Catapult Sports Ltd (CAT) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Catapult Group International Limited FY '25 Results Conference Call. [Operator Instructions]. I would now like to hand the conference over to Mr. Will Lopes, Chief Executive Officer and Managing Director. Please go ahead.

Thank you. Good morning, and welcome to Catapult's investor conference call for our FY '25 results. I have with me Bob Cruickshank, Catapult's Chief Financial Officer. This morning, Bob and I will present our results, our strategy and outlook and then take questions from participants on the call. Today, I am pleased to share another strong set of results for Catapult. But before we get into the numbers, I think it's worth taking a step back to remind ourselves of what we're building and why it matters. Catapult is setting the global standard in performance technology for professional sports. Over the past 12 months, we've grown to serve more than 4,600 teams across 40 sports in over 100 countries. That is an increase of nearly 400 teams year-over-year. And these aren't just any teams. They are the elite, competing in the world's biggest stages and choosing Catapult because they know what's at stake and they demand the very best. This year alone, we welcomed the Brazilian National Soccer Federation, the Saudi Pro League and the English National Rugby Union to our roster, organizations that represent the pinnacle of professional sport. Their decision to join us is not just a signal of trust, it's a signal of where the market is going. The best are choosing Catapult, and that speaks volume. It validates our product leadership, our commitment to innovation and the clarity of our long-term vision. And it gives us great confidence as we look ahead to FY '26 and beyond. But before we look ahead to FY '26, let's talk about the amazing performance we've just delivered in FY '25. First, a quick note on the numbers. All figures I will reference today are reported in U.S. dollars, unless otherwise indicated. And to provide a clearer picture of our underlying performance, year-over-year growth rates are presented in constant currency to remove the noise of foreign exchange and reflect the true trajectory of our business. Let's begin with Slide 6. FY '26 was a milestone year for Catapult. The Rule of 40 remains our North Star, a single powerful benchmark that captures the health of our growth engine and the path to profitability. Two years ago, we were at 3%. Today, we are at 31%. That is a 28-point gain and an all-time high. That kind of progress doesn't happen by accident. It's the result of disciplined execution, sharp focus and a maturing business model, delivering consistent results. Our free cash flow tells a similar story. When we reported FY '24 results, we crossed a key threshold, positive free cash flow for the full year. At that time, we set ourselves a new goal to grow that figure meaningfully in FY '25, and we did exactly that. Free cash flow nearly doubled, reaching $8.6 million, up $4 million from FY '24. In just 2 years, we've improved our free cash flow by more than $30 million. That's just not a financial turnaround. It is a structural shift. We are now operating well above cash flow breakeven with a stronger, more resilient financial foundation, one that enhances our capacity to scale and more importantly, to lead. It is a transformation both operationally and strategically. The driver behind this performance transformation is simple, a disciplined focus on profitable growth. If we move to Slide 7, you can see our key leading indicator, annualized contract value, or ACV, grew by 18% year-over-year, reaching USD 101.2 million by the end of the year. When normalized for a onetime impact of ceasing operations in Russia during this past second half, ACV growth was even stronger at 19%. That momentum carried through the top line. Total revenue grew 19% year-over-year, reaching $117 million, a clear indication that our business is scaling with speed and consistency. And that scale is showing up where it matters most in profitability. Our management EBITDA margin, our key measure of operating performance, hit a record 13%, driven by a growth of $11 million year-over-year. We're not just growing, we're growing with leverage, and that's the hallmark of a SaaS business hitting its stride. Catapult's SaaS engine remains exceptionally strong, as you can see on Slide 8. Our ACV retention rate came in at 96%, a figure that places us alongside the most successful enterprise software companies in the world. It's a testament to the stickiness of our platform and the value it delivers season after season. I'm also pleased to report that ACV per Pro team, this is our core ARPU metric, rose 12% year-over-year, and that's up from 7% growth in FY '24. That kind of acceleration is the result of disciplined execution and increasing adoption of our multi-solution offerings. In fact, the number of pro teams using more than one Catapult solution or what we call multi-vertical teams grew 53% in FY '25. We added nearly 300 of these teams over the past year alone. This expanding cross-sell success not only reflects growing customer trust, but it's also fueling the outstanding unit economics you see in today's results. Slide 9 underscores the depth of operating leverage in our model and the strength of our unit economics. At the heart of our approach to profitable growth is a focus on incremental profit margin, a metric that reveals how effective we were converting growth into value. When we exited our investment-heavy growth phase in FY '23, we set a clear target to retain at least 30% of every new dollar of revenue to profit. In FY '24, we surpassed that goal with a 43% incremental profit margin, a strong sign of momentum. But in FY '25, we took another major step forward. And this year, I am pleased to