The Evolution of Altium: Road to a Record-Breaking Year

Estimated reading time: 14 minutes

Warner: Looking ahead, where do you see the market going and where do software companies like Altium need to focus?

Donato: Our goal as a company is to be the number one PCB design software company in the world. If you asked me that six or seven years ago, as optimistic and as committed to winning as I am, I might have questioned it. Today, I can say that it's not an if, but just a matter of when, and we have a plan to do it by 2020. I keep reading about how things in the EDA market and semiconductor industries are not looking good. From my point-of-view, I still see a lot of growth in the EDA market. As I mentioned before, with the need to make smart products, each smart product will need a printed circuit board.

There’s just ourselves, Mentor, Cadence, Zuken, and a few others that do it. We're in a very small niche market. It’s only a $500 million market, if that, but the surrounding ecosystem that surrounds this market is massive. I can see there's going to be an explosion. We're also in the age where the experts in this industry are at retirement age and we're seeing the next generation of engineers, the millennials, rising up. They don't have allegiance to companies, but they want to be able to do their job, use the best, most innovative products to get their job done. They're not experts; they are more generalists, and I see them, coupled with the smart devices coming in, creating a lot of market growth.

Warner: I’ve noticed in recent years that a lot of RF/microwave engineers are being asked to design their own PCBs—have you seen that also?

Donato: Absolutely, we see that. If you just think about the way that the EDA industry runs, there used to be experts and there used to be CAD librarians. There are no CAD librarians anymore. Some of the old oligarchy types of companies still have them because they might have 30 years of processes to untangle. Most companies, minus those big few, don't have separate schematic and PCB teams. They're asking people to do more and to learn both of those skills. People that, like you said, don't have the expertise. They're starting to do things that they used to just outsource.

We’ve seen a lot of our growth and brand recognition come from our user-centric approach. We market to, sell to, and talk to the user base, where the other guys do these large multimillion-dollar deals and it's a very top-down relationship approach. We've always had the goal of putting software on the desktop of every engineer and working from the bottom up.

That's the approach we've taken and I think that's what the engineering community wants. They want to be listened to, talked to, and we've seen that the buying power has actually shifted to the engineers, where the days of budgets are really gone. Not many companies have a CAD budget.

Warner: I also wanted to ask you about a recent press release announcing that, at the end of your fiscal year on June 30, 2016, Altium posted record numbers. Tell us about those numbers and a little bit about the recent press release.

Donato: Yeah, it's very exciting that we've had a record year over the year prior, but this one's special. As a company, it's the first time that we've hit $100 million in sales, which is a 22% growth over last year. We're very excited to see that. It's a really great time at Altium, and now it puts the pressure on us to continue this amazing double-digit growth in an industry that, as you know, is very slow, we’re talking single-digit growth at other companies

Warner: Congratulations; as the VP of sales, you must be very excited and pleased with your team.

Donato: We are, and it's great. A lot of the team is new; many people I'd say haven't even been here two years. As I mentioned, we went through a transition from a reseller model to a direct sales model three years ago, and that was sort of a turning point. We've taken this transactional selling model that differentiates us from our competition. We're taking the success that we've done here in the US and we're optimizing it and looking to improve it by taking some key markets in Europe and moving those to a direct selling model as well.

One of the really exciting things if you look at the revenue breakdown is that we sold 5,180 new licenses of Altium Designer full board package and that raises our active subscriber count, which is anyone that has an active Altium license, to over 31,000 globally.

Warner: That's a heck of a number.

Donato: It is, and you know, it puts the pressure on the sales guys because now we have to do more than that this year.

Warner: That’s how it always is in sales, right? You break records, but you have to turn around and do it all over again. You get to celebrate and be in your glory—for about five minutes, before you start again at zero! At least that's how it always seemed to me when I was in sales. (laughs)

Donato: It hasn't changed. We had an annual sales kickoff global event in Boston in August, and that's exactly what we did. We congratulated each other, turned the corner, and then rolled out some new initiatives and got everybody excited and rowing the same direction, and we're off again.

Warner: There was also mention of some M&A activity at Altium. In that growth. What's the breakdown as far as organic growth versus acquisition?

Donato: That's a great question. If you look at the metrics and the underlying numbers, we have Octopart, which is an acquisition bringing us a little bit over $4 million, and Perception Software, which we got towards the end of the fiscal year that didn't contribute as much in this fiscal year. We do divisional reporting now, so we have our makers and content division, which is Octopart and Ciiva. We have Perception Software, which again we just purchased, so that’s very small. Then, we have a microcontroller and embedded systems division, which is TASKING. The majority of our revenue is from the board and systems division, which is PCBs, and that revenue was up 17% over the year. Again, we're looking to expand that by some of this M&A activity, but that is our main focus and our mainstay, at least it is for me, being part of the board and systems division.

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