Altium shares sink -9%: Earnings beat and guidance upgrade not enough

A return to “winning form” and full-year earnings upgrade has failed to woo investors, as Altium (ASX: ALU) shares tumbled -8.5% as the market opened. 

Financials at a glance: 

• Revenue of US$102m, up 28% 

• Core printed circuit board (PCB) segment revenues of US$79m, up 16% 

• Electronics search engine, Octopart revenues of US$22m, up 105% 

• Profit after tax of US$22m, up 38% 

• Interim dividend of 21 cents per share, up 11%  

The net profit figure came in slightly ahead of Bell Potter and Citi expectations of US$20m. 

“Momentum has returned to our core PCB business and our business model transition is going smoother than expected with minimal headwinds,” said CEO Aram Mirkazemi. 

“The overwhelming response to Altium 365 from our customers and the broader engineering software industry is most heartening. We are picking up pace toward market dominance …” 

Octopart capitalises 

For the uninitiated, Octopart provides industry users access to a comprehensive, up-to-date library of electronic parts data. 

The visibility for parts has become ever so important amidst a global chip shortage and how engineers are forced to redesign certain solutions.

During the half, Octopart experienced a 70% increase in weekly active users to almost 200,000 and a 123% increase in annual recurring revenues to $44.2m.

Earnings on the rise 

Altium upgraded its FY22 revenue guidance to between US$213m to US$217m, representing 18-20% growth compared to last year. 

Margins are expected to be towards the low end of the guidance range which sits between 34-36%.

What went wrong?

Octopart was the best part of Altium's business.

Even though the segment represents 22% of Group revenues, it was responsible for just over 50% of the company's revenue growth for the first-half.

Perhaps investors were expecting more growth from the company's core PCB segment.

In addition, an upgraded revenue outlook alongside subdued margins doesn't sound too promising for the bottom line.