It was a great day for Altium shareholders today with an intraday high of $38.26, up over 40% on Friday's closing price. Is it time to take some profits?
While Altium has a wonderful future the share price is now well above the average Strawman intrinsic value.
Altium's fundamentals and guidance have not changed because of the Autodesk $38.50 aquisition offer. However, in the space of few hours Mr Market has revalued Altium 40% higher!
Autodesk might raise it's offer, or it could walk away from the negotiation table. What happens then?
At $38 Altium is trading on a forward (2023) PE of 80 (average consensus of 9 analysts on Simply Wall Street) With forecast growth of 17% per annum over the next 3 years, a forward PE of 80 seems quite high to me.
I am happy to take profits at $38 (sold part today) and buy back under $30. I'm also happy to hold part of the holding in case Autodesk increase their offer. Either way, if you hold Altium shares, 'time is your friend'!
Disc: hold shares
Yep plenty of downvotes at the lows now this won't probably see sub $30 prices ever again (see my prev posts), well done to the people who ignored the noise and managed to buy some cheap. I believe APX will do something similar soon as the market has that all wrong also.
07-June-2021: Altium (ALU) is up over 33% so far today on the back of a takeover offer from Autodesk Inc priced at A$38.50/share. ALU management have rejected the offer as they believe it significantly undervalues the company and its prospects. I hold ALU.
I think this seems very positive, Altium helping both sides of the design and build equation to work collaboratively.
Altium’s CoDesigner capabilities keep MCAD synchronized with ECAD so that electronic and mechanical design teams can truly work concurrently.
Qualitative information only here.
Just looking through their Glassdoor reviews. Average rating 3.3 stars. 60% approve of CEO. As usual, some disgruntled past employee reviews, but also a fair few stunning reviews that can't fault the business.
Overall people say it's a friendly atmosphere. A few recurring themes are free lunches, smart co-workers, and continuous adaptation. The sales team are reportedly aggressive, but less so than other businesses.
Complaints mainly revolve around structure- constantly changing teams and objectives. Many write that it is disorganised.
Also, many report conflict in upper management, lots of politics, to the point of ignoring the lower tiers an of the business.
I find this stuff pretty interesting and you have to take it with a grain of salt. Definitely jump on Glassdoor and get a feel for it yourself. For me, they seem pretty on point for the kind of business that they are. My take away was that they are understandably fluid, and this reduces their efficiency, but this would improve if the business hits it's stride with a focus. I really like the overall positivity about kindness and free lunches- even the negative reviewers appreciated this.
22-Mar-2021: I bought a position in ALU today. I missed the lows last year - they got down to $26/share in March 2020 - but I note they got even lower than that earlier this month - to $25.50. I regard anything under $30 as a good buy zone for Altium, so I pulled the trigger on them today in one of my RL portfolios.
Their 12-month chart looks ordinary, but their 5 year chart (see below) puts that into some perspective. They are rising, but with some sell-offs now and then which present buying opportunities. This latest one was prompted by an underwhelming 1st half report coupled with a big tech sector sell off in the US (including a technical correction with the NASDAQ, the quickest -10%+ drop NASDAQ's history actually) which spilled over into our tiny little tech sector here on the ASX.
That all seems done and dusted now however, with a new low point appearing (to me at least) to have been made. So I regard this as a good entry point for me for ALU. I've always wanted to own ALU shares, but they always looked too expensive. However - at under $30 - not so much.
I'm extremely bullish on Altium long term and I'm quite surprised it's $25! I have been buying since $28~ and thought that was very fair. So what is the market missing? probably a lot. thoughts:
>Altium is a leader and global one of that
>It's proven it can scale
>High operating margins
>It's users love it's product/services
>Management is adaptive and pivoting
>It offers exposure to many industries beacuse of how much pcb boards are used in many day-day products
>It's going to benefit so heavily off EVs when many of these vehicles have Altium pcb boards in them
>The demand from the above statement is totally being missed here and I think the company will enter double digit growth again in the future.
03-Mar-2021: From Marcus Padley's EOD (end of day) newsletter today:
"China has big plans in the Chip market. Beijing had set aside at the start of its last five-year plan around 1 trillion yuan ($155bn) for potential investment in semiconductors over five to 10 years. Taiwan looks interesting then. Big M&A option there."
