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Why the Altium share price could rocket tomorrow

circuit board
Credit: Printed Circuit Corporation.

This afternoon Altium Limited (ASX: ALU) reported its half-year results for the period ending December 31 2018. Below is a summary of the results with comparisons to the prior corresponding half (all figures in US$).

  • Revenue of $78.4 million, up 24%
  • Net profit of $23.4 million, up 57%
  • EBITDA margin increased from 30% to 36.3%
  • Reported expenses of $49.8 million, up 12%
  • Earnings per share of 18 cents, up 57%
  • Interim dividend of A$0.16, up 23%
  • China revenue of $9.66 million, up 49%

As we can see this is another standout result from the California-based provider of software for designers who want to build the printed circuit boards that are required to connect to the internet in everyday electronic devices.

No wonder the CEO, Aram Mirkazemi, sounded ebullient in his commentary on the half and outlook claiming he had “no doubt” it would hit its $200 million revenue by 2020 target, with it looking to scale to 100,000 subscribers thanks to an expectation subscriber growth “will accelerate post 2020”.

Other positive features of the result include the strong EBITDA margin growth from 30% to 36.3% as the company’s attractive economics of recurring revenue come to a fore, while the 49% sales growth in China (albeit of a relatively low base) is also likely to excite investors.

The strong result and management’s confidence in the future could combine to send the Altium share price soaring above $30 tomorrow.

Others in the hot tech space yet to report this earnings season include Appen Ltd (ASX: APX) and WiseTech Global Ltd (ASX: WTC).

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Returns as of 6th October 2020

Motley Fool contributor Tom Richardson owns shares of Altium.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia owns shares of Altium, Appen Ltd, and WiseTech Global. 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.

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