report an incremental profit margin of 65%, a record for Catapult over a 12-month period. To put it plainly, we've kept $0.65 of every new revenue dollar as profit. That's just not financial discipline. It's sustainable operating leverage at scale. And it's positioning us exceptionally well for the road ahead. Now before I hand it over to Bob to unpack the underlying drivers of these results, I want to take a moment to spotlight some of the innovations we've been delivering for our customers. We move to Slide 10. As many of you know, we've launched several exciting new initiatives in recent months. After years of focused R&D, we announced the launch of Vector 8, a transformative leap in athlete performance monitoring and a defining moment for us at Catapult. Vector 8 brings a new level of real-time decision-making to elite sports. At its core is a next-generation wearable built with the most advanced microprocessors and inertial sensors in the industry. It is paired with the most powerful smart dock we have ever engineered, combined with a new receiver and relay network, our new system now supports up to 120 athletes across a coverage area that is 70% larger than before. This is live data at scale with a fidelity and speed the industry has never seen. We're in the early stages of rollout and the initial feedback has been exceptional. The first deployments have been focused on American football, particularly during their off-season, a deliberate strategy that gives us a strong proving ground before expanding into other sports and regions. Vector 8 doesn't just move the category forward. It redefines what's possible. We also launched Hub Pro, our next-generation coaching platform, designed to unify the best of Catapult's legacy and new video solutions into a single powerful experience. Built for scale and precision, Hub Pro integrates seamlessly with MatchTracker to form the most advanced video and data capture system in sport. This is more than a product release. It's a strategic step in building familiarity with Catapult's next-generation video technology, ensuring that transition from our legacy system, particularly for our American football and ice hockey clients are frictionless and future-ready. With Hub Pro, coaches can tag key moments, ingest third-party data, analyze player metrics and work across multi-angle video feeds, all within a fast, intuitive environment designed to elevate how teams teach, review and adapt. We're excited to put this tool in the hands of many teams and coaches this year. It's another example of how we're relentlessly improving the experience and impact of our technology on the ground. Just before our FY '24 results, we had partnered with the SEC to launch Focus Live, a groundbreaking sideline video solution purpose-built for American Football game day. In its debut season, Focus Live quickly proved to be a competitive advantage, delivering SEC coaches and players a meaningful edge over non-SEC opponents. In FY '25, we are now expanding on that foundation and introducing Focus Live for practice, a new module designed specifically for training environment. For the first time, our sideline video technology integrates directly with our wearable tech, creating a unified system that links live video in real time with real-time athlete data. This is a major leap forward. It equips teams with a holistic view of performance from drills to game day and unlocks entirely new coach -- new workflows for coaching, analysis and decision-making. Like Hub Pro, Focus Live is yet another example of how we're turning innovation into competitive advantage. And we're focused on getting this as well on the hands of more teams in the year ahead. Now despite the launch of Vector 8, we continue to extend our leadership in the vertical, rolling out a steady cadence of innovation over the past 12 months. We released new AI algorithms that pushed the science forward, including advanced metabolic power measurements and sports-specific parameters tailored for basketball, rugby and tennis. These enhancements were the result of deep collaborations between our R&D teams and the evolving needs of elite athletes and coaches. We also worked closely with leagues and federations to deliver live insights in high-stake environments. At UEFA, we automated matchtracker workflows for Euro 2024, making real-time performance data accessible to pundits and decision-makers during every match. In partnership with the French Rugby League, we delivered live performance data from our Vector Pro devices directly into the broadcast experience, bringing fans closer to the action and showcasing the power of data and storytelling. And we didn't stop there. As you'll see in the bottom right of the slide, we expanded Vector core product commonly used by our academy teams into more sports and added new language support across French, Spanish, Portuguese and Japanese, broadening its accessibility and reach. All of this reflects years of focused investment in R&D, and FY '25 was the year it came together. Now as we head into FY '26, we're excited to deliver these innovations into the hands of more teams, more sports and more geographies than ever before. In summary, we closed FY '25 in a position of real strength. Our SaaS business continues to deliver, driving top line growth, accelerating free cash flow and converting revenue into record incremental profit margins. At the same time, our long-term investment in R&D is bearing fruit. The innovations we brought to market this year are not just advancing the industry, they're embedding Catapult more deeply into the daily workflows of the world's best teams. As I said at the half year, and it's even more true today, it is an incredibly exciting time to be at Catapult. And with that, I'm going to hand it over to Bob to walk us through the financials in more detail.

