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ALU

Why Altium Was Down 4.8% This Morning

Max Molinari

Max is an Equity Analyst with ASR Wealth Advisers. He has studied a Bachelor of Business and a Bachelor of Laws at the University of Technology, Sydney. Max currently holds RG146 qualifications.

30 minutes after the market open this morning, tech stock Altium Limited (ASX: ALU) was trading down 4.8%. This is because the company updated the market on their unaudited sales and revenue for the first half of FY21 (period ending December 31, 2020).

 

1Tech giant Altium Limited (ASX:ALU) opened down 4.8% this morning on the back of a bad revenue result. (Source: stocklight.com).

 

Altium recorded a revenue result of US$89.6 million, a 3% decline from the previous corresponding period and a ~2.5% miss on analyst expectations of US$91.2 million. The company claims the decline was due to extreme COVID conditions in the US and Europe and challenging economic conditions, post COVID, in China for licence compliance activities.

Primarily, the result can be contributed to two key lagging geographies. Namely, the Americas (the second largest geographic exposure for the company, making up 11.5% of total revenue) and China (the largest geographic exposure for the company, making up 11.9% of total revenue). The Americas underperformed, with a decline in revenue of 10% for the half year, which Altium directly attributes to the weakened economy as a result of the ongoing COVID19 pandemic. Furthermore, China underperformed, with a decline of 15% in revenue for the half, with the company claiming that licence compliance activities have become more challenging at the low end of the market due to uncertain economic conditions post COVID in China.

It is interesting to note, however, that the company’s move to a cloud-based system software hasn’t been well adopted by the Chinese market yet. CEO Aram Mirkazemi is confident that the result could be primarily contributed to the first quarter of FY21, claiming that the company began to recover in the second quarter:

 

despite a challenging first half, we saw signs of recovery in the second quarter.

 

The company has maintained its full year guidance.

At midday, the stock is trading at 30.18, down 1.95%, having recovered from the morning’s lows.

 


Disclaimer:

This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)
(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).
This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law, we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.
ASR has no position in any of the stocks mentioned.

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