Nuix (ASX:NXL) dropped below its IPO price again after its latest financial update which showed its customers were downgrading their contracts.

The forensic data company listed in December last year at $5.31 and rose as high as $11.86 in late January. But it crashed in March after its first set of financial results fell short of its prospectus forecasts.

After a gradual climb in recent weeks, Nuix’s ASX shares fell again today after another trading update and revision to its forecasts.

Nuix is now anticipating pro forma revenue of $180-$185 million when it promised $193.5 million its IPO prospectus.

Its Annualised Contract Value is projected to be between $168 and $177 million when it estimated $199.6 million.

However its earnings will be slightly higher than expected, forecast between $64.6 million and $66.6 million when it had indicated $63.6 million. The company credits this to forex benefits, a lower head count and reduced travel costs.


Why are Nuix’s forecasts down?

Nuix told the ASX a number of its clients have been shifting from module-based subscription licences to consumption and SaaS licence models.

The company says it is a good thing for its growth prospects in the long term and is more attractive to customers as they seek flexible global licensing and to operate remotely.

“The increasing rate of adoption of consumption licences has had a positive impact on new business and existing retention,” said CEO Rod Vawdrey.

But in the short term the shift is impacting statutory revenues and this caused shareholders to panic.

Nuix shares were 14 per cent down as at 10.30am today and are over 18 per cent down from their IPO price.

Nuix (ASX:NXL) Share price chart


Company optimistic for the long term

Vawdrey said despite the impact in the short term, the longer term appeared positive.

“Giving our customers the choice in how they consume Nuix is a key competitive advantage,” he said.

“The fundamental revenue drivers for Nuix are strong and underpinned by a growing order book and pipeline.

“It reflects the underlying strength of the Nuix software offering, a sticky, loyal customer base, strong growth in new business and an increase in order size.”