Search by ticker code:
Generic filters

Search by ticker code:
Generic filters

Search by ticker code:
Generic filters

Nuix (ASX:NXL) share price tumbles after another downgrade

Nuix Ltd (ASX: NXL) shares fell 17.8% yesterday after downgrading guidance for the third time since listing on the ASX last year.

In just over four months, Nuix’s market valuation has now tumbled by more than 76% on the back of multiple downgrades and a media investigation that raised concerns over governance and financial reporting quality.

NXL share price

Source: Rask Media NXL 6-month share price chart

FY21 guidance

Nuix is now expecting FY21 pro-forma revenue between $173-$182 million, down from $193.5 million from its IPO prospectus.

Annualised contract value (ACV) is expected to be between $165-172 million, down from $199.6 million.

Pro-forma earnings before interest, tax, depreciation and amortisation (EBITDA explained) is expected to be unchanged – somewhere between $64.6-66.6 million.

Reasons for downgrade

Management indicated there are various factors that led to its forecasts being revised. In particular, it noted the expected timing of the closure of various upsell opportunities was one key factor.

Other potential headwinds up until 30 June include customer negotiations of product and licence types, the timing of deals and potential foreign exchange (FX) movements.

CEO Rod Vawdrey said that the company expects to capture most of the revenue under current negotiation by financial year-end or early into FY22.

My take

It’s been another tough day for shareholders of Nuix, who had high expectations.

Nuix was promoted as a high-growth company that floated with a $1.8 billion market capitalisation with shares trading at 9x projected revenue.

Given FY21 revenue is expected to come in flat compared to FY20, I can see why Nuix’s shares have fallen to the extent they have.

Management has noted the shift from on-premise models to consumption-based models has been a key factor behind the recent shift in its revenue and ACV profile.

This is clearly turning out to be a major roadblock in Nuix’s growth plan, but it somehow didn’t make the list in the top risks section as part of its prospectus. While consumption-based licences might indeed bode well with its long-term strategy, I do find management’s communication with shareholders less than satisfactory.

As part of the Rask investment philosophy, I try to look for companies with aligned management teams that have a demonstratable track record.

Nuix isn’t investable for me at the moment on governance issues alone, so I’ll be sitting on the sidelines for now.

For more share ideas, click here to read: 3 ASX tech shares on my watchlist. 

I’d also recommend getting a free Rask account and accessing our full stock reports. Click this link to join for free and access our analyst reports.

$50,000 per year in passive income from shares? Yes, please!

With interest rates UP, now could be one of the best times to start earning passive income from a portfolio. Imagine earning 4%, 5% — or more — in dividend passive income from the best shares, LICs, or ETFs… it’s like magic.

So how do the best investors do it?

Chief Investment Officer Owen Rask has just released his brand new passive income report. Owen has outlined 10 of his favourite ETFs and shares to watch, his rules for passive income investing, why he would buy ETFs before LICs and more.

You can INSTANTLY access Owen’s report for FREE by CLICKING HERE NOW and creating a 100% FREE Rask Account.

(Psst. By creating a free Rask account, you’ll also get access to 15+ online courses, 1,000+ podcasts, invites to events, a weekly value investing newsletter and more!)

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.
Skip to content