Nuix (ASX:NXL) share price gains 12% on signals of accountability

The Nuix Ltd (ASX: NXL) share price is flying higher following the company's CEO addressing issues and concerns during its investor day.

Mitchell Lawler

Mitchell stumbled upon the concept of investing when in high school, devotedly urging his parents to put some money into a handful of technology companies with increasingly popular products among his demographic – many of which have gone on to great success. It wouldn’t be until 2017, some five years later, that Mitchell became an investor of his own money. Having studied and worked as a mechanical engineer in the building services industry, Mitchell takes a methodical and analytical approach to evaluating businesses. Rather than relying purely on numbers, Mitchell drills beyond a company’s metaphorical mantle to unearth obscure patterns or competitive advantages that would go otherwise unnoticed. His expertise resides within areas such as software, consumer goods, and building services equipment. However, his quest to find quality companies that set the industry standard and flex some degree of an impenetrable position has no limits – small cap to mega cap, cosmetics to healthcare – if it’s an exceptional business it’s on his radar.

Published May 18, 2021 12:21 pm AEST

The Nuix Ltd (ASX: NXL) share price is flying higher today after the intelligence software company conducted its investor day presentation.

At the time of writing, Nuix shares are swapping hands for $3.51 – an increase of 11.78%.

It seems investors are eyeing a glimmer of green following an extended timeline of disappointment and doubts. Comments addressing these issues head-on in the presentation have been met with optimism.

Let's look at what is moving the company's shares.

asx share penalty represented by lots of fingers pointing at disgraced businessman Crown royal commission WA — Image source: Getty Images

Stormy Nuix share price backdrop

Beginning as one of the hottest initial public offerings (IPOs) last year, this fairytale story evolved into a shareholder nightmare. The potential growth story had investors excited, with many believing Nuix could be the next big Australian technology company.

Hopes began to shatter when the company announced its results for the first half of FY21 on 26 February. Statutory revenue was down 4% to $85.3 million, while profit after tax dropped 20.4% to $9.5 million.

The disappointment was only compounded when Nuix revised its guidance for FY2021 on 21 April. Due to a shift from module-based subscriptions to software-as-a-service (SaaS) licenses, Nuix downgraded its forecasts. Controversially, this occurred only 6 weeks after reaffirming guidance to shareholders.

The reaction was what you'd expect from shareholders jostled around by conflicting statements. Shares in the intelligence software provider plummeted 16%. The Nuix share price had been gradually falling following the downgrade.

A joint investigation by The Sydney Morning Herald, The Age, and The Australian Financial Review released 17 May 2020 added to shareholder distrust. The publications mostly discussed Nuix founder, Tony Castagna.

Although Castagna left the Nuix board prior to its ASX float, the publications pointed out that Castagna's involvement and history were not disclosed in the prospectus. For those unaware, Castagna was acquitted of charges relating to tax fraud and money laundering in 2019.

Nuix CEO addresses the elephant in the room

With so much speculation and controversy swirling, today's investor presentation had a lot hanging over its head. The weight of the market's discontent was a heavy stone that CEO Rod Vawdrey did not want to leave unturned.

In a show of accountability, Vawdrey commented on the lack of communication and business priorities, "That's on us, that's our bad. Building trust with you, our investors really is our top priority. I take full responsibility for the performance of the business." He added, "For those investors big and small who have been impacted in the last few months, I'm incredibly sorry."

The remarks have been well received by the market. The Nuix share price is on track for its best day since 23 April.

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