the remainder of these slides, as well as the remainder of our presentation, is available on our investor relations section of the website, as well as being lodged with the ASX. Andrew?
Thank you, Will. For participants, if you'd like to ask a question, please raise your hand in Zoom or drop a question into Q&A and I'll read it out on the call. We do have a couple of raised hands. Michael Aspinall from Jefferies. Michael, you'll need to unmute your line, but come in.
Yeah. Thanks, Andrew. Hopefully you can hear me.
Yes.
Yeah. Great. Thanks. Good morning, Will, Hayden, and Andrew. A few from me. I'll start on your growth guidance for 20% to 25% ACV growth. I'm just wondering if you can give us some context on how that looks in terms of new Performance & Health customers and the rollout of tactics and coaching products to existing Performance & Health customers.
Yeah. Good morning to you as well. Yeah, I think we see the growth in P&H probably skewing higher than that rate. I think, you know, we're seeing growth around 30%+ this past fiscal year. That growth engine looks like it's here to stay. I think we're feeling. Actually, all of the investments we've made this past year has allowed us to feel even more confident that we're able to deliver on that. We anticipate the growth on the T&C to start to catch up. I don't know if it'll be 30%, you know, next year. I think there's still, you know, quite a bit of elements that I think we want to bring to the market.
A quick note on that, Michael. You know, our integration that we launched this year was designed for soccer and rugby. We anticipate that the platform will allow for the integration of basketball, American football, and ice hockey in quick succession. You know, it'll be throughout this year as well as Aussie football and then finally with baseball. I think when we get all of those out there, I think we anticipate that our growth rate will probably be, you know, in the 30%+. But I think, you know, less than 20% on the video side, probably greater than 30% on the wearable side.
Okay. I guess, is that sort of a function of, I mean, in tactics and coaching, you've got the legacy products as well as SBG. If you just looked at the SBG products, I'm guessing they'd be growing much faster than that 20%.
Yeah. I mean, they're actually growing much faster than 20%. I think what you have to account for is that, you know, we have a fantastic base of customers in North America in video already. We're dominant in American football, you know, with our Thunder solution, dominant with ice hockey, as well. I think we're growing that number from a pretty large base. The SBG solution was growing from a, you know, pretty small base, I think, when we acquired them. I think it's now the combination of the products that I think will unleash even faster growth.
Yeah. No, that's great. That makes sense. Just interested in what success you've seen in selling the integrated product in the two months kind of beyond the end of FY 2022?
Well, I mean, I think, you know, the numbers tell the story, right? I think in APAC, you know, we brought the product out. I want to say, I think it was at end of February was launch date. We had started to demo that product around December. And in a short amount of time, I think in APAC, we saw growth of, you know, 30%. So we only had a couple of months really of the product in market. I think we're delighted by that result to begin with. I will also add that I think, you know, what we've seen from a momentum basis, you know, outside of APAC, has been pretty incredible.
You know, our ability to sign the German FA really came down to this integration. You know, I think you could imagine that there's different technologies that I think were up for competition, and we won that tender immediately after showing this integration. The same thing happened with Stuttgart. You know, I think we saw similar results with our basketball solution. What we're seeing in market right now is that as we bring and show what contextualized wearable data mean to a coach in video, it's clicking.
It's, you know, it's like, wow, I could understand what it looks like when an athlete is tired and the impact it has on their accuracy in game, and so I could make a tactical decision in moment, whether live or even post-match. That I think, you know, it opens up so much opportunities for discussion, and then obviously open up immense opportunities in terms of the data analytics that we could bring downstream.
Okay, great. Last one from me. Thanks for that, Will. Quick one on prosumer. Very strong growth in ACV. Should we expect that to translate into year-on-year growth in the prosumer revenue, or prosumer revenue in FY 2023?
You definitely should expect that to translate into subscription revenue growth, right? I think, you know, we're going through in the prosumer business is a similar shift as we've done with our pro business, where, you know, it's going to take, you know, a year to a year and a half for the capital sales to flow out of our revenue line and for the subscription revenue to catch up to the subscription line that we've moved in. But I think, you know, what we've seen, particularly with selling to prosumer teams directly, you know, it's been incredibly strong this past year. The change in the product that we've made is really resonating with what we're seeing in youth academies and high schools. We're just getting very positive feedback both in soccer teams and American football teams. While it's early days, being able to grow, you know, a subscription business 300% year over year is pretty good. I couldn't have asked for more. You know, I think if we have 300% a year plus every year, I think we're going to be delighted.
Okay, great. Thanks very much for that, Will.
You're welcome.
Next question, coming in with raised hand. Julian from Evans & Partners. Julian, you'll need to unmute as well, please.
Hi, Will.
Sorry, Julian, I think you've gone back on mute.
Can you hear me now?
Yes.
Yes.
Yep. Okay, Will, just a couple questions from me. Firstly, with that rollout of, you know, video wearables product, presumably, you know, the teams you're targeting already have an incumbent product, and it's probably a lot cheaper. At this stage, are you saying that they see, you know, the benefits of taking it to even potentially end contracts early or take on two contracts at the same time?
Good morning. Actually, just I want to make one correction of the statement you made, that, you know, what they have in contract is cheaper than what we have. That's not the case at all. You know, I think we're actually highly competitive, and teams are willing to spend quite a bit when it comes to video analysis. When I say it's an average of AUD 40,000 per team, that's what they're spending today, not just with us, but with others as well. What we are finding is that teams are, because the integration of the data is so powerful, they're willing to actually have two systems running side by side.