Thank you, Will, and good morning, afternoon and evening, everyone. I'll start by saying that I'm thrilled to have another great set of results to share with you all. I will begin with an overview of our key SaaS metrics before taking you through our financial performance in more detail, and then I will hand it back to Will to talk about our strategy and outlook. I'd like to reiterate that unless I state otherwise, all the numbers we are presenting today are actual reported numbers in U.S. dollars and that our growth rates, which compare our performance year-on-year are in constant currency, removing the impact of fluctuations in foreign exchange rates. Now starting with the drivers of some of those great numbers Will presented earlier. I'll begin by focusing on our primary metric on Slide 12, our annualized contract value, or ACV. In FY '25, we delivered 18% constant currency growth, exceeding $100 million for the first time. As Will mentioned earlier, this was a 19% constant currency growth rate when normalizing for the onetime impact of closing our Russian business in the second half. More on that in a minute. But for those of you who are interested in translating that 18% growth rate into a constant currency ACV number, it would have been $102.1 million. Our strong growth rate this year was driven by the performance of both core SaaS verticals, which can be seen on Slide 13. I'll start with our P&H vertical, which includes our wearables business and continues to be a reliable and predictable growth engine. It yet again delivered an excellent growth rate, growing by 18%, driven particularly by success signing League deals in soccer across EMEA and LatAm and continued growth from baseball and basketball across North America. Now P&H was where we felt the impact of exiting Russia as our business in that region was almost entirely in this vertical. Normalizing for this impact, our growth rate would have been 20% for P&H. We are very pleased with our P&H growth and very excited by the opportunities that our new Vector 8 device will create in FY '26 and beyond as there remains a significant addressable market in this segment. Now our T&C vertical, which includes our video solutions, continues to deliver on the investments we have made in our video products. In FY '25, our T&C vertical experienced 18% ACV growth. This is the highest growth rate we've generated from our video solutions in the last 6 years. Importantly, this was also off of the biggest base, which goes to show just how strong our performance has been this year. Our new video solutions continue to drive this overall growth rate, growing at an impressive 42%. This was underpinned by strong growth in American football, driven by Catapult's groundbreaking sideline video solution, Focus Live for American Football, which launched in FY '25. In addition, this growth was supported by continued expansion from new and existing customers in soccer and motorsport. As Will mentioned, with more new video products entering the market in FY '26, I'm looking forward to seeing the performance in our T&C vertical this upcoming year. I also wanted to flag that we're no longer breaking out different video products, legacy versus new video on this chart, albeit we have included this in the commentary at the bottom. As Will outlined earlier, our product suite has developed significantly since we purchased SBG Sports Software 4 years ago, and we've continued to progress toward a unified software platform. So given the increasing blurring of line between legacy and new video, we feel the time is right to simplify our reporting and present our video solutions as one complete vertical. And now as you can see on Slide 14, our ACV per Pro team continues to expand, primarily driven by our success in cross-selling. Average ACV per Pro team increased by 12% year-over-year, meaning that our average ACV is now approaching $27,000 per Pro team. This is excellent progress and has been delivered through a combination of cross-selling, upselling and pricing with cross-selling our new video solutions having the most significant impact. The chart on the right of this slide expands on our cross-selling success. In FY '25, we experienced a 53% increase in the number of pro teams who are using products from 2 or more of our verticals. This represents fantastic progress year-over-year. And actually over a 2-year period, the number of teams taking 2 or more of our products has doubled, as you can see here. This is an ongoing validation of the investment we have been making in our new video solutions and the success of our go-to-market strategy in getting those solutions into the hands of our customers and educating them on the value proposition.Also, as I communicated at the half, but we'll mention again, we are no longer including runoff products in this chart for the simple reason that we have now end of life those products. One of the core elements of our top line growth strategy is to maintain ACV retention rates above 95%. As you can see on Slide 15, we delivered an ACV retention rate of 95.7% in FY '25, the inverse of which being a rate of 4.3%. This continues to be on par with the best retention rate seen among the world's most successful enterprise software companies, even including the onetime impact of our exit from Russia. But this is not an aberration for Catapult. Since FY '21, we have now consistently reported a year-over-year retention rate greater than 95%, this is a testament to our world-class suite of products, our industry leadership position and above all, the deep and trusted relationships we have built with our customers and partners over the last 25 years. We are incredibly proud of this performance and expect to continue to deliver retention rates of this magnitude. And finally, Slide 16 provides a good overall view of the SaaS metrics we have spoken about today. These are the leading indicators of our future growth, and they continue to move in the right direction. In addition to what I've already talked about, there are 2 other numbers I'd like to call out on this slide. First is lifetime duration, which has increased from 7 years to 7.8 years, an 11% increase during a period in which we added 400 new teams. It's a great sign that even though we are signing new teams, we are building longer and longer tenure into our customer base. And the second number is our Pro team count, which increased 9% year-on-year. We now have more than 3,600 Pro teams as customers, a significant