Nuix (ASX:NXL) share price crashes 11% amid another disappointing update

Nuix is disappointing its shareholders again…

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Key points

  • Nuix has had a tough first half of FY 2022
  • Revenue is expected to be down slightly year on year due to weakness in Europe
  • Operating earnings have been smashed from higher costs

The Nuix Ltd (ASX: NXL) share price is under significant pressure again on Friday.

At the time of writing, the investigative analytics and intelligence software provider’s shares are down 11% to a new low of $1.83.

Why is the Nuix share price sinking again?

Investors have been selling down the Nuix share price this morning following the release of a trading update for the first half of FY 2022.

According to the release, Nuix is expecting to post a decline in revenue and operating earnings during the first half.

In respect to revenue, the company is guiding to revenue of $82 million to $85 million for the six months ended 31 December. This will be a 0.35% to 3.9% reduction on the $85.3 million recorded a year earlier.

This is expected to underpin annualised contract value (ACV) of $161 million to $164 million, compared to ACV of $161.8 million during the prior corresponding period.

Management advised that this reflects a stronger performance in North America and APAC which has been offset by a weaker performance in EMEA. And while its ACV is relatively flat, the company highlights that it continues to see a marked shift away from module-style licences to consumption licences.

Operating earnings more than halve

As for its earnings, Nuix expects to post pro forma earnings before interest, tax, depreciation and amortisation (EBITDA) of $13 million to $15 million. This is down more than 50% from $31.6 million a year earlier. Finally, on the bottom line, Nuix is guiding to a net loss after tax of $2 million to $3.5 million.

Management advised that this earnings weakness has been driven by materially higher costs, such as non-operational legal costs. In addition, the company is reinvesting in sustainable revenue generation. This includes building sales and distribution capability and increasing levels of investment in the product development pipeline.

Following today’s decline, the Nuix share price is now down a massive 83% over the last 12 months.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended Nuix Pty Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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