Pinned straw:
02-March-2025: Nuix (NXL) is a turnaround that DID turn around, then in the past few months they've done another U-turn and headed back south again.
You can see on that 5 year chart (above, right) that they were powering back up at a very good clip, and then they had their AGM on 13-Nov-2024 and that was the end of that. Their SP dropped -22% on that day, then another -20% on 28th Jan (2025) when they released this: NXL-1H25-Results-Update-28-Jan-2025.PDF - Here's a snippet from that:
And after dropping -20% on that guidance downgrade in late January, they managed to drop again on the day they actually reported (24th Feb) and on every day since then as well:
Was it really that bad? Well, it wasn't good:
Source: Page 1 of NXL-1H25-Results.PDF
They managed to land within the guidance ranges they provided in late January, except for narrowly exceeding their $11 to $13 million Cash EBITDA guidance (by 0.4m), but importantly that particular number does NOT include legal costs and restructuring costs, and they've got a few class actions ongoing, so there are substantial legal costs. And restructuring costs.
The thing that everybody is focusing on NOW, and rightly so, is the Statutory NPAT, i.e. bottom line profit number, and it was a 10.4 million LOSS, a whopping -115.4% WORSE than the $4.8 million LOSS that they had reported 12 months ago for H1 of FY2024 (the p.c.p.).
You may note that they did NOT given any Statutory NPAT guidance in January - they did give guidance for the 5 metrics above that one, but not that one, which, coincidentally, happens to be the WORST one, both in terms of comparisons with the previous corresponding period, and also in terms of how the business is travelling right now. Which is... not good.
To make matters even worse, as if it wasn't bad enough already, their "Outlook" Statement was...
As you can see, that consists entirely of "STRATEGIC TARGETS", rather than any substantive guidance. In other words, "this is what we'd like to happen, and what we're working towards, but we can't tell you what the odds are of us achieving any of these targets, but obviously we'll give it a red hot go". [paraphrasing]
Bottom line, they're still losing money, and they have not been great at setting realistic targets and achieving them over the past few years, so with every additional disappointing result, and guidance downgrade, they shake off even more of whatever true believers they've got left clinging on in the hope that there is a decent company among all of the rubbish management. It increasingly looks like even if there is, this management are going to run it into the ground anyway.
They might get some traders jumping on them when they're in an uptrend, but it seems that they go up mostly on hot air and then gravity brings them back down.
Still, if you look at them over the past 3 years against a couple of other companies that were also supposed to be turning around and heading north again, Retail Food Group (RFG) and Appen (APX), at least Nuix are still ahead of where they were 3 years ago; those other two are not:
The Orange line is the ASX200 Accumulation or Total Return (TR) Index (XJO.asx), which is the baseline ETF return.
From a starting point of 3 years ago - beginning of March 2022 - Nuix was bouncing along with a negative return and then went from -43% down on July 12th, 2023 to +463% up on the last day of October 2024, and despite it being all downhill from there, they're still trading at levels that are +167.6% higher than 3 years ago, but, that being said, they're also back in a strong downtrend, so... there's that.
Nuix's positive turnaround was clearly unsustainable.
Disc: Not holding these.
No end in sight yet for the latest NXL downtrend:
There are 20.6 times the number of shares for SALE (on the "sellers" side) than there are to BUY (on the "buyers" side).
There are 1,961% more shares lodged for sale overnight than there are lodged to buy.
WHY are there any buyers at all?
In the wise words of lengendary fund manager Peter Lynch: "Behind all the smoke and noise on the market’s surface, it’s important to remember that companies — small, medium, and large — make up the market’s backbone. And corporate earnings drive stock prices."
And Warren Buffet said: “In the short run, the market is a voting machine but in the long run it is a weighing machine.”
NXL is still posting losses. Still!
And their management do not underpromise and overdeliver. They overpromise and then underdeliver.
So who is looking at Nuix and saying, "Yep, that's definitely where I want my capital to be 'invested'!?"
Wednesday 7th May 2025: 6 weeks since my last shot at Nuix (see here for the thread) and things aren't getting any better:
Trading-Update.PDF [5:49pm on Tuesday 6th May 2025]
The market didn't get to react to that last night, since it was released after the market had closed, but they got to react to it today:
Nuix made another new 12-month low today, of $1.785 which at that time was 58.5 cents per share (cps) or -24.68% below their previous day's closing share price of $2.37, and were "only" down -16.67% @ $1.975 when I took that snapshot this afternoon. They have just closed at $1.99, which is -16.03% below yesterday's close.
The drop today was due to last night's (after market) announcement by the company abandoning their previous ACV target range guidance as well as their previously stated growth and underlying free cash flow (FCF) targets - see below:
There are ALWAYS reasons - but the thing to note here is that they're not just reducing guidance, they're actually abandoning guidance altogether now. There is no guidance now.
So, the turnaround that followed the previous turnaround continues - Southwards:
What's to like?
Nothing!
The investment thesis was busted long, long ago, and now the turnaround thesis is also busted. No need to bottom-fish for rubbish like Nuix when there are quality companies listed on the ASX that have management that say what they're going to do and then do it, and set realistic targets and give realistic guidance and then achieve those targets and that guidance, or better still, exceed those expectations.
There are management teams who usually underpromise and overdeliver most of the time. And the companies those people manage tend to be fairly solid investments.
Nuix has management that always do the exact opposite of that, and that's why they have been a terrible investment.
And they are once again heading south at a decent clip. Because they are still rubbish.
For anybody who is still hoping this one will come good, how much rope are you going to give Nuix management?
How many times do they need to overpromise and then underdeliver before you accept that they are bad managers that are managing a company that is going backwards?
Why do you think this company is one of the best opportunities across the market for your hard earned to be invested in?
Two lessons to remember here:
- No matter how much you've lost, you can still put what's left into something better, for as long as they remain trading on the ASX anyway; and
- You don't have to win back lost money in the same company you lost it with.
If anybody has a plausable investment thesis for Nuix from here that shows why they should be a superior investment to the many alternative investment options we have, including cash and ETFs, I'd like to hear it.
25th August 2025: Nuix-Announces-FY25-Results.PDF
Revenue Flat, Cash EBITDA up +24.5% while Statutory EBITDA DOWN -14.8%, Underlying Cash Flow DOWN -18.6%, and a LOSS reported for the year.
What's to like?
Bugger All!
The 10 year chart below shows how they started turning then hit an iceberg and sank again, and now they're just bobbing along at the bottom of the ocean...
Another example of the likely outcomes of turnarounds.
They rarely turn, and they take longer than you expect when they occasionally do turn, and then in this case we see they can also turn back around and head south again.
They say a rising tide lifts all boats, and the Aussie stock market has been regularly achieving new record highs lately, so we've got that rising tide, but not ALL boats, not the ones whose hulls are full of holes. Not the structurally damaged boats. They can still sink.
Disclosure: Not a barge pole long enough for me to even prod this one let alone hold it.
Thanks @Shapeshifter - I love to hate on Nuix at least twice a year. Speaking of leaky boats, saw this on LinkedIn today:
Good advice for retail shareholders when we start listening to all of that "noise" around us and trying to make sense of it - it's sometimes better to block it out; don't let it in, and filter information sources based on credibility rather than how loud they're yelling or how many are agreeing with each other. I'm sure that's not what this particular "motivational poster" creator had in mind when they designed that one above, but that's what I got from it.