Nuix, the biggest IPO of 2020 crashes to all-time low

Nuix shares fell more than 17pc after it revised its FY21 guidance, slashing the value of largest shareholder Macquarie’s stake.

Nuix CEO Rod Vawdrey ringing the ASX bell at the ASX last year. Picture: Bianca De Marchi

Shares in the biggest IPO of 2020 – global software company Nuix – plunged more than 17 per cent to all-time lows on Wednesday after the company trimmed its revenue guidance.

The Macquarie-backed company cut the full-year forecasts laid out in its IPO prospectus, just over a month after it restated them following its half year results.

The move highlighted how finely-balanced the pricing of high flying technology companies has become, with investors pushing up valuations while global markets are awash with cheap money.

Nuix’s revenue was now forecast to land within the $180m-$185m range, compared to the $193.5m originally forecast, it told the market.

Annualised contract value was also revised downwards, to the $168m-$177m range as compared to $199.6m.

However, the group slightly lifted its earnings outlook, on the back of cost-cutting.

Pro forma EBITDA was revised upwards to $64.6m-$66.6m compared to the previously forecast $63.6m.

In its trading update Nuix said the revenue downgrade was due to “a significant and larger than expected number of Nuix’s customers, including one of its largest,” choosing to change from module-based subscription licences to consumption and SaaS (Software as a Service) licence models as their employees continue to work remotely.

Additionally, some of Nuix’s law firm and advisory customers have a reduced need to expand current licences with the company “due to both their unutilised licence capacity in the current climate as well as the recovery in legal case backlog being slower than anticipated.”

Chief executive Rod Vawdrey told The Australian that this change in customer behaviour was a “positive” development which will boost long term revenue over upfront payments by customers.

“The increasing rate of adoption of consumption licenses has happened faster than anticipated and means that some of the revenue upside expected for financial year 2021 will occur in future years in line with customer usage and data growth,” he said.

“We see this as a positive trend that will start to deliver longer-term growth across Nuix’s business”.

“Growing demand for our products is also reflected in the number and value of new orders both being substantially higher compared to this time last year.’

Despite the earnings lift the company plunged after the market opened to fall as low as $4.20 per share in the afternoon, 17.2 per cent below Tuesday’s closing price of $5.07.

Nuix closed at $4.29 per share, down 15.4 per cent.

It’s a far cry from the positive investor response the company received at its IPO last December, which priced Nuix at $2.7bn, making it the largest ASX debut of 2020.

Nuix shares launched on the ASX at $8.50 on December 4, a substantial premium to shares sold in the IPO at $5.31. The stock reached as high as $9 before ending the session at $8.14.

It valued the 30 per cent stake of its largest shareholder – Macquarie Group – at around $900m. The stock price hit a high of $11.86 in January, pushing the value of Macquarie’s holding to more than $1.2bn.

Now that same stake is worth just more than $400m.

On Wednesday Nuix also said the number of new customers acquired in the nine months to March 31 was more “than in the same period for the previous year.”

“The total order value and average order value from these new customers were significantly higher than the prior year period.”