Amazon Vet Steers From Wearable Tech to Data Analytics as Market Matures

·6 min read

Using technology to give Australian Olympic athletes an edge in the 2000 Sydney Games made Catapult Group one of the most widely used tech companies in sports. Its wearable tech—think of a cropped tank top stuffed with sensors—won credit for helping its home country achieve an outsized medal count through intense monitoring of athlete training. Now, Catapult works with some 3,200 sports teams worldwide. In April the company inked a deal with the Atlanta Falcons, the last National Football League team not using its services.

Yet despite its ubiquity, Catapult’s shares on the Australia Stock Exchange are about half their peak price from five years ago. Shares were roiled by a plan to extend sales of its wearable tech to consumers, an effort resoundingly panned by shareholders and which led to the ouster of its CEO in 2019. In the wake of the turmoil, the company turned to Will Lopes, an American who spent the bulk of his career building Amazon.com’s Audible audio book business. The reason: Catapult had its business plan backwards, having focused on selling the hardware while treating the data largely as an afterthought, sales-wise. The real value, Lopes contends, is in the data—and in getting customers to subscribe to the analytics to understand it.

“Hardware is just a means to an end,” Lopes said in a video call from Catapult’s office in Boston’s Post Office Square, where he relocated from New York when appointed CEO in November 2019. “Sports, especially on the professional side, is very new to me. B2B is also very new to me, but technology and data is not. I have found in this industry that, surprisingly, it is still in a kind of nascent state in terms of how data is utilized.”

Catapult’s main offering is ClearSky, a local positioning system that uses inertial, positional and event data gathered from its shirt to provide insight into how much an athlete is working. Duke University men’s basketball, for instance, is a typical customer. It uses ClearSky to help develop player workloads starting in the summer ahead of a season, with players wearing the top during every game, practice and shootaround.

The technology was developed in the 1990s by two Australian researchers who are now the company’s largest shareholders, Igor van de Griendt and Shaun Holthouse. The business was commercialized in 2006 after its work with the Australian Olympic team, expanding to include technology that tracks team positioning on the playing field, called Vector, video analysis software used in scouting and recruiting, as well as a media arm that primarily manages B-roll-type video of college mascots, stadiums and marching bands. In 2009 Catapult inked its first American client, the New York Knicks, and has grown the U.S. market to be its largest, generating 70% of its revenue today.

A problem for Catapult is that the business plan became a victim of its own success. While the names of marquee users are impressive—including the Dallas Mavericks, whose owner, Mark Cuban, also owns 727,000 shares of Catapult—its overall base is vast. When you’ve sold one-off tech into the likes of the County Clare Gaelic football team in Ireland’s national amateur league and to the Delsea (N.J.) Regional High School girls soccer team, the question of where future growth will come from starts begging for an answer. Plus, despite its prime mover status, plenty of other companies are offering detailed player training technology today too.

Lopes’ job is to move revenue away from one-time sales and create a pathway forward for growth in the process. His experience with building integrated software-as-a-service approaches at Amazon—for instance, predicting and presenting Audible subscribers new books they will like—tells him that the next opportunity for Catapult is to do the same for sports teams. The way to do that is to treat the data and analytics Catapult products generate as the primary offering, away from being a bonus to buyers under the hardware-first approach. Then, the goal is to extend the software focus into synthesizing data for coaches in ways that become more valuable both for game prep and during play.

“Sports is still far behind in the movement toward predictability and prescriptability, and a lot of the data is highly fragmented. You might have coaches looking at hydration data, sleep patterns, heart rate, performance on the field and they’re trying to use a lot of their cognitive loads to make good decisions on it,” Lopes explained. “It is really important that we unify our technology and our solutions, that the platform become more sophisticated and… actually make it more algorithmic in nature with predictive datasets.”

A glimpse of the predictability came in the English Premier League with a player for one client squad (and who Lopes can’t name for privacy reasons). Catapult’s wealth of data on the player, including his health history and workload, led to a prediction that the player shouldn’t log more than 69 minutes in a match, a mark the club coaches stuck to. When the player left for the national team, however, England managers let him play past that mark and before the game’s end he suffered a groin injury, sidelining him for a month.

The fact that teams see hundreds of millions of dollars in salary sit on the sidelines with injuries every year means there’s already a market for the service. To extend the business further, Catapult is charging ahead on plans to integrate data with video. That means matching data and analytics to the game in real-time, so coaches can use insights to make quick decisions during play—like a much more sophisticated version of how NFL players and coaches review overhead photos on the sidelines today. It is the potential for those developments that suggest Lopes has Catapult moving in the right direction, according to Owen Humphries, an analyst at Canaccord Genuity Capital Markets in Sydney. “We believe all financially sound sporting organisations [sic] will use wearable technology to capture and analyse [sic] data on their assets/athletes over the next decade, providing a major structural tailwind,” he wrote in a May research note rating Catapult stock a ‘buy.’

Based on recent sales figures, the wind is filling Catapult’s sails. In 2019, 48% of company revenue was one-off sales of hardware. It was just over 20% on the most recent year, ended March 31, even as sales edged out 2019 despite the pandemic, at $67.1 million (the company reports in U.S. dollars). By 2023, total sales should rise another 25% to $84 million. By then, 88% of the business will be from recurring, subscription-based offerings, according to an analysis by Humphries. It appears to be pleasing shareholders, with Catapult Group shares up 69% in the past year, to AUD$2.19.

“The [sales] shift is going very well; the growth momentum has returned for us,” added Lopes. “Teams want to perform at their best level, have players avoid injury, have their best players on the field, and they really want to [know], ‘How do I use data to move forward?’”

Catapult believes it can help them make that jump.

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