Nitro (ASX:NTO) share price pushes higher following strong Q2 update

Here’s how this tech company is performing in FY 2021…

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The Nitro Software Ltd (ASX: NTO) share price is rising on Wednesday.

In morning trade, the document productivity software company’s shares are up 1.5% to $3.50

Why is the Nitro share price trading lower?

The Nitro share price is trading higher today following the release of a solid second quarter result.

According to the release, Nitro’s annualised recurring revenue (ARR) reached US$33.8 million at the end of June. This was an increase of 56% over the prior corresponding period.

This means that Nitro is on course to deliver on its FY 2021 guidance for ARR of between US$39 million and US$42 million.

Management advised that this was driven by the continuation of its sales momentum. This includes key customer wins and expansions such as Silicon Valley Bank, FLSmidth & Co, Canadian Natural Resources, Thermo Fisher Scientific, and AmSpec.

It notes that the strong demand for the Nitro Productivity Platform continues to be underpinned by the global shift to remote and digital work, accelerated by the COVID-19 pandemic. There were more than 1 million eSign requests sent in the first half of FY 2021. This is the same number of eSign requests that were sent for the entirety of FY 2020.

Nitro ended the period with a cash balance of US$38.8 million with no debt.

SaaS model transition continues

Also giving the Nitro share price a boost today was the strong progress the company is making with its transition to a SaaS business model.

The release reveals that subscription revenue comprised 63% of total revenue for the first half. This compares to 48% in the prior corresponding period. Furthermore, in the larger Business sales channel, 85% of revenue was from subscriptions.

Nitro’s Co-Founder and Chief Executive Officer, Sam Chandler, commented: “The evolution of the Nitro Productivity Platform has continued to accelerate across the past quarter, with major milestones that have enabled us to offer a full suite of powerful productivity solutions to meet our customers’ needs.”

“In June, we announced the acquisition of PDFpen, adding Mac, iPad and iPhone capabilities to our platform and opening up new market opportunities. This month we have unveiled a comprehensive new pricing and packaging structure that, for the first time, includes the full commercial availability of Nitro Sign as a standalone subscription product offering.”

“With these developments, our Platform offers customers the flexibility to tailor individual productivity solutions that remove barriers to growing their businesses in this fast-changing, post-COVID world,” he added.

Outlook

As mentioned above, Nitro is on track to achieve its FY 2021 ARR guidance of between US$39 million and US$42 million.

In addition, the company has upgraded its revenue guidance to be between US$47 million and US$50 million. This compares to the prior guidance range of between US$45 million and US$49 million. Management notes that the favourable revenue expectation is due to higher return on investment from some of the company’s first half initiatives.

Another positive is that its full year operating EBITDA loss is not expected to be as great as previously expected. It now expects a loss within the range of US$9 million to US$11 million, compared to the previous guidance range of US$11 million to US$13 million.

This is due largely to its stronger revenue performance and partly from cost efficiencies and the timing of personnel hiring.

The Nitro share price is up 70% over the last 12 months.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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.

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