Insights From The 2023 Altium (ASX: ALU) AGM

Last Thursday, Altium (ASX: ALU) held an investor day in the morning and covenened its FY 2023 Annual General Meeting in the afternoon. Altium normally records and uploads the AGM on its investor relations page but here are some interesting insights from ground zero.

It was great to listen to a few key executives who flew in from the US and provided detailed updates on their respective projects. Sitting two rows behind the Altium management team and most importantly the CEO Aram Mirkazemi, I got the feeling they were quietly confident. Mirkazemi in particular exhibited calmness and pragmatism in the way he spoke about Altium’s future outlook. He also gave undivided attention to each presenter.

Mirkazemi veered away from his recent cricketing analogies, instead using the US Route 66 to symbolise Altium’s growth strategy. Management remains committed to leveraging its dominance in the printer circuit board (PCB) software market to reach deeper into the value chain. Altium wants to not only help printer circuit board designers but also those who are responsible for developing and designing products at the enterprise level.

Source: Altium Investor Day presentation

The most interesting presenter was Henry Potts, the Vice President of Enterprise Sales. Potts joined Altium in 2015 after 16 years as the head of the PCB division at competitor Mentor Graphics. He noted a lot of enterprises have been saying a lot of the designers they’re hiring are experienced Altium users, which wasn’t the case a decade ago. Potts also mentioned that a lot of these designers are saying Altium is easy to use and it’s evolved from an individual tool to a product development tool.

This Reddit thread discussing the merits of signing up for Altium’s academy courses supports Potts’ anecdotes. Most notably, the comments below highlight the importance of experience and knowledge in Altium for aspirational designers. It’s also worthwhile tracking the number of subscribers of the Altium Academy YouTube channel, which sits at around 55,000.

Potts also emphasised the importance of selling to the right people at the enterprise level. As you move higher up the food chain, the conversations revolve more around return on investment. So, it’s a matter of demonstrating the return on investment case for enterprises and executing well.

At the end of the investor day presentation, management revealed a dazzling marketing video showcasing Altium’s latest feature Designer 24, which is focused on improving collaboration and functionalities for end users.

In the AGM, Altium appointed three new non-executive directors. All of them appear to possess impressive commercial and financial experience but there was nothing noteworthy of calling out.

There was one question from a shareholder who wanted the board to provide an update on the taxation stoush with the ATO. Altium chairman Sam Weiss didn’t disclose anything we don’t already know, outlining their barrister’s opinion that it will be more likely than not that Altium will prevail if they take the ATO to court.

The management team confirmed Altium is on track to achieve its original guidance of revenue between $315m to $325m and an underlying EBITDA margin of 35% to 37% for FY 2024. Altium also reaffirmed its aspirational targets for FY 2026, targeting revenue of $500m and an underlying EBITDA margin of 38% to 40%.

There were no surprises at the AGM and this was reflected by little to no movement in the Altium share price.

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Disclosure: the author of this article does not own shares in Altium (ASX: ALU). The editor of this article owns shares in Altium (ASX: ALU). The editor will not trade Altium shares for at least 2 days following the publication of this article. This article is not intended to form the basis of an investment decision and is not an official recommendation. Any statements that are advice under the law are general advice only. The author has not considered your investment objectives or personal situation. Any advice is authorised by Claude Walker (AR 1297632), Authorised Representative of Equity Story Pty Ltd (ABN 94 127 714 998) (AFSL 343937).

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