global footprint. And as a reminder, the Pro team count is different from the 4,600 total teams mentioned earlier by Will, which includes non-Pro customers. And now let's move on to our financial results. And you can see on Slide 17, the impact that our strong ACV growth and best-in-class customer retention is having on our P&L. SaaS revenue derived from our ACV balance grew another impressive 20% year-over-year. Recurring revenue, which is comprised of both SaaS revenue and revenue from our media business grew by 21% year-over-year. And like ACV, finished FY '25 above $100 million for the first time at $110 million. As you can see, our media business had a very good year. We were delighted by some of the new opportunities in media this year that generated the growth rate that we saw. But I would call out that it's unclear if these opportunities will continue to present themselves over the course of FY '26. In saying that, we're feeling a bit more positive in this area than we have in the past, however. And finally, on that slide, you can see that recurring revenue as a percentage of revenue now represents 94% of our overall revenue, an increase from 92% this time last year. A disciplined approach to managing our cost base enables us to take advantage of this recurring revenue growth by improving the efficiency of our growth. On Slide 18, you will see the trend of our variable costs compared to the steady growth of our revenue over the last 3 years and how these costs are declining as a percentage of revenue. Variable costs are the cost of growth, which are made up of COGS, delivery and sales and marketing expenses. These are costs that will continue to grow in absolute dollar terms as our revenue grows, while also declining as a percentage of revenue as we gain efficiencies in our business scales. As you can see, we continue to make progress on this metric. While our variable costs increased $4.7 million year-over-year, they decreased as a percentage of revenue from 54% to 51%, corresponding to an improvement in the contribution margin from 46% to 49%. This improvement was driven by strong revenue growth in conjunction with driving efficiencies from our delivery and sales and marketing teams. And that means we are now only 6 percentage points away from reaching our target of 45%. As we grow at scale, we continue to see our fixed costs declining as a percentage of revenue toward our target of 25%, as you can see on Slide 19, where our revenue is steadily growing on the foundation of our stable cost base. Fixed costs consist of our G&A and R&D costs, and importantly, R&D costs include costs both expensed and capitalized. These costs are increased by -- these costs increased by less than 3% in FY '25 to $43 million and combined with revenue growth, improved fixed cost as a percentage of revenue by 5 percentage points, decreasing from 42% in FY '24 to 37% in FY '25. Fixed costs support our business at scale and are expected to rise modestly in absolute dollar terms while declining as a percentage of revenue as we continue to make progress toward our 25% target. And these concepts all come together on Slide 20, which highlights how our operating leverage is accelerating the growth in our profit margin. You can see the gap that is now opening up between our revenue and our OpEx as a percentage of revenue and the impact that is having on our profit margin at the bottom of the chart. We have now delivered $19 million of positive operating profit margin, management EBITDA in the last 2 years, and we are making great strides towards getting to our targeted 30% profit margin, delivering a 13% profit margin this past financial year. As revenue grows and our variable and fixed costs continue to approach their targets, our operating profit margin is expected to increase. And on Slide 21, you can see the significant improvement in our free cash flow position that has come about because of these increased efficiencies we're delivering on our cost base and with our top line growth. We generated $8.6 million in free cash flow in FY '25, almost doubling the free cash flow delivered in FY '24 and a $30 million turnaround from 2 years ago. Significantly, growth in our free cash flow means that we have further strengthened our balance sheet. We closed the year with a debt balance of $3.5 million, which combined with $10.8 million of cash on the balance sheet now puts us in a net cash position of just over $7 million. This is a great place to be and demonstrates that we are now firmly in charge of our own destiny. Finally, moving to our profit and loss summary on Slide 22. We've already touched on many of these numbers, so I'll make a few observations on those that we have not. Management EBITDA, Catapult's measure of profitability, climbed to $14.8 million, an improvement of $10.6 million year-over-year. This was again driven by strong revenue growth and very little growth in our cost base as we benefited from these efficiencies I outlined earlier. Share-based payments increased by $2.3 million year-over-year. And as a reminder, that was not reflective of an increase in shareholder dilution. Rather, the cost increase is primarily due to the increases in our share price over the last year, along with changes in the accounting valuation methodology for this expense that we outlined 12 months ago. On the depreciation and amortization line, in FY '25, we made the decision to reduce the useful life of [indiscernible] vests from 4 years to 2 years. This decision was based on a review of wear and tear, usage intensity and vest replacements and resulted in a $900,000 nonrecurring depreciation charge in that line you can see on the table in FY '25. And finally, interest, taxes and other improved by $1.8 million year-over-year. This was the result of a $3 million tax benefit or credit related to adjustments to our deferred tax positions as we approach profitability and partially offset by foreign exchange movements that had a negative impact in FY '25. In closing, we made tremendous progress in FY '25. All our key metrics and targets continue to trend in the right direction and because of that, ensuring that Catapult's financial performance continues to go from strength to strength. The resilience we have built into our business is positioning us to continue executing on our objective of delivering strong, profitable growth and progress on the Rule of 40. With that, I will hand it back to Will to discuss our strategy and outlook further.

