Good morning, everyone, and welcome to Nuix's First Investor Day. As I said, my name is Jeff Blanch, the Chairman of Nuix, and I'm joining you from my home in San Francisco, California. I wish you could be there in person, but unfortunately until Australia opens its borders, This is the best I can do. But I'm looking forward to a day soon when it's safe for all of us to close the social distance and to be together in person. Before we see a video and then Rod walks you through the agenda and formally start the session, I wanted to share my thoughts with you about Nuix, what attracted me to it, where I see us going and why despite some of the noise, I'm more enthusiastic about Nuix than ever before.
But first, I'd like to just say a few words about some recent media reports because as you know, we've been in the news a bit for the past couple of days. Nuix had a spectacular launch 6 months ago, the biggest tech IPO of the year and a rapid bounce in our price. And an event like that is a 2 edged sword. On the leading edge, it showed that among investors who looked carefully at Nuix and our prospects and thought about us deeply through the due diligence process. They were keen to buy shares.
And in fact, so many were so keen David pushed the price up rapidly and has given us resources to do important things going forward that will improve our market opportunity. But on the bleeding edge, That kind of price pressure is based on a supply demand imbalance in shares rather than company performance. And so it really can't lap. Inevitably, it produces some unrealistic expectations and extraordinary scrutiny. The very First hint of anything that's less than spectacular will bring swift reaction.
And here, a swing in the U. S, Australian exchange rates, Some unprecedented turbulence in the U. S. Post election transition and government contracts following from that. And And a shift in customer consumption model would normally be seen for what they were.
There's some short term shocks that are unrelated They're the fundamentals or the prospects of the business. But instead, when you've got price expectations that high, It produced some concern in the market and the usual kind of recriminations by undisclosed sourcing. So let me be very clear. Nuix is every bit as good as people thought it was 6 months ago. Nuix is a company with a valuable fleet of products built over a long period of time with blue chip clients who are loyal and who are satisfied in a market that is rapidly growing.
And best of all, we've got an extraordinary team of professionals, smart, dedicated, genuinely first in class. And we're continuing to recruit the very best of the best. So I wouldn't have agreed to chair Nuix's Board and put in the many hours that it requires If I didn't believe in Nuix's mission, in its people and in its extraordinary prospects for the future, Nuix provides something invaluable, a way to decipher the truth in a complex and exponentially expanding digital world. It's something that the world needs and that no one delivers that is a Nuix. And I grew up doing legal work for Warren Buffett and learning from him and from his business partner, Charlie Munger.
And they said that a good investment was like an average. They taught me to think long term and find a partner you understand and respect and then stay the course of it. The 1st few weeks of Ameris can be a little surprised, but you figure it out. Nuix in its early days in public company has had a couple of patchy moments. After a long time of having only a few investors who know our model and our prospects intimately, we weren't used to investors, so we're still just getting to know And we've probably been appreciated as well as we should have that some investors were still uncertain about how revenues came in, changes happening in our business, our exposure to U.
S. Exchange rate and kind of the lumpiness of U. S. Government contracts and the like. And we were still learning market assumptions and how investors interpret market But let me be very clear here.
We have heard you and we're good. Now I've been on my own journey with Nuix. And over time, I've come to understand it so much better than I did when I first started. The things that attracted to me attracted me to it, they've only gotten better. And so I just want to tell you now and why I have come to only have greater enthusiasm for Nuix and its future.
I started out as a customer. It was over a decade ago as a lawyer in Silicon Valley. We needed a way to sort through and analyze terabyte of data quickly and to figure out the facts in a massive dispute that I was working on. The Head of our eDiscovery department came back to me, it seemed like in record time. And he produced the best Most comprehensive review and analysis of the data I'd ever seen.
And I asked him, how on earth he had done this? And he said that it was thanks to a small company in Australia named Nuix, and that this company had these blazingly fast engine that allowed him to do things he never meant. A few years later after President Obama asked me to coming to the White House as the Special Counsel and then appointed me to be the U. S. Ambassador to Australia.
Surprisingly, It brought me back in contact with Nuix again. It was now a much more substantial company with growing business with the U. S. Government. And as ambassador, I received these briefings about the challenges of disinformation and misinformation and international crime ratings, hacking operations and you know, all the various threats in cyber.
And I learned that Nuix is doing work with The same engine that they had for e discovery to take that unstructured data and to help government identify threats and investigate misconduct. And one day, after I returned For the states, I remember receiving a call from Nuix asking if I considered joining the Board. And I had certain down every opportunity has to join Private Company Board. But I was impressed enough with Nuix from what I had seen as a customer that I agreed to at least do some due diligence. And after really digging in, I discovered Nuix was actually providing precisely the service that I thought every democratic government in the world, every regulated company, every investigative journal and every advisory firm who wishes the ability to make extends out of massive troves of unsolicited data to get to the truth.
It had been growing steadily and organically. It had solid leaders and a really good culture. And to me, if you've got a company with the right purpose, the right people and the right passion, then you got something special. And so I let them know that I would join as an independent director 5 years ago, and it's just been this extraordinary ride ever since. My views on the long term opportunity for Nuix as the global industry developed have only grown more positive.
The market, as I said, is massive and Nuix is only getting started. The challenges there's these new verticals and new jurisdictions to make smart acquisitions that are going to further complement our offerings. I see EFG as probably do as a driver for business. As you know, it's becoming an expectation for every company. Self regulation and disclosure and more and more Aspects of the company's business are going to be the norm.
