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What to watch when Altium Limited (ASX:ALU) reports

Here are three things to look for when Altium Limited (ASX: ALU) reports next week:

1. Revenue per subscriber will be watched

Following the COVID-19 outbreak and updates from Altium’s management, the revenue result will likely be slightly higher in FY20 but below what many investors were expecting six months ago.

Based on recent commentary and forecasts, it’s likely revenue growth will be 10% above last year. Management seems to have achieved some strong operating growth, such as growth in the number of subscribers (now totalling 50,000+), but the revenue from the newer customers mightn’t be as strong as many expect.

What to look for: clarity around pricing and the efficacy of online sales — management promised more clarity on pricing and incentives during COVID.

2. Altium 365 uptake is key

Altium’s new cloud product should be an essential tool for engineers and designers working remotely.

Subscriber numbers are still small relative to Altium Designer, the flagship product. However, the workflow improvement for companies shifting to more remote workforces means the uptake of Altium 365 is key.

As investment analyst Owen Raszkiewicz explained in a Reporting Season video update this week, competitors like Cadence Systems (NASDAQ: CNDS) and Mentor Graphics, owned by Siemens, have recognised the importance of this shift as an opportunity to grab customers.

What to look for: Investors will be hoping for strong uptake and commentary around pricing for Altium 365.

3. A strong profit result is expected

Given the scalable and strong cash flow generation of Altium, analyst are expecting a net profit (NPAT) of $26 million, according to reporting by Bloomberg.

On Monday morning August 17th, tech investors will have their gaze fixed firmly on Altium’s commentary and financial statements.

Click here to read Jaz Harrison’s take on the Altium FY20 report

Use your web browser to bookmark our ASX growth shares or Reporting Season pages for daily analysis and updates.

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At the time of publishing, the author of this article owns shares of Altium.

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