Nuix $2 Party!, page-420

This article, from today's AFR, paints a decidedly positive outlook for NUIX.
We could see a big rebound today from yesterday's overreaction.

Nuix boss has ‘nothing to hide’ as shares fall12pc

JessicaSierJournalist

Aug 17, 2023

KEY POINTS

• Why it matters: Once a market darling, Nuix shares have fallen significantly
• The company said it has narrowed losses and added to earnings this year
• Nuix boss is still being scrutinised by the corporate regulator over share purchases

Nuix bossJonathan Rubinsztein has defended his purchase of shares amid a possibletakeover discussion, saying he has “nothing to hide” as the investigationsoftware company narrowed losses for the year and reported a sharp uptick inunderlying earnings.

Nuix, whichsells investigative software for large enterprises, reduced its losses to $5.6million for 2022, down from $22.8 million a year earlier. Underlying earningsbefore interest, taxes, depreciation, and amortisation came in at $46.4million, up 59 per cent on the previous period.

Nuix chiefexecutive Jonathan Rubinsztein says he has nothing to hide, after the companyreported its latest earnings results.

“Our legalcosts are lowering and we’ve been signing up more pharmaceutical and legalcustomers,” Mr Rubinsztein said.

“We’ve alsojust launched our new platform, from which revenue is likely to flow through tothe bottom line within the next six to eight months.

Nuix sharesfell 12 per cent in early trade to $1.40.

Nuix burnedthrough $17 million in cash over the past year, but Mr Rubinsztein said most ofthat was through one-off legal costs and twoacquisitions – natural language processing company Topos Labs and long-termCanadian technology partner Rampiva.

“We’re verycomfortable with the cash position, and the current cash burn is not fromoperations, it’s from legal costs and acquisitions,” he said. Nuix has about$29 million in the bank, and Mr Rubinsztein said Nuix had no plans to go tomarket and raise further cash.

Nuix hasbeen plagued by several ongoing legal battles, including an ASIC investigationinto the company’s reporting following its 2020 IPO and another investigationinto the purchase of shares by Mr Rubinsztein.

“I havenothing to hide,” Mr Rubinsztein said of the investigations. “We are workingwith ASIC to close it out quickly.”

Nuix hasalso been dealing with a five-year court battle against former chief executiveEddie Sheehy, whose appeal will be heard next week.

Earlierthis year, the courtdismissed Mr Sheehy’s claim that he was entitled to astock split that would have allowed him to cash out during the company’sbillion-dollar IPO.

“Hopefullythat [appeal] will be dealt with very quickly,” Mr Rubinsztein said.

The techstock reported a 19.8 per cent rise in statutory revenue to $182.5 million overthe past year. Most of the new revenue was added during the month of June andthe company benefiting from a currency tailwind.

Despite thejump in new customer sign-ups, multi-year deals fell from 40 per cent to 30 percent for the financial year.

Contractvalues are a key metric for Nuix, which sells technology that analyses largeswaths of unstructured data and is embedded within large companies such asbanks, auditing firms and investigations units within the FBI and UKintelligence.

This metricrose 14.5 per cent to $185.5 million for the year, with the company pointing togrowth in North America, Europe and Asia-Pacific.

Customerchurn slipped from 5.4 per cent to 5.3 per cent for the year, though MrRubinsztein said increased upselling contributed to the boost in underlyingearnings.

Excludingthe legal bills, Nuix booked underlying cash flow of $9.1 million for the year.