And Nuix has 2 massive advantages in this space. We've got the fastest engine and we've got lower costs because we aren't dependent on sending battalions of people to set up and run the program. Program can be run effectively and efficiently in house. So we're better, we're faster, we're cheaper. We've gone through an interesting transition to being a public company.
And I appreciate now more than ever as Chair the importance of getting our governance right. I have tremendous and about Nuix long term. But I'm also clear eyed about the short term work that we need to do to become a mature public company. A good reminder, our first conference here that Nuix operated as a successful private company for a long time with basically one principal investor. And that means it didn't develop the internal structures that you generally need to ensure strong investor relationship across a broad spectrum and to communicate business priorities and processes broadly to stake Gold is beyond your customers and future customers, but really to appreciate the challenges of being a company with a valuation of over $1,000,000,000 in a major media market.
And this is something that some things Nuix. Nuix assumed would be properly understood by the market, instead produce some confusion or surprise and that's on us. That's our math. Building trust with you, with our investors really is a top priority. And that's led us to get to work to increase transparency about our business and developing internal governance and control that will reassure the markets going forward.
As I said, my mentor was Warren Buffett. I spent the first 20 years of my career at the firm his partner Charlie Munger founded. And I worked with Berkshire Hathaway and Charlie and Warren for the 1st 2 decades of my career. And his principles were straightforward. Get business to people We bring in the most talented people you can find, maintain rigorous ethics and operate in a manner that inspires trust.
That's what we intend to do. The companies that have worked with Nuix for the past 20 years have stayed with Nuix because it is a trustworthy company. And we are committed to building the same relationship with our investors now and working closely with our senior leadership to get the right pieces in place, yet I am confident more in greater returns and long term Thank you for being here today. Thank you for your confidence in Nuix. Thank you for your investment in Nuix.
I'm committed to doing exactly the sorts of things you expect a leader at this company to do. And now we have a short video to show you about Nuix. And if you'd like to view this video in full screen, Just please click the maximize icon at the top right hand side of your screen and you'll get the whole show. Thank you again.
2 decades ago, Nuix started with a very clever idea. Today, that idea has grown into a remarkable company Working across 79 countries. Nuix's promise of finding truth in a digital world has attracted financial regulators, Law enforcement and intelligence agencies, the world's largest law firms and advisories, global corporations and even the United Nations. Nuix specialises in transforming massive amounts of messy data from emails, social media and other human generated content Across billions of items and hundreds of data sources simultaneously and at speed. What's more, Nuix's software processes the data with forensic level accuracy that customers can rely on in the face of increasing public and regulatory scrutiny.
Organizations are grappling with an explosion in the volume and variety of data, which is no longer measured in megabytes and gigabytes. Today's enterprise data challenges often involve making sense of terabytes, petabytes and even exabytes Across a myriad of repositories, a shift comparable to the difference in size between the earth and the sun. And this data is under constant threat from ransomware attack, identity theft, privacy intrusion, financial crime Regulators are stepping in, insisting on better accountability, while the public demand higher protection of their personal data. For government and business leaders, throwing people at these problems is not sustainable, but Nuix is. The creation of a technology solution that allows the world to gain clarity and control over the hypergrowth in data, not to be overwhelmed by it, Has caught the attention of governments and corporations around the world.
Nuix customers are now using its Software to take back control of their data, to solve some of their most difficult data challenges, identify wrongdoing and reduce financial and reputational risk. At the heart of the Nuix platform is the Nuix engine, a supercharged data processing technology supported by patents, Which gets to the ones and zeros of more than a 1,000 file types. This is the core of the clever idea that is Nuix. Having made data searchable with the engine, Nuix has built investigative user applications with embedded analytics, Which allow users to start working with the data quickly, understand the context and connections and find the truth it holds. Whether it's a counter terror analyst using Nuix Investigate to detect an impending terrorist attack Or an attorney using Nuix Discover to prepare courtroom proof evidence or an in house corporate investigator Using Nuix Endpoint to identify and remediate an insider threat, Nuix is the trusted solution for finding truth
Thank you, Jeff, For your opening remarks and support for our team. Just before I take you through the agenda for the day, I wanted to say Today as Group CEO of Nuix, I do take full responsibility for the performance of the business. To those investors, big and small, That have been impacted by our share performance over the last few months, including many Nu X families and friends, I feel incredibly sorry, but also resolute in my commitment to do everything I can to lead our team to deliver on the opportunity before us. I cannot directly influence how markets react in the media reports, but I'm acutely aware that helping You all understand this incredible business will deliver for our shareholders. We have a simply amazing team here at Nuix And some of the world's best and brightest people.
And I can confidently assure you all, we are doing everything possible to achieve our revised forecast to set us up to realize the true potential of the business. So I'd like to thank you all for participating in Nuix's 1st Investor Day. We hope by the end of the morning, you will be as excited about Nuix as we are and its growth opportunities. Our strategy is to unlock the growth potential of Nuix hasn't changed nor have the fundamentals of the company. The real purpose of this Investor Day is to show you how we're continuing to grow our best in class software, adapting it to new markets and use cases with existing and new customers.
Today, we will also showcase our leadership team, including some new members who joined us recently. If we turn to Slide 6, operator. I'd like to run through the agenda. Firstly, you've heard from our Chairman, of course, and I thank Jeff again. And I'll speak for a few minutes, then we'll have an overview of our technology strategy and product roadmap With our Chief Product Officer and our Chief Technology Officer representing.