Surely Altium should benefit, as a leading provider of chip design software. They do not feature in the graphic below, but perhaps they should.
quite the fire sale here! $26 is a damn steal, It appears this is not far off from starting a very strong uptrend once a bottom is confirmed. Fear is ruling these markets currently which is geat news for people with a plan and able to execute. Altium is a very well run business and good business's can adapt and pivot when the music stops which is exactly what is happening, in 6-18months from now this will likely be much higher and probably have done some multiples by then as shocking as that may sound.
Pivot to the Cloud With Growing Momentum for a Stronger Second Half
Sydney, Australia - 15 February 2021 - Electronic design software company Altium Limited (ASX:ALU) has announced its results for the half year ended 31 December 2020.
After eight consecutive years of double-digit revenue growth, Altium experienced a decline in first half revenue for fiscal 2021 of 4% to US$89.6 million, compared with the same period one year earlier (pre-COVID).
This atypical decline reflects the economic slowdown caused by extreme COVID conditions in the US and Europe, and a challenging environment, post COVID in China, for license compliance activities.
Additionally, Altium undertook its hard pivot to the cloud. Boards and Systems revenue for the second quarter was, however, stronger than first quarter revenue and that trend is continuing with early signs of growing momentum into the second half of fiscal 2021.
Highlights for the first half included:
~ Strong adoption of Altium 365 continues with over 9,300 active monthly users and 4,400 monthly active accounts (up 83% and up 69% respectively since July).
~Octopart grew strongly by 19% to US$10.8 million, as electronic manufacturing rebounded during the half.
~Altium subscription business grew by 12% year-on-year to reach 52,157 subscribers.
~ Term-based license more than doubled over the half, which bodes well for Altium’s goal of 80% recurring revenue by 2025.
DISC : Previously held
ALU is down $1.295 to $29.365 at 3:18pm
You probably won't get many chances to own this great company much cheaper, I'm loading up some more here at $28~
A month ago I was advocating to buy this at $28~ see above and I got 1 upvote/11 downvotes so naturally I added more in my real portfolio, I believe this is going to new highs this year and probably sooner than ppl think. On that note I will give this a mid term target (0-9months) of $45-50 if our covid low holds, more of a technical based play but company has great fundamentals also.
Altium has said it expects a 3% decline in first half revenue to US$89.6m due to extreme covid conditions in US, Europe and tough conditions in China.
That being said, the company is maintaining its full year guidance, saying it has seen positive signs in Q2.
Read the full announcemenet here for more detail, but if we dont see a materially stronger second half I'd expect a lot of downside. Shares are on a PE of 72 and very much priced for growth.
A Challenging First Half But Enough Positive Signs to Maintain Full Year Guidance
Sydney, Australia - 12 January 2021 - Electronic design software company Altium Limited (ASX:ALU) updates the market on its unaudited sales and revenue for the half year ended 31 December 2020. Altium experienced a decline in first half revenue for fiscal 2021 of 3% to US $89.6 million due to extreme COVID conditions in the US and Europe and challenging economic conditions, post COVID in China, for licence compliance activities.
A great opportunity to add a quality stock to a long term growth portfolio at a great price.
Altium Divests Non-Core TASKING Business to Support and Enable Future Investment in Altium 365
Electronic design software company Altium Limited (ASX:ALU) has entered into a Definitive Agreement with FSN Capital to sell the assets of its TASKING business for US$110 million. The transaction will be settled in cash with US$100 million up front and US$10 million conditional upon achieving revenue targets in Fiscal 2021 post divestment. The transaction is expected to close in the first quarter of calendar 2021, subject to customary closing conditions and regulatory approval.
Altium Chairman Mr Sam Weiss commented, “we are generating real momentum with Altium 365, the world’s first cloud platform for PCB design and realization, and we believe that Altium 365 is critical to enhance long term shareholder value. The divestment of TASKING enables us to singularly focus on our transformative vision and to fast track the building and acquisition of complementary assets.”
Altium CEO Mr Aram Mirkazemi commented, “the strategic divestment of TASKING combined with our recent organizational changes and hard pivot to the cloud marks an inflection point for Altium in its pursuit of industry transformation. While TASKING is a great business, it does not play a central role in our design to realization strategy for the electronics industry, which is being delivered through our new cloud platform Altium 365. The divestment of TASKING will free up organizational capacity and allow Altium leadership to focus on our main game, which is to expand Altium 365 and accelerate its adoption.”
This transaction will have a one-time positive impact on Earnings Per Share (EPS) in Fiscal 2021 reflecting the profit on the sale of the business. First half Fiscal 2021 results will include TASKING as the transaction will close in the second half. Altium’s first half performance remains solid, however, the effect of this transaction combined with ongoing COVID lock-downs in the US, will have a marked impact on our historic first half/second half 45/55 revenue split. Altium remains confident of achieving full year guidance adjusted for the sale of TASKING whose results will not be included in second half revenue and earnings.
