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Why the Altium share price was on watch today

The Altium Limited (ASX: ALU) share price was on watch today after holding its AGM.

Altium provided guidance for its revenue and profitability expectations for the rest of the year. 

Management said that for FY20 is expected to be in the range of US$205 million to US$215 million and the earnings before interest, tax, depreciation and amortisation (EBITDA) margin is predicted to be in the range of 37% to 38% before the impact of the new leasing standards. 

What this means is that revenue is expected to grow by at least 19% and the EBITDA margin should improve by at least 0.5% from 36.5% in FY19. 

However, the company did note that Octopart’s growth has slowed down considerably in the current financial year because of a global downturn in the semiconductor and electronics manufacturing industry as well as a temporary impact from a change to the Google search algorithm. 

Altium is still aiming for 100,000 Altium Designer subscribers by 2025 and revenue of US$500 million in 2025. 

The company also committed to ‘the rule of 50’ where revenue growth and the EBITDA margin combined is at least 50% each year. 

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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.

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