Catapult Group International Limited (ASX:CAT)
Targeting high-growth, positive cash flow generating business: With the start of the week, Catapult announced about launching a fully-underwritten institutional placement of new ordinary shares in order to raise A$25 million at A$1.10 per share, representing a 6.8% discount to the last traded price (i.e., 23 March 2018) with an intention to use the money for business opportunities. Allotment and normal trading of new shares issued under the Placement will start on 3 April 2018.
Particularly, the group will direct the net proceeds to capitalise the business appropriately, execute Catapult’s significant growth opportunities in the Elite and Prosumer markets and deliver long-term growth to shareholders.
It is worth noting that Goldman Sachs Australia Pty Limited has fully underwritten the placement and the group seems to be poised to drive its core business units for growth. CAT has been focussing on addressable markets, customer economics, customer product needs and long-term budget requirements, in order to track on its long -term strategy. The group will now put the funding for the use of hiring of additional sales and marketing FTEs in the Americas, Europe and Asia and to accelerate Catapult’s penetration in those markets for its Elite business. For Prosumer segment, the group aims to provide marketing, distribution and working capital to accelerate growth in unit sales following a soft launch to the Prosumer soccer market in Q4 FY18. CAT would also be hiring additional software development FTEs to continue to develop and commercialise the tactical product for Elite teams and invest in Elite Technology Stack.
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Growth Drivers (Source: Company Reports)
The group does not anticipate the need of having any further equity injection before becoming cash flow positive under its current strategy and three-year plan. The group has also retained its FY18 guidance entailing revenue of between A$76-$81m and positive underlying EBITDA, while considering Elite Wearables subscription mix expected to be slightly below the 66% level as previously advised (62% in FY17), foreign exchange changes, Prosumer launch in Q4 FY18 and Elite Wearables and Elite Video to deliver positive underlying EBITDA after corporate costs.
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