Here’s why the Nitro Software (ASX:NTO) share price is tumbling lower

The Nitro Software Ltd (ASX:NTO) share price is trading lower on Wednesday morning following the release of its full year results…
The post Here’s why the Nitro Software (ASX:NTO) share price is tumbling lower appeared first on The Motley Fool Australia. –

A white arrow point down into the ground against a blue backdrop, indicating an ASX market crash or share price fall

It has been a disappointing day of trade for the Nitro Software Ltd (ASX: NTO) share price on Wednesday.

In early trade the global document productivity software company’s shares are down 2.5% to $2.62.

Why is the Nitro Software share price trading lower?

Investors have been selling Nitro Software shares today despite the release of a strong full year result this morning.

While much of this result was pre-released with its fourth quarter update last month, there was still plenty for investors to take note of.

According to the release, at the end of December Nitro Software’s annual recurring revenue (ARR) reached $27.7 million. This was up 64% year on year and ahead of its upgraded guidance range of $26 million to $27 million.

This underpinned a 13% increase in total revenue to $40.2 million for FY 2020, which was in line with its prospectus forecast.

At the end of the financial year, subscription revenue had increased to $21.2 million. This was up 61% year on year and means it now accounts for 53% of total revenue. This was driven by a sizeable increase in licensed users to 2.6 million. It now has approximately 11,700 business customers and deployments in 68% of the Fortune 500.

In respect to its earnings, Nitro Software reported an operating loss of $2.4 million for the year. Once again, this outperformed its prospectus forecast. The company was forecasting an operating loss of $4 million.

Management notes that operating expenditure savings during the year were largely attributable to delays in hiring and COVID-related savings. These were partially offset by other incremental investments.

At the end of the period, the company had a cash balance of $43.7 million. Management feels this provides it with the flexibility to pursue organic and inorganic growth opportunities.


The company is positive on the year ahead and is expecting to deliver further strong growth in ARR.

It expects FY 2021 ARR to be between $39 million and $42 million. This represents a 41% to 51.6% year on year increase.

It is, however, also forecasting a sizeable operating loss. It expects this to be in the range of $11 million to $13 million, which compares to its operating loss of $2.4 million in FY 2020. This forecast could be weighing on the Nitro Software share price today.

Looking further ahead, management notes that it has a significant market opportunity to grow into.

It commented: “Nitro will continue to focus on delivering its platform product strategy, driving increased adoption of the Company’s PDF productivity, eSigning and analytics solutions across new and existing customers in its enterprise, mid-market and SMB segments.”

“Nitro’s total addressable market in document productivity and eSigning is large and growing, supported by strong structural tailwinds and changing work practices accelerated by COVID-19, and estimated at $28 billion.”

Despite today’s weakness, the Nitro Software share price is up over 50% since this time last year.

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Motley Fool contributor James Mickleboro 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.

The post Here’s why the Nitro Software (ASX:NTO) share price is tumbling lower appeared first on The Motley Fool Australia.

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