The Nuix Ltd (ASX: NXL) share price is down 69% this year. Can the Topos Labs acquisition turn things around?
Topos Labs acquisition
Nuix has announced it is going to buy Topos Labs, a developer of natural language processing (NLP) software that helps computer systems better understand text and spoken words at speed and scale.
It’s based in Boston. The AI-driven platform aims to reduce the workload on data reviewers and analysts by surfacing relevant or risky content faster.
Nuix noted that Topo’s early stage platform is already able to automate accurate analysis and classification of complex content in documents, electronic communications and social media. Topos is able to present its risk assessment to clients on user-friendly dashboards.
The initial cost is US$5 million, with a potential for up to US$20 million more based on staff loyalty, revenue and development. Of the US$20 million, US$18.5 million of that would be cash.
Why is Nuix buying the business?
We’ve heard about what Topos does.
But in terms of what it’ll do for Nuix, the company said that with the Topos team and by integrating the NLP software capability at this stage of its development, Nuix can optimise the technology to benefit its investigations, e-discovery and GRC (governance, risk and compliance) customers, further enhancing the unstructured data processing power of the Nuix engine.
Nuix CEO Rod Vawdrey said: “Topos will strengthen Nuix’s product offering by helping customers get to relevant data even faster. The potential for user friendly dashboards and for users to easily customise the software to their specific needs also reflects Nuix’s focus on empowering our customers to search through unstructured data at speed and scale. We look forward to Christopher Stephenson [Topos CEO] and his talented team joining Nuix.”
Summary thoughts on Nuix and the share price
It has been a painful year for Nuix shareholders, including after the FY21 result. At the time of writing, Nuix shares are down 1%.
The underlying Nuix product is seemingly good, but the company has some work to do to regain market confidence. The retirement of Mr Vawdrey may help with that.
There could be an opportunity here after such a big fall, but I don’t have any conviction or expertise on the business. There are other ASX growth shares that could make better ideas.
