Altium Limited (ASX: ALU) is holding its AGM today. It gave an update about how it’s tracking this year.
Trading update
Altium said that that FY21 is going to represent a ‘pre-vaccine’ environment for Altium’s path to 2025, which is the year that its goals are based on.
The electronic PCB tech company said that economic environment remains challenging with a second wave of COVID-19 and the uncertainty relating to the US elections.
The FY21 first half is still being affected by COVID-19, but management says there are signs of “momentum” coming back for the second half.
Altium confirmed that company’s guided range for the full FY21 result. Revenue expectations are for between US$200 million to US$212 million, representing growth of 6% to 12%. EBITDA (EBITDA explained) is expected to come between US$76 million to US$89 million – this would be growth of between 0.5% to 17.7%, representing an EBITDA margin of between 38% to 42%.
Other parts of the AGM presentation
The company reminded investors that it’s targeting 100,000 active subscribers, and market domination, by 2025 to compel key industry stakeholders to support its agenda to transform electronic design and its realisation.
Altium said that its move to the cloud with its Altium 365 product is from a position of strength and does not force its customer to change either their licensing model or the way they use Altium’s existing software.
Altium 365’s move to the cloud will bring revenue in like software-as-a-service without changing its software licensing model.
Altium 365 also provides future opportunities for direct monetisation. It could get transaction fees on manufacturing (using an Airbnb model) and/or through premium services (like Amazon Prime).
There has been 40% growth of Altium 365 adoption since July 2020. It now has 7,486 monthly active users and 3,739 monthly active accounts.
Time to jump on Altium shares?
Altium is one of the highest quality ASX shares around. It has a lot of growth potential over the long term, with a good focus on cashflow and shareholder returns. No debt and a growing cash balance is also attractive.
For a long term buy, Altium is probably still worth buying in my own opinion. But it’s valued at 61 times the estimated earnings for the 2021 financial year, according to CommSec, so it’s certainly not ‘cheap’. However, I believe potential market domination is worth holding it for at least the next five years.
But in terms of ASX growth shares, I’m more attracted to an idea like Pushpay Holdings Ltd (ASX: PPH).
