Altium shares volatile as company passes 50,000 subscriber milestone

We examine the highlights from the company's preliminary revenue and sales market update.

Unaudited sales and subscriber figures at a glance

PCB design software and high-powered tools company Altium (ALU) today provided the market with preliminary FY20 revenue and subscriber figures.

Overall, Altium said it expected its full-year revenue to come in at US$189 million (unaudited) – representing a year-over-year growth rate of 10%. Growth in Altium Designer seats also proved robust in fiscal 2020, with the company today reporting total seat sales passed 9,100, implying a growth rate of 14%; despite Covid-19 headwinds.

Elsewhere, the company enthusiastically reported that it had exceeded its 50,000 subscriber target – with subscriptions growing by 17% on a year-over-year basis. Altium’s Chief Financial Officer – Joe Bedewl – pointed out that these figures put the company ‘in a strong position to drive further adoption of its news cloud platform Altium 365.'

In response to the release of these key unaudited results, investors bid the stock higher in the first 15-minutes of trade. Enthusiasm tapered off not long after that, mind you, with Altium trading at $32.93 per share (-1.64%) per share, by 11:00AM.

The broader market was also down at the time of writing.

Altium share price: the analyst take and a path forward

Today’s preliminary revenue release caps off an uncertain (though not unexpected) period for the company – with Altium in June revealing that it expected its full-year revenue to come in below the analyst consensus.

The stock fell as much as 12% in response to that news, though analysts from the Royal Bank of Canada (RBC) remained upbeat on the company’s longer-term outlook, at the time. Here, RBC analysts, retaining their Perform rating on the stock, said:

‘Over time we believe ALU should be able to extract higher ARPU from new customers as pricing returns to “normal” levels; however, in the near term this presents a meaningful headwind to revenue and ARPU.’

Looking forward, Altium Chief Executive Officer, Aram Mirkazemi today said:

'At our full year results, we will share more color on the long-term impact of Covid-19 on the acceleration of our strategy of our strategy of market dominance and industry transformation.’

‘We will also share color about our recurring revenue and pricing model post COVID-19 and based on the impact of Altium 365,’ Mr Mirkazemi finished.

Investors will likely be keen to gain more clarity on the Altium’s pricing strategies – given that it was the company's volume over value approach, in response to the emergence of the coronavirus pandemic, which contributed to ALU lowering its full-year revenue expectations in June.

At the time of writing, the company had over US$90 million cash on hand.

Altium is set to hand down its final FY20 results on Monday, 17 August.

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