Nuix (ASX:NXL) - Chair, Jeff Bleich
Chair, Jeff Bleich
Source: US Studies Centre
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  • Troubled software developer Nuix (NXL) opens in the red on the ASX following the release of its annual report for the 2021 financial year
  • In the report, Nuix highlighted flat year-on-year revenue and a 33.1 per cent increase in net profit after tax (NPAT) to $25 million
  • However the annual report comes after a string of guidance downgrades and management scandals during NXL’s first eight months as a public entity
  • Chairman Jeff Bleich says despite the challenges the company has faced over the year so far, he is confident in the future of Nuix
  • Shares in Nuix are down 5.23 per cent and trading at $2.72 each at 11:48 am AEST

Troubled software developer Nuix (NXL) has opened in the red on the ASX this morning following the release of its annual report for the 2021 financial year.

In the report, Nuix highlighted some modest gains to year-on-year revenue and a neat 33.2 per cent increase in net profit after tax (NPAT). However, the results follow several months of guidance downgrades and upper management churn that saw NXL shares lose more than 75 per cent of their value in just seven months.

Despite the issues faced by Nuix in its first few months as a publicly listed entity, the company still managed to keep statutory revenue flat on the 2020 financial year, up just 0.1 per cent to $176.1 million.

Annualised contract value (ACV) fell a slight 1.7 per cent to $165.5 million, though Nuix said this actually represented a 4.1 per cent increase compared to the year before on a constant currency basis.

Meanwhile, year-on-year earnings before interest, tax, depreciation and amortisation (EBIDTA) grew by 20.2 per cent over FY21 to $66.7 million, with NPAT up 33.2 per cent to $25 million.

While these figures may, on paper, seem to represent reasonable growth, Nuix’s annual results are a far cry below what investors may have been expecting when the company debuted on the ASX in late 2020.

A turbulent eight months

Nuix listed on the ASX in December 2020 with a $1.7 billion float, closing out its first day of trade with a $2.5 billion market cap.

Shares that were priced at $5.31 each in NXL’s initial public offering (IPO) soared to almost $12 each in January. However, shares took a massive hit in February after Nuix reported softer-than-expected half-year results.

In the months thereafter, the company downgraded its annual earnings guidance twice, eventually predicting between $173 million and $182 million in pro-forma revenue for the financial year.

Meanwhile, reports then surfaced that former Nuix Chief Financial Officer Stephen Doyle, along with his father and brother, was being investigated by the Australian Securities and Investments Commission (ASIC) for alleged insider trading.

At the same time, reports surfaced that former CEO Rod Vawdrey, who resigned in June, is also being investigated for his previous role at Fujitsu Australia.

The revenue woes and management scandals have seen Nuix shares fall to below $3 each.

What’s next for Nuix?

Nuix management said this morning that despite the challenges it has faced over the year so far, it is confident in the future of the company.

Chairman Jeff Bleich said the company’s senior management was focused on strengthening all aspects of the company and addressing the issues that surfaced during its first eight months as a public company.

“Progress on our agenda continues apace with the expansion of our board through the pending appointment of two additional independent non-executive directors and a strong field of candidates for the CEO position,” Mr Bleich said.

“We have concentrated on our valued team members around the globe to ensure they have the right support and incentives to drive future success.”

He also spoke about the company’s technology, which is designed to analyse and organise mass amounts of data using artificial intelligence (AI), maintaining that the software is “world-leading and unique”.

As such, he said he is confident the company is in the process of emerging as a stronger business that can reach its “incredible potential”.

Nevertheless, the company did not offer an earnings guidance for the 2022 financial year.

Shares in Nuix were down 5.23 per cent and trading at $2.72 each at 11:48 am AEST. The company has an $885 million market cap.

NXL by the numbers
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