Thanks, Bob. It's genuinely inspiring to be here today presenting our FY '25 results. The performance Bob just walked us through reflects the incredible passion, discipline and execution of our team. People who are showing up every day with a deep commitment to helping professional teams unlock the full potential of athletes through our technology. Before I continue, a brief note. Several of the next slides will be familiar, especially to those who joined us at Investor Day. I'm going to keep my remarks focused and efficient. Let's start with Slide 24. It speaks to the scale of the opportunity ahead. The professional sports technology market is projected to exceed $71 billion by 2030 doubling in the next 5 years. Live sport remains one of the last bastions of live entertainment, and that structural demand is translating into an unprecedented investment in our industry. As many of you know, our U.S. team is based in Boston, so it didn't go unnoticed when in late March, the Celtics were sold for $6.1 billion, a record in American sports. It's a signal that investment in sport is accelerating. And as a global category leader, Catapult is uniquely positioned to ride that tailwind. Slide 25 should also be familiar. It illustrates how our platform strategy is delivering differentiated value. Our unified SaaS platform is built to help teams make faster, smarter decisions. It saves time, it contextualizes data and integrates seamlessly into team workflows, turning information into a competitive edge. On Slide 26, you'll see the breadth of our solutions that we offer. We're not just a vendor. We're an integrated partner across every major performance and coaching workflow. No one else in this space and industry provides the same level of horizontal capability with vertical precision. Slide 27 highlights a foundational truth. Catapult now has built a competitive moat that's wide, deep and defensible. Our one-stop platform, our proprietary data stack, global scale and multisport intelligence is now unmatched. And we're not standing still. Our aim is to continue to widen this moat as our market continues to expand. Slide 28 outlines our focused go-to-market approach. We land in performance and health. We expand with our video solutions through tactics and coaching. We retain more than 95% of our customers, and we drive cost efficiencies as we move towards a 30% target profit margin. Slide 29 details the economics that support this journey. We've built a SaaS business designed for profitable growth at scale. Our ability to drive contribution margin through cross-sell and product innovation allows us to improve unit economics while leveraging a stable fixed cost base, yielding higher profitability as we grow. And Slide 30 brings us all back to the Rule of 40. And I believe this offers one of the clearest summaries of how we measure success, both internally and for our shareholders. At the heart of this framework are 5 key drivers, each a critical in powering our ACV growth and/or our management EBITDA. Together, they shape not just our financial outcome, but the discipline behind the way we scale. First is looking at how Pro team counts grow. With more than 3,600 Pro teams today, we continue to see greenfield opportunities across leagues, regions and sports. Second, it's about ARPU or ACV per Pro team, and we're increasing that ARPU through upsell, cross-sell, pricing and product expansion, especially by converting single vertical teams into multi-vertical customers. Next is about retention, particularly around ACV. We're maintaining rates above 95% by consistently delivering value, service and most importantly, innovation. Next is about efficiencies around our variable cost of growth. We're scaling smart, supporting growth while driving productivity and lowering marginal delivery costs. And last but not least, it's our discipline around fixed cost. With our foundation in place, we are positioned to grow without layering in equivalent fixed overhead. So now let's turn to our outlook on Slide 31. Our objective remains to deliver on our strategic priorities with a continued focus on profitable growth. For many of you, this slide will feel familiar, and that's the point. Our strategy is completely unchanged in FY '26, and we're targeting the same successful outcomes that we delivered in FY '25. So in FY '26, expect ACV growth to remain strong with low churn, continued improvement in cost margins towards our target and higher free cash flow as our business continues to scale. So to summarize, FY '25 was an exceptional year. Catapult is in a position of strength, powered by a disciplined focus on profitable growth and by the kind of operating leverage that defines the very best SaaS companies. Our product engine is firing. Our unit economics are best-in-class, and we are building a platform that's just not growing, but it's compounding in value over time. And this all-in-one SaaS platform, purpose-built for sport is uniquely positioned to help the best teams perform at their peak. I'm confident in the trajectory and in the increasingly vital role we're playing in unlocking the potential of every athlete in every organization through data, science and innovation. I'd like to thank you all for listening, and I will now turn it back to the operator for questions. Operator?