FSN Capital is a European private equity firm with a successful track record in software and technology investments. FSN Capital Partner Mr Robin Muerer commented, “TASKING is a market leader in embedded software for the automotive safety space. We are excited to work with TASKING’s management team as we see opportunities to expand TASKING’s product range and continue its strong partnership with Infineon Technologies.”
The full impact of the divestment will be disclosed as part of Altium’s half year results, including the impact on on-going operations.
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About Altium: Altium (ASX:ALU) is a multinational software corporation headquartered in San Diego, California, that focuses on electronics design systems for 3D PCB design and embedded system development. Altium products are found everywhere from world leading electronic design teams to the grassroots electronic design community.
With a unique range of technologies, Altium helps organizations and design communities to innovate, collaborate and create connected products while remaining on time and on budget. Products provided are ACTIVEBOM®, ActiveRoute®, Altium 365® , Altium Concord Pro™, Altium Designer®, Altium NEXUS®, Altium Vault®, Autotrax®, Camtastic®, Ciiva™, CIIVA SMARTPARTS®, CircuitMaker®, CircuitStudio®, Common Parts Library™, Draftsman®, DXP™, Easytrax®, EE Concierge®, NanoBoard®, NATIVE 3D™, OCTOMYZE®, Octopart®, P-CAD®, PCBWORKS®, PDN Analyzer™, Protel®, Situs®, SmartParts™, the TASKING® range of embedded software compilers, Upverter®, X2®, XSignals®, PCB:NG®, and Gumstix®.
Founded in 1985, Altium has offices worldwide, with US locations in San Diego, Boston, Dallas and New York City, European locations in Karlsruhe, Amersfoort, Kiev, St Petersberg, Moscow, Munich, Markelo and Zug, and Asia Pacific locations in Shanghai, Beijing, Shenzhen, Tokyo and Sydney.
For more information, visit www.altium.com. You can also follow and engage with Altium via Facebook, Twitter, LinkedIn and YouTube.
Altium has reported a 10% lift in revenue. As forshadowed in June, this was below prior expectations and certainly well below the average top-line rate over the previous 3 years of ~22%.
The group did manage a record EBITDA margin of 40%, which helped net profit grow by 12%, though this too is well below prior year's growth rates.
Altium is targeting (at the midpoint) revenue from existing operations of AUD$596m (at current FX rates), with EBITDA of AUD$253 by 2025 -- which represents annualised growth of 17% and 19% resepctively, and excludes any additions from acquisitions.
That's still very attractive -- especially in the context of their balance sheet strength ($US93m cash / no debt) and their high levels of high margin recurring revenue.
But then again, all this would seem to be "in the price".
EPS in Aussie dollars (normalised for a one-off tax adjustment) = 0.59c, which puts shares on a PE of 55. Shares are now on a P/S ratio of 16x. However, assuming they can maintain an (outstanding) 30% net margin and hit US$450m in revenue by 2025, the company could be generating an EPS of AUD$1.47 by 2025.
If shares could sustain a PE of 35 at that time, you could consider shares fairly valued. Of course, anything less than these assumptions would undermine shareholder returns.
There's a lot of detail in these results -- which you can dig into here -- but for me I'd like a bigger margin of safety before taking a position.
Altium Announces Financial Results for the Full Year to 30 June 2020
Altium Exceeds 50,000 Subscribers, Delivers Solid Revenue Growth and Successfully Launches Altium 365
Sydney, Australia - 17 August 2020 - Electronic design software company Altium Limited (ASX:ALU) has announced its results for the full year ended 30 June 2020. Altium achieved revenue growth of 10% to US$189 million with solid performances in all core business units and key regions. Profit before tax grew by 12% to US$65 million. The company delivered an EBITDA margin of 40.0% for the full year. Other highlights include:
--- click on links above for more ---
I'm feeling a greater probability of a sp drop following the report on the 17th August. S.P has been stagnant since the financial accouncement and a number of sell recommendations may mean only a Stella report will move the sp significantly higher. As long as no unforseen surprises are reported, I will be adding on any price drop.
Altium Achieves 10% Revenue Growth and Exceeds 50,000 Subscriber Target
Sydney, Australia - 14 July 2020 - Electronic design software company Altium Limited (ASX:ALU) updates the market on its unaudited sales and revenue for the full year ended 30 June 2020. Altium achieved revenue growth of 10% to US $189 million with solid performances delivered in core business units and key regions during the challenging COVID-19 environment.
