Here's why the Nitro Software (ASX:NTO) share price is surging 7% higher today

The Nitro Software Ltd (ASX: NTO) share price is surging higher on Wednesday morning. Here's why investors are buying its shares…

| More on:
hand on touch screen lit up by a share price chart moving higher

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Nitro Software Ltd (ASX: NTO) share price has been a very strong performer on Wednesday morning.

In early trade, the document productivity software company's shares are up 7% to $3.27.

Why is the Nitro share price surging higher?

Investors have been buying the company's shares following the release of its fourth quarter update this morning.

According to the release, the company completed the fourth quarter and FY 2020 with annualised recurring revenue (ARR), subscription revenue, and cash receipts above its prospectus forecasts.

In respect to its ARR, Nitro finished the year with ARR of US$27.7 million, which was up 64% on the prior corresponding period. This also compares favourably to its previously upgraded guidance of US$26 million to US$27 million.

Nitro also revealed that its subscription revenue has now increased to approximately 58% of total revenue and comprised approximately 78% of revenue across the dominant Business sales channel. It notes that this reflects strong progress in Nitro's transition to a subscription revenue model.

The company now serves 11,700 business customers, including 68% of the Fortune 500, and saw over 1 million Nitro Sign eSignature requests sent during the year. Key expanding and renewing accounts in the period included Lufthansa, Swiss Mobiliar, Pike Corporation, PPD, USI Insurance, and Citco.

What about its full year results?

In respect to its full year results, Nitro expects to report total FY 2020 revenue in line with its prospectus forecast of $40.5 million.

Management also advised that it expects to post an operating loss (excluding share-based payments and FX) within the range of $2.1 million to $2.6 million. This compares to its prospectus forecast of a $4 million operating loss. This better than expected performance was due to the slower pace of planned hiring and lower required marketing investment to achieve its sales goals.

At the end of the period, the company had a cash balance of US$43.7 million and no debt. Management believes this provides it with a strong financial position to pursue growth opportunities.

Nitro's CEO and Co-Founder, Sam Chandler said: "We achieved a very strong finish to 2020 as the transition to digital workflows and productivity anywhere remains a priority for organisations of all sizes. Our results are testament to the quality of our products and the incredible efforts of the Nitro team in delivering continued acceleration in subscription sales and revenue. As the world navigates the ongoing disruption caused by the COVID-19 pandemic, we will continue to provide our customers with best-in-class solutions for remote work and digital productivity."

"We're honoured to serve 11,700 Business customers, including 68% of the Fortune 500, and we look forward to continuing to drive digital transformation around the world in 2021 and beyond," he concluded.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Nitro Software Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

A neon sign says 'Top Ten'.
Share Gainers

Here are the top 10 ASX 200 shares today

Investors regained some confidence on the stock market today.

Read more »

A couple sit in front of a laptop reading ASX shares news articles and learning about ASX 200 bargain buys
Share Market News

ASX 200 lifts as RBA keeps interest rates steady

ASX 200 investors were buoyed by the RBA’s interest rate decision.

Read more »

A young women pumps her fists in excitement after seeing some good news on her laptop.
Share Gainers

Why Baby Bunting, Bellevue Gold, Cettire, and New Hope shares are rising today

These ASX shares are having a good session. But why are investors buying their shares?

Read more »

A young woman holds an open book over her head with a round mouthed expression as if to say oops as she looks at her computer screen in a home office setting with a plant on the desk and shelves of books in the background.
Share Fallers

Why Aussie Broadband, Liontown, Metals Acquisition, and Seek shares are falling

These ASX shares are having a poor session. But why?

Read more »

woman holding her baby and looking at her phone happy at the rising share price
Broker Notes

3 ASX All Ords shares that brokers tip will grow 30% to 40% this year

The experts say these three ASX All Ords stocks have great growth ahead of them.

Read more »

A man stands with his arms crossed in an X shape.
Mergers & Acquisitions

Boral share price falls after rejecting Seven Group takeover

The offer 'undervalues' Boral according to its committee.

Read more »

A businessman hugs his computer and smiles.
Opinions

3 Australian shares to buy and hold forever in your ASX portfolio

I think these three ASX shares can outlive us all.

Read more »

Smiling man with phone in wheelchair watching stocks and trends on computer
Share Market News

5 things to watch on the ASX 200 on Tuesday

A positive session is expected for the ASX 200 on Tuesday.

Read more »