[Operator Instructions]. Your first question comes from Julian Mulcahy from E&P.

Just a couple of questions from me. Firstly, with the video rollout to the cross-sell, where are we at in terms of the module uptake? Are they still just starting with one and then we're going to see further uptakes as we go over the next year or so?

I didn't quite get the question there, Julian.

So when teams take up the video option, are they starting with just still the first module and then over the next sort of 12, 18 months, you'd expect them to roll out to the full suite?

Yes. Sorry, I apologize. I had a hard time here. Absolutely. So we're typically the go-to-motion for cross-selling for us at this stage is that depending on the sport, but primarily with a soccer in EMEA, they will typically start with MatchTracker. That's one of the modules. We have 3 core modules in our video suite. And then over time, typically within, I would say, a season to 2, we are expanding that from 1 module to a 3 module. And the impact on the ACV is typically -- the average ACV on 1 module is typically anywhere between $15,000 to $20,000 a year. As they get to all 3 modules, that ACV typically doubles closer to about $40,000 a year.

Right. So does that mean like most of the teams that you've signed up in the last year are still on that module. So we've got that natural still follow through as they go to the full suite?

That's correct.

Yes. Okay. And then -- and with the sideline addition, I mean you've only rolled out to the SEC. Do you -- I mean, can you talk about how much that actually impacted on ACV and then the timing of the rollout to the other conferences?

Yes. It was a significant contract for us. I think we were delighted to kind of work with the SEC in particular. It certainly had a positive impact, particularly in the first half of the year. And I think I don't think we quantify that, but I think it was obviously a pretty healthy impact. But more importantly, is actually in the second half of the year where we didn't have that impact on, we were still able to maintain that 40-plus percent growth on new video solutions. I think we're pretty delighted by that. To the second part of your question, I think the signing of new conferences from a sideline game day solution, I think it's going to continue to take a little bit of time. So the first year just passed, almost every other conferences, including our contract with the SEC, we were pretty much a multiyear agreement. So we don't -- we didn't anticipate that we were going to sign a second conference right away. But our expectation is that as those contracts start to get closer to being up for renewal, some of them were 2 years in nature. Some of them will be 4 years in nature. So let's call it, 3 years as an average. We anticipate that we'll have a fantastic shot in converting some of those to long-term customers. But I think what I don't want to lose sight is that actually what's really exciting about what we just announced earlier this year with Focus Live for practice is that we're able to take that technology and bring it to training sessions for every team. So even teams that are not in our SEC conference we will see benefit of signing up for Focus Live for practice, which is a completely unique product in the market. So we're pretty excited that, that actually will allow us to add even more pressure for when those deals are up for renewal for game day.

Right. Cool. And just finally, so the churn rate, I mean, it's still very low, but was most of that blip up just Russia going?

Yes, the impact there is really -- I mean, to be very honest with you, I think we're absolutely delighted that we are still over 95% retention despite this onetime event exiting Russia. But I think it's a small increase on a small base, right?

Your next question comes from Owen Humphries from Canaccord.

Bear with me, I've got a bad reception here. But just well done on the results, great numbers. Just to kind of confirm that outlook range in the past, you've always done between kind of 18% to 22% ACV growth, just confirming that is still the range.

Yes. I don't think we ever quantified the number, but I think we said basically strong is sort of reflective of our -- what we've done in the past.

Okay. Good one. And you guys are overachieving on your margin metrics now you've done that for a little while. Obviously, now above your long-term targets. Just talking about into FY '26 and '27, just understanding, is there an expectation around incremental costs coming through while still seeing margin benefits?

I don't know if we're past our long-term targets just yet. But I think overall, we're definitely making great progress through it. Our expectation is that, yes, we're going to see some incremental costs come into the business, both on the variable side and the fixed cost side, but that the growth rate on those incremental costs are obviously significantly lower than the revenue growth rate that we anticipate, which is it's that dynamic, right, that's creating sort of a really positive growth rate while also having an accelerating profit margin rate.

