The Nuix Ltd (ASX: NXL) share price is rebounding after a horror run.
At the time of writing, the investigative analytics and intelligence software provider's shares are up over 5% to $5.28.
Why is the Nuix share price?
Investors have been buying Nuix shares this morning after it responded to an article in the Australian Financial Review.
Within that article, one analyst likened Nuix's IPO as putting lipstick on a pig. "There was so much lipstick caked on, no one could recognise it was a pig," the analyst said.
This comment is in relation to the disappointing half year results release by Nuix in February. Given that Nuix's shares hit the ASX boards on 4 December, just a matter of a few weeks short of the end of the financial period, investors were very surprised to see it fall short of expectations.
This led to concerns among some shareholders that Nuix "was fattened up for market day."
This goes some way to explaining why the Nuix share price was down 58% from its high and trading below its IPO price at Friday's close.
The Nuix response
This morning Nuix released a response to the article. It commented:
"Both 1H FY21 revenue and 1H FY21 Annualised Contract Value (ACV) reported by Nuix on 26 February 2021 were in line with management's expectations when considering the impact of currency headwinds and the timing of certain deals which subsequently completed in January. As noted in its prospectus, Nuix's contract completions are typically weighted towards the end of Nuix's financial half years. In 1H21 for example, more than 30% of that half's revenue was signed in December 2020."
Management also notes that the US election had an impact on its first half performance due to delays in contracts being signed. It explained:
"In the case of ACV, this also included a delay in spending with the US government associated with the US election, in particular the unexpected delay in transitioning the Administration which impacted access to government agencies and officials required for signing contracts. Given the strength of Nuix's government relationships, Nuix is well positioned to capture US government spend as it is released."
FY 2021 guidance explained
The company also decided to add more colour to its guidance for FY 2021. It said:
"The FY21 revenue forecast, prepared on a consistent basis with applicable accounting standards, is based on estimated renewals, upsell renewals and new business. Renewals and upsell renewals, in the form of additional cores, licences and application add‑ons, are forecast at $164.1 million representing 85% of total revenue. New customer revenue, which has the longest sales cycle and provides opportunity for future renewals and upsell, is forecast at $29.4 million representing 15% of FY21F revenue. In 1H FY21, renewals and upsell of $72.2m was 85% of total revenue and new business at $13.1 million was 15% of total revenue, both in line with the full year forecast mix."
Nuix's CEO, Rod Vawdrey, concluded: "Nuix has been a trusted partner for more than fifteen years to leading organisations around the world including governments, law enforcement agencies, regulators and major corporations. As a newly listed company we are committed to building the same long-term trust with the market. The fundamentals of our business remain strong supported by our powerful processing engine and sticky customer base."
