The company told investors that 5G communications, car electrification and automated driving, industrial-scale IoT connectivity and data science have seen demand for electronics soar.
But an overburdened supply chain and the decoupling of the Chinese and U.S. economies give Altium a chance to position itself among companies that bring their electronics in-house, management said.
Altium President Sergey Kostinsky said 33% of new seats sold were term licenses which, combined with the adoption of “pro” and enterprise-level seats, generate subscription revenue.
“This positive trend has accelerated our annual pace of recurring revenue and supports our drive to reach our ambitious goal of $500 million,” Mr. Kostinsky said.
Altium had prepared the market for a profit margin of between 34% and 36%, and investors were pleased to see the company beat that forecast with a profit margin of 36.7%.
Bell Potter analysts said it was “a stunning result”, saying the success of Altium’s 365 product could prompt US engineering software giant Autodesk to return with another takeover bid .
Last year, Altium rejected Autodesk’s takeover bid, arguing that the $38.50 per share offer was too low.
The company, led by chief executive Aram Mirkazemi, insisted the company’s plans to connect manufacturers, suppliers and designers and all aspects of the engineering process through the cloud would ultimately increase its value.
Bell Potter analysts seemed to agree, telling customers that Autodesk still lacked the range of functions performed by Altium’s cloud-based tool.
“Our view is that Autodesk’s Fusion 360 platform lacks a powerful ECAD offering. We therefore believe that Autodesk would still be very interested in Altium and may come back with a revised offer,” they wrote.
Despite macroeconomic headwinds, Altium announced operating cash flow improved 30% to $72.5 million, and the board approved an 18% increase in the annual dividend to $47 ¢ per share.
The company has approximately $200 million in cash and no debt.
Looking ahead, Altium said it was “committed” to revenue growth and a firm profit margin.
Total revenue is expected to be between US$255-265 million; a growth rate of between 15 and 20%.
This represents revenue of between $195 million and $200 million for its electronics design software business. This would be a growth of between 15 and 18%.
He also said his engineering cloud platform business will generate between $60 million and $65 million in revenue, which would represent between 20 and 30 percent growth.
The underlying EBITDA margin should be between 35% and 37%.