Yes. Like obviously, having incremental margins of 60-odd percent is, I guess, just not sustainable, that exceeds your target. So do you think you'll go back to that kind of target?

Yes. Sorry, I misunderstood what you're asking. You're absolutely right. The 65% of the incremental profit margin is significantly higher than the 30% we've targeted ourselves, if that's what you meant. Apologies there.

Yes. So going forward back to 30%, I imagine.

Yes. Look, I think it's -- last year, we were at 43%. This year, at 65%. Both of those years had some step change functions and efficiencies. I don't think we're going to keep the momentum of creating these step change functions. We anticipate the number to be higher than 30 for sure. I don't think we're going to be at 65. But to be very honest with you, I didn't think we were going to be this high this year. So I think we are finding some efficiencies, particularly as we add more products to our mix.

And just a question around tariffs. So obviously, tariffs caused a bit of a wobble in the last 6 months. Did you see a sales cycle elongate the sales get pushed into this half? Was that an impact on your velocity of sales? Or did you guys not feel it?

To be very honest, I feel like we're in an incredibly privileged position where tariffs is really not a thing in our business. We had prepared ourselves to move out of manufacturing out of China a while back, where we still believe that's probably going to be where the bulk of the tariffs concerns will occur. Our hardware is a real small blip in terms of the contract value that we get from our customers. And then this is really contained to our P&H vertical in the U.S., right, which is a pretty small amount at the end of the day from an overall ACV. So we're -- we have some contingency plans along the way. But for us, it had very little impact. The one small blip we saw is that we still have a small capital sales line in our revenue, and that's typically customers buying servers and laptops for the legacy video solution. We saw a little bit of acceleration in that in Q4, but it was minor where people were just kind of ordering some stuff ahead of time to just prepare themselves in case there was a large increase in tariffs.

And maybe last one, just on M&A. You guys are now accumulating cash. Did you guys have a deep dive in any strategic bolt-ons during the period?

I think as any other company, we really don't talk about opportunities that I think we're talking to. I think the thing that I'll say is probably for the last 3 years as our balance sheet continues to strengthen as our platform continues to really prepare itself for multiple solutions, we probably have fielded a pitch or 2 a week from different start-ups, different midsized companies in the industry. And we're in this great privileged position, right? We're probably 1 of 2 really large companies in the sports tech space that could really apply a lens of discipline. And I think we continue to set the bar pretty high from an M&A candidate perspective. we want to make sure that, one, it's accretive to our Rule of 40. We want to make sure it's something that expands our tech capabilities and ultimately, that allows us to use the position that we have in the market to potentially scale and accelerate what they're doing. So it's a high bar. And I think we've continued to stay really disciplined after 24, 36 months of fielding 1 or 2 pitches a week at this stage. But at this stage, there's nothing for us to talk about.

Your next question comes from Evan Karatzas from UBS.

I just had one question just around the P&H segment. Obviously, another period of solid growth there. Maybe just talk to where you're seeing, I guess, the opportunities for continued growth in that segment or the wearables segment for FY '26 by sport and region, if you can, please?

Yes, absolutely. So I think, first, we were delighted, right? I think as Bob mentioned, we had a 20% growth year-on-year, particularly when you normalize for the onetime issue in Russia. And this is coming -- and that growth is coming really at the end of a product cycle that's been our S7 device, sorry, has been around now in the market for a little over 5 years. So I think where are we looking at the opportunities? First and foremost, we've just launched a complete new device and a new generation of software into the market. We think that's going to open up a decent amount of upsell around new algorithms, new design. That new device is going to become really a platform of things for us to be able to connect other sort of capturing devices in the body. So we think that's going to allow us to expand over time, the ACV or the contracts that we get from our current customers. The connection of that new device now also with the video solution, particularly in practice, really opens up some really interesting workflow for us and across a bunch of different sports. And we think that's actually going to -- the combination of the 2 also starts to accelerate some sales on both ends. So we're pretty excited. And from a region perspective, sports perspective, we actually see the opportunity for the new generation of hardware and the combination of the software, the algorithms that were coming in, the connection into the video analysis tool to be quite honestly, available as a growth opportunity everywhere. I think typically, we start with our big regions. So it's going to be North America, it's going to be Europe and then it eventually comes down to APAC and LatAm. We, again, focused initially typically in our big sports. So imagine that's going to come through American Football, soccer and then eventually Rugby, basketball and baseball.

Your next question comes from Chris Savage from Bell Potter.

I have 2 questions, if I may. First one, you've got a 30% margin target. What's a reasonable time frame for you to achieve that? Is it 3 years? Is it 5 years? Is it longer?

