'Underperforming' Nuix stayed mum after $1.8b float

Nuix should have revealed a failure to hit financial targets that were pitched to investors who bought $1.8 billion in shares when the software company went public, a court has heard.

The Australian Securities and Investments Commission claims the company and its board were negligent, misled the market and engaged in deceptive conduct.

The financial watchdog alleges Nuix breached the law because it did not publicly disclose its financial underperformance after the firm's initial public offering on December 4, 2020.

At the time, 179.5 million shares were offered at a price of $5.31 per share.

As the market opened, the share price increased to just over $8, hitting a peak of $11.86 by January 22 the following year.

Morgan Stanley estimated that between $17 million and $19 million worth of shares were traded daily at the time.

The share value plummeted to around $2.50 by June.

In the IPO's prospectus, the firm claimed it could hit an estimated revenue for the 2021 financial year of $193.5 million and that its annualised contract value would be $199.6 million.

The annualised contract value is the total value of the agreements Nuix had with customers averaged out over the year.

The firm would enter into multi-year contracts with companies and organisations, including the ASIC and US government, and would provide licences to those clients for the use of its software.

As a 19-day trial began in the Federal Court on Monday, ASIC's barrister Jeremy Giles SC said that by New Year's Eve of 2020 - weeks after the float - internal forecasts for Nuix's annualised contract value had dropped to $161.9 million for the 2021 financial year.

Estimates for the first half of FY21 were $17.1 million or 9.6 per cent less than the financial figures used to develop the prospectus prior to the float, he told Justice Scott Goodman.

By April, revenue forecasts were also down to either $185 million or in the range of $180 to $185 million, the court heard.

“What they lost sight of was the need to inform the market," Mr Giles said.

Nuix and its directors allegedly breached the law from January 18, 2021 until April 21 that year by failing to disclose the failure to hit these targets and the reasons behind the underperformance, the court heard.

"It is a question about having put some information into the market, what had to be done if anything,” Mr Giles said.

The company could have issued corrective notices on the Australian Securities Exchange or entered into a trading halt while it examined its forecasts to determine whether they were accurate, Mr Giles said.

ASIC's lawsuit does not complain about the prospectus itself.

The executives sued include former executive chairman and CEO Rod Vawdrey, former executive chairman Jeffrey Bleich and then non-executive directors Iain Lobban, Daniel Phillips, and Susan Thomas.

ASIC is seeking court-ordered penalties and orders disqualifying the former Nuix directors from managing corporations.

The trial continues.

What is AAPNews?

For the first time, Australian Associated Press is delivering news straight to the consumer.

No ads. No spin. News straight-up.

Not only do you get to enjoy high-quality news delivered straight to your desktop or device, you do so in the knowledge you are supporting media diversity in Australia.

AAP Is Australia’s only independent newswire service, free from political and commercial influence, producing fact-based public interest journalism across a range of topics including politics, courts, sport, finance and entertainment.

What is AAPNews?
The Morning Wire

Wake up to AAPNews’ morning news bulletin delivered straight to your inbox or mobile device, bringing you up to speed with all that has happened overnight at home and abroad, as well as setting you up what the day has in store.

AAPNews Morning Wire
AAPNews Breaking News
Breaking News

Be the first to know when major breaking news happens.

Notifications will be sent to your device whenever a big story breaks, ensuring you are never in the dark when the talking points happen.

Focused Content

Enjoy the best of AAP’s specialised Topics in Focus. AAP has reporters dedicated to bringing you hard news and feature content across a range of specialised topics including Environment, Agriculture, Future Economies, Arts and Refugee Issues.

AAPNews Focussed Content
Subscription Plans

Choose the plan that best fits your needs. AAPNews offers two basic subscriptions, all billed monthly.

Once you sign up, you will have seven days to test out the service before being billed.

AAPNews Full Access Plan
Full Access
  • Enjoy all that AAPNews has to offer
  • Access to breaking news notifications and bulletins
  • Includes access to all AAPNews’ specialised topics
Join Now
AAPNews Student Access Plan
Student Access
  • Gain access via a verified student email account
  • Enjoy all the benefits of the ‘Full Access’ plan at a reduced rate
  • Subscription renews each month
Join Now
AAPNews Annual Access Plan
Annual Access
  • All the benefits of the 'Full Access' subscription at a discounted rate
  • Subscription automatically renews after 12 months
Join Now

AAPNews also offers enterprise deals for businesses so you can provide an AAPNews account for your team, organisation or customers. Click here to contact AAP to sign-up your business today.

Download the app
Download AAPNews on the App StoreDownload AAPNews on the Google Play Store