SYDNEY – Altium anticipates headwinds because of the prolongation of restrictions and continued lockdowns associated with Covid-19 and its impact on the economies of the US and Western Europe.
Altium is operationally and commercially well positioned, despite the ongoing Covid-19 market conditions. However, the prolongation of restrictions, and the consequential economic and social impacts, are likely to impact Altium’s performance in the final quarter of the financial year.
“Altium is working intensely to deliver a solid fourth quarter result within the unprecedented Covid-19 environment,” said Aram Mirkazemi. “As the governments of the US and Western Europe continue to wrestle with containing the virus, we believe the prolongation of restrictions is likely to impact Altium during May and June. 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.
“We have launched attractive pricing and extended payment terms to drive volume in challenging market conditions. We also have accelerated the introduction of our new digital online sales capability, as part of the execution of our man-out-of-the-loop strategy to bolster our transactional sales capacity. Altium’s digital sales model will take some time to fully ramp up but will be important to support our climb to the 100,000 subscriber target by 2025.
“We have intensified the rollout of our new cloud platform Altium 365 to our subscribers to allow engineers to work from anywhere and connect with anyone, and we are focused on driving adoption of this platform. Altium 365 Standard was made available to all of our subscribers from May 1. We are off to a great start, and the early signs are looking promising. While this is not going to be a short-term revenue driver, making Altium 365 available to all of our subscribers is a critical part of our strategy to transform the electronics industry. In addition, it will enhance the quality of our recurring revenue from our subscription business.”
“While we continue to actively close sales, in April we began to see some signs of startups and smaller companies in distress,” said CFO Joe Bedewi. “Business with new accounts has become more challenging, as customers preserve cash during the pandemic. This is extending the timing of our sales conversions. That said, we have the right products at the right price, with the right value proposition, and we are working hard to engage new and existing customers. Our renewal business has performed solidly, and we are committed to achieving our 50,000 subscriber target for the full year.
“Our Nexus team is actively closing deals and has a good pipeline for the remainder of the fourth quarter. Tasking also has performed well on a year-to-date basis and is further buoyed by the reopening of car manufacturing production in Europe. Octopart is receiving solid traffic to its website, as engineers search for electronic parts and, at this point, is holding up its cost-per-click rates with distributors.
“Altium is profitable and financially very strong, with a strong balance sheet and a current cash balance of more than US$77 million. Our focus, as always, is cash-flow management, and we will leverage our strong balance sheet to support our customers and to continue to invest in Altium 365 and our digital sales platform. We dynamically manage costs to support our fourth quarter initiatives, and we also have rolled-out incentive schemes for our sales organization to support a final sprint to the finish of the full year.
“While we may see a positive impact from stimulus packages to be released by governments in key economies, and are excited by the rollout of Altium 365 and our digital online sales platform, our long-term aspirational goal of US$200 million revenue for the full year will require our typically strong months of May and June to be unaffected and have the usual strong finish. At this point, given the economic consequences of the continued restrictions, this is likely to be a low probability.”