Nuix caps troubled year with a loss

Shares in tech firm Nuix have been mauled after the company swung to a net loss, with several events since it listed haunting the business.

Nuix CEO Rod Vawdrey. Picture: Bianca De Marchi

Shares in tech firm Nuix have been mauled after the company swung to a net loss, with several events since it listed haunting the business.

Nuix, which produces investigative analytics and intelligence software, has been in the headlines in the wake of three market selldowns which saw the company’s shares fall from $11.05 to just $2.87 on Friday.

This came after the business missed prospectus forecasts and delivered two profit warnings.

Shares further slumped Monday, falling 10.8 per cent from their $2.87 Friday close to $2.56 after Nuix reported a $1.64m loss, down 107 per cent on the $23.58m profit last year.

On a pro forma basis, the group posted a net profit of $25m.

The company is pushing forward with a shift in its business model, towards consumption software packages with an eye to offer most products on the cloud.

But several issues remain unresolved for Nuix.

The Australian Securities and Investments Commissions is investigating its ex-CFO Mr Doyle.

ASIC alleges Mr Doyle was involved in a $17.8m insider trading scheme with his brother Ross Doyle that saw the men trade shares before Nuix published a market update.

The company is also under separate investigation by the corporate regulator for alleged misstatements across several corporate documents in the lead-up to its listing.

The Australian Federal Police is also investigating co-founder Tony Castagna for potential breaches of the Corporations Act involving Nuix.

The company disclosed to the market on August 10 it had become aware of investigations in relation to potential contraventions of the Corporations Act concerning Nuix.

Nuix noted in its results “for the abundance of caution” the company had obtained waivers from Commonwealth Bank “of potential technical or administrative breaches of CBA Facility Agreement” as a result of the ASIC investigation.

Nuix is also in a court fight with ex-CEO Eddie Sheehy, who is seeking he be granted 453,273 options in respect of 22,663 Nuix shares.

Delivering its maiden full-year earnings result as a listed company, Nuix noted that while revenues had remained flat, profit on a pro forma basis had lifted.

Nuix posted revenue of $176.1m, up 0.1 per cent.

This came a touch within the $173m -$182m guidance issued by the company in May.

Nuix had originally forecast $180m – $185m in revenue for the year in April.

Revenue of $165.6m was driven by renewals.

It compared to the guidance of $165m – $172m issued in May and the original forecast of $166 – $177m.

Nuix ex-chief executive Eddie Sheehy is fighting the company in court over options. Source: Supplied

The results also see escrow on 37.9 per cent of shares expire at 4.15pm on Monday, delivering key figures in the company a windfall of new securities in Nuix.

Mr Castagna is due to gain access to shares worth 4.2 per cent of the company via his holding company Blackall.

Mr Doyle gains 0.3 per cent of Nuix shares.

Macquarie, which led efforts to bring Nuix to market, gains access to share in 30.1 per cent of the company.

Nuix’s CEO Rod Vawdrey is due to leave the business after Nuix released its full-year earnings, but no replacement has yet been announced.

In the results call on Monday, in which questions were only open to select investors, Mr Vawdrey said he would continue as CEO until a replacement were found to ensure an orderly transition.

No questions were asked in the call.

Mr Vawdrey noted the year had been “challenging for Nuix and our stakeholders” with multiple sell downs and raids on the company’s Sydney office.

“We are optimistic and remain confident in Nuix’s future. Our employee base continues to grow, and our technology is best in class, and critical for our customers and partners,” he said.

“Further investment in our technology will enhance and consolidate Nuix’s market position.”

Mr Vawdrey said perpetual licenses on products sold by Nuix were declining with more customers choosing to take up consumption based licenses.

Subscription annualised contract value grew 10.3 per cent, with customers taking up the packages up to 112 by year’s end from the 71 in the prior corresponding period.

Nuix also noted its customer churn remained low, at just 3.7 per cent.

The company contracted 100 new customers over the financial year, with Nuix noting many were willing to enter into multi-year deals, with those contracts rising to 36.3 per cent of revenue.

Nuix noted it had experienced a 15-18 per cent turnover in staff in the year, but grew its team with 119 hires in the year.

Since July 1 Nuix has added another 32 staff.

Mr Vawdrey, the outgoing CEO, even went so far as to tell Nuix staff the company had overdone its cuts to engineering.

On Monday Mr Vawdrey said 21 of the new hires had been in the engineering division of Nuix.

However, Nuix has lost several executives in the last year and the new hires come off a period of cuts ahead of the market listing.

“Over the last 18 months 40 per cent of the leadership team are new to Nuix,” Mr Vawdrey said.

In its guidance Nuix flagged it would continue to invest in growth and push the business towards a cloud-based product offering.

Mr Vawdrey flagged the business was looking at value accretive acquisitions, with several items in the pipeline.