The Altium Limited (ASX: ALU) share price hasn’t moved much so far after the tech business announced its FY21 half-year result.
Altium’s FY21 half-year result
Altium said that it has seen a decline in performance due to the economic slowdown, caused by extreme COVID-19 conditions in the US and Europe, and a challenging environment in China relating to license compliance activities.
The company recently sold its TASKING business, which has been classified as discontinued operations within its report.
Revenue, including discontinued operations, fell by 4% to US$89.6 million. Excluding TASKING, revenue also fell by 4% to US$80 million.
There was a mixed performance across different areas of the business. Board and systems (including Altium Designer) saw a 5% decline in revenue to US$62.1 million. Within that, the Americas saw a 10% revenue decline, EMEA declined 4%, China saw a 15% drop and the rest of the world saw a 13% increase of revenue to US$6.3 million.
There has been strong growth in the cloud offering called Altium 365, with over 9,300 active monthly users and 4,400 monthly active accounts – up 83% and up 69% respectively since July.
Altium’s subscription business saw growth of 12% year on year to reach 52,157 subscribers.
The only other positive area of growth was Octopart, with a 19% rise in revenue to US$10.8 million.
Continuing reported expenses went up 3% to US$53 million, leading to a 15% decline in EBITDA (EBITDA explained) to US$27 million. The reported EBITDA margin fell from 38.3% to 33.8%, while the underlying EBITDA margin fell from 35.9% to 30.6%.
Altium’s profit before income tax sank 23% to US$20.7 million and the profit after income tax went down 12% to US$16.6 million. Group operating cashflow declined 10% to US$18.7 million.
Altium dividend and balance sheet
The amount of cash on the balance sheet increased by 9% to US$88.3 million.
However, that wasn’t enough to stop the board deciding to reduce the dividend by 5% to AU$0.19 per share.
With COVID-19 vaccines rolling out and a strong performance in the second quarter of FY21 compared to the first quarter, Altium is expecting a stronger second half.
Its guidance, including the continuing economic uncertain, is for full year revenue to be between US$190 million to US$195 million (excluding TASKING) and an EBITDA margin in the range of 37% to 39%.
Altium has been warning that this result would be weak, which it was. It wasn’t much of a surprise, but it’s still disappointing that momentum has slowed so much compared to a year ago.
If Altium can regain its momentum and emerge from this period as the clear market leader in the industry then the long term is still positive, so Altium could still be one to watch during this period of difficulty.
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