Why is this ASX tech stock crashing 27% today?

Why are investors hitting the sell button? Let's find out.

| More on:
A man in a suit face palms at the downturn happening with shares today.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Nuix Ltd (ASX: NXL) shares are having a very tough time on Wednesday.

In morning trade, the ASX tech stock's shares were down as much as 27% to $5.51.

The investigative analytics and intelligence software provider's shares have recovered a touch since then but remain down 16% to $6.36 at the time of writing.

Why is this ASX tech stock crashing?

Investors have been rushing to the exits today after the company released an update at its annual general meeting.

At the event, the company's CEO, Jonathan Rubinsztein, reminded investors what it was hoping to achieve in FY 2025. He said:

At the FY24 full year results in August, we flagged the following strategic targets for the full year FY25: Targeting ~15% ACV growth in constant currency. Continued successful rollout of Nuix Neo. Revenue growth to exceed operating cost growth (excluding net non-operational legal costs). Underlying Cash Flow positive for the full year.

The good news is that the ASX stock continues to target these metrics for FY 2025. The bad news is that it seems apparent that its first half performance will be well short of them.

This appears to have sparked fears that the company is more likely to not deliver on these targets than it is to achieve them over the course of the full year. Rubinsztein adds:

We continue to execute on our strategy and I take the opportunity today to reiterate these targets. Nuix's sales are not linear over the course of the year, and our current expectations are that growth will be weighted towards the second half of the fiscal year.

He then concludes:

In closing, I want to acknowledge the hard work of the team who are driving this transformation. They are committed to execution of the strategy, with a particular focus on customer centricity. Thank you for your tremendous efforts over the year. I would also like to extend my thanks to my fellow Directors, to all of our stakeholders and particularly you, our shareholders. We are tremendously grateful for your support and look forward to delivering further innovation and growth.

Big returns

While today's decline is disappointing, shareholders aren't likely to be too downbeat.

That's because the ASX stock is still up over 300% since this time last year.

To put that into context, a $5,000 investment 12 months ago would now be worth over $20,000 even after today's sharp decline.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Nuix. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Technology Shares

A man holds his head in his hands, despairing at the bad result he's reading on his computer.
Technology Shares

DroneShield shares sink 7% despite big news

Let's see what's going on with this market darling on Thursday.

Read more »

A man activates an arrow shooting up into a cloud sign on his iPad.
Technology Shares

Up 25% since April, is it too late to buy Xero shares today?

A leading expert gives his verdict on the growth outlook for Xero shares.

Read more »

Man looking at digital holograms of graphs, charts, and data.
Technology Shares

2 amazing ASX tech shares I wish I'd bought last year

These tech companies are among the world’s best companies.

Read more »

A man in a business suit and tie places three wooden blocks with the numbers 1, 2, and 3 on them on top of each other.
Broker Notes

3 reasons to buy this booming ASX All Ords tech stock today

A leading broker forecasts more gains to come from this surging ASX All Ords tech stock.

Read more »

Man ponders a receipt as he looks at his laptop.
Technology Shares

Brokers rerate 3 leading ASX 200 tech stocks

Experts reveal their ratings on the ASX 200 tech sector's three biggest companies.

Read more »

Hologram of a man next to a human robot, symbolising artificial intelligence.
AI Stocks

Why Macquarie forecasts a big rebound for these 2 quality ASX All Ords tech stocks

Macquarie expects a big rebound is coming for these AI linked, ASX All Ords tech stocks.

Read more »

A young man goes over his finances and investment portfolio at home.
Technology Shares

Is it too late to buy DroneShield shares?

This high-flying stock is up 90% since this time last month. Where next? Let's find out.

Read more »

A frustrated male investor frowns with his hands and arms open asking why the share price has dropped today.
Technology Shares

Why this high-flying ASX 200 tech stock just got downgraded

Let's see which stock has been hit with a downgrade today.

Read more »