Altium Limited (ASX: ALU) has just reported its FY19 result to June 2019, is the share price a buy?
Altium 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 FY19 Result
The electronic PCB business reported that its revenue increased by 23% to US$171.8 million.
There were a number of individual elements that performed well. The number of Altium Designer seats sold increased by 27% to 8,015. There was 13% growth of the subscription base to more than 43,600 subscribers.
China led the growth of revenue, Chinese growth was 37%. US revenue growth was 14% and EMEA (Europe, the Middle East and Asia) growth was 20%.
Board and Systems revenue increased by 17% to US$126.8 million, Octopart increased revenue by 49% and TASKING increased revenue by 37%.
EBITDA (click here to learn what EBITDA means) rose by 40% to US$62.7 million and EBIT increased by 44%. The reason EBITDA was able to grow faster than revenue was because the EBITDA margin improved to 36.5% from 32% a year ago.
Most importantly, Altium’s net profit after tax (NPAT) grew by 41% to US$52.9 million and the profit/earnings per share (EPS) increased 41% to USD 40.57 cents. According to CommSec, the market was expecting a profit of US$53 million, so the estimate was almost exactly right.
Altium Dividend, Balance Sheet And Cashflow
For investors focusing on the cash returns from Altium, the Board declared a final dividend of 18 cents per share, bringing the full year dividend to 34 cents per share – an increase of 26%.
The tech company remains debt free, its operating cash flow increased by 42% to US$69.1 million, its free cash flow rose by 42% to US$64 million.
Thanks to the pleasing cashflow, the company ended with US$80.5 million of cash.
Altium Management Comments
Altium CEO Aram Mirkazemi said: “What makes this performance most outstanding is that it has been achieved while Altium has been focused intensely on investing to accelerate future growth.
“We are increasing the efficiency and reach of our transactional sales model and rolling out our new cloud platform Altium 365.
Is The Altium Share Price A Buy?
We’ll have to wait until tomorrow to see what the market’s reaction is to the result.
Altium is continuing a revenue goal of US$500 million in 2025 and 100,000 Altium Designer subscribers before 2025. Management anticipate reaching the halfway mark of 50,000 subscribers as early as 2020.
If it reaches those goals then Altium could still be a good buy if interest rates remain low. But, the price is quite high right now as the market recognises the quality of Altium. But, I’ll be keeping a close on Altium to see if I can buy any more shares at a pretty good price.
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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
Disclosure: Jaz owns shares of Altium at the time of writing, but this could change at any time.