Potential catalyst for rocketing soon, page-214

Can I share my current thoughts on this stock. Unfortunately, I invested heavily at $2.88. I still hold today. It is the biggest (paper) loss I have ever recorded. Naturally, I feel anxious about it. Other holders can probably relate to this. I can well understand those wishing to get out over the past week in view of some media reports. My current sentiment is that in my own personal circumstances this stock is very attractive for the following reasons:

1. Critically, management have made no announcement since the 31 May 2021 revision to the FY21 Forecast Range. We all know that it is in the nature of continuous disclosure obligations that if there is a change, we would know about it. Therefore, we can take from such silence that management represent even today that they expect Pro forma EBITDA of $64.6-66.6mm (unchanged from 21 April). In my own opinion (and I accept not all will agree), that is very solid performance which warrants a much higher price than its latest prices. I had worried about a further downgrade but think that for each day that passes, the silence strengthens the position.
2. Its existing customer base includes governmental departments (eg crime detection and prevention, such as the AFP who use Nuix). To be precise 20% of all customers are governmental entities. The sensitivity of the material in the Nuix platform for those customers means that one cannot change providers without almost prohibitive cost and risk. Such governmental departments are the stickiest. They are not going anywhere. And consequently they represent an effectively recurring revenue stream in perpetuity. Similar considerations are indeed also associated with most of its customers. And its customers are well diversified - both by sector and region (over half of Nuix's revenue is sourced from the USA). Nuix is used by AIG, Amazon, Barclays, Grant Thornton, Jaguar Land Rover, ThomsonReuters and “Big 4” accounting firms. In addition, ASIC use Nuix (eg see Prospectus, page 13). About 70% of customers have been with Nuix for more than 5 years and a third of all customers have been with Nuix for over 10 years (Prospectus, page 89).
3. It is no secret that Nuix’s move to a consumption based business model will generate higher revenues than has been recorded in previous years. This is an often overlooked aspect of valuation. Under a consumption licence, the customer is charged based on the volume ofdata processed or under management in each licence period. Customers are charged on a tiered “cost pergigabyte” basis, typically with minimum annual volume commitments (eg see Prospectus, page 94). This was genius. Data is not getting any smaller. It is exponentially ballooning. This will stand Nuix in very good stead in the future.
4. To the extent it warrants comment, media reports of the criminal investigation have had an adverse effect on price for all the wrong reasons. It has been confirmed that such an investigation has nothing to do with Nuix, only one individual in his personal capacity. It should have at worst a neutral impact and at best a positive impact for the optics of isolating responsibility for such conduct to that individual and nothing to do with the company.

Best of luck to all.