Nuix share dive triggered by new earnings warning
Just two weeks after an apology to investors, a new earnings warning sent shares in troubled software company Nuix down another 17%.
Troubled investigative software company Nuix has issued its third earnings downgrade since February after junking profit guidance only given to the market six weeks ago.
The move sent its share price tumbling another 17 per cent on Monday, confirming it to be one of the worst floats of the last year.
Following an investor update only two weeks ago, when Nuix chief executive Rod Vawdrey apologised for the tech company’s imploding share price and issued a mea culpa for months of underperformance, the company has once again dashed the hopes of investors.
On Monday Nuix issued yet another earnings warning, advising the market the expected timing of closure of some “upsell opportunities” and new potential customers would impact its projected revenue for fiscal 2021.
Nuix said following recent developments in its new and existing customer contract revenue pipeline, pro forma revenue of $173m-183m was now expected, against $180m -185m forecast at the April 21 update and then profit downgrade.
It said annualised contract value of $165m - $172m was expected - versus the $168m - $177m forecast on April 21 - while pro forma EBITDA of $64.6m - $66.6m was unchanged.
The worse-than-promised performance for 2021 sent Nuix shares into another tailspin, falling by as much as 17 per cent, or 57c, to $2.80.
The Macquarie Bank-backed Nuix, which produces investigative analytics and intelligence software, has come under fire and seen panic-selling by investors since February when it issued its first profit warning, which triggered a 70 per cent share price collapse.
Since its IPO and float in December the shares have fallen more than 75 per cent from its peak of just above $11 per share.
When Nuix floated on the ASX in December it grabbed the honours as the biggest IPO of 2020, with its promised hi-tech growth potential exciting investors just as the market was chasing growth stocks and pushing share prices to record highs.
The buoyant conditions for growth stocks saw Nuix shares rocket from its IPO price of $5.31 to as high as $8.50, a 60 per cent stag, which rewarded existing investors and allowed its major owner, Macquarie Bank, to cash in $575 million in shares while it kept a 30 per cent stake.
But the shares have collapsed since then as corporate governance issues and missed earnings guidance erodes the confidence of the market.
Nuix said on Monday there remains uncertainty in relation to both the structure and timing of a small number of large customer upsell opportunities, including whether these may result in multi-year deals during 2021.
The forecast range for pro forma EBITDA takes into consideration the continued prudent control over costs, Nuix said. The revised forecasts are susceptible to a number of risk factors relevant between now and 30 June 2021, including final customer negotiations of products and licence types, timing of deals and potential foreign exchange rate variability.
Mr Vawdrey said he understood the importance of meeting financial forecasts.
“There’s a near-term level of uncertainty regarding the precise timing, shape and scope of some large and anticipated customer contracts coming to fruition in the next few weeks. We expect to capture most of the revenue which remains under current negotiation with these customers either by financial year-end or early in our new financial year.
“We remain confident in the long-term outlook for the company.”
In May Mr Vawdrey apologised to investors who had lost money in the stock and for the company’s performance.
“I wanted to say that as group CEO of Nuix I do take full responsibility for the performance of the business, to those investors, big and small, that have been impacted by the share performance over the last few months including many Nuix families and friends, I feel incredibly sorry,” Mr Vawdrey said at the May investor update.
“But also resolute in my commitment to do everything I can to lead our team to deliver on the opportunity before us.”
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