Investors dump Nuix shares after profit warning, mounting legal bills and revenue drop
Shares in Nuix have been hammered after the embattled software company warned of mounting legal bills and new customer revenue shortfalls.
Investors dumped Nuix shares after the software company warned of major shortfalls in new customer revenue and a mounting toll of legal bills arising from its tortuous market debut.
Shares in Nuix dropped more than 13 per cent to $2.22 on Tuesday following the troubled tech player’s latest warning at its first annual general meeting. The stock has fallen sharply since its ASX debut last December at $8.50, a 60 per cent increase on its IPO price of $5.31.
Outgoing chief executive Rod Vawdrey said revenue for the four months to the end of October was up around 10 per cent from the same period last year, in both reported and constant currency.
But this was offset by new customer revenue coming in about 40 per cent lower than the same time last year.
Pro forma underlying earnings for the four month period was down around 27 per cent in both reported and constant currency.
Nuix also warned that it had seen a “material increase” in legal costs of about $4m this year to date.
“These costs will reduce over time but are ongoing while investigations and claims are underway,” Mr Vawdrey said.
The earnings warnings comes just days ahead of Nuix’s new CEO Jonathan Rubinsztein taking the helm on December 6.
Nuix has been slapped with two class actions, with the latest arriving on the eve of the company’s AGM after law firm Phi Finney McDonald filed for losses suffered by shareholders in the wake of its ASX debut.
This comes after Shine Lawyers launched similar action on behalf of shareholders who were allegedly misled on forecast revenues.
The sharemarket debut for the Macquarie-backed group was hugely profitable for Nuix, with the investment bank banking $575m after selling down its stake from 76 per cent to 30 per cent.
The company maintains a close eye on Nuix, with Macquarie group executive Dan Phillips sitting on the company’s board.
While legal bills are mounting at Nuix in response to the flurry of actions Macquarie may be forced to wear some of the cost.
Nuix’s prospectus notes the Macquarie Insurance Facility covers various “insurances, including prospectus liability and director and officer” for the business.
Chairman Jeffrey Bleich told investors the company’s board would continue to “engage transparently and in good faith with our key stakeholders, including our regulators” as it moved to steady itself.
“We have been candid with you and with ourselves about where we have performed and where we have fallen short,” he said.
“That work remains. There are ASIC investigations that relate directly or indirectly to Nuix, recent class actions concerning the same issues, and an outstanding legal proceeding with a former CEO about his claimed compensation.”
Nuix has also been raided by the Australian Securities and Investments Commission as part of investigations into alleged insider trading by the company’s former CFO, whose house was also raided.
Tony Castagna was also forced to step down as chair from the Nuix board after Australian Federal Police confirmed it was investigating possible breaches of the Corporations Act.
“At this point in time, we have no further updates on these investigations or the lawsuits. But if or when there are material updates, we will promptly advise the ASX,” Mr Bleich said.
“Our commitment to you is that we will handle these professionally and responsibly, and consistent with our commitment to finding truth.”
Additional reporting: Valerina Changarathil
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