Join our daily newsletter At The Bell to receive exclusive market insights
- Nuix (NXL) shares have dropped this morning after the company revealed it’s expecting a lower revenue and contract value in the 2021 financial year than previously thought
- The software company is now expecting a pro-forma revenue of between $180 million to $185 million, a drop from the previous $193.5 million forecast
- Its annualised contract value is expected to be a minimum of $168 million, down from the previous forecast of $199.6 million
- According to the company, the lower forecast is the result of customers moving from module-based subscription licences to consumption and software-as-a-service licences as companies transition from office settings to remote working
- Nuix is down 13 per cent on the market this morning and is trading at $4.41 per share
Nuix (NXL) shares have dropped this morning after the company revealed it’s expecting a lower revenue and contract value in the 2021 financial year than previously thought.
The software company is now expecting a pro-forma revenue of between $180 million to $185 million, a drop from the previous $193.5 million.
Its annualised contract value is now forecast to be between $168 million to $177 million, down from the previous forecast of $199.6 million.
The drop is attributed to a significant and larger-than-expected number of Nuix customers, including one of its largest, electing to transition from module-based subscription licences to consumption and software as a service (SaaS) licenses.
The switch to consumption license is driven by businesses continuing to shift from office settings to remote working environments. The change has had negative impacts on Nuix’s statutory revenue, however, according to the company, this will not impact growth prospects, which it claims remains strong.
Nuix is also expecting pro-forma earnings before interest, taxes, depreciation, and amortisation (EBITDA) of between $64.6 million to $66.6 million, which is up from the previous forecast of $63.6 million.
The increase in projected EBITDA over forecast is, in part, reflective of lower headcount, reduced travel costs and FX benefit from United States costs.
Additionally, some of Nuix’s law firm, advisory and service provider customers have also recently informed Nuix of a reduced add-on requirement for existing licences. This is due to their unused licence capacity in the current climate, and the legal case backlogs are slower than anticipated.
For the nine months ended in March 31, the company acquired more customers than in the same period last year.
Customers have also continued to make longer-term commitments to Nuix, with a higher-than-expected level of multi contracts.
“Over the last 18 months, Nuix has enabled its customers to move from module-based subscription licenses to more flexible consumption-based licensing models,” CEO Rod Vawdrey said.
“The increasing rate of adoption of consumption licenses has had a positive impact on new business and existing retention notwithstanding a transitory downward impact on FY21 revenue. Giving our customers the choice in how they consume Nuix is a key competitive advantage,” he added.
Nuix is down 13 per cent on the market this morning and is trading at $4.41 per share at 10:32 am AEST.
