Altium (ASX: ALU) has reported that its financial year 2020 (FY20) sales have gone up by 10% compared to FY19 despite the impacts of the COVID-19 pandemic.
What is Altium?
Altium Limited is an Australian multinational software business that was founded in 1985. It now has offices globally in places like San Diego, New York, Boston, Munich, Shanghai, Tokyo and Sydney. Its software focuses on electronics design systems for 3D PCB design and embedded system development. Its services include Altium Designer, Altium Vault, CircuitStudio, CircuitMaker, TASKING and Octopart.
Altium’s FY20 revenue update
Last month the company gave a business update about how things were going during COVID-19.
Today, the software business announced that it has achieved revenue growth of 10% to US$189 million. That includes record growth in new Altium Designer seats and subscriptions to exceed its 50,000 subscriber target.
The number of Altium Designer seats sold increased by 14% and there was record growth of 17% of the subscription base to more than 50,000 subscribers. Worldwide sales also increased by 10% to US$194 million.
The ASX share now has a cash balance of over US$90 million.
In previous business updates Altium has revealed that it made a strategic move to provide attractive pricing and extended payment terms to support customers and drive volume to achieve long term market dominance.
I think that was the right call by management. Whilst this year’s subscription may have been cheaper for customers, next year’s can be full price again and Altium will benefit. It has made the right long term decision.
Altium CEO Aram Mirkazemi revealed that there are now 2,500 companies and almost 5,000 active users now utilising the Altium 365 platform. That’s Altium’s cloud version of its software. He also said:
“Altium has not been immune to the uncertainty and the evolving impact of COVID-19, however as a global high-tech company, geared to work remotely and with a robust and highly adaptable business model, we were able to deliver a strong performance through COVID-19 conditions – maintaining our unbeaten record of eight consecutive years of double digit revenue growth and extending it to nine straight years.”
Altium’s CFO Joe Bedewi announced that there were 3,000 upgrades of Altium Designer (up 47%), which shows the attractiveness of Altium 365 to existing customers.
Summary
Considering everything that has happened over the past six months, 10% revenue growth isn’t bad at all as it meant good growth of subscriber numbers. I think it bodes well for the FY22 result (and perhaps the FY21 result) when the effects of the price cuts wear off.
I’m not sure if today is the best day to buy Altium shares, there could be another market dip later this year – so I’d be happy to wait for a share price of around $30 (or under).
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