2 small cap ASX shares you need to know about

Nitro Software Ltd (ASX:NTO) and this small cap ASX share could be the ones you need to know about right now. Here's why…

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There are a good number of options at the small end of the market for investors to choose from.

However, two small cap ASX shares that stand out from the crowd are listed below. Here's what you need to know about them:

ELMO Software Ltd (ASX: ELO)

ELMO is a cloud-based human resources and payroll software platform company. The company's increasingly popular platform streamlines a large number of important processes. This saves time and money for businesses.

Demand has remained strong for ELMO's software over the last 12 months. This led to ELMO reporting annualised recurring revenue (ARR) of $74.2 million at the end of December. This was an increase of 42.8% over the prior corresponding period. This was driven by a combination of organic growth and the benefits of acquisitions.

Positively, this is still only scratching at the surface of its significant market opportunities in the ANZ and UK markets. In addition, the company's jurisdiction agnostic platform gives it the option to expand into new markets in the future with relative ease.

One broker that is a fan of ELMO is Morgan Stanley. It currently has an overweight rating and $9.70 price target on its shares.

Nitro Software Ltd (ASX: NTO)

Nitro is a growing document productivity software company best-known for its Nitro Productivity Suite. This solution provides users with integrated PDF productivity and electronic signature tools via a software-as-a-service and desktop-based software solution.

The company has been experiencing strong demand for its products from some of the world's biggest companies. This includes Barclays, CBRE, IBM, and Toyota.

This strong demand led to the company releasing a strong full year result last month. For the 12 months ended 31 December, the company reported ARR of $27.7 million. This was up 64% year on year and ahead of its upgraded guidance.

Positively, management is predicting more strong growth in FY 2021. It expects FY 2021 ARR to be in the range of $39 million to $42 million. This represents year on year growth of 41% to 51.6%.

Morgan Stanley is also positive on Nitro. It recently retained its overweight rating and lifted its price target to $3.70 price target.

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Elmo Software. The Motley Fool Australia has recommended Elmo Software and Nitro Software Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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