Then we'll have a short Q and A and a coffee break. After the coffee break, we'll delve deeper into our market solutions, our strategy in the field and a panel with a panel of senior executives from the U. S, the UK, Europe and Australia. This session will be followed by some details of our licensing and revenue generation profile With our CFO. Following our CFO talk, there will be a second opportunity for you all for Q and A, And then I'll finish the morning with some closing remarks.
Throughout this event, of course, you can submit questions using the Q and A box on your screen And we'll try to answer all the questions in 1 of the 2 sessions. Slide 7, please. To begin with, who is Nuix? Many of you have already heard presentations from me and others in the business, but it's important to recap on the fact that we're a leader in Investigative Analytics and Intelligence, doing that through our Nuix software. At the heart of our software, of course, is the Nuix engine, a patent in technology that's been with us since the beginning with patents that protect its core attributes of parallel processing and forensic accuracy.
Our software is now licensed to over 1,000 customers located in more than 78 countries. We have a truly global footprint with more than 4 20 employees worldwide in our headquarters here in Sydney. Yes, we listed on the Australian Stock Exchange last December and we are part of the index, the ASX 200 Index. Let's move to Slide 8. Why is Nuix important?
Well, many of the world's leading organizations use Nuix software in their most critical work In sometimes you need famous and sometimes in infamous cases. During the Banking Royal Commission here in Australia in 2018 2019, More than 3,500 people across financial services industry involved in responding to probing questions from the commission. Our software was used by teams on both sides to gather, analyze and review that information and evidence. Then of course, there's the Panama Papers where data was leaked to a German newspaper. They used our software provided to us as part of our foundation at no cost to make 2.6 terabytes of Data is searchable for journalists around the world to analyze.
And then our law enforcement agencies worldwide used our software to make The world a better and safer place, conducting investigations into child pornography, cyber terrorism, organized crime and more. Slide 9 please operator. Even if some Nuix customer stories don't tug at your heartstrings quite as much as the ones I just discussed, They find very creative ways to use our software. Recently, a national border agency used Nuix to rapidly assess the risk of subcontractor data breach. After citizens data found its way onto the dark web, The agency quickly spun up a Nuix system to assess the risks of data exposure.
Within days, the agency could start responding to a government oversight committee, including specifics and numbers of potentially exposed citizen data. Slide 10, please. A global telco brought their internal Litigation and litigation capabilities in house because it was taking too long to work with external suppliers. They eliminated their processing backlogs. Tasks were completed literally in hours rather than days and they greatly reduced their spend on external providers.
Slide 11, please. An emerging use for our software that we're really excited about is where there was a bank in the APAC region having problems with people breaking The ethical walls between its investment and trading divisions. We helped them develop a system to detect in real time when people were communicating across Those ethical walls, whether by email, instant messaging or other communication channels. Slide 12, please. I joined Nuix more than 5 years ago now and the vision with the vision of transforming it truly into an enterprise software company.
We needed to refocus the sales force, enter new markets, expand our software so that it would be more applied to new use cases and strengthened the leadership team, most of whom are still with us today. In my time here, we have effectively doubled revenue, more than doubled headcount And the customer numbers moving have also increased significantly as we move from selling what's traditionally called tool software to truly enterprise grade software. Our focus for the next 5 years is to continue that journey. When I look at the business, I'm still very excited. The fundamentals that make this a valuable company have not changed.
The growth drivers have not changed. There truly is a matrix of opportunity. A software platform driven by the Nuix engine complemented by software applications to solve specific use cases. Evolving to a full software as a service model, so we can quickly develop new solutions for emerging customers' problems and customers and adding new customers as they need to expand their software in the investigative space. And our choice of strategic partners, Which are involved in more than 70% of our business around the world in many, many countries, more than 140 of them are critical to complementing our software in the delivery And provision of services.
Slide 13, please. To give you a deeper understanding of this opportunity, our Chief Product Officer, Danny Paduti, We'll talk you through the key industry and technology trends
and
the key to the trends that are driving demand for our software. Our Chief Technology Officer, Stephen Stewart, will show our technology strategy and the product roadmap. Our customers can use our software to solve the current and emerging challenges Thought about by these trends. Slide 14, please. After the first Q and A and a short break, we'll have a panel discussion On our market solution strategy featuring Jonathan Rees, who is Executive Vice President of International Sales Bill Adams, Executive Vice President of eDiscovery And I'm also excited to introduce 2 new additions to our executive team, Abdez Afras, who is leading our global strategy for investigation, who comes to us from one of our competitors in that space, Access Data, and is based in Frankfurt.
I'd also like to introduce Oliver Harvey, who's here in Sydney, who recently joined us from ASIC to drive our governance, risk and compliance strategy. Following the panel, myself and our CFO, Stephen Doyle, We'll go through Nuix's licensing and revenue generation profile. And you'll have another opportunity for questions before we close. Slide 15, please. So let's move to hear from Denny Paduti.
Thanks, Rod. You should be on Slide 15, operator. Before we jump into product and roadmap, I thought it'd be worthwhile spending a few minutes to provide some background as context for this presentation. Nuix is a generalizable data processing platform. And at its core, Nuix processes data so that it can be used to do really 2 things.
