Printed circuit boards are the (usually) green or brown plasticky things that hold the electronics in products. As you can see from Chart 2, Altium has clearly been doing something right - and we'd expect the momentum from that to carry it into a dominant industry position over the next few years. It's difficult to verify all this (we'd love to hear from anyone with industry knowledge in the comments below), but to some extent the proof of the pudding is in the eating. The consensus seems to be that Altium's tools have always been easier to use and that it has caught up in terms of advanced features to give it a superior product across the (ahem) board. Its singular focus on PCB design software may also have helped (while competitors have been distracted by tools for designing chips as opposed to the boards they go into). The company's historic emphasis on lower and middle market users has ensured a strong familiarity with its software. It's hard to pinpoint the reasons for this success. Earnings have risen sixfold and the share price more than tenfold (see Chart 1). This year the company is expected to move into a market leadership position, having almost doubled its share over six years while its competitors have all gone backwards. However, with a market share of barely 15% and some heavyweight competitors, it still had a lot to prove - particularly at a (stratospheric for the times) price-earnings ratio of around 30. When I first took a serious look at the company in 2014 it looked like a promising business.
More money has been lost jumping on long departed bandwagons than perhaps in any other area. 'Better late than never' are four of the most dangerous words in investing.
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