Altium Limited On Track To Achieve Goals
Altium Limited, one of ASX ‘WAAAX’ tech stocks along with WiseTech, Afterpay, Appen and Xero, believes that it is in an excellent position to achieve its goals despite current market conditions. The electronic printed circuit board (PCB) design software firm has previously envisioned to be the key player in the market before 2025, boasting 100,000 subscribers and $500 million in revenue.
Including 2020, the company has successfully maintained its track record of eight succession periods of double-digit revenue growth. It’s products which include its signature Altium Designer software, competes with those of larger players such as Mentor and Cadence. Altium's software has previously been positioned as easy to use and more economical than its competitors. Yet, that also meant that its products would be less compatible to cater to complex projects. However, in the last few years, this phenomenon no longer holds.
The firm has released products that are targeted towards the premium end of the market while dedicating resources to its cloud product. The product, which is scheduled to be released at the end of the year, will aim to connect PCB design to the manufacturing floor. However, amidst all the aspirations, the company has joined the string of ASX firms who have signalled that its full-year results will be adversely impacted due to the outbreak of the coronavirus.
Additionally, the trade war with China witnessed the majority of companies within the supply chain stockpiling parts. Consequently, Octopart, a search engine for industrial and electronics part that the firm acquired in 2015, has been adversely affected. Specifically, growth within the search engine advanced by 2 per cent in the first half, primarily due to the reduced volume experienced across the parts distribution industry.
Even as Altium chief executive Aram Mirkazemi asserts that there exists a pick-up in Octopart’s revenue in January and February, growth for the full year remains to fall within single-digit percentage points. The outlook also falls part of the firm’s anticipation for full-year revenues to come between the range of US$205 million to $215 million. More notably, should the business come in at the low end of its 2020 full-range, Mr Mirkazemi remains optimistic that the firm is on the right track to achieving its 2025 goals.
This is because, with reference to the Global Financial Crisis that hit the world in 2008, the industry feedback obtained was that the circuit board design software industry emerged relatively unscathed. Instead, the focus turned to research and development in an attempt to capture the next wave of opportunity when conditions have improved. Presently, the $5.5 billion corporation posted close to a 20 per cent spike in revenue to $US92.8 million. However, as the firm took a hit from the higher effective tax rate of 27 per cent, net profits slipped 2 per cent to $23.1 million.
By Caroline Wong
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