The Altium Limited (ASX: ALU) share price is down by 4% at the time of writing.
Altium has just reported its FY21 half-year result to the market for the six months to 31 December 2020.
Highlights of the Altium FY21 half-year report
Altium disclosed that its Altium 365 product, which is the cloud platform service for engineer clients, has seen its active monthly users rise to 9,300 and monthly active accounts increased to 4,400. This represented growth of 83% and 69% respectively, since July.
Another segment that saw growth was Octopart, its revenue grew by 19% to US$10.8 million. Management said that electronic manufacturing rebounded during the half.
The company also said that Altium's subscription business grew by 12% year on year to reach 52,157 subscribers. Altium also said that term-based license revenue more than doubled over the half. It has a goal of 80% recurring revenue by 2025.
Turning to the overall financial statistics reported by Altium, continuing revenue (which excludes TASKING) fell 4% to US$80 million. However, continuing reported expenses still increased by 3% to US$53 million.
This combination of lower income and higher expenses led to continuing earnings before interest, tax, depreciation and amortisation (EBITDA) falling 15% to US$27 million. The underlying EBITDA margin declined from 35.9% to 30.6%.
Continuing profit before income tax dropped 23% to US$20.7 million and continuing profit after tax went down 12% to US$16.6 million.
The Altium dividend was cut by 5% to A$0.19 per share.
In terms of the cash and cashflow, Altium said its operating cashflow fell 10% to US$18.7 million and it ended with US$88.3 million of cash on the balance sheet.
The TASKING business, which Altium has decided to sell, made a profit after tax of US$3.1 million – this was down 26%. The Altium share price has fallen 18% since the announcement of the sale of TASKING.
Why did revenue decline in this result?
Altium's management explained that it experienced a challenging first half with extreme COVID-19 conditions in the US and Europe. It also attributed some of the decline to the ongoing shift of the business to the cloud involving a number of significant organisational changes that the company has referred to as the 'Netflix moment' when a company pivots to cloud operations.
Altium CEO Aram Mirkazemi said: "These changes include the separation of our CAD software from our cloud business and the bifurcation of our sales into high volume (digital sales channel) and high touch (professional sales channel)."
Altium 365 focus
The cloud offering of Altium 365 is a key focus of the business. Mr Mirkazemi explained: "Altium 365 is key to our future success through indirect monetisation from our CAD software tools and, in time, direct monetisation from the broader ecosystem. I am most heartened by the strong adoption of Altium 365."
Second half and FY21 expectations
Whilst Altium is positive about the fact that COVID-19 vaccines are being deployed, it still views FY21 as a pre-vaccine year in relation to its goals for 2025.
The company is expecting stronger execution momentum in the second half, but there are still macroeconomic uncertainties, so its full year revenue guidance is at the lower end of the range. FY21 revenue is now expected to be in the range of US$190 million to US$195 million (excluding TASKING) and the EBITDA margin is expected to be in the range of 37% to 39%.