In morning trade, the Nitro Software Ltd (ASX: NTO) share price is surging higher.
At the time of writing, the global document productivity software company's shares are up over 6% to $3.14.
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Why is the Nitro share price surging higher?
This morning Nitro released its first quarter update. As you might have guessed from the Nitro share price performance, it was strong performer during the quarter, reporting growth across all key metrics.
At the end of the quarter, the company's annual recurring revenue (ARR) was 66% higher than the same time last year.
And while it hasn't provided the actual ARR figure, this growth rate is well ahead of what is required to achieve its FY 2021 ARR guidance. That guidance is for ARR of between $39 million and $42 million, which represents year on year growth of 41% to 52%.
Another positive is the ongoing transition to a software-as-a-service model. At the end of the quarter, subscription revenue accounted for 61% of total revenue. This is up from 53% during FY 2020.
Also growing strongly were its cash receipts from customers, which grew 31% over the prior corresponding period to $12 million.
This strong growth was driven by increased usage and a number of key customer wins and expansions. The latter includes BNY Mellon, Howden Group Holdings, Mace Group, Petrofac, Continental AG, and Jeff Bezos's Blue Origin.
And although it posted a net cash outflow from operations of $1.5 million, it remains in a very strong financial position to pursue growth opportunities. At the end of the period, Nitro's cash balance stood at $41.8 million.
"The accelerating multi-year shift to a digital workplace"
Also giving the Nitro share price a boost was commentary from Nitro's Co-Founder and Chief Executive Officer, Sam Chandler.
Mr Chandler spoke positively about the quarter, the remainder of FY 2021, and its long term opportunity.
He said: "The accelerating sales momentum we demonstrated at the end of FY20 has continued into the current year, with the strategic investments we made in our people, product suite and sales strategy across the past 12 months positioning us well to ride the global work-from-anywhere tailwinds."
"As the world continues to manage the fall-out from the COVID-19 pandemic, digital-first and digital-only workflows are becoming increasingly entrenched. Throughout FY20, we laid the foundations to lead in this new environment by strengthening our leadership team, sharpening our go-to-market strategy to win and retain customers, and developing our document productivity platform, with the launch of Nitro Sign."
"The results of this investment are demonstrated by our strong performance in the first quarter, which shows continued growth in ARR and subscription revenue. With a solid balance sheet and a scalable platform for growth, we are confident we can take advantage of the accelerating multi-year shift to a digital workplace to build a truly sizable and substantial enterprise software company."
Outlook
Nitro has reaffirmed its guidance for FY 2021.
It continues to target ARR between $39 million and $42 million, revenue between $45 million and $49 million, and an operating EBITDA loss between $11 million and $13 million.
