Nitro Software Limited, continued acceleration in subscription sales and revenue

Team Veye | 28 Jan 2021 ASX - NTO
Nitro Software Limited, continued acceleration in subscription sales and revenue

Nitro Software Limited (ASX: NTO)

Nitro Q4 2020 Quarterly Activities Report

Nitro Software Limited (ASX: NTO) on 27 January 2021 released its Quarterly Cash Flow Report for the quarter ended 31 December 2020 (unaudited). The Report provided an update on financial and operating performance.

The company closed the year 2020 delivering continued acceleration in subscription sales and revenues. It delivered best-in-class solutions for remote work and digital productivity to its customers under the disrupting circumstances caused by the COVID-19 pandemic. Nitro completed FY2020 with subscription revenue well above the Company’s prospectus forecast of $20.2 million.

(Chart source: TradingView)

Performance in Q4 2020 and FY 2020

  • ARR at year-end was up by 64% to $27.7 million, from 31 December 2019, well above the upgraded forecast of $26.0 million - $27.0 million and significantly higher than the prospectus forecast of $24.4 million.
  • Subscription revenue captured approximately 53% of total revenue for FY2020, compared to 37% for FY2019, reflecting successful conversion Nitro’s ongoing model to a subscription-based business model.
  • Q4 2020 subscription revenue increased to approximately 58% of total revenue, compared to 41% for Q4 2019.
  • The successful transition to a subscription business model is evident across its Business sales channel which represented 73% of the total Company revenue in FY2020
  • In the Business channel, Q4 2020 subscription revenue increased to approximately 78% of total, compared to 55% for Q4 2019.
  • The transition to a subscription business model across this channel will be effectively complete in FY2021
  • Net cash outflow from operations in the period was $0.8 million, an increase of $1.2 million from the previous quarter.
  • Higher net cash outflows in Q4 2020 compared to Q3 2020 were attributable to the full quarter impact of increased headcount and marketing costs as the Company invests for future growth.
  • Cash receipts from customers reported 6% increase from FY2019 to $42.7 million in FY2020. Cash receipts in FY19 included significant upfront receipts from customers pertaining to multi-year, non-cancellable subscription contracts.
  • Cash receipts from customers were up by 3% from the previous quarter in Q4 2020 to $12.0 million
  •  The new customers contributed over 26,000 new licensed users in Q4 2020

FY2020 Outlook:

  • The company expects to deliver total revenue for FY2020 approximately in line with the Company’s prospectus forecast of $40.5 million.
  • Operating EBITDA (excluding share-based payments and FX) loss is expected to be within the range of $2.1 million - $2.6 million, compared to the $4.0 million prospectus forecast.
  • EBITDA loss is expected to be within the range of $6.0 million – $6.5 million, compared to the updated EBITDA loss range of $8.1 million - $8.6 million provided on 29 October 2020.  (Data Source – Company Reports)


Veye’s Take

The Company built strong foundations across the business in 2020 to ensure the capacity and capability to explore future growth opportunities. It introduced Nitro Sign and Over 1 million Nitro Sign eSignature requests were sent during the year. The company is focused on continuing the drive digital transformation around the world in 2021 and beyond. The stock has taken support at $3.05 exactly at the middle Bollinger band. The immediate bullish candle formation supported by RSI indicates its upside potential. Levels near $3.40-$3.50 are a resistance area. Initial “Buy” was given to “Nitro Software Limited” at the price of $1.725 on 27 February 2020. It returned a strong 90% in just about eleven months. Veye maintains a "Hold" on “Nitro Software Limited” at the current price of $3.28


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