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.
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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.
