Embattled forensic software and data analytics company Nuix (ASX: NXL) is deep in damage control following media reports of questionable practices, today downgrading their revenue forecasts, citing “uncertainty” in their ability to convert upsell opportunities. 

The market update revises Nuix’s FY21 pro-forma revenue forecast to $173m-$182m, having previously forecast $180m-$185m in April 2021. Pro-forma EBITDA forecasts remain unchanged at $64.6m-$66.6m. 

While the downgrade in revenue forecast is less than 4%, Nuix shares have been battered since the April forecasts were confirmed having previously targeted $193.5m in their IPO Prospectus and listing on the ASX in December 2020. 

“We understand 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,” said Nuix CEO, Rod Vawdrey. 

“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.”

The revised forecasts reference new risk encountered from customer negotiations, the timing of their deals and foreign exchange variability, and are not suggested by the Company to be linked to the termination of co-founder Dr Tony Castagna as a consultant last week. 

Following the initial downgrade in April, a string of Fairfax Media reports surfaced in May highlighting the ongoing involvement of Dr Castagna while serving time on personal tax charges, of which he was acquitted in 2019. 

Core to media attention is the ongoing decline in Nuix’s share price and the Company’s ties to Macquarie which is widely referred to as Australia’s ‘Millionaires Factory’

With a substantial stake in Nuix and acting as Lead Manager for the $1.8 billion IPO, Macquarie used the listing to substantially sell down their 66.1% stake to 30% as one of their most successful investments. 

Just one month after listing, NXL shares traded as high as $11.85 before declines in March tumbled shares below $5 amid media reports of financial struggles despite the Company re-affirming their Prospectus forecast in their H1 results a week earlier. 

Unable to stem the selling, NXL shares have continued to fall with UBS, Bank of America and Regal Funds Management all submitting ASX notices in the past two months, ceasing to be substantial shareholders. 

Making matters even more difficult for Nuix and Macquarie are the string of current and former staff that have suggested key personnel were complicit with irregularities in the Prospectus that may have resulted in misleading practices.

Since these reports have surfaced, class action law firms Quinn Emanuel and Phi Finney McDonald have commenced their own investigations. 

NXL shares hit an all-time low of $2.76 in the first 40 minutes of morning trade.

 

*Owners of this website are MQG shareholders