The investigative data analytics company hit a 3-month high last week on the back of a big upgrade to FY23 guidance after the year-end. The company will release its FY23 report on August 18 and expects to report a ~15% increase in Annualized Contract Value (ACV) and a 51-61% increase in Underlying EBITDA. The updated guidance shows a vast improvement in performance in the 2H, adding ~9% to ACV in the last 6 months. EBITDA margins have also increased in the 2H based on the midpoints of guidance. While the growth was supported by positive moves in the currency, the underlying business has vastly improved and the company is showing its ability to execute sales with “several key contracts” being won late in the financial year. While an ASIC investigation remains, the update shows the opportunity ahead. Not long ago we wrote we would ”wait until there is more conviction in earnings and revenue outlook,” both of which we are far more confident on following last week’s update.
The headline EBITDA continues to be weighed by one off legal costs which will roll into FY24. The company is under an ASIC investigation regarding a parcel of shares bought by its CEO in September 2022 which follows a number of other legal challenges regarding the 2020 IPO. Putting these challenges to one side, Nuix is actually a top quality business with low reliance on any single customer, long term deals locking in revenue (more than 40% of ACV is contracted for 10+ years) and an international footprint that can access key global markets.
MM is now bullish NXL ~$1.15
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