Altium Share Price Sinks on Unaudited FY21 Results (ASX:ALU)

The Altium Ltd [ASX:ALU] share price fell today as audit delays led the tech firm to released unaudited FY21 results.

ALU shares are currently trading at $31.17 a share, down 10.46% for the day.

ASX ALU - Altium Share Price ChartSource:

Altium — the printed circuit board designer — today released its FY21 unaudited results after experiencing delays in securing auditors.

ALU FY21 highlights

Altium reported that revenue (including TASKING) only rose 1% over FY20, rising from US$189.1 million to US$191.1 million.

Underlying EBITDA margin (including TASKING) fell from 38.5% to 36.1%.

Operating expenses jumped from $107.6 million to $120.2 million, an increase of 12%.

EBITDA dropped by 3% to $60 million, down from $61.7 million in FY20.

Profit Before Tax was down 7% to $47.7 million from $50.9 million.

This drop was offset by a 79% jump in Profit After Tax. It climbed from $19.7 million to $35.3 million.

Operating cash flow also increased 9% to $61.7 million from $56.5 million.

Finally, Altium declared a partially franked (15%) dividend of 21 cents.

Total FY21 dividend stood at 40 cents, up 3% over the prior year.

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ALU share price outlook

Altium raised its cash position by $98.9 million in FY21, largely attributed to $85.8 million it received from the sale of TASKING.

This meant ALU ended the FY21 with $191.5 million in cash and cash equivalents.

Bullish investors may see in this a stockpile Altium can use for aggressive growth investments or future dividend hikes.

So why was the ALU share price sinking today?

Multiple items in Altium’s report combined to sag investors’ confidence, even in the face of Altium’s own rosy outlook.

Regarding the outlook, Altium predicts it will reach $500 million in revenue by the end of FY26.

Company PresentationSource: Company presentation

Further, ALU is eyeing revenue growth of 16–20%, and predicting underlying EBITDA margin to stand at 34–36% in FY22.

But this wasn’t enough to prevent a sell-off.

For one, the company had to delay its audited results and ended up releasing unaudited financial statements for FY21.

Altium said it experienced ‘unforeseen delays in the finalisation of the annual audit process amplified by the impact of the COVID-19 pandemic in NSW.’

Secondly, ALU today flagged that the ATO provided Altium its preliminary position regarding the transfer pricing and anti-avoidance provisions.

The ATO believes Altium may have understated some of its Australian tax impacts.

Altium revealed that the potential tax liability is in the range of US$15.9 million to US$118.5 million.

ALU disagrees with the ATO’s preliminary position and ‘intends to vigorously defend its position,’ contesting via litigation if necessary.

Finally, some analysts have pointed out that Altium’s outlook isn’t rosy across the board.

As RBC Capital Markets noted today, Altium removed its FY2025 prior EBITDA margin target of 39–44%, replacing it with a floor of 34%.

All these factors — coupled with US software giant Autodesk walking away from its $40-a-share verbal bid for Altium — likely led to a general fall in the market’s confidence regarding Altium.

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 Kiryll Prakapenka,

 For Money Morning

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Kiryll Prakapenka is an investing autodidact who is passionate about conducting in-depth research on investments. Kiryll brings sound analytical skills to his work, courtesy of his Philosophy degree from The University of Melbourne. A student of legendary investors and their strategies, Kiryll likes to synthesise macroeconomic narratives with a keen understanding of the fundamentals behind companies.

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