Nuix slumps to all-time low on earnings update

SHARES in software firm Nuix slumped to an all-time low on Friday, as the embattled company revealed it expects substantially lower interim earnings, while its legal costs are blowing out.

For the six months to December, the data analytics and forensics company being sued by former CEO Eddie Sheehy is likely to report an after-tax loss of between $2m and $3.5m, an improvement on the $16.6m loss in the first half of the 2021 financial year.

Nuix shares fell 22.8 per cent on the news, to $1.59.

Pro-forma earnings before interest, taxes, depreciation and amortisation (EBITDA) are likely to range between $13m and $15m, down more than 50 per cent from the $31.6m reported in the prior corresponding period.

Statutory EBITDA, which incorporated IPO costs in the prior corresponding period, is expected to be higher.

Revenue is likely to come in at $82m-$85m, lower than the $85.3m in the prior year.

“Non-operational legal

costs remain significant, and were higher in the last two months of the half,” Nuix told investors on Friday. “The company has seen a continuation of the trend of revenue growth from existing customers, while revenue from new customers is lower than the prior corresponding period.”

Costs are also rising, with the company “reinvesting in sustainable revenue generation”, including building sales and distribution capability and building its product development pipeline.

The update comes amid a tumultuous period for Nuix.

Mr Sheehy’s legal action against his one-time employer is centred around a potential $183m claim in share proceeds that he says were wrongly denied to him.

In response, Nuix directors have laid out claims about Mr Sheehy’s “idiosyncratic” management style and alleged repeated disputes with executives.

Nuix is also facing two class actions surrounding allegations of misleading shareholders on revenue forecasts ahead of its listing on December 4, 2020.

Nuix’s $1.7bn listing on the day marked the biggest float of the year. Its market capitalisation has now shrunk to $524m with its share price down almost 80 per cent from its listing price of $8.01.

Mr Sheehy’s successor, Rod Vawdrey, resigned “by mutual agreement” after the disastrous float.

Corporate regulator ASIC is also investigating the company’s financial statements, market disclosures and prospectus from the time of the float to May last year.

Nuix will release further information, including commentary in relation to its strategic review, at its half-year results on February 21.