Altium (ASX:ALU) share price sinks 9% on half-year results

Here's how Altium performed during the first half…

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Key points

  • Altium delivered strong growth during the first half
  • Its sales and profits grew in the double digits thanks to solid performances across the company
  • Management's guidance for FY 2022 was a bit of a mixed bag, though

The Altium Limited (ASX: ALU) share price is on the slide on Monday morning following the release of its half year results.

At the time of writing, the electronic design software provider's shares are down 9% to $31.36.

Altium share price lower despite solid growth

  • Revenue up 28% over the prior corresponding period to US$102 million
  • EBITDA margin improved by 3.5 basis points to 34.1%
  • Operating cash flow up 33% to US$33 million
  • Net profit after tax up 38% to US$23 million
  • Interim dividend up 11% to 21 Australian cents per share
  • Cash and cash equivalents of US$195 million

What happened during the first half?

For the six months ended 31 December, Altium delivered a 28% increase in revenue over the prior corresponding period to US$102 million.

The core Board and Systems business performed very well, reporting a 16% increase in revenue to US$79.17 million. This was driven by double digit growth across all regions (except for China) and the NEXUS platform. Management revealed that it experienced strong adoption of Altium 365 during the period. This means there are now over 19,700 monthly active users, which is up 54% since August.

But arguably the highlight of the period was the company's Octopart search engine, which doubled its revenue to US$22.2 million. This was driven by tailwinds from the global electronic parts shortage.

Management commentary

Altium's CEO, Aram Mirkazemi, was pleased with the half.

He said: "Altium delivered a strong performance for the first half of fiscal 2022. Momentum has returned to our core PCB business and our business model transition is going smoother than expected with minimal headwinds. Our Octopart business is performing at its all-time best and the adoption of our cloud platform Altium 365 exceeds our expectations."

"The overwhelming response to Altium 365 from our customers and the broader engineering software industry is most heartening. We are picking up pace toward market dominance and accelerating our transformative vision to digitally connect electronic design and manufacturing to the broader engineering ecosystem."

"While I am very pleased with our first half performance, we must maintain intensity and focus in the second half, as our first half performance should be compared to a low-base last year that was impacted by COVID and the business and organizational model changes that we made as we pivoted to the cloud," Mr Mirkazemi added.

Outlook

The company's outlook was a bit of a mixed bag, which may explain the weakness in the Altium share price today. Although it is guiding to the top end of its previous revenue guidance range, it is expecting to achieve the low end of its margin guidance range.

Altium's guidance stands at:

  • Revenue between US$213 million to US$217 million (18-20% growth).
  • Underlying EBITDA margin of 34-36%.
  • ARR growth of 23-27%.

It explained: "Altium is upgrading its revenue guidance for fiscal 2022 to the high-end of the range. The margin is likely to be at the low end of the guided range or thereabouts, as Altium plans to scale up its leadership recruitment including new cloud and enterprise sales roles in an increasingly competitive talent market."

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended Altium. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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