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Highlights:
- Nitro released its quarterly activities report (Q2 FY22) and an updated FY22 guidance on the ASX recently.
- As per the updated guidance, the company has slashed its Annual Recurring Revenue.
- Meanwhile, Nitro ended the second quarter with a strong cash balance and zero debts.
Renowned software firm Nitro Software Limited (ASX:NTO) spotted trading 5.148% weaker to AU$1.195 per share at 11:57 AM AEST on the ASX today (27 July). On 26 July 2022, the company shared its quarterly activities report for the second quarter of FY22 ended on 30 June 2022 (Q2 FY22).
Despite sharing a robust Q2FY22 result yesterday, the company’s shares plunged by 24.333% at 3:06 PM AEST on the ASX (26 July).
Along with the quarterly activities report, Nitro also shared an updated guidance for the financial year 2022 in the same announcement.
What is pulling Nitro's share price on the ASX today?
Nitro is an ASX-listed software service provider which is popular for offering document productivity and eSignature SaaS solutions for businesses. Recently, the company came up with a price-sensitive announcement that provided details of its quarterly activities and updated guidance for FY22.
Nitro's updated FY22 guidance suggested that the company expects to generate an Annual Recurring Revenue (ARR) of US$57 million to US$60 million in FY22. According to the initial guidance, the expected ARR was US$64 million to US$68 million.
Therefore, we assume that slashing down of the company's expected Annual Recurring Revenue might have affected investors' sentiments. Hence, there is a significant share price fall for Nitro on the ASX today.
However, Nitro kept its revenue unchanged in the updated guidance. The company expects to deliver US$65 million to US$69 million in revenue in FY22.
Furthermore, the company has also cut down its EBITDA loss in its latest FY22 guidance. Earlier, Nitro's EBITDA loss was expected to be in between US$15 million and US$18 million. In the updated guidance, the company expects its EBITDA loss to be in the range of US$10 million to US$13 million.
Despite these positive factors in the company's guidance, the share price of Nitro dipped significantly on the ASX, probably due to the lowering of Annual Recurring Revenue.
Image source: © Terovesalainen | Megapixl.com
Nitro's achievements in Q2 FY22:
- Nitro reported that its Annual Recurring Revenue was up by 52% on a year-on-year basis to US$51.5 million on 30 June 2022.
- The company's cash receipts from customers gained by 43% to US$16.2 million in the given period.
- Lastly, Nitro reported a strong financial position at the end of the quarter (30 June) with a cash balance of US$35.2 million and zero debt.
Summary of Nitro's share price performance on the ASX:
Nitro's shares paint a disappointing picture before us. In a span of a year, Nitro shares have marked a loss of almost 65% on the ASX. On the other hand, Nitro's YTD-based share price marked a loss of around 51% (as of 11:57 AM AEST on the ASX today, 27 July).
