Altium share price crashes as ‘strong growth’ disappoints

Popular ASX-listed software company Altium (ASX: ALU) saw its share price crash on Monday after releasing its unaudited FY21 results to the market.

Altium closed out the session down 14.36% to $29.81 per share. At those levels, the stock is down around 12.30% year-to-date, as investors remain uncertain on the name.

Below we will look at some of the highlights from the company’s FY21 release. Importantly, these results are ‘unaudited’ as a result of covid-19 related delays. As the company noted in its results release:

'Due to unforeseen delays in the finalisation of the annual audit process amplified by the impact of the COVID-19 pandemic in NSW, the release of Altium’s audited accounts has been delayed.'

Management said they expected to have an audited copy of the FY21 results released within a week and that the expectation is for there to be no 'material difference between today's release of unaudited financial statements and the audited financial statements to be released shortly.'

FY21 results

On the topline, Altium delivered what was described by management as strong growth, with FY21 revenue coming in at US$191.1 million. That strong growth was likely commentary on the second half of FY21 not the full-year. Indeed, full-year revenue grew a mere 1%, while second-half revenue did accelerate, gaining 16% on a half-on-half basis.

Beyond that, there were other pockets of growth among Altium’s different business segments: Octopart revenue, for example, was up 42% for the full-year, and Altium's China revenue gained 11%.

The picture gets less rosy as we move down the income statement. Earnings (EBITDA) fell 3% to come in at US$60.0 million, earnings margins fell and/or were broadly flat on an underlying basis; but positively, post-tax profits surged 78%, coming in at US$35.3 million.

Management also declared a final dividend of AUD 21 cents per share, taking the company’s full-year payout to AUD 40 cents per share. The business had US$191.5 million in cash on hand at the close of the year.

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FY22 outlook

Maybe most importantly, Altium’s management team said they remained confident that they could hit the FY25 US$500 million revenue target they set in 2019.

But before we get there – Altium’s CFO, Margin Ive – said 'We have a confident and positive outlook for fiscal 2022.’ That positive outlook was quantified as follows:

• FY22 revenue of between US$209 million to US$217 million
• FY22 earnings (EBITDA) margin of between 34% to 36%
• Annual recurring revenue growth of between 23% to 27%. That is a shade down from the 29% figure of FY21.

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