Content Assessment: Down Under? Nuix FY22 Results and Strategic Refresh Update
Information - 90%
Insight - 89%
Relevance - 92%
Objectivity - 86%
Authority - 90%
A short percentage-based assessment of the qualitative benefit of the FY22 earnings results from global software provider, Nuix.
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Background Note: The following announcement shares the FY2022 financial results for eDiscovery software provider Nuix and may be of interest to legal, business, and information technology professionals operating or investing in the eDiscovery ecosystem. Additionally, a recent post by Tomasz Tunguz, a venture capitalist with Redpoint, provides an interesting consideration that may be of relevance regarding the value of public software companies. The post, titled Growth is No Longer the Best Predictor of a Software Company’s Value, notes that profitability has surged as the most significant correlate and predictor of a public software company’s value. This revenue observation may also be of interest to individuals considering valuations in light of annual earnings results.
Press Announcement and Investor Presentation
Nuix Announces FY22 Results and Strategic Refresh Update
Sydney, Australia – Global software company Nuix (ASX:NXL) announces its preliminary results for the financial year ending 30 June 2022 in line with the recent trading update. Nuix also today releases more detail on Strategic Refresh initiatives.
- Annualized Contract Value $162.0m, down 2.3% on FY21
- Statutory Revenue $152.3m, down 13.5% on FY21
- EBITDA $12.1m, down 82.0% on FY21 (pro forma)
- NPAT ($22.8m), down 190.4% on FY21 (pro forma)
Annualized Contract Value (ACV), which seeks to remove volatility associated with multi-year deals, fell by 2.3% compared to the prior corresponding period (pcp). Subscription ACV, an important metric given its recurring nature, grew by 1.1%, representing 91.6% of ACV. Consumption-based ACV grew by 40.6%, continuing the trend seen in recent periods. Regionally, Asia Pacific ACV rose, while North America and EMEA ACV fell.
As previously advised to the market the fall in statutory revenue occurred primarily due to a lower value of multi-year contracts sold and lower new sales. Lower revenue combined with an increase in costs led to a lower EBITDA outcome for the full year.
Customer churn rose to 5.4% for the full year, although generally remains low, with strong customer relationships maintained. Net Dollar Retention (NDR) rose compared to the prior year, to 96.8%.
As flagged in previous updates, Nuix increased Research and Development spend materially during the year, with a firm commitment to further investment in revenue generation. Research and Development spend for the year totaled $58.3m, an increase of 32% on the prior year. Important progress was made on critical projects, including further development on the integrated SaaS platform and Natural Language Processing (NLP) integration.
Nuix finished the year with a total headcount of 475, an increase of 8% on the prior year. In line with experience elsewhere in the industry, Nuix is experiencing an increase in employee retention and recruitment costs.
Before Topos acquisition costs and trading losses, as well as non-operational legal costs, Nuix recorded a small fall in underlying cash flow for the full year, and a positive underlying cash flow in the second half. The increased cash costs associated with Research and Development were funded from operational cash flow. Non-operational legal costs remain elevated and amounted to $13.8m for the full year. Nuix ended the financial year with a cash balance of $46.8m.
Strategic Refresh Update
Group Chief Executive Officer Jonathan Rubinsztein provided further detail on Strategic Refresh initiatives across the group, commenting:
“We’ve been clear about the need for a refresh of strategic initiatives to drive growth. Our strategy revolves around a greater focus on customer centricity and initiatives across three key horizons. The team has been working exceptionally hard behind the scenes over the last half, and today I’m pleased to be able to share an update on our early progress. We’ve made good headway on key Horizon 1 initiatives, and work is already underway on Horizon 2 and 3 initiatives.
We recently launched a new price book, providing greater alignment between pricing and the value added from the Nuix offering. A global sales process refresh program has been initiated to standardize our buyer experience. As this program comes to fruition it is expected to provide significant benefits in terms of improved win rates, higher customer retention and sales force efficiencies.
A more rigorous renewal process is being implemented, with a strong focus on renewal metrics and processes to drive stronger NDR outcomes. We’re also upgrading our service offerings to customers, to help make sure that customers can optimize their Nuix experience, providing incremental revenue opportunities for our organization.
Structure follows strategy, and we’ve made important changes to our organizational structure, including key hires at the leadership level, to drive our strategy forward. Across the company we’ve realigned performance incentives and KPIs to ensure better alignment between individual performance measures and the goals of the organization.
Looking further out to Horizon 2, we are already building out our SaaS infrastructure and will increasingly integrate Nuix’s technology into a unified investigations platform. Releasing our Natural Language Processing capability will enable customers to ‘work smarter’, building new use cases and giving our customers an early opportunity to take advantage of the Nuix SaaS infrastructure. Over Horizon 3, our team is already working on new, high-value, repeatable use case solutions.
Nuix is a remarkable organization making a meaningful difference in the world. We’re putting the right people in the right roles to make sure Nuix is fit for growth. Our customer and partner relationships remain strong. Our Engine remains unparalleled and is central to our platform, underpinning our growth trajectory. And lastly, our strategy is clear and we’re acting on it, with urgency and focus. I’m excited and optimistic about our future, and as an organization, the Nuix team is mobilizing to enact the changes required to drive growth.”
Jonathan Rubinsztein, Group Chief Executive Officer, and Chad Barton, Chief Operating Officer & Chief Financial Officer, will present the FY22 results via webcast at 10.30 am (AEST).
To access the webcast, please use the following link:
A replay of the webcast will also be made available on the investor section of the Nuix website shortly after the event:
This announcement has been authorized by the Nuix Board.
Nuix Limited is a leading provider of investigative analytics and intelligence software, with the vision of “finding truth in a digital world”. Nuix helps customers to process, normalize, index, enrich and analyze data from a multitude of different sources, solving many of their complex data challenges. The Nuix platform supports a range of use cases, including criminal investigations, financial crime, litigation support, employee and insider investigations, legal eDiscovery, data protection and privacy, and data governance and regulatory compliance.
For further information, please visit investors.nuix.com
Nuix FY22 Financial Results Investor Presentation
- Investments in eDiscovery (A Running Listing)
- An Abridged Look at the Business of eDiscovery: Mergers, Acquisitions, and Investments
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