1, identify, minimize and remediate risk. Typically as a response to the regulatory landscape, corporate governance, legal requirements and social group. And 2, it can be used to cater to the desire of our customers to utilize that data in the pursuit of justice, ensuring public safety, national security or provide commercial insights And sustainable competitive advantage. Next slide please, operator. As you might imagine, the demand for Nuix is intrinsically linked To the key market trends you see here.
The increase we are seeing in digitization and automation means the modern enterprise is generating exponentially more data, all of which needs to be analyzed and assessed for risk. Nuke's helps these enterprises manage their data risk I meet their time, cost and regulatory obligations. But it's worth spending a little time on the other four trends, the uncontrolled growth of unstructured information, Data migration to the cloud, an increased focus on governance, risk and compliance and the consequences of a data breach. Next slide, operator. It can be hard to comprehend just how much data gets created.
So to try and put some perspective on it, you can take a look at the stats here. Most of you probably don't know what an exabyte is. But to give you context, Every word spoken by every person since the dawn of time can be stored in approximately 5 exabytes. We currently create 5 exabytes every 2 days. The other stat of note here is that 49% of the world's data will reside in the cloud by 2025.
The sheer volume of data and And proliferation is making it even more difficult for organizations to remain compliant. On the other side of the coin, the lightened value of this data opens up value creation opportunities for our customers. So it's pretty clear to us that the technology is needed to help customers achieve both value creation and risk mitigation in a cost effective manner. Next slide, please, operator. The challenge is that most of the data created approximately 80% of it is very difficult for machines to understand.
It's what we call unstructured. Think office documents, emails, images, voice, video, etcetera. So it doesn't fit nicely into the rows and columns of a database like structure Combined with the fact that this data comes in a variety of different formats, indexing and searching it quickly and effectively is very difficult. Another complexity that must be dealt with are the communications between parties. Think of collaboration platforms like Microsoft Teams, Skype for Business, Slack or indeed mobile centric applications like WhatsApp and SMS texts.
Capturing these communications provides valuable insight into the intent of parties And when used properly, makes prevention of undesirable behaviour possible. In a sense, traditional documents and communications contain proof of wrongdoing, But communications go a step further and could also demonstrate intent. Next slide, please operator. We're also seeing our customers make more use of The cloud for data storage and is the basis for their office and productivity tools and collaboration. We believe this trend will continue to accelerate as the cost of storage keeps falling And more business and productivity applications adopt a cloud first deployment model.
And as you will see, our product strategy accommodates and in fact anticipated Next slide please, operator. While data is certainly a corporate asset, we've seen time and time again how it can be used Inappropriately impacting customers causing reputational harm, damaging shareholder value in some cases resulting in substantial fines. Next Next slide, please. Compliance with regulations is a key requirement for any organization. However, it's one thing to claim compliance and it's another to achieve it.
Here we can see the immediate financial impact of compliance violations. What this doesn't speak to is the reputational damage and opportunity cost of which are typically very high. The common thread here is that compliance failures are inevitable when people fail to follow the rules and monitoring is inadequate. Next slide, please. And despite the best efforts of even the most secure data repositories in the world, breaches seemingly happen on a regular basis.
Given that 50% of breaches involve insiders, it's imperative that impacted organizations implement a prevention program. Monitoring communication patterns, Analyzing communication sentiment, calculating risk can provide valuable insight into the intent of these insiders, all of which involve the use of unstructured data. And when the inevitable happens, response and recovery as quickly as possible is perhaps even more important. By understanding what information has been accessed And what sensitive data it contains, organizations can notify affected parties and provide guidance on how to mitigate downstream issues their customers might face. Next slide, please.
Data breaches and regulatory violations certainly get a lot of the press, But data is at the center of a variety of corporate hygiene issues. Think IP theft, trade secret protection, toxic workplace issues like harassment, bullying, discrimination. All truly unacceptable behaviors that can be responded to earlier by using Nuix to also process chatter on the corporate communications channels like Slack, Teams and Skype. Next slide, please. So hopefully by now you're asking yourself, well, how does Nuix help?
Next slide, please. At the 100,000 foot level, Nuiqs can connect to a variety of data storage locations, business and productivity applications, Collaboration platforms, whether they be on prem or in the cloud. We process thousands of different data types and make that data searchable. Processing also extracts entities Like company names, person names, email addresses, phone numbers, credit cards and maps the relationships between people, the data objects, Events and Locations. The Nuix presents the data in such a way that users of all skill levels can conduct investigations for discovery purposes Or for digital forensics purposes as used by law enforcement.
Our software development kit also enables our partners and customers to use Nuix to address a multitude of other data centric use case. Next slide, please. Once the data has been processed and made searchable using Nuix's Proprietary Parallel Processing Engine that it can be enriched to make it even easier to search an index. Enrichment helps to accelerate general purpose search across all of the data. Finally, the data is presented in Nuix's customer centric user interfaces, where we leverage powerful data analytics and advanced visualizations to make searching massive amounts of data So before we jump to the roadmap, I'm going to hand it over to Steven Stewart, Nuix's Chief Technology Officer, Well, he's going to dive into a little more detail and demonstrate Nuix in action.
Stephen, over to you.
Thanks, Danny. Next slide, please. So I mean, essentially, that's all great, but what is it that we actually So from the macro level, we handle lots of data. Next slide, please. So At the end of the day, again, it's we make stuff searchable.
Slide 29, please. And so When you take those specific aspects around sort of its fundamental value of organizations have tremendous amounts of data, And they're trying to answer the fundamental questions of how can we get into that information. We need to make good quality informed decisions throughout that entire process. And so with that in mind, how do we do that? Next slide, please.
