Nuix (ASX:NXL) Looks Cheap on 6x EBITDA, Is the Turnaround Real?

The Nuix Flywheel Is Turning, Bigger Deals, Better Margins

Nuix is one to keep on the watchlist. At first glance, it is coming off a profitable start to H1 FY26 and, on an EBITDA multiple of roughly 6x, it screens as cheap for a SaaS style business that appears to be building momentum.

Revenue reached $121m, up 15% year on year. That growth was supported by a higher mix of multi year renewals, which you can see flowing through the balance sheet in the non current section, alongside accelerating customer activity.

Nuix Multi year deals represented 33% of revenue, up from 22% in the prior year. That shift matters because it improves revenue visibility and increases the quality of the forward order book.

On the contracted revenue base, subscription ACV represents 96% of total contracted revenue. The engine is overwhelmingly recurring, which helps explain the strong gross profit profile.

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A SaaS Style Re Rate Candidate

What stood out most in this result was profitability. Adjusted EBITDA came in at $19m, up 42%. Profit grew faster than revenue, and that is exactly what you want to see when recurring revenue is doing more of the heavy lifting.

Net income came in at $11m, a strong swing from the $10.4m loss last year. It is worth keeping the quality of that profit in context though.

A $8.6m tax benefit helped lift reported earnings. Management also noted a further $33.8m of tax assets were not recognised, but remain available. So yes, the core operational improvement is real, but NPAT was also assisted by tax effects and the normalisation of legal costs.

Looking at the segment detail, the standout was the platform shift.

Nuix Neo generated $46m of revenue, up 148% year on year, and now represents around 20% of ACV with a 101 logo count. There are two reasons this matters commercially.

First, existing customers that migrate to Neo typically see a 30% to 50% uplift in contracted revenue. That is a clear monetisation lever, because it means the migration is not just a technology refresh, it is a revenue expansion event.

Second, a new Nuix deal on Neo is typically 2x to 3x larger than a non Neo sale. That gap highlights the economic value the new product is delivering, and it helps explain why Neo traction can translate into materially stronger growth and profitability if momentum continues.

Watchlist Name, Strong Half, Key Risks Still Live

We think Nuix is a company worth keeping a close eye on.

The setup is improving across a few key fronts, product migration is gaining traction, customer contracts are getting larger as the Nuix Neo platform scales, margins are expanding, and churn is trending down. Churn is now around 5%, and free cash flow is improving, which is exactly what you want to see if this is going to be a credible turnaround story rather than a temporary bounce.

That said, there are still a few risks we are watching closely.

The first is regional momentum. Revenue in Asia was down 8.6%, and if that weakness persists it can cap the upside even if other geographies perform well.

The second is retention quality. Net Dollar Retention is still not where it needs to be. 101% is an improvement, and management has been clear that it needs to be higher. If large contracts are downsold, or if pricing pressure increases at renewal, NDR can stay volatile and limit the strength of the recurring revenue flywheel.

In short, the direction of travel is encouraging, but the next phase of the re rate will come down to sustaining growth while proving retention and pricing are durable.