What: The share price of software developer Altium Limited (ASX: ALU) has fallen 7% today after the group released its interim profit results.
The share price fall does however need to be kept in the context of the stock's meteoric rise which has seen a gain of nearly 70% over the past 12 months.
For comparison, the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) is down around 16% over the same time frame.
Here's what Altium reported for the six months ending December 31:
- Revenue rose 13% to US$42.5 million
- Earnings before interest, tax, depreciation and amortisation (EBITDA) increased 6% to US$10.6 million
- The group's underlying EBITDA margin increased to 27.5%
- Earnings before interest and tax gained 1% to $9.7 million
- Net profit after tax (NPAT) jumped 35% to US$9.1 million thanks to a low income tax expense
Now what: Altium noted that it remains on track to achieve its revenue goal of $100 million by financial year 2017 and that it expects to be able to expand operating margins to over 30%.
Altium, like other listed software companies such as XERO FPO NZ (ASX: XRO) and Technology One Limited (ASX: TNE), certainly has a positive growth outlook and an appealing business model.
However, with the information technology sector enjoying significant investor support in recent times it's important to remain focussed on valuation as some share prices may arguably have run well ahead of themselves.
