The Nuix Ltd (ASX: NXL) share price is having a very disappointing finish to the week.
In morning trade, the ASX All Ord share was down as much as 20% to $1.67.
The investigative analytics and intelligence software provider's shares have recovered slightly since then but remain down almost 15% to $1.79.
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Why is this ASX All Ord share sinking?
Investors have been hitting the sell button today after Nuix released a half-year update before the market open.
According to the release, the company expects to report annualised contract value (ACV) of $196 million to $199 million for the half. This will be up 15% to 17% over the prior corresponding period.
This has been driven largely organically but also boosted by favourable foreign exchange movements. The latter is attributable to approximately 1-2 percentage points.
While this is positive and means that the ASX All Ord share remains firmly on track to achieve its ~10% ACV growth target in FY 2024, it seems that the market was factoring in an even stronger performance and is therefore disappointed with this update.
After all, Nuix shares are up 150% over the last 12 months despite today's decline. Clearly, lofty expectations were built into its share price.
What about earnings?
Nuix also provided an update on its earnings, advising that underlying EBITDA is expected to be $27 million to $29 million for that half. This represents a slower growth rate of 8% to 16% over the same period last year.
And on a statutory basis, the company expects its EBITDA to fall 9% to 19% year on year to $17 million to $19 million. This is due largely to non-operational legal costs related to the ASIC Federal Court hearing.
Positively, if you take the legal costs out of the equation, the ASX All Ord share was underlying cash flow positive in the first half.
Management believes this trend will continue and has maintained its FY 2024 strategic objective to be underlying cash flow positive for the full year. Nuix ended the half with cash on hand of $24 million and no debt.
