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The Nuix Ltd (ASX: NXL) share price is facing significant downward pressure in Monday's trading session, with shares dropping as much as 15% to $1.65. This sharp decline follows the release of the company's half-year results, which failed to meet market expectations. ASX technology stocks, representing companies involved in various aspects of the technology sector, are closely monitored alongside Nuix Ltd's performance for insights into market trends and investor sentiment in the technology industry.
Lackluster Half-Year Performance:
Nuix's half-year results for the period ending 31 December reveal a mixed performance:
- Annualised Contract Value (ACV) Increase: ACV saw a notable 17.3% increase to $199.6 million, driven primarily by growth in the existing customer base across all key regions.
- Revenue Growth: Statutory revenue rose by 12.3% to $98.4 million.
- EBITDA Decline: However, statutory earnings before interest, tax, depreciation, and amortisation (EBITDA) experienced a significant decline of 17.6% to $17.2 million, primarily due to increased legal costs.
- Net Loss: Nuix recorded a net loss after tax of $4.8 million for the period, compared to a $1.3 million profit in the previous corresponding period.
Strategic Initiatives and Financial Position:
Despite the challenging financial results, Nuix CEO Jonathan Rubinsztein highlighted the company's progress on strategic growth initiatives, particularly Nuix Neo. The company also maintained strong commercial relationships with customers, evidenced by continued growth in ACV and statutory revenue.
Nuix ended the half with $24 million in cash and no debt. To bolster its financial position, the company secured a $30 million multicurrency revolving credit facility from HSBC.
Outlook and Targets:
Despite the disappointing half-year results, Nuix reaffirmed its targets for FY 2024, including:
- ~10% ACV and statutory revenue growth in constant currency.
- Revenue growth exceeding underlying cost growth.
- Achieving underlying cash flow positivity for the year.
Market Reaction:
The Nuix share price decline reflects investor disappointment with the half-year results. However, it's essential to note that the stock remains up 58% over the last 12 months, despite today's weakness.
Overall, Nuix faces challenges in maintaining profitability amid increased legal costs, but management remains focused on driving growth and achieving its long-term targets.
