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.