Nuix (ASX:NXL) reported first-half FY26 results highlighting growth in annual contract value (ACV), accelerating adoption of its Nuix Neo platform, and a marked improvement in cash generation, while management acknowledged weaker net dollar retention (NDR) and outlined a structured migration program intended to improve retention and expansion in the existing customer base.
Half-year performance: ACV growth and operating leverage
Interim Chief Executive Officer John Ruthven said Nuix delivered ACV of AUD 234.4 million, up 8.4% on the prior corresponding period, alongside revenue of AUD 121.2 million, up 15.2%. Adjusted management EBITDA rose 42.6% to AUD 19.1 million, with the margin expanding to 15.8% from 12.7%, which management attributed to revenue growth and disciplined cost management.
On the balance sheet, Nuix ended the half with a net cash position of AUD 57.8 million (up 88.4% year-over-year) and a closing cash balance of AUD 67.8 million. McClelland said the company’s bank facility had been upsized to AUD 50 million and remained undrawn except for AUD 1.3 million used for bank guarantees; he added that AUD 20 million of the facility is restricted to funding the Linkurious acquisition.
Nuix Neo driving mix shift
Management emphasized momentum in Nuix Neo, which Ruthven described as central to Nuix’s strategy in an AI-driven software landscape. Nuix Neo ACV reached AUD 46.8 million, up 148% on the prior corresponding period, and represented 20% of total ACV. Neo had 101 customers at period end, with growth driven by new customers, new sales, and migrations from component products.
Ruthven said EMEA performance was particularly strong and cited “Investigations and Foundation” as key growth drivers. He also said that when customers migrate from component products to Neo, Nuix typically sees a 30% to 50% ACV uplift, while new Neo sales are typically two to three times the size of non-Neo sales.
Nuix also discussed Nuix Neo Discover, which now incorporates Neo capabilities. Ruthven said Neo and Nuix Neo Discover together represent 40% of total ACV, and he described the continued migration from component products to Neo as a defining feature of Nuix’s customer base over the medium term. In response to an analyst question, management said it intends to continue presenting Nuix Neo and Nuix Neo Discover separately for transparency around product mix.
McClelland noted that component ACV declined by AUD 18.3 million, attributing the decline to net downsell in the component customer base and customer migration to Neo.
AI positioning and product roadmap
Ruthven framed Nuix’s strategy around what he described as a market segmentation between “LLM plugins for routine tasks” and enterprise-ready platforms designed for enterprise-scale datasets and forensic integrity requirements. He said Nuix Neo combines large-scale forensic data analysis with the flexibility to integrate large language models through a “Bring Your Own AI” framework.
According to Ruthven, customers in regulated environments must balance AI innovation with accuracy and defensibility, with outcomes that can withstand legal and regulatory scrutiny. He argued that Nuix’s “forensic-grade governance layer” allows customers to plug in AI models while maintaining governance and defensibility, and said the platform is designed to integrate new AI models as they emerge.
On the product roadmap, Ruthven said the company is delivering releases in line with its R&D roadmap and highlighted ongoing investment in AI advancements. In Q&A, he pointed to BYO AI capabilities as an important growth driver and said Nuix is doing pre-work in the half for the launch of a Neo SaaS platform. He also referenced an upcoming “Neo 2.1” release in March and said it would include items such as semantic search, user interface improvements, and enhancements related to local deployment and time-to-value in customer environments.
NDR pressure and the Neo migration program
Both Ruthven and McClelland said NDR performance was below target. McClelland said the decline reflected downsell in a small number of large clients that offset upsell elsewhere. He attributed a significant portion of the downsell to normal client project cycles, including several peak projects ending, and said there was also competitive activity, including a significant client winding down while moving to a competitor (which management said had been flagged at the AGM).
In Q&A, management added that some downsell related to global advisory arrangements where participating businesses may opt in or out. McClelland also said customer churn improved to 5% (as at FY25).
Ruthven said Nuix had launched a comprehensive Nuix Neo migration program intended to reduce friction for customers transitioning to the new platform and to address NDR challenges. He described three objectives for the program:
- Transition customers to the modern Nuix Neo platform to “secure the future.”
- Drive ACV growth by unlocking expansion opportunities.
- Enhance retention through improved Neo capabilities.
Ruthven said Phase I (customer segmentation and readiness assessment) has been completed, while Phase II is focused on building a “migration factory” with standardized playbooks and partner capabilities and is underway.
Regional performance, revenue mix, and cash flow
McClelland said EMEA led regional results with ACV up 18.8%, supported by new logo acquisitions in Central Europe and strong Nuix Neo performance. The Americas grew 10.8% with continued adoption of Foundation and Investigation solutions and new wins in service providers and financial services. Asia Pacific ACV declined 8.6%, which he attributed to lower new customer numbers and the loss of a large legal sector client, previously flagged at the AGM.
On revenue composition, McClelland said multi-year deal renewals and strong new customer growth—particularly in Nuix Neo—supported statutory revenue growth. Multi-year deals represented 33% of revenue, up from 22% in the prior period. In Q&A, Ruthven said Nuix is not actively driving a materially higher multi-year deal mix, but said large enterprises and government agencies within its ideal customer profile tend to prefer longer-term contracts.
Nuix reported research and development spend of AUD 28.8 million, up 0.7%, representing 24% of revenue, with a lower capitalized component than the prior period. McClelland said R&D is funded from underlying cash flows.
Cash flow improved materially, with underlying cash flow of AUD 28.4 million (up from AUD 7 million in 1H FY25) and overall free cash flow of AUD 20.4 million (compared with negative AUD 7.4 million in 1H FY25). McClelland said lower non-operating legal costs helped overall cash flow. He also noted non-operating legal costs of AUD 3.3 million were significantly lower than the prior period, and that the group received a tax benefit of AUD 8.6 million primarily from partial recognition of tax assets related to historical option cancellations.
Looking ahead, Ruthven reaffirmed Nuix’s ACV guidance range of AUD 240 million to AUD 260 million, excluding any ACV associated with the Linkurious acquisition. He said ACV is expected to be weighted to the second half in line with prior years and the renewals profile. Management’s stated FY26 focus areas include driving ACV growth through Nuix Neo, ensuring revenue growth exceeds operating cost growth, and maintaining positive underlying cash flows for the full year.
On Linkurious, Ruthven said Nuix is still waiting on French regulatory approvals and had no further update, adding the company would update the market when it has more information.
About Nuix (ASX:NXL)
Nuix Limited provides investigative analytics and intelligence software solutions in the Asia Pacific, the Americas, Europe, the Middle East, and Africa. The company offers Nuix Neo, a platform for complex data challenges. Its solutions include Nuix Neo Data Privacy solution for managing data privacy; Legal eDiscovery and Early Case Assessment solution to streamline processes to uncover crucial information, spot notable case trends, speed up and enhance the legal decision-making process, and save legal costs; and Fraud and Investigations solution to ingest data from all relevant data sources and apply an array of collaborative fraud techniques to connect the dots between digital evidence and human behaviour.
