The Altium Limited (ASX: ALU) share price has grown strongly over the past three years, despite not making any significant ground over the past 12 months. The Altium share price is up nearly 50% from its March low but only 7.5% in year-to-date trading.
Altium released its full year results for FY 2020 last week. It was a reasonably strong set of numbers in light of the challenging market conditions. Altium achieved its ninth year in a row of solid revenue growth.
Is the Altium share price a buy in light of these results?
Another solid financial year for Altium
Altium achieved revenue growth of 10% to US$189 million for the full year ended 30 June 2020. Performance was solid across all of its core global operating regions and core business units. Profit before tax for Altium climbed by 12% to reach US$64.6 million. Meanwhile, earnings before interest, taxes, depreciation and amortisation (EBITDA) grew by 13% to $75.6 million.
Altium recorded a 17% increase in its overall subscriber base to 51,006. Altium Designer seats grew by 15%, with 9,251 new licenses sold throughout FY2020. Altium Designer is now the most widely used professional PCB design tool globally. It is used by over 100,000 engineers worldwide.
The Aussie WAAAX share also ended the financial year with a strong balance sheet. The company's cash balance at the end of June was US$93 million. That was up 16% on the prior year.
What's been driving the Altium share price?
Altium has now recorded nine consecutive years of double-digit revenue growth. Annual revenue has increased from $71 million in FY2014, to $111 million in FY2017 and now $189 million during FY2020, as reported above. Equally impressive is that Altium's operating margin has expanded each consecutive year during that time. Back in FY2014, Altium's operating margin was only 30.1%, and during FY2020 it has now reached 40%.
Altium's customer base now extends across a broad range of industries. This includes everything from automotive, aerospace and defence, mobile device and consumer electronics to industrial controls and research and education.
Altium's target of US$500 million in revenue and 100,000 subscribers by 2025 is still in place. However, it may now be delayed by around 6 to 12 months due to COVID-19.
Foolish takeaway
The Altium share price was hit hard in the first phase of the pandemic. Since then, it has only made a partial recovery, and is currently trading at $36.91. Combined with a very solid set of numbers for FY 220, this in my opinion, offers investors a good buying opportunity right now. Altium now has a proven track record of strong financial performance and has an entrenched global market position in its technology niche.
I believe the growth prosepcts for the Altium share price over the next five years look very positive. In my view, a growing number of smart connected devices globally is likely to lead to continued strong demand for Altium's products in the years to come.
