He resurfaced in early May with another email from staff, obtained by The Australian Financial Review.
“I am delighted to be back after a few weeks break… Thank you all for your patience on communications since we announced our future structure,” he wrote.
“Over the past month, our new leadership team has worked hard to identify the structure, roles and responsibilities that lie under the leadership team across Nuix.”
Key personnel continue to go out
The May 4 staff email discussed a presentation made at a Macquarie conference the day before where he had outlined the new strategy to investors along with a trading update.
“My key message to the audience – and which I pass on to you – is that the strategy we have built and our three horizons are positioned to set us up for future success, reigniting revenue growth for Nuix,” said- he writes. .
The presentation at the Macquarie conference went like a lead balloon. By May 16, Nuix shares had fallen to $1.02. It now trades at $1 a share.
Against this backdrop, Nuix has continued to lose key personnel at a time when it cannot afford it, as its competitors capitalize on the damage to its brand and reputation.
Some have defected to the competition. Among them, Simon Barnier, considered one of the most successful salespeople in the APAC region of Nuix.
Barnier left in February to become vice president for Asia-Pacific and Japan at Reveal Brainspace, a Nuix competitor. Enzo Lisciotto, who led Nuix’s eDiscovery in the APAC region, also joined Reveal, as did Sam Mather, director of strategic accounts in London.
In other moves, Abdeslam Afras, executive vice president of investigations, a key market for Nuix, left in March, a year after joining to much fanfare.
Others have left Nuix’s research and development function. Although he hired staff to plug the holes caused by a cost reduction campaign before the float, the loss of institutional memory is palpable, according to those in the know.
Some current and former staff say the organizational structure has been poorly communicated within the organization, which has fueled further disengagement. They expect more departures in the next fiscal year, in stark contrast to the picture painted in a five-star posting on online employer review website Glassdoor in May.
The post, recorded as coming from the CEO, describes Nuix as “a great company with great people” and lists the pros as “great people and awesome technology” and the cons as “lots of opportunities for change.”
Over the past few weeks, morale plummeted further as it became apparent that an important part of the new strategy to drive top line growth was to dramatically increase product prices across the board, in some cases by almost 200%.
An updated price list communicated to the sales teams a few weeks ago shows that customers will be slugged out from July. This sent shockwaves through teams as they tried to build a narrative on how to sell the new fares to customers.
Raising prices is a valid business strategy if managed correctly, but huge price increases are risky, especially in an environment where competitors such as Relativity and Reveal are making inroads.
It’s even riskier when one of Nuix’s goals is to restore trust between stakeholders. In a memo to staff in February, Rubinsztein said, “When we talk about trust, we are talking about rebuilding trust with our employees, our customers and our shareholders…with our customers, we have the opportunity to become more customer-focused. customer. . To build our future around how we deal with their issues alongside them.
Forcing price increases of this magnitude on customers was likened to sending the sales team to the wolves.
Investors are flying blind
Investors are also struggling to trust Nuix after they were sucked into believing it was a growth stock when the stark reality was that its earnings were falling and its costs were rising. The company faces a myriad of litigation and legal issues, as well as the monumental threat of legal action from former CEO Eddie Sheehy, which will soon come to a head.
As one investor put it in March last year, Nuix was lipstick on a pig.
Fast forward to today and investors are probably flying blind because the company has refused to provide the market with specific earnings forecasts for this year.
A market update in May is not enough. Understandably, Nuix is unwilling to provide market-specific guidance, given its history of failing to meet pre-IPO budgets, failure to meet prospectus forecasts, and a series of post-IPO downgrades. floating. But that’s cold comfort for shareholders.
Leaked documents late last year reveal that Nuix had set itself a base budget of $190 million for 2022. It’s unclear if it readjusted that number, but if first-half results – and its most recent update in May – are a guide. , it would need to generate more than $100 million in the second half, well beyond what it has ever achieved in a seasonally milder period.
A series of questions have been sent to Nuix. In a statement, he said management remains focused on its strategic refresh, sales excellence and the ongoing shift to a software-as-a-service model for the Nuix engine and products.
He said, “Nuix is focused on returning to growth by driving growth of existing customers and winning new customers.”
In response to price increases, he said that with rising inflation around the world, it was natural for organizations to consider their prices.
He said hiring and retaining staff remained a key objective.
Given that Rubinsztein’s $2 million signing bonus in five-year performance rights is only worth a fraction of that, shareholders hope, more than anything, that he’s motivated to make a U-turn.
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