The Altium Limited (ASX: ALU) share price rose nearly 9% today after holding its AGM and a technology presentation.
Earlier in the day, Altium gave a technology presentation saying how the Internet of Things has an estimated $2 trillion industry size with electronic design tools representing a $2 billion to $5 billion industry and printed circuit board fabrication estimated size is $80 billion to $100 billion, showing where Altium’s segments fit into the overall industry. It also outlined other factors to Altium’s marketing success.
Altium also outlined Altium 365, which aims to connect the electronics design to the manufacturing floor, which is an industry first. It is both a cloud and on-premise software. Altium Designer users will be able to access lots of new services on the Altium 365 infrastructure.
The company is working on the best way to attract and maintain Silicon Valley grade talent by rewarding them for the outcome, not just their effort. Up to 5% of the company’s issued capital will be set aside for this plan to meet goals to 2025 and will be allocated to employees who make the biggest contributions to achieving the targets.
Those main two targets for the ‘Altium Ownership Plan’ is hitting 100,000 Altium Designer subscribers and becoming the market leader for PCB design.
In FY19 the company aims to:
- Expand the penetration of its NEXUS go-to-market model for solution selling
- Drive adoption of Altium 365 as a cloud offering and increase the subscription run-rate
- Increase the efficiency and reach of its transactional sales model to increase the recurring revenue and conversion rate
- Scale up licence compliance operations in China to drive growth and maintain a 20% plus run-rate each year
- Deliver a prototype of design to manufacturing by combining Altium’s design tools, Ciiva, Octopart and PCB:NG
The company is aiming for high-teens double-digit revenue growth and expanding profit margins to achieve its 2020 target.
Altium is one business that has delivered on its long-term goals and has set some very impressive goals for the next decade or so. It’s a high quality growth share with a great balance sheet.
Is it worth a buy at 46x FY19’s estimated earnings? I’m not sure it is in this environment of rising interest rates. But, if you bought now and held until 2025 it could turn out (very) well if things go according to Altium’s plans.
However, I’d rather go for better value growth shares like this top ASX growth stock.
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Motley Fool contributor Tristan Harrison owns shares of Altium. The Motley Fool Australia owns shares of Altium. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.