Up 53% in a month, how Nuix shares are winning back investors

Is this ASX tech share back in the good books of investors?

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Man smiling at a laptop because of a rising share price.

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The Nuix Ltd (ASX: NXL) share price is rising from the ashes as it trots towards 4 years as an ASX-listed company.

As the trading ceases for another day, shares in the investigative analytics software provider rest at $2.98, up 25.21% from Friday's closing price. The rapid rise makes Nuix's monthly return look outlandish, sitting at a smitten 53%. It would've taken the last 4 years and 19 days to get the same return from the S&P/ASX All Ordinaries Index (ASX: XAO) before dividends.

Zoom out, and the returns from holding Nuix quickly become astronomical. For example, the one-year return from this Sydney-based tech company is 195% as of Monday afternoon. Yes, that's the equivalent of turning $5,000 into $14,750 in 12 months.

It sparks the question: Why the sudden shift in gears after what was a disastrous time?

What's behind the resurgence?

There's no way of pinpointing what flipped the switch to put Nuix shares on a positive trajectory. However, we can see which announcements were followed by significant company share price increases. This should give us an insight into some of the driving forces behind the change in investor sentiment.

A quick glance at a one-year price chart shows 20 July 2023 as the first major upward move, as shown below.

On 20 July 2023, Nuix released its FY23 preliminary results. A few important pieces of information were contained in this announcement:

  • Nuix was returning to growth, forecasting $184 million to $186 million in annualised contract value
  • Legal costs were on the downtrend, and
  • Earnings before interest, tax, depreciation, and amortisation (EBITDA) were expected to rise

Fast forward to the present day, and it's a similar situation presented in today's FY24 earnings update. Nuix expects to exceed its 10% revenue growth target for the full financial year, and statutory EBITDA is anticipated to land between $47 million and $52 million — increasing more than 35% from FY23.

Part of the rosy forecast originates from Nuix bagging a 'significant multi-year deal' with an unnamed customer.

Still hanging over Nuix shares

It would be remiss to gloss over the anchors still shackled to the metaphorical ankles of Nuix.

While the Nuix share price has performed exceptionally recently, it has still underperformed the benchmark since its hyped initial public offering (IPO). From its listing, the ASX tech share is down approximately 63%, whereas the All Ordinaries Index is up about 19%.

Lastly, the high-flyer remains subject to a decision on allegations of misleading the market made by the Australian Securities and Investment Commission (ASIC). Without knowing the verdict, the pending outcome presents a risk.

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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 Scott Phillips.

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