The choice of a European acquisition, as noted by Shaw and Partners, also provides confidence that Nitro is offering a world-leading platform given that it would meet stringent data regulation protection requirements in the region.īell Potter retains a Buy rating and target price of $4.50. Currently, Nitro competes with Adobe’s offerings at less than half the cost.
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With Docusign having a dominant hold on the e-signing market, and Abode holding a similar position in PDF productivity, Shaw and Partners notes that either competitor could aggressively match Nitro’s product pricing if they perceive threat from the company. Solidifying its global status against sector leadersĪccording to Bell Potter the acquisition of Connective will confirm Nitro Software’s position as the third global player in e-sign space, alongside dominant sector leaders Docusign and Adobe. The addition of Connective also introduces an additional revenue stream for Nitro given Connective works on a volume-linked revenue model compared to Nitro’s subscription-based model. Evans and Partners noted that the additional capability to Nitro Software’s Contract Lifecycle Management is a step towards a holistic offering for document creation, signing and storage.
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The acquisition will allow Nitro Software to introduce Connective’s enterprise e-signing capabilities to its customers, with Connective’s full suite of services including high trust e-signatures, identification verification, workflow and automation, enhanced compliance and regulatory adherence, and private cloud functionality. Despite this, Shaw and Partners notes that while the acquisition adds a suite of services to its offerings, failure to reach annual recurring revenue expectations and deliver on potential would likely impact on share price. Wilsons recently noted that given current growth, Nitro needs to only participate in, rather than dominate, business digitisation acceleration to retain its trajectory.Īlready guiding to strong organic growth, in recent months Nitro has faced increasing investor expectation to deliver more accelerated long-run growth, and the acquisition of Connective accelerates the company’s ability to penetrate the market at a global level.
The announced acquisition comes off the back of a year of strong organic growth for Nitro, which recently upgraded its FY22 revenue guidance to US$49-51m followed a robust third quarter that saw the company grow annual recurring revenue 50% on the year. Further, the all cash upfront deal structure does not allow for much protection for Nitro Software if Connective does not perform to expectations. The deal itself, while in line with company strategy, is slightly more expensive than expected by some analysts. Nitro Software highlighted that the transaction will allow it to assimilate e-signature capabilities into enterprise e-signing which it expects can increase the value of its total addressable market by US$11bn.
The balance of raised equity will fund an additional US$5 in transaction costs and US$5m in integration costs, as well as providing additional working capital for the company.Ĭonnective is the leading e-sign software as a service business in Belgium, with a growing France market share as well as customer bases in a further eleven European countries. The transaction is set to complete for US$81m, and Nitro Software has concurrently announced a US$105m equity raising to fund the purchase. Acquisitional activity and a strong FY21 make for a positive growth outlookĪ move by Nitro Software (( NTO)) to acquire Connective has been labelled a ‘game changer’ by industry analysts despite some associated risk. The move cements the company as a global top three competitor Nitro Software entered into a binding agreement for the acquisition of Connective Young gun electronic document provider Nitro Software is turning heads with its acquisition of Connective, making it a top global player and laying the foundation for a strong growth outlook. This story features NITRO SOFTWARE LIMITED.
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