The Altium Limited (ASX: ALU) share price is charging higher on Tuesday.
In morning trade, the electronic design software company's shares are up 18% to $35.35.
Why is the Altium share price charging higher?
Investors have been bidding the Altium share price higher this morning after the release of a full year result for FY 2022 that smashed expectations.
For the 12 months ended 30 June, Altium reported a 23% increase in revenue to US$220.8 million and an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 36.7%.
As a reminder, Altium was guiding to revenue of US$213 million to US$217 million with an EBITDA margin at the lower end of 34% to 36%.
Thanks largely to Altium's stronger than expected margins, its net profit after tax grew by 57% to US$55.5 million. This compares favourably to the market consensus estimate of US$47.7 million.
A 'cracking result'
One leading broker that was impressed with Altium's performance was Bell Potter.
Its analysts described it as a "cracking result" and were quick to highlight that this stellar performance wasn't boosted by one-offs. In fact, it notes that there were negative one-offs holding it back from an even stronger performance. It explained:
FY22 EBITDA grew 33% to US$79.8m which was 6% above our forecast of US$75.4m. The beat was driven by higher revenue than forecast (US$220.8m vs BPe US$218.5m and guidance towards top end of US$209-217m) and a better EBITDA margin than forecast (36.2% vs BPe 34.5% and guidance towards low end of 34-36%). Note there were no positive one-offs which drove the beat and the result was even negatively impacted by one-off costs of US$1.3m from relocating staff out of Ukraine (so that the underlying EBITDA margin was actually 36.7%).
The broker was also pleased with Altium's guidance for FY 2023 and appears confident that the company will achieve its longer term goals.
Altium provided FY23 guidance of revenue b/w US$255-265m and an EBITDA margin of b/w 35-37%. The company also provided a breakdown of the revenue guidance b/w US$195-200 in electronic design software and US$60-65m in engineering cloud platform. Altium also reiterated its FY26 target of US$500m revenue and an EBITDA margin of 38-40% but said it believes it can now get there with <100,000 subscriptions.
Buy rating maintained
In light of this strong performance and positive outlook, Bell Potter has maintained its buy rating and lifted its price target on the Altium share price to $37.50.
