Nuix board failed to act on actual revenue, ACV projections court hears

Technology company Nuix has been accused of knowing its revenue projections would not hit shareholder expectations as a Federal Court trial gets underway.

Nuix CEO Rod Vawdrey rings the ASX bell to signal the company’s listing in 2020. Picture: NCA NewsWire/Bianca De Marchi

Technology firm Nuix failed to enter a trading halt despite allegedly knowing its forecast revenue was millions of dollars lower than what was published in an announcement to the ASX, the Federal Court has heard.

The Australian Securities & Investments Commission opened its misleading and deceptive conduct case against the company on Monday with ASIC barrister Jeremy Giles SC spending most of the morning canvassing disclosure obligations and outlining opportunities he said Nuix missed to correct announcements made to the Australian Securities Exchange.

ASIC has alleged Nuix made two announcements to the ASX that were false, including one on February 26 and another on March 8, 2021, that reported forecast revenue for that financial year was expected to reach $193.5m and that its projected annualised contract value was $199.6m.

The corporate regulator has also accused Nuix’s directors – including Jeffrey Bleich, Rodney Vawdrey, Susan Thomas, Daniel Phillips and Sir Iain Lobban – breached their duties by failing to prevent the company from making misleading statements.

The Macquarie-backed analytics and intelligence software company had the biggest initial public offering of 2020, with a $2.7bn sharemarket debut.

But it was alleged the board had information that projected revenue was lower than its public forecasts for the year to June 30 by April 9, 2021.

It wasn’t until April 21 an updated announcement was made to the ASX that showed the company’s revenue was forecast to land within the $180m-$185m range, and its annualised contract value was also revised downwards to the $168m-$177m range.

Mr Giles said procedures were in place, including the option to request a trading halt or voluntary suspension, for companies if they had sensitive market information that couldn’t be released immediately.

“At that stage, having lawfully not sought to announce on the ninth (of April), by the time it reaches the 13th of April what goes wrong … is a debate about what is to go into the market announcement,” he said.

Mr Giles said the board lost sight of what they needed to inform the market in the days leading up to the April 21 announcement. “(Our) case is that it had to be disclosed after a weekend of analysis,” he said.

Weeks after Nuix first listed on December 4, 2020, its share price peaked on January 22 at $11.86, the court heard. Morgan Stanley estimated an average of $17m worth of shares were being traded daily at the time. But by June the value of shares dropped to $2.50.

Mr Giles discussed difficulties the firm had in reaching its annualised contract targets, and outlined reports exchanged in emails with different directors that outlined in a “plain manner” the increasing gaps between forecast and actual ACV.

The trial continues.