Altium Releases Audited FY21 Results In Line With Preliminary Figures

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Altium Releases Audited FY21 Results In Line With Preliminary Figures

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  • FY21 net profit after tax from continuing operations up 79 percent to $35.3 million, EPS of 26.89 cents (AU)
  • Underlying EBITDA margin from continuing operations down from 36.5 to 33.3 percent
  • Flat FY22 EBITDA margin guidance and 5 percent higher FY21 operating costs compared to FY20
  • ATO tax audit relating to circumstances of company restructure implemented in 2015
  • FY22 revenue target $209 million, potential exists for $500 million and 95 percent recurring revenue by FY26, buoyed by product innovation, including Altium 365

Altium Limited (‘Altium‘ or the ‘Company‘) was founded in 1985 and today is a multinational electronics design software corporation with offices all over the world.  The Company is focused on electronics design systems that enable users to collaboratively connect with every aspect of the Printed Circuit Board design and related system development process.

Note: All numbers are expressed in US$

Full Year 2021 Financial Result

The delayed release of Altium’s audited accounts contained no major variations from the unaudited, preliminary financial results previously released. The more detailed accounts however did refer to an ongoing tax audit. The Company recorded a full year profit after tax from continuing operations of $35.3 million, up 79 percent compared to the previous year.

Revenue from continuing operations was up 6 percent for the year to $180.2 million. The high quality of this revenue outcome is reflected in the fact that 65 percent is recurring revenue, sourced from its growing subscription business. The subscription base increased by 7 percent during the year to 54,394 subscribers.

Higher operating costs on an underlying basis of 5 percent to $122.1 million compressed the Company’s EBITDA margin from 36.5 percent to 33.3 percent, which is below full year market guidance of 37 percent. FY22 underlying margin guidance is 34-36 percent.

Altium is in a strong financial position with a cash balance at 30 June 2021 of $191.5 million.                 

ATO Tax Audit

Reasons cited for the 5 percent cost increase include compliance costs associated with an ongoing ATO income tax audit. It is worth noting that in FY21, Altium’s effective tax rate was 26 percent. However, the tax audit relates to the circumstances of a company restructure implemented in 2015. The ATO is examining the restructure in terms of transfer pricing and general anti-avoidance provisions of Australian tax law. The ATO considers that Altium has understated the Australian tax impact of the restructure. Altium intends to vigorously defend its position and has not raised a specific provision amount in its FY21 financial accounts.

Leading-edge Product Development

The Company has highlighted the future economic benefit of its market-leading, cloud-based  platform for electronics design, Altium 365. Thousands of person-years of R & D investment ensures that Altium 365 will strengthen Altium’s market position in the years ahead. The Company has established a separate team focused on its emerging Cloud business to accelerate future revenue growth. Altium 365 is a first for the electronics industry, in that it digitally connects electronic design to the supply chain, from parts sourcing to the manufacturing floor. Demand for the product is building, with 13,000 users and 6000 businesses active on the platform.

US$500 million FY26 revenue growth target

Altium has guided FY22 revenue to US$209 million (16 - 20 percent growth) and re-iterated its   US$500 million FY26 target from 100,000 subscribers with a 95 percent recurring revenue component. Altium 365 and a raft of other product initiatives indicate that this target is within reach.

Caroline Wong

Caroline Wong is a Research Analyst at KOSEC – Kodari Securities. She writes on markets and focuses on ASX Top 300 companies. Email Caroline at c.wong@kosec.com.au.

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