Altium shares plummet as revenue forecast misses expectations

Shares in the circuit board software maker plummeted by nearly 10 per cent on Monday.

Altium chief executive Aram Mirkazemi

Shares in circuit board software maker Altium plummeted by nearly 10 per cent on Monday, with the company warning its full-year result will miss market expectations after a rise in US coronavirus infections and fresh lockdowns in Beijing.

Altium on Monday said revenue for the 12 months to June 30 would rise but fall short of consensus predictions by analysts.

Monday’s downgrade was the fourth for Altium since COVID-19 hit and its share price was punished as a result, ending down 7.6 per cent at $33.60.

Citi this month forecast $US193m ($280m) in revenue, which it said was in line with market consensus.

Altium last month warned it was unlikely to hit an aspirational fiscal 2020 target of $US200m because customers were preserving cash. On Monday, the company said its sales run-rate was falling behind analyst consensus. Altium said it had closed its Beijing office and staff were closing sales remotely. The company usually closes a significant amount of business in the last two weeks of June.

“Our strategy to support our customers and to increase volume under COVID-19 conditions through attractive pricing and extended payment terms is driving strong seat growth and will get us close to or just surpass our key target of 50,000 subscribers,” chief executive Aram Mirkazemi said in a filing to the ASX.

“However, we are feeling the revenue impact of this strategy.”

$33.60 Altium closed down $2.76

Other technology market darlings such as Afterpay and Xero have performed strongly during the COVID-19 pandemic, with employers increasingly looking to digital solutions to support their businesses.

Mr Mirkazemi said the company would lift prices on its Altium Designer software, with a one-year subscription to cost $9945 in July, up from the current discounted price of $7185.

In May, as reported by The Australian, Altium warned it was unlikely to hit its annual sales revenue target after observing distress among start-ups and smaller companies in April.

“While engineers are actively doing prototype designs, and the electronics industry is holding up relatively well, the cash preservation priorities of small to medium-size businesses are likely to affect the timing of closing sales in our typically strongest months of the year, being May and especially June,” Mirkazemi said at the time.

On Monday analysts at Goldman Sachs and Ord Minnett maintained a “neutral” rating.

“Given ALU’s headcount has increased by 45 since December 2019 (according to LinkedIn), we expect the revenue impact will largely drop through to EBITDA in the 2020 financial year,” Ord Minnett’s Jules Cooper said.

Additional reporting: Dow Jones newswires