Nitro share price storms 23% higher on record quarter

Nitro’s shares are rocketing higher thanks to a record quarter…

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Key points

  • Nitro shares are rocketing higher on Friday
  • The document productivity software company had a record quarter
  • This puts it on course to achieve its FY 2022 annual recurring revenue guidance

The Nitro Software Ltd (ASX: NTO) share price is on course to end the week with a big gain.

In morning trade, the document productivity software company’s shares are up 23% to $1.40.

This follows a rebound in the tech sector and the release of Nitro’s quarterly update.

Nitro share price rockets on stellar Q1 growth

  • Annual Recurring Revenue (ARR) excluding Connective up 40% year on year (60% including Connective)
  • Software as a service (SaaS) subscription revenue now represents 72% of total revenue, up from 61% a year earlier
  • Cash receipts from customers up 42% to a record of US$17 million.
  • Cash of US$42.1 million at 31 March 2022 and no debt
  • FY 2022 EBITDA guidance upgraded by US$3 million to loss of US$15 million to US$18 million

What happened during the quarter?

For the three months ended 31 March, Nitro reported record cash receipts of US$17 million, up 42% on the prior corresponding period. This led to its ARR growing 40% year on year excluding the Connective business and 61% including the recently acquired business.

This was driven by key customer wins, expansions, and renewals in the quarter. This includes with customers such as Lloyds Banking Group, Subsea 7, NRG Energy, BP, BNP Paribas and Pioneer Natural Resources.

Pleasingly, while no ARR dollar figure was provided, management notes that its first quarter performance puts it on track to achieve its FY 2022 ARR guidance of $64 million to $68 million. This represents a 39% to 47% increase on FY 2021’s ARR.

Another positive which appears to be lifting the Nitro share price today is news that management expects lower operating expenditures than previously forecast. This reflects enhanced business efficiencies.

As a result, it has improved its EBITDA loss guidance for FY 2022 by US$3 million to the range of US$15 million to US$18 million.

But these losses won’t be for too much longer. Management expects the company to move toward a cash flow breakeven profile in second half of 2023.

Management commentary

Nitro’s Co-Founder and Chief Executive Officer, Sam Chandler, was pleased with the quarter and the integration of the Conenctive business. He commented:

“Nitro delivered record cash receipts from customers over the opening quarter of 2022 as the Company continues to execute on its growth strategy.

In parallel, we continued to focus on integrating Connective to ensure we deliver on the full benefits of this acquisition and the game-changing technology and team it brings. The integration is progressing well and on schedule, with Connective’s market-leading high-trust, enterprise-grade eSigning, eID and workflow capabilities now available to Nitro customers. Our go-to-market team is focused on cross-selling the expanded product set to a combined customer base of over 13,000 businesses around the world.

“We have entered 2022 well positioned to continue scaling our document productivity and workflow platform, and to cement our status as a leading global player in enterprise eSigning at a time when high-trust solutions are in growing demand.”

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 Scott Phillips.

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