The Catapult Group International Ltd (ASX: CAT) share price will be one to watch on Tuesday after a late announcement on Monday.
What did Catapult announce?
After the market close on Monday, Catapult announced that it has commenced the lifting of its COVID-19 operating cost mitigation measures.
The sports analytics and wearables company revealed that it is able to make the move sooner than planned because the negative impact to its business from the pandemic was less than anticipated.
According to the release, management has been closely monitoring its performance, controlling costs, and managing working capital to ensure it maintained a strong cash position while minimising disruption to the business during a period where sport around the world was put on hold.
These cost measures included implementing furlough leave for staff in some regions, and reducing salaries for others. But as of 13 July 2020, Catapult has begun ending these measures.
The company's CEO, Will Lopes, commented: "Entering the COVID-19 crisis we took preventative measures anticipating a worst-case scenario impact to our global business. I am glad such impact was less than anticipated and we are able to remove such measures earlier than expected."
What now?
This news could give the Catapult share price a much-needed lift.
Although its shares have rebounded strongly from their March low, they are still down materially from their 52-week high. Based on Monday's close price, Catapult's shares are down 45.5% from their high.
I suspect that investors were expecting the suspension of professional and amateur sports globally to weigh heavily on its performance during the second half. But given its update today, things don't appear to have been anywhere near as bad as they could have been.
It is also worth noting that approximately 75% of Catapult's revenue is subscriptions-based, supported by long term contracts and customer relationships. This could arguably mean the Catapult share price weakness in 2020 has been severely overdone.