As a matter of fact, one of the very attractive things about the SBG solution when we actually looked into it was that the way they've made their, you know, entrance into the EPL and into the Bundesliga was that they would come in with their MatchTracker solution, which combined all of this amazing data and allowed for, you know, quick discovery of insights. They would have that work side by side with a video editing solution that was, you know, dominant in the team already. Over time, what they discovered was the team would stop using the incumbent video editing solution because everybody was using their solution. We see the same thing happening here on sort of as we expand into video.
Okay, cool. A question probably for Hayden. In the step chart in the cash flow, can you talk about the inventory-related investment of AUD 4.8 million? What's that in relation to?
Pardon me. The capitalized COGS.
Yes.
Yeah. There's a couple of things there. One, we have seen with the pandemic and some supply chain issues a desire, I think just prudent wise internally to hold a little bit more in terms of inventory just to manage you know supply chain. You know, we're holding more months worth, more components, that type of thing. But there is also a shift here with the subscription model too, where the hardware component for a subscription device is not in COGS anymore. It gets capitalized to the balance sheet and then amortized through the P&L. There's a little bit of a shift there too, Julian.
Right. Cool. Thanks, guys.
Okay. A couple of questions in Q&A. Firstly, Owen Humphries from Canaccord, asking about multi-product solutions, saying that in an absolute sense from our last reporting date to March, there's an increase of seven teams. What do you expect it to be going forward now that you've got an integrated solution?
Yeah. I actually think if you normalize for the runoff products that number is actually significantly higher than what you just pointed out, Owen. I think you know we had a lot of customers who were using Vision and wearables. And as we've moved that product out you know we anticipated of losing them and now we're bringing them back into the pipeline. Looking ahead I think you know we anticipate the growth in this area to ideally be somewhere between 30%-50% on an annual basis if not higher. I think the fact that you know even before the products were fully integrated we were able to hit that 50% when you normalize for you know for runoff products I think has been incredible. I think the other thing to point out is that in this past year, 24% of new multi-vertical customers were coming in already with two solutions. You know, and so I think that really bodes well for our ability to really start to welcome customers, not just with one product, but with two products on hand.
Yeah. I'll add to that too, Owen, if you're doing your equations here. On slide nine, which has the breakdown of various customers, you'll see that there are some non-ACV customers. You can think of some, you know, old legacy capital customers on the P&H side, that we have effectively switched off, and that has had sort of a decline effect on that cross-sell too. When you actually have a look at the raw number of customers who have been added to that multi-vertical customer number, it's a lot higher than seven.
Okay. Next question, typed in from [Raymond Jang]. How have you found recruiting software engineers? Do you need to offer more share-based compensation? How close is Catapult to the required number of engineers for completion of the current R&D cycle?
Yeah. I think, you know, as every other company on the planet, you know, we're finding that engineering resources are probably as competitive as they've ever been. We're also finding that those engineering resources are being competed for no longer in a local, you know, basis, but they're being competed for on a global basis. We are seeing pressures on wages. I think we are seeing pressures on obviously equity. I think, you know, if you're hiring engineers in North America, if you're hiring engineers in Europe, it's expected that there is an equity component to their total compensation package. I think we're seeing all of that.
None of that, I would say is not in our design and plan for this past year as well as into next year. I think, you know, what we saw from a cost perspective was much in line of what we planned. I think what we still have to add to our, you know, our arsenal of team is also pretty much planned. In terms of where are we in terms of hiring, you know, I don't have a specific number. I would say that in FY 2022, from an engineering perspective, we probably hired about, you know, 60%-65% of what we needed to hire from an engineering product technology side. I think we still have a few more to go, you know, in this coming year. I think as we mentioned in our presentation, we are fully capitalized for what we're doing next year, and we have no anticipation that we need to raise capital to deliver on what we are focused on.
Yeah. Maybe one just additional thing to add there too, is as our product set improves, you'll tend to find that the level of tech debt that we've got around some old legacy technology starts to dissipate. There are some engineering resources there that, you know, we get some efficiencies out of as well. That'll only sort of tend to grow over time too.
Okay, thank you. There are no more open questions, so I'm going to hand back to you, Will, for closing remarks.
I appreciate it. First, I want to thank everyone for joining and dialing into the conference call. Again, I will recommend if you haven't listened to the presentation or gone through the entire deck, I highly recommend it. I'll end it by saying, you know, in the two years I've been here at Catapult, it's been an incredibly interesting ride with year one, but I would say an incredibly rewarding year in year two. You know, I think we came in to set out this company to really shift into a full modern SaaS business. We've done that. The lag in total revenue is now behind us. We came in to turn our core part of the business back into high growth.
That's done. We're now accelerating at 30%+ year-on-year. We came to create a platform that allowed us to expand our ACV, and I think what we've launched now is the beginning of something that's going to be incredibly special and allow us to accelerate overall growth in the company even further. I would even venture to say that, you know, even early indications of our ability to start to make some very positive headway in the mass market side of the house is starting to show, you know, fairly well. With that, I think we are at an amazing inflection point. I appreciate all the support for the longtime shareholders who continue to believe. I think for those of you who I will be seeing and talking to, I look forward to giving more details over the coming weeks. With that, I appreciate it, and enjoy the rest of your day.
Thanks, Will. Thank you.