The Nuix Ltd (ASX: NXL) share price is under pressure again today as it reduced its FY21 guidance.
What did Nuix say about FY21?
Nuix said that as a result of decent developments in its new and existing customer contract revenue pipeline, it is adjusting its guidance.
FY21 pro forma (meaning company calculated) revenue is now expected to be in a range of $173 million to $182 million. This is down from a range of $180 million to $185 million – this guidance was only given just over a month ago on 21 April 2021.
Annualised contract value (ACV) is now forecast to be in a range of $165 million to $172 million. That’s down from a forecast of $168 million to $177 million.
There was part of the guidance that didn’t change. Pro forma EBITDA (EBITDA explained) guidance is still for a range of $64.6 million to $66.6 million.
Why has this happened?
Nuix explained that several key factors have affected the revised forecasts including the expected timing of closure of some upsell opportunities and new potential customers.
In particular, there remains uncertainty in relation to both the structure and timing of a small number of large customer upsell opportunities, including whether these may result in multi-year deals during FY21.
Why didn’t the EBITDA guidance change? Nuix said it took into account the continued prudent control of costs.
This guidance could change yet again. The ASX tech share warned that the revised forecasts are susceptible to a number of risk factors relevant between now and 30 June 2021, including final customer negotiations of products and licence types, timing of deals and potential foreign currency exchange volatility.
Management comments
Nuix CEO Rod Vawdrey said: “We understand the importance of meeting financial forecasts. There’s a near-term level of uncertainty regarding the precise timing, shape and scope of some large and anticipated customer contracts coming to fruition in the next few weeks. We expect to capture most of the revenue which remains under current negotiation with these customers either by financial year-end or early in our new financial year. We remain confident in the long-term outlook for the company.”
Summary thoughts on Nuix and the share price
The fact that Nuix has experienced so much difficulty meeting forecasts so soon after listing is not a good look.
It seems like there’s a quality product underpinning Nuix, but it could take some time for investors to rate Nuix highly again and to trust forecasts.
If Nuix ends up producing revenue and profit growth over the coming years, then this could prove to be an opportunistic time to pick up some shares. But there could be more difficulties, so I’m inclined to wait for the FY21 result at the earliest.
There are ASX growth shares I’m looking at that aren’t downgrading guidance.
