“Officials from the corporate regulator arrived at the Nuix headquarters in Sydney searching for evidence that the company’s chief executive, Jonathan Rubinsztein, traded shares while possessing confidential information.” Wrong, said tech company Nuix (ASX: NXL), responding to a claim by the Australian Financial Review. For one, the regulators sent an email. Secondly, the investigation took place in an orthodox manner. However, there was an investigation and there were revelations of fraud.

Just a couple of months ago, Nuix was living out a nightmare, akin to a horrifying Stephen King novel. Then, it decided to revamp its business through its automation partner Rampiva’s acquisition, which was finalised in July 2023.

The Company came under the purview of every media house and legal institution. Reports of insider trading, governance issues and cultural problems pulled focus from what Nuix does: investigative analytics and intelligence (but that’s not as sexy as fraud, is it?).

Nuix’s revamp finally appears to be bearing fruit. Providing an FY23 update, the Company reported that its annualised contract value (ACV) is in the range of $184 – $186 million, up 14 to 15% on FY22’s $162.0 million 14-15%. Its statutory revenue is set to be between $181 – $183 million, up 19 to 20% on $152.3 million. Finally, Nuix’s underlying EBITDA is in the range of $44 – $47 million, up from $29.2 million, representing an increase of 51-61%.

Nuix had a robust finish to the fiscal year, with lucrative agreements signed in June. The variability in Statutory Revenue is higher compared to ACV, mainly because of the effects of multi-year deals. Foreign exchange fluctuations positively impacted both ACV and Statutory Revenue, contributing about 3-4 percentage points of growth to each.

As predicted during the H1 FY23 result, non-operational legal expenses were higher in the latter half of the year when compared to the first half, owing to the ongoing investigations. Throughout the entire year, non-operational legal costs totaled approximately $8 million, showing a decrease of $6 million from the previous year.

The stronger revenue performance along with a focus on cost containment across the business is expected to result in a material increase in both Underlying and Statutory EBITDA for FY23. Underlying EBITDA is expected to be up more than 50% on the prior corresponding period.

Statutory EBITDA is projected to increase by over 160% compared to the same period in the previous year. Throughout the year, Nuix remained committed to its strategy of financing software development expenses using free cash flow. The Company achieved positive cash flow in both the second half and the entire year, excluding non-operational legal expenses and acquisition-related and operating costs associated with the Topos (a natural language processing company) acquisition from 2021.

This positive underlying cash flow surpasses Nuix’s earlier goal of achieving underlying cash flow neutrality for the year. At the end of FY23, Nuix had $29.6 million in cash reserves and zero debt.