The Altium Limited (ASX: ALU) share price will be one to watch on Tuesday.
That's because the electronic design software company has released its half year results after the market close.
Altium share price on watch amid strong growth
- Revenue up 17% to US$119.5 million (22% in constant currency)
- Recurring revenue increased from 74% to 79% of total revenue
- EBITDA margin up 2.1 percentage points to 36.2%
- Profit after tax jumped 30% to US$29.6 million
- Interim dividend increased 19% to 25 Australian cents per share
What happened during the half?
For the six months ended 31 December, Altium reported a 17% increase in revenue to US$119.5 million.
A key driver of this was a 16% increase in Design Software revenue to US$91.6 million. This reflects an 11.5% increase in average subscription seat value to US$2,304 and a 3.7% lift in subscriptions to 58,030. Solid revenue growth was achieved in all regions but China, which went backwards due to COVID lockdowns.
The Octopart business was also on form, delivering a 22% increase in revenue to US$27 million. This reflects an increase in average revenue per click to $1.96 from $1.55, which offset a moderation in clicks.
And with Altium benefiting from operating leverage following a period of restructuring, the company's earnings grew quicker than sales. Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 24% to US$43.3 million and net profit after tax jumped 30% to US$29.6 million.
Altium's operating cash flow was strong at US$22.5 million, allowing the company's board to declare a 25 Australian cents per share interim dividend. This is up 19% on the prior corresponding period.
The company ended the period with a sizeable cash balance of US$205.3 million.
Management commentary
Altium's CEO, Aram Mirkazemi, was pleased with the company's performance during the half. He commented:
Altium delivered a strong financial result and is on track to achieve our full year guidance. This solid performance under challenging global macroeconomic conditions reflects Altium's dominance in the mid-market and growing competitive strength. We have added a net 2,052 seats to our subscription pool from one year earlier and increased Average Subscription Seat Value by $237. The primary drivers for the increase in Average Subscription Seat Value have come from the mainstream adoption of Pro and Enterprise capabilities and growing sales of term-based licenses.
Altium interim CFO, Richard Leon, added:
The strength of our EBITDA margin is evidence of a return to traditionally strong operating leverage following a period of restructuring for Altium. The cash-generative nature of our business is underpinned by growing recurring revenues and a value discipline approach to investments and cost management. Our transition to a business model focused on both design software and cloud platform continues to progress well with solid revenue growth driving bottom-line profitability.
Outlook
Altium has reaffirmed its FY 2023 guidance. It continues to expect:
- Total revenue of US$255 million to US$265 million (15% to 20% growth)
- Underlying EBITDA margin of 35% to 37%
The Altium share price is up 23% over the last 12 months. Shareholders will no doubt be hoping it continues this positive run on Tuesday.