Altium delivered record growth in new Altium Designer seats and subscriptions to exceed its 50,000 subscriber target. Other highlights include:
Comments from Altium’s CEO Mr Aram Mirkazemi:
Altium CEO, Mr Aram Mirkazemi commented: “Altium’s strategy of providing attractive pricing and extended payment terms to support our customers during COVID-19 and to drive volume to support our pursuit of market dominance has been rewarded. Altium achieved strong growth in new Altium Designer seats and record growth in our subscription base to reach well over 50,000 seats on subscription”.
Mr Mirkazemi further commented: “Altium has not been immune to the uncertainty and the evolving impact of COVID-19, however, as a global high-tech company, geared to work remotely and with a robust and highly adaptable business model, we were able to deliver a strong performance through COVID-19 conditions - maintaining our unbeaten record of eight consecutive years of double digit revenue growth, and extending it to nine straight years”, stated Mr Mirkazemi.
“While COVID-19 prevented us from reaching our long standing aspirational goal of $200 million in revenue, conditions surrounding COVID-19 have dramatically accelerated our movement towards market dominance and the implementation of our transformative agenda for the industry”, said Mr Mirkazemi.
“We accelerated the roll-out of our new cloud platform Altium 365 from 1 May 2020 to help engineers to work from anywhere and connect with anyone. It is pleasing to see that Altium 365 is gaining traction with over 2,500 companies and nearly 5,000 active users on the platform already”, said Mr Mirkazemi.
“We also launched online selling in May to expand reach, and to grow sales capacity to support our climb to 100,000 subscribers by 2025. While early days, our digital sales are gaining traction and in time will allow our transactional sales to fully focus on value-based selling and higher value deals”, commented Mr Mirkazemi.
“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 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”, said Mr Mirkazemi.
Comments from Altium’s CFO Mr Joe Bedewi:
Altium CFO, Mr Joe Bedewi commented: “Altium’s achievement of 10% revenue growth during COVID-19 is an impressive result. Moreover, Altium achieved strong growth in new Altium Designer seats sold of over 9,100 (up 14%) and delivered 17% growth in the subscription base to well over 50,000. This result places Altium in a strong position to drive further adoption of its new cloud platform Altium 365”.
“Altium also delivered over 3,000 upgrades of Altium Designer, up 47%, demonstrating the attractiveness of Altium 365 to existing customers. Altium 365 is moving our subscription business from being maintenance driven to capability driven”, commented Mr Bedewi.
Altium will release its fiscal 2020 results on Monday 17 August 2020 with an investor call to be hosted by Altium’s CEO and CFO at 9.30am that same day.
Participants can pre-register for the investor call using the following link to receive dial in details:
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[click on link above for the full announcement]
[I hold ALU shares]
Altium said it expects some headwinds from the ongoing restrictions associated with COVID-19, which will impact performance for the final quarter.
SME's cash preservation priorities are expected to impact sales in May and June, which are typicaly the strongest months for sales.
Importantly, long-term aspirational target of US$200m in revenue for FY20 is now a low probability. That's a big change from the reiteration of this target only one month ago.
I really like the company, but feel shares are overpriced -- especially in light of today's update.
ASX announcement here
Hard to be too displeased with the latest set of numbers. As shareholders have come to expect, revenue grew strongly (up 19% on the half), margins improved, license numbers increased etc
The business is still debt free and has over $80m in cash.
HOWEVER, Net profit did fall -- for the first time in a long time, dropping 2%. The reason for this was that Altium was previously applying a large deferred tax asset, which has now been fully used. As such, Altium paid US$8.7m in income tax for the first half, comparted with just US$2.3m in the previous corresponding half.
That being said, pre-tax profit was around 23% higher (see attached image)
The company did reiterate full year revenue guidance of between US$205-215m, with an EBITDA margin of between 39-41%. BUT, the coronavirus in China and an underperformance of Octoparts (revenue grew just 2% in the half), mean that they expect to come in at the lower end of this guidance.
That suggests a full year NPAT of ~US$50m, which on a per share basis in AUDs is about 56c. So although shares have fallen today, the PE is still ~65x (at time of writing)
Management reaffirmed the longer term revenue target of US$500m by 2025, which is 2.5x the current level. So a premium is certainly warranted if you think this is achievable, especially if you give extra points for business quality (as I do). It's just a question of how big a premium you think it deserves.
I really like the business, but feel a lot is already priced in by the market.
Results presentation is here