Yes. I think we've put a target out there that we should hit those that margin when we're basically around $200 million of revenue. I think if you look at the growth rate we're running right now, we are probably going to -- we're probably a little bit ahead of where we thought we would be. We should say midterm, so that was about 3 to 5 years. I think we're probably running a slight bit ahead of that. So I would say it's still in the midterm. I don't think we have an exact time frame we could give it out. But I think the way to think about it is really when we get to about $200 million of revenue, you should anticipate that profit margin. Right now, I think we're running a little bit ahead of schedule.

Nice. And just with the ACV growth, Will, you mentioned strong was more or less historical rates, which is mid- to high teens. But could it actually accelerate from here with the rollout of the new products and the increasing scale of cross-sell?

I would like to. I think we're always being cautious on what we're building, right? I think there are a lot of levers for us down the line from a growth perspective, right? So obviously, the new devices, the new technology that we see, I think, opens up an opportunity for us. I think down the line, the connection and the integration of more solutions in our platform is going to continue to open up an ACV opportunity from a share of wallet from our customers. And then obviously, one of the things that we know we have the potential, but we're holding that potential until much later in our strategy is pricing power. So we really don't think about that at this stage and probably won't really push too hard on that for the next 2 years. But those 3 things, I think, allows us to feel that we have a really good handle on the levers that allows us to say, look, we anticipate strong ACV growth. Could it be higher than the historical aspects? Everything is possible. I think obviously, the base is getting larger, right? And so I think it's going to probably require that some more innovation, some more solutions into the mix for us to be able to capture that opportunity.

I know I said 2 questions, but can I just add a further one sort of in addition to Owen's questions around M&A. Would your preference be to do something that adds to wearables or video? Or would you be prepared to look at something that potentially adds a new division for you?

Yes. I don't know if there's a preference along the way. I think our preference is to find a solution in all of the verticals we anticipate that is accretive to what we're doing. And then 2, that we feel strong in terms of the long-term opportunity for us helping at scale, right? So I think the advantage we're in today is that we probably have the deepest tentacles in terms of relationships and professional sport. And so if we had the right solution, it doesn't merely matter which vertical and that solution was accretive to the Rule of 40. We think that our capability of cross-selling and adding to the platform and pushing it globally is really strong. So I don't know if I have a preference, but I think my preference would be, I'd love to have something that's accretive at 50%, 60% on the Rule of 40.

Your next question comes from Andrew Brown from East 72 Holdings Limited.

Just a couple from me. The first one is in terms of European football. Is that market getting a little bit more competitive for you? Or are you finding it a little easier to actually make inroads into it against certainly 2 major competitors?

Yes. No, we're not seeing any change in the competitive landscape. I think as a matter of fact, I would say it's probably getting a little easier given some of the rollouts that we're doing, the integration around sort of our platform with other solutions. I think our team has done an excellent job in really helping guide the market, the industry to really understand where we're going long term and how that -- all the product are coming together. So I think we're feeling pretty bullish. And from a competitive perspective, I think we continue to be the market leader, and I think we'll continue to be seen as the market leader by that sector of the industry.

The second question relates to revenues from media. They were obviously pretty strong in the whole year, but also in the second half in North America. Can you just give us a bit of an idea what's actually driving that? And are you getting into a marketplace that's sort of quite a lot larger with the gaming providers who also obviously provide data to TV stations and other media providers? And what do you see the outlook for that revenue growth being?

Yes. Look, I think there were some opportunities that showed up this year that I think we're pretty excited and we weren't anticipating them. I think they're really a reflection of what's happening in the industry as a whole. And so what we're seeing is that the demand for content, sports content is just really starting to continue to increase. And primarily, again, there's not a lot of live entertainment for people to review. A lot of the way that new consumers are also consuming sports or in bite-size views. And so what drove a lot of that growth was really packaging our media product that we support from all the different conferences in college sports in different ways for different content providers from Netflix to ESPN to different brands using it in commercial. The demand was actually a little bit higher than we anticipated. And with that, there were some unique ways that they were using the content, and those were the opportunities we didn't anticipate. I think we're feeling better about this. It's been a while that we've been able to grow this part of our vertical. It's primarily been flat for, I would say, 4 to 5 years. But this year, we saw a 20-plus percent growth on it. I think we're being a little cautious. Some of these opportunities are new. We want to make sure that there's at least a couple of seasons of demand on that. But I think as Bob said, we're definitely feeling better about this vertical than we've ever been.

All the best.

Thank you very much.

Thank you. There are no further questions at this time. That does conclude our conference for today. Thank you for participating. You may now disconnect.