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- Altium’s (ALU) shares have slipped today despite a strong 2020 guidance
- The software design company posted strong numbers over 2019, causing a strong share price run
- Altium’s outlook for 2020 falls directly in line with company and market expectations — meaning investors might have wanted the company to over-perform
- The U.S.-China trade could be a concern too, given Altium’s Chinese success
- At midday trade, Altium shares are down 2.09 per cent and selling for $35.20 each
Solid year-on-year growth does not seem to be enough to keep Altium’s (ALU) shares afloat today.
The company’s Chairman, Samuel Weiss, spoke to shareholders at today’s Annual General Meeting (AGM) and highlighted some solid figures over 2019.
For the 2019 financial year, Altium grew revenue by 23 per cent and profits by 41 per cent compared to the year before.
The company’s software is used to create 3D printed circuit board (PCB) systems which support all kinds of electronic devices.
Altium’s long-term goal is to reach 100,000 subscribers for its software by 2025, which will bring in A$730 million (US$500 million) in revenue. Samuel highlighted the fact that over 2019, the company grew its subscriber base to 43,600 — almost the halfway point for its big plans.
However, despite some strong figures, Altium’s share price has seen a dip of more than two per cent today to trade around the $35 mark.
Why the drop?
Perhaps shareholders were more focussed on the company’s future predictions that past success.
Looking ahead, Altium maintained it is on track to hit its 100,000-subscriber and US$500 million revenue goal.
On top of this, the company forecast revenue of between roughly A$300 million (US$205 million) and A$315 million (US$215) million for the 2020 fiscal year — in line with goals and expectations laid out back in 2016.
Thus, Altium’s predictions fall directly in line with market and company expectations. The slight hit to shares may just be the result of investors wanting the company to exceed these expectations.
Still, shares are still in a healthy place compared to when these expectations were laid out. At the end of 2016, Altium’s shares were worth $8.09 each.
Another issue for consideration, however, is Altium’s success in China. Samuel said in his speech China was a “stand-out performer” over 2019, growing 37 per cent on the year before Altium opened a new office in Beijing in the second half of the year and made the call to scale up its Chinese operations.
While, once again, these are strong performance markers, ongoing trade tensions between the U.S. and China could be making Altium investors nervous. With sanction and tariff threats being thrown around over the year, increased reliance on China for growth could be a risky move.
Nevertheless, Samuel addressed these concerns today, making an effort to put investors’ minds at ease.
“Altium actively manages its compliance with (and reporting to) regulators in multiple markets and this is overseen directly and regularly by [the Altium] Board,” Samuel said.
And, importantly: “We do not see any material risk to Altium at the present time.”
At midday AEDT today, Altium has recouped the worst of the morning losses. Shares are down 2.09 per cent and selling for $35.20 each in a $4.61 billion market cap.
