Nuix tips 2023 earnings lift, but warns that its legal costs may mount
Shares in listed tech software player Nuix have risen after it said its earnings would come in significantly higher than in 2022.
Shares in Nuix have soared after the analytics software company told investors that earnings in the six months to December 31 would come in higher than last year.
Nuix said it expected statutory earnings to come in between $19m and $21m in the first half of the 2023 financial year, compared to $13.8m for the same time in the last financial year. But the company also said its earnings could be hit by one of several legal cases hanging over the company.
Nuix said it expected to unveil a 3.7-5.6 per cent lift in annualised contract value to investors when it reports its first half.
The company said its ACV – the measure used by Nuix to report income from multi-year tech deals – would land between $168m and $171m in the first half. This would bring ACV in above the $164.5m reported in the same period in the 2022 financial year.
Nuix said it would continue funding its software development costs from free cash flow, noting it had been cashflow neutral in the first half “before non-operational legal costs and acquisition, and operating costs related to the Topos acquisition, in line with its near-term stated aim”.
Nuix purchased language processing company Topos Labs in September 2021 for an upfront payment of $US5m, followed by a $US20m earn-out over the next 30 months.
The company said its statutory result had been buoyed by “a stronger trading performance in December and currency tailwind”, leaving it with $37.1m in cash on hand and no debt.
Nuix said legal costs were significantly lower during the half compared with the previous period. The company spent big to defend a case brought against it by former chief executive Eddie Sheehy, who claimed he should be paid up to $180m after Nuix refused to honour his options before its initial public offering.
“The company has no further updates in relation to the previously disclosed legal proceedings in relation to a former CEO at this time,” Nuix said. “However, if a judgment is received prior to the publication of the full 1H results, adjustments may be required to the 1H results. Nuix will advise the market if a judgment is handed down, along with any potential financial impacts.”
Nuix said it might face high legal fees in the second half of the financial year after the corporate regulator launched action against former directors. The Australian Securities & Investments Commission sued Nuix and its board for continuous disclosure breaches in 2022, alleging the company failed to reveal to the market its ACV for the 2021 financial year was materially below forecast.
Nuix shares rose 14.6 per cent, or 12c, to close at 94c. They have fallen more than 54 per cent in the past 12 months alone.
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