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Altium share price on watch after FY 2020 result

Altium share price

The Altium Limited (ASX: ALU) share price will be one to watch this morning following the release of its full year results for FY 2020.

How did Altium perform in FY 2020?

For the 12 months ended 30 June 2020, Altium achieved revenue growth of 10% to US$189 million. This was driven by growth across all core business units and key regions.

The company’s key Board and Systems segment posted a 4% increase in revenue to US$132.3 million. This follows record growth of 17% in its subscription base to 51,006 subscribers.

Whereas Octopart revenue rose 6% to US$18.98 million, NEXUS revenue jumped 133% to US$15.5 million, TASKING revenue was flat at US$19.8 million, and Manufacturing revenue rose 328% to US$2.55 million.

Thanks to the widening of its earnings before interest, tax, depreciation, and amortisation (EBITDA) margin to 40% following good cost control, Altium recorded a 13% lift in EBITDA to US$76.63 million.

Things weren’t quite as positive on the bottom line, with profit after tax falling 42% to US$30,9 million. However, it is worth noting that this was driven by a one-time accounting charge related to deferred taxes. On a pre-tax basis, net profit was up 12% to US$64.64 million.

Also of note was Altium’s operating cash flow, which fell 18% in FY 2020 to US$56.5 million. This was driven by the company providing customers with financial support (extended payment terms) during the pandemic.

Nevertheless, this didn’t stop the Altium board from growing its dividend by 15% to 39 Australian cents. At the end of the period, the company’s cash balance was 16% higher year on year at US$93.1 million.

Management commentary.

Altium’s CEO, Aram Mirkazemi, was pleased with the company’s performance in FY 2020 given the tough trading conditions.

He said: “Altium achieved a strong performance in fiscal 2020 having exceeded its 50,000 subscriber target and delivered solid revenue growth. While COVID-19 prevented us from achieving our long-held aspirational goal of US$200 million, it has been a catalyst for our pursuit of market dominance and transformation.”

“We have successfully launched Altium 365, our new cloud platform, which is causing excitement and gaining strong early adoption. This is most heartening and an early validation of our vision and strategy for this new digital platform to transform the electronics industry,” Mr Mirkazemi added.

Outlook.

No guidance has been provided for FY 2021 due to the pandemic. However, management remains committed to its 2025 targets for market dominance with US$500 million in revenue and 100,000 subscribers.

Though, it warned that “due to COVID19, the achievement of US$500 million may be delayed by 6-12 months.”

It also “remains committed to delivering to the Rule of 50 post-vaccine and will do its best to achieve in a COVID-19 environment pre-vaccine.” This relates to its revenue growth and EBITDA margin being greater than 50% combined.

Management also advised that the company will pursue merger and acquisition opportunities to support total address market expansion and the monetisation of its new digital platform Altium 365 for the electronics industry.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia has no position in any of the stocks mentioned. 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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