So it should be on Slide 30. So when Nuix thinks about data, We think about data across the 10 dimensions of data. And the reality is, what those 10 dimensions represent to our users, our customers and our practitioners is the fact that there's this huge continuum of information. Everything from human generated content, digital and mobile forensic data, Network data, user data, enterprise cloud repositories. And to me, those all sound like just a load of different buzzwords and different aspects It's about the types of data that we can search.
But the reality is, to practitioners, and effectively our customers, those each represent a Specific unit of work that they have to do to be able to understand that content. Operator, please switch to slide 31. So from a detailed perspective, many of you sort of watching this today, you'll look at this slide and it will basically look like an eye chart. You'll be looking for some of the details and mostly it will sort of be you'll gloss across it. But to our customers and to our practitioners, They lean in.
They look very, very closely because the reality is, as you move from left to right, you talk about human generated data, you talk about forensic images, System files. And then you move sort of further and you're talking about communications and multimedia and archival systems and all these different aspects. Each one of those requires you to basically have a different tool to search it. And so as that investigator, or if you're an attorney, Basically, you're trying to answer all of those basic questions and ultimately something as simple as building a timeline. But if I have to go in and physically search Each one of those individual repositories and make those decisions, that's a huge amount of effort.
So what the Nuix engine does and has done since I joined 12 years ago is basically go out across all that different information, connect to it, extract it, index it. We can leave it in place if you're operating in a cloud environment. And basically, we extract all that text and metadata and make it searchable. And as Danny was talking on the previous couple slides ago, we then enrich it to make it easier, More powerful for users to conduct search and analytic workflows. So we do things like entity extraction.
But sort of all of those types of things Really drive essential processes around how we go about things, getting data out of things like Office 365, how we get things out Slack and all of these different types of ways in which we can get the data. So while this may seem like a whole lot of detail, to our practitioners, This is really the nut of what we do. We take all of that information and make it easy to get to, make it easy to search, etcetera. Operator, please switch to Slide 32. So we've talked about sort of the data sphere.
We've We've talked about the volume of data, we've talked about the types of data, but let's take a minute and get in the mind of a practitioner. And I find that this is a really useful exercise when people are trying to understand what is it that Nuix does, how does Nuix operate, what do our customers do. And so again, I think it's an important distinction And basically, Nuix provides software and our entire customer and partner ecosystem actually conducts these investigations. And they use us for our unparalleled speed and capability. So if we take slide, basically, we take a slide, let's get in the mind of a practitioner.
So I'll role play for just a minute. So it's basically May 20, 4:30 p. M. We're all sort of working for Xbank, And we anticipate a large deal is going to close. But then all of a sudden, late in the day, 4:30 p.
M, we get notified that we've been disqualified for the deal, That somehow the deal has gone to Port Consulting Limited of Guernsey. Immediately red flags are raised. The account team is up in arms. We've been working this deal. We understand this.
So what is the deal? Again, this is acting asking you to role play. Listen along. Think about if you were in this position. You'd been working a deal for 10 years.
It represented a giant investment of your time as well as a tremendous opportunity for your organization. And then all of a sudden, poof, it seems to go up in smoke Almost without any type of cause, what do you do? You're the investigations team. You're tasked with going and figuring out how to conduct that investigation. Figure that out And basically drive that result.
You've got players that are across the globe. So what do you do? 1, you have to understand who they were talking to, who are the players. You also have years of data. So these aren't sort of discrete events.
Sometimes you may have to look back 10, 20 years. You may then also have to think about the scope. We know the players. We have 10 players in this fictitious scenario. But who else might have been involved?
Were there AAs? Were Are there other people? Anybody that might have had access to the deal. All that does is increase the scope of what the investigator has to think about. Then there's the multi jurisdictional aspect.
We have people in the Netherlands, Germany, Switzerland, Australia, Dubai, the U. S. That global footprint means that you have to be able to treat The data in each one of those countries with a distinct set of rules around privacy. And so when you're thinking about that broad picture, The drivers for investigations and investigators is how quickly can I assess what's going on and start to make good informed decisions? Operator, please advance to Slide 33.
So what do you do? Essentially, the first thing that you're going to try to do is understand the basics. Who's talking to who and the frequency of their communications? This is so basic, but it's, again, so complicated When you're operating in such a diverse environment. So I have people spread around the globe, different time zones.
They're communicating across email, Microsoft Teams, Slack. They might have mobile devices that they're texting each other. And so by starting with those basics of trying to understand who's communicating, the frequency of that communication, You can start to really start to pull that investigation apart. And Nuix has been built over decades to basically help organizations understand those communications. So why would we are fantastic at being able to take all of that, pull out the to, the from, the cc, easily map and visualize that such that you can start to understand the players all within that space.
Once you sort of understand those players, you can then start to think about the additional scope. Well, do we need specific documents? Where do they live? How can I go Collect them? Again, we're operating in a global environment.
What other sources of information might be relevant? Travel, expense documents. Essentially, at the end of the day, When you put yourself in the mind of an investigator, it's really like nothing else it's really almost like everything else that you do in life when you're doing an investigation. You're trying to understand the facts. You're trying to understand, the various views that are associated with these different aspects.
And so at the macro level, you're trying to paint that entire picture to understand everything that's been going on. Slide 34, operator? And so While the use cases change, the facts may be different, the questions are all the same. Organizations are trying to answer the simple questions of who, what, when, where, Why and how? We've all learned those questions throughout decades or sort of about our overall life experiences.
