NXL
Hi James & Team, Could you please offer some explanation on Nuix as they were on your Hitlist and now after they reported 19 08 24, the share price has taken off. Look forward to you reply as always Christof
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Answer
Hi Christof,
Earnings season can be a frustrating period at times with missed opportunities one of the toughest to swallow but with reporting season often delivering binary outcomes it can be reckless taking on positions ahead of releases. In the case of NXL, they announced strong earnings growth in their FY24 report with the stock finally trading back around its IPO price.
- Annualised contract value came in at $211.5mn, +14% yoy.
- Underlying EBITDA of $64.4mn was +38.7% yoy
- Overall Free Cash Flow of $11.9mn was a major turnaround on -$12.9mn FY23.
The key here is that NXL is scaling very well, expanding margins and this will lead to strong earnings growth from here. In the short term, we think we’ve missed the boat, however we will keep it on our Hitlist for a better entry point given the business is now firing, circa ~$4.00 would look interesting.
