Ann: 1H23 Results Update, page-27

I've always thought the Sheehy case was a sideshow (albeit a fairly significant one) to the core issues that Nuix faces as it battles for survival a) it doesn't have sufficient cash to deal with adverse outcomes on the ASIC litigation and class action; and b) its much touted "operating leverage will work against it as revenue declines and each round of cost cutting further compromises the company's ability to support and maintain its existing client base (let alone invest for growth.

In previous posts I've pointed to the fact that the company is burning around $10-15M per half and around $25M per annum. That means it has just over 12 months runway unless it 1) cuts costs thereby further compromising its ability to support its clients and grow; or 2) raises capital or debt which I very much doubt it can do with all of the legal overhang that remains along with a declining business (only vulture like investors would be interested at all and you can imagine the onerous investment terms they would seek).

If ASIC or any of the Australian government clients were to drop Nuix it would be on a slippery slope to oblivion - its global regulator client base would abandon it quickly followed by all of its major corporate clients and the global list of advisory and legal firms that service them.

I had a look back at the prospectus and on page 104 it talks about Nuix's "industry centric land and expand strategy". At the heart of this is its market share of corporate and tax regulators. it's presence with the likes of ASIC and ATO seems to be key to Nuix's push into corporates. In their own words, to "position Nuix through education and marketing as a "must have" technology integral to enterprise data architecture". If ASIC and the ATO are no longer customers, why would corporates use them (or at least as much of Nuix)?