And they are absolutely the fundamentals Of solid investigations, e discovery, but also things like information governance and GRC. Our ability to help organizations Understand large volumes of opaque data is central to the Nu X value proposition. So as you think about all of the different types of things that Nu York. Can do around investigations, discovery and all of the different types of customers, the law firms, the corporations, The regulatory agencies, the advisories, the government, both civilian and defense, they all have one common problem that Nu X solves, And that's they have tremendous volumes of opaque data. Danny referenced the tremendous growth, the exabytes of data that are being generated on a daily basis.
Organizations have to be able to cut through that veil of data to be able to understand the facts and really be able to sort of Drive to those very specific nuggets of what's going on, so they can really gain that understanding. So with that, I'd like to sort of play a little video for you guys. And essentially, it's a demonstration of Investigate, Enterprise Collection Center and Discover. So, operator, if you would queue the video please. So we'll start out at Nuix Investigate.
Nuix Investigate is Nuix's Web based interface into the Nuix cases. It provides all of the search capability and all of the capability to see and understand that data. In this specific example, we want to focus on mobile data because we're trying to understand how these individuals communicated and very much focus on the who. So here we have all of our chat messages. We can see that we can easily filter.
We're looking at conversations. We're looking at SMS. We're looking at MMS. We're able to scroll through and see all of the different bits of the chatter. But that's sort of looking at them as individual textual documents.
What we really want to do is start to understand and investigate the connections. And we want to see how this network of individuals is communicating. Who are the most frequent communicators, who are those that sort of have all of these different connections and potentially are the most influential. Because one of the key things about conducting this style of investigation is understanding the connections and the communications. Individuals cannot Act alone to sort of deceive or commit this level of fraud.
So it's really important that you understand the people. So here we have a metaphor to understand People, their associated communications attributes and we can aggregate those into nodes on the graph. So it's super easy to understand and basically take phone numbers and map them to people. But then the next thing I may want to do is actually then drill in and start to filter that. So you can see I basically updated my relationships Only understand the most frequent communicators.
But now I want to drill back into those items and I want to sort of take a much deeper dive into that chat communication. I didn't want to pivot and start to understand wins. So we're talking about who, we're talking about what, we're talking about when. And by being able to see that and quickly navigate that, It's really imperative that you can now start to understand the communications, who's talking to who and the frequency of their communication. Furthermore, I can actually then pivot into a different aspect of the investigation.
This is a really powerful capability because investigations are inherently non Linear. You basically start pulling that piece of thread and you're like, all right, well, I understand what that individual is doing. Oh, wow, that's an interesting piece of information. How can I pivot off that to go find something else? And so again, all throughout this information, you're trying to understand, read this information and understand it.
And what's really powerful is that Nuix really allows you to do all of this without any upfront work. You essentially take these mobile phone devices, you feed that information in And all of a sudden you've got access to that. And then I can quickly move from point to point through these various aspects. I can then easily reach out And again, pivot off keywords. So I previously pivoted off an individual's name.
Now I'm going to pivot off another individual or a piece of text contained within that. And so here, I've got that. I can then actually then once I've sort of understood that landscape, I can then start to dig in and try to understand the what and the how. So I can go through, read those messages and whether I've got emails or documents or PDFs or Excels or PowerPoints, pretty much you name it, I can then quickly and easily work through all of that information. So again, from that perspective, I'm going to grab that information, I'm going to make some quick decisions And then I'm going to tag those.
And again, by tagging those items, I basically memorialize that this is a set of documents that matter to me. So now the next thing that I may want to take a look at is I want to start to then understand the where. So we've talked about the who, the what, the when, Now the where. So there's a tremendous amount of location information that's stored on whether it's photographs or if it's mobile data or every time you connect to a Wi Fi Hotspot, there's all kinds of telemetry about where the individual is. Nuix extracts all of those GPS coordinates And immediately allows you to plot them onto a map.
This takes no work. And again, this is really one of the most powerful differentiators for Nu X Is it instead of having to do a bunch of work to massage this information, we take that raw source information, whether it be digital forensics information, I talked about the 10 dimensions of data. If across those ten dimensions of data we see GPS coordinates, we will extract those GPS coordinates and immediately allow you to plot that on a map. This is incredibly powerful and it allows you to sort of again get all of this investigated intelligence without really having to do a whole load of work. And so it's It's really phenomenal.
And again, once I go from there, I can then pivot back and rotate through that information. So again, really fast, really easy to start to understand. But so now we go back to our visualization to understand the who. Let's say that I'm looking for some more information. So I've got these people.
This feels like I need a little bit more detail. So next, let's take a look and go over into Enterprise Collection Center. So what ECC allows us to do is go out and collect information From all manner of endpoints. And so whether or not I want to collect from an individual device or I actually want to sort of drill in and look at it in real time. So what we have here is a convenient dashboard that allows you to sort of see across all your collection jobs.
But again, when you start to think about related use cases, As we may be doing conducting an investigation, maybe I want to do sort of a long collection job across an entire enterprise and pull in information. But there are certain situations around incident response where I want real time access to that machine. So what's happening here is I have gone in through the ECC See console, I have right clicked on the specific endpoint and now I'm actually connected live to that endpoint and I'm able to browse files. So if you're in an incident response scenario or you suspect some, something's going on, The idea of collecting data and then waiting for it at some point in the future, you can break that boundary with Nuix and Enterprise Collection Center. You can actually not only collect, but you can connect To that endpoint.
And so what you saw was I opened up a PDF. I opened that up on sort of my analyst machine to be able to understand What is that file? So you could imagine all different types of access to be able to give you that visibility across the enterprise. The last thing I did was, okay, well now I want to collect All of that individual's My Documents data. So I want to go out and I want to grab that information.
And so with that in mind, I've just kicked off a collections job. But maybe some of the other things that I might be interested in is, okay, well, I now want to set up templatized jobs that will go across the enterprise looking for specific content. So here we're setting up our search criteria. So again, I can filter on dates, I can filter on keywords, I can filter on regular expressions. So in places where you know what you want, you can drive this process very effectively.
And so now we've gone out, we've kicked that collection job Let's actually sort of see what it looks like at the tail end of this process. So we're going to go back in to investigate. We've now run a search for Liam. We're going to pull up some of those chat messages. And the last step of this process is while we've got our investigators deep looking at the data, now we need to take that last step and we're going to promote this information up to Discover.
So Nu X Discover is Nu X's SaaS offering. This is basically our legal services framework that allows us to interact and deliver a user experience that is commiserate with the expectations of all of our attorneys. And so essentially what we've got going on is we're trying to drive that Process as quickly and efficiently as possible. And so once I'm in here, I basically got the ability to look through these documents, tag them, move through them quickly and efficiently. I can then also pivot out and take a look at my concept map.
So again, the idea of being able to move through all of these different dimensions Very, very quickly is really what drives much of the overall investigative experience for Nuix. So this is why we believe that we are one of the leaders In the investigative analytics and intelligence space, because I can go end to end without leaving the sort of Nuix portfolio from collections all the way through. The idea of being able to run that end to end analysis and investigation and being able to drive those collections from truly an end to end perspective, With all of the rigor and structure that's expected around the various use cases, so everything from digital forensic investigations to collections to Early case assessment and on and on, the ability to get in there and understand that data. But most importantly, to be able to pull all of those threads. Investigations are inherently non linear.
They don't go basically step, step, step. You have to be able to pull all of those different threads. And as you're going, Be able to answer the questions around who, what, when, why, where and how. And all of that sort of information can be teased out from within that electronic information. So back to our scenario of collecting data from people around the globe, being able to understand it, some of its regional implications, etcetera.
That is really sort of very much the nature of exactly what our customers and partners are trying to do on a day to day basis. They have tremendous data volumes and they've got to get to those facts York. Next slide, please. And with that, I'll actually transition it back to Danny.
Great. Thanks, Stephen. Operator, I think we should be on Slide 37. Hopefully, we've successfully demonstrated the unique value proposition of Nuix. Data is at the core of investigations, risk mitigation and value creation.
And our technology essentially makes it easy for our customers to quickly collect Data, search it, interact with it, highlight relationships and reduce vast quantities of data to find what's most relevant. Next slide, please. Our customers continue to tell us what great technology we have. And obviously, we aren't going to rest on our laurels. We have a healthy roadmap that will continue to focus on timely releases, delivering value to our customers and driving innovation across the portfolio.
All the work we are doing on the existing products will not only benefit new and existing customers, but will also benefit our journey to Nuix SaaS. As you can see, our major strategic themes are included here. The first, getting data getting to the data that matters. This includes connectivity to the major business collaboration platforms like Teams and Slack, as well as content aggregation points like Google and Druva. We will also support encrypted disk images with our Passware partnership and additional digital forensic support with the addition of Hancom.
The second is accessing new market opportunities. This really includes opening up the digital forensics market in Asia Pac with our Hancom integration, additional U. S. Government Opportunities by being FedRAMP ready and enabling our extensive partner network to leverage the generalizable data processing platform that is Nuix to deliver new innovative solutions into our current and adjacent markets via our software development kit. Number 3, as you saw in the demonstration, the NTM workflow across the products is critically important.
As we embrace new file formats and communications data, we will ensure that all of our customer facing user experiences are able to interact with this data. We will also be introducing automation to accelerate time to value across this end to end workflow, minimizing the time it takes to get this data in front of our users. Number 4, we'll also help our customers be more proactive about how they can further reduce the risk of data By monitoring sensitive file activity, preventing data loss and enabling the automatic collection of data based on a user's unusual behavior. I think you can see customer value creation and innovation are right at Nuix. And if this was all we were doing, it would still be considered impressive, But we're doing so much more.
A core part of our product strategy revolves around SaaS and solutions. And I'm really excited to announce We're currently working on delivering engine as a service into Nuix SaaS, further reducing our customers' total cost of ownership by eliminating hardware and improving time to value for their And we will be delivering compliance scanner and e comm surveillance as the first of many solutions, allowing us to target adjacent markets like governance, Risk and Compliance. Next slide please, operator. For the remainder of the presentation, we'll go a little deeper on Nuix SaaS and solutions. Next slide.
The generalizability of the Nuix platform opens up new opportunities for our go to market. Our traditional markets of e discovery and digital forensics represent approximately a $4,000,000,000 TAM. So there's plenty of greenfield opportunity there. Our endpoint posture is primarily focused on data collection and preventative measures Our customers can take as a result of utilizing behavioral analytics, essentially looking at the actions of their employees and Taking action when something unusual happens. This technology is supportive of our overall digital forensics, e discovery and GRC play.
