The Nuix Limited (ASX: NXL) share price dived by 40.55% to an intraday low of $3.21 in morning trading today.
Nuix shares opened at $3.30 and quickly fell to $3.21 before rebounding strongly.
The Nuix share price is currently sitting at $4.60, down 14.81%.
It is likely that two factors are driving the Nuix share price lower today.
Firstly, Nuix released an update on its expected results for 1H FY25, warning it expects a fall in statutory and underlying earnings before interest, tax, depreciation, and amortisation (EBITDA).
Secondly, Nuix, which provides specialised software for analysing large data sets and is heavily exposed to the artificial intelligence (AI) thematic, is being hit alongside many other ASX tech shares by news of a much more energy-efficient generative AI chatbot app released by Chinese tech start-up DeepSeek.
According to The New York Times, the chatbot app was released on 10 January and has now surpassed ChatGPT as the most downloaded free app on the iOS Apple Store in the United States.
The chatbot was reportedly much cheaper to make than ChatGPT and requires much less energy to run.
This sparked a sell-down of US tech stocks overnight, with the Nasdaq Composite Index (NASDAQ: IXIC) closing 3.07% lower.
Shares in chip makers Nvidia (NASDAQ: NVDA) and Taiwan Semiconductor Mfg. Co. Ltd. (NYSE: TSM) crashed by 16.86% and 13.33%, respectively.
Stock in companies offering and developing their own AI assistants also fell, but not as hard.
Shares in Google owner Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG) closed 4.2% lower. Microsoft Corporation (NASDAQ: MSFT) shares fell 2.14%.
Today, ASX tech shares and ASX property shares with exposure to AI have also suffered significant falls.
Nuix told the market today it expects increased statutory revenue but lower statutory EBITDA in 1H FY25 compared to the prior corresponding period (pcp) of 1H FY24.
The expected range for 1H FY25 statutory revenue is $104 million to $106 million, up 6% to 8% on the pcp.
But statutory EBITDA is likely to be 7% to 19% lower than the pcp at $14 million to $16 million.
Nuix said this was mostly due to a significant decrease in the capitalised component of its research and development spend and a $2.2 million cost related to an efficiency improvement program.
Underlying EBITDA is expected to fall by 1% to 8% on the pcp to between $26 million and $28 million.
Nuix said it expects an 8% to 9% increase in annualised contract value (ACV) for 1H FY25 to a range of $215 million to $217 million. This compares to an ACV of $199.6 million in the pcp.
However, it represents just 2% to 3% growth compared to 2H FY24.
Nuix explained that it expects greater growth in 2H FY25 because the completion of some pipeline deals has been delayed.
The company also said the increasing size and complexity of several contracts, along with the shift from component to platform, is contributing to longer procurement cycles for some clients.
Nuix said it continues to target approximately 15% ACV growth for FY25. That's at the high end of its target range of 11% to 16%.
Based on unaudited figures, the company said Nuix Neo ACV grew to approximately $19 million in 1H FY25. That's up about 360% on the pcp, growing from eight customers to 46.
Cash EBITDA for 1H25 is expected to increase by 7% to 26% on the pcp to between $11 million and $13 million.
Nuix said it remains on track to meet its full-year FY25 strategic target of revenue growth exceeding operating costs growth, excluding non-operational legal costs.
Nuix maintained its full-year strategic objective to be underlying cash flow positive for FY25.
The company was underlying cash flow positive in the first half. As of 31 December, Nuix had $30 million to $31 million cash on hand, up 25% to 29% on the pcp, and no drawn debt.
Nuix will release its 1H FY25 results on 24 February.
The ASX tech share was among the 5 best-performing ASX All Ordinaries shares of 2024.
The Nuix share price rocketed 232.63% higher in 2024 to close at $6.32 per share on 31 December.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.