It is another brutal day on the ASX, especially for local technology stocks, which are being pummelled following a dramatic selloff on Wall Street.
The Nasdaq Composite, heavily weighted toward tech stocks, plunged around 6% on Friday night, dragging it into bear market territory. That heavy fall has spilled into Monday's session, with the S&P/ASX All Technology Index among the hardest-hit sectors on the local market. It is down by over 7% at the time of writing.
And among the worst performers today is Nuix Ltd (ASX: NXL), with its shares falling as much as 14% to $2.33 in early trade.
While broader sector weakness is certainly playing a role, today's selloff is being exacerbated by a trading update from the investigative analytics and intelligence software provider that has disappointed the market.
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Why is this ASX 200 tech stock crashing?
This morning, Nuix informed investors that while it is pleased with the growth and quality of its sales pipeline, it now expects Annualised Contract Value (ACV) growth to come in at the lower end of its previously guided range of 11% to 16% in constant currency for the full year.
The ASX 200 tech stock has blamed this on a more unpredictable operating environment. It said:
Recent increases in uncertainty and volatility in the geopolitical and global economic landscape, while creating opportunities, are impacting the predictability of deal closure timeframes. Against this backdrop Nuix currently expects Annualised Contract Value (ACV) growth for the full year to be in the lower end of the previously advised range of 11-16% in constant currency.
In other words, the tough macro environment is making it harder to get deals across the line — and that is hitting its revenue expectations.
Still, there were some positives in today's trading update. Nuix said it is continuing to execute the rollout of its next-gen platform, Nuix Neo, which aims to drive long-term growth by expanding the company's capabilities in forensic data analytics and investigation tools.
It also confirmed that it expects revenue growth to outpace operating cost growth (excluding net non-operational legal costs) in FY 2025. As a result, it is forecasting to be underlying cash flow positive for the full year
That's good news for a company rebuilding investor confidence following the high-profile issues it faced in prior years. But clearly, the market was hoping for a more positive update.