Governance Risk and Compliance is another huge opportunity for growth. As mentioned, we will be enabling our partners to target this market via our software development kit And delivering our own solutions in compliance scanner and e comm surveillance. The next horizon of innovation, new access. This will really give our customers deployment choice across the entire Nuix stack, Discover, Investigate, Enterprise Collection Center and of course the engine, allowing our customers to process as much data as they need at speeds and costs that are currently impractical and cost prohibitive with an on prem approach. The benefits for our customers include reducing total cost of ownership and speeding their time to value.
In addition, introducing SaaS friendly commercial models that more closely align our growth with the growth and proliferation of data trends we spoke about earlier will undoubtedly represent future upside Newix. I'm going to hand it back to Stephen, who's going to go into more detail around our SaaS and Solution initiatives. Stephen, over to you.
Thanks, Danny. Operator, if you could advance to Slide 41, please. So Nuix engine as a service is really our first milestone. And really, it's a tremendous milestone as it relates to the broader Nuix ecosystem. Organizations are constantly looking, as Danny has said and I've reiterated, looking to be able to grapple with the larger and ever increasing quantities of data.
But with that, they struggle with basically their own Structure. How can I possibly keep up with all of the growing data volumes that my clients are providing to me, but have to run it on my own hardware? So the power of Nuix Engine as a Service and SaaS is really to allow them to be able to tap into Nuix's processing capability, But with all of the infrastructure that's available from AWS or Azure, we're starting with sort of with AWS. But the reality is we've Done some great proof of concepts to illustrate how you can take huge amounts of information, dynamically spin up compute and storage within the AWS infrastructure To basically tackle any size job. And so with that, you get massive scalability and tremendous durability.
Because again, all of these SaaS based infrastructures Provide tremendous storage cost efficiency for how you can think about putting that information out and storing it. Similarly, you have tremendous performance and elasticity. So I can basically scale out, use faster disks. But most importantly, that's not what the customer needs to be concerned with. The customer just needs to be concerned with the inputs, The process, they need to automate a process.
They want to execute their workflow. They want to get in and answer the questions around who, what, how, when, where and why. And then they also then want to just kick out Loadfly. So they need to be able to get through that. We need to be able to sort of crush that information down and make it as fast and easy as possible.
And so we're listening and we're basically aggressively pursuing our first milestone of true engine as a service. Load it up, process it and do what you need to with it. Operator, next slide, please. So we should be on 42. The Nuix compliance scanner is really sort of a great illustration of how we can basically Take the generalizable capability of the Nuix engine and apply it to an adjacent use case.
So compliance has a whole sort of loaded meaning. But one of the hard and true facts of one of Danny's slides is all about how can we increase the overall increasing volume of information that's contained Inside a cloud storage. One of the things that's happening with that is the associated risk. People are just forklifting entire data centers of data up to S3 because the price is so cheap. You have to be able to restore it, but now they're basically creating a huge amount of risk.
We're looking to use the Nuix Ingen, and we've already, again, proof of concepted this as well, to be able to scan that information with all of the forensic rigor. But instead of trying to build a huge searchable index, We actually just look for what matters. We look for PII and then we basically facilitate easy reports. Operator, next slide, please, over to 43. And so as Danny sort of described our roadmap, we have sort of all the capabilities as business as usual.
We have a robust business for our existing products Across law enforcement, legal, compliance, government and a wide variety of use cases. We've talked about moving into The SaaS infrastructure and extending what we already do today with Nuix Discover with engine as a service as well as compliance scanner. Well, one of the other key initiatives that we've laid out is really a crystal focus on solutions. And one of the key solutions that we're targeting first out of the ranks is e com surveillance. We actually have several customers and partners that are already doing this with the Nu X engine, where they recognize the value, not only of being able to process the information, But oftentimes, compliance initiatives are very geared towards what's happened in the last 24 hours.
But they don't offer the ability to look back. So one of the key things that we're driving is the ability to not only look at what's happened in the last 24 hours or even dial that down closer to real time, But give you that tremendous look back and the ability to pivot from a compliance event to an investigation to gain that context. That context is absolutely critical to our investigators. So again, if we go back to the use case, there's all these different players and all these different conversations. As an investigator, I need to understand, is this a single point event?
Or is this a consistent trend in users' behaviors? And so when we think about e com surveillance, It's a natural fit. Nuix has been sort of a leading player, if not the dominant player, for processing email over the last 15 years. Now we're basically focusing that in. How do we deliver that to market?
Focus our collections and connector capabilities around Teams, Slack, communications, Continue to lever the Nuix engine, as well as then start to think about how we can augment that with adaptive security. So move beyond communications, but then to start to understand All of the user behaviors. And again, this focus on core product, evolving our SaaS infrastructure and then targeting solutions It's really sort of the key element of how we're sort of driving growth going forward. And so with that, I think we're over to Rod Voughtry for some of the Q and A.
Well, thank you, Stephen and Danny. A bit like the Nuix engine, speed and precision as we went through technology That really sets Nuix apart from many of our competitors. And it's important to pick up a couple of key threads from what was said is that we have this extensible platform
that allows us to take our
technology into many, many different use York. That allows us to take our technology into many, many different use cases, often with our partners who put that together for us. It is it also comes to life in very focused solutions and use cases such as the e comm surveillance. So in a sense, we think about our software being able to bend into new areas. And when we get see that there's a huge market opportunity, we add more engineering capability to