One of the hottest tech shares on the Australian share market is printed circuit board design software company Altium Limited (ASX: ALU).
Interestingly, despite seeming to appear out of nowhere over the last couple of years, the $4.2 billion company has been around much longer than you might think.
Altium was actually founded in 1985 in Tasmania but was known as Protel Systems until 2001.
This means the company pre-dates tech giants such as Google, Facebook, and even Amazon.
The Altium IPO.
On August 4 1999, Protel Systems completed its Initial Public Offering and its shares were listed on the Australian Stock Exchange. The company raised $30 million at $2.00 per share, with the funds being used to assist in financing its growth strategies.
Things started very well for the company and it was soon able to tap the markets for even more funds. Just over six months after listing on March 22 2000 it completed a private placement of 6,000,000 shares at a price of $5.50 raising $33,000,000.
However, a series of missteps and the dot com bubble bursting, meant by 2003 Altium's shares were trading as low as 40 cents.
Unfortunately for its shareholders, that's how things remained for a good number of years. In fact, as recently as 2011 the company's share price was trading as low as 9 cents.
And then came along the Internet of Things boom.
The Internet of Things.
The Internet of Things is the term used to describe the extension of internet connectivity into physical devices and everyday objects.
This is more than just your smartphone or MacBook. This is everything from lights, televisions, fridges, cameras, and cars.
Generally, in order for these devices to communicate and interact with others over the internet, they require printed circuit boards inside them. Which is why Altium's award winning design software has been experiencing a significant increase in demand in recent years.
The good news for the company is that demand looks likely to continue growing exponentially for the foreseeable future,
According to Statista, there were an estimated 23 billion Internet of Things devices worldwide in 2018. This is expected to more than triple to 75 billion by 2025.
Altium in 2025.
When the company released its impressive half year result last month, management revealed that it was very confident it would achieve its revenue target of US$200 million by 2020.
In light of this, it set itself a new (aspirational) target of revenue of US$500 million by 2025.
Given the forecast growth of the Internet of Things market and the positive impact this is likely to have on its subscriptions, I believe there is a strong probability the company will achieve this.
Should you invest?
Given the quality of its products, management team, and the tailwinds it is experiencing, I think Altium would be an outstanding buy and hold investment along with fellow tech stars Appen Ltd (ASX: APX) and WiseTech Global Ltd (ASX: WTC).
