Nuix slashes forecasts as customers downgrade contracts in pandemic

Data analytics group Nuix has warned it will not meet the business forecasts set out in its IPO documents, just months after its shares soared on their trading debut.

Nuix told the ASX on Wednesday morning its revenue would be below prospectus guidance, but underlying earnings would be higher than predicted as some customers downgraded their contracts and others converted software licenses to consumption-driven software-as-a-service (SaaS) contracts, which require lower upfront payments.

Nuix said some of its law firm, advisory and service provider customers recently advised they were downgrading their contracts as they were not fully using them in the pandemic.

Nuix CEO Rod Vawdrey led the company to a high-profile IPO in December.Credit:Ben Rushton

The pandemic has also had an impact on customers switching to SaaS contracts.

“The accelerated switch to consumption licenses, including SaaS, is primarily driven by changing
customer business models, caused in part by a shift from office settings to remote working
environments and the need to have flexible global licensing to manage projects in line with data
privacy and sovereignty requirements,” the company said.

Nuix now expects to report pro forma revenue of $180 million to $185 million, compared to a $193.5 million forecast in the prospectus, and annualised contract value (ACV) of $168 million to $177 million compared to a forecast of $199.6 million.

Pro forma earnings before interest, tax, depreciation and amortisation (EBITDA) will be higher, with the company flagging a range of $64.6 million to $66.6 million compared to a prospectus forecast of $63.6 million.

The data analytics company soared more than 50 per cent from its $5.31 IPO price on its sharemarket debut in December, but it was forced to defend its prospectus forecast in February after handing down a poorly received interim result, which caused its share price to slide over 30 per cent.

At that time, the company said it was still confident of hitting its forecasts, but it would need a strong second-half performance.

“After a softer (first quarter), the December quarter was encouraging with a strong performance in all sales regions despite the US government being impacted by delayed access to decision makers because of COVID and the US election,” Nuix chief executive Rod Vawdrey said at the time.

The stock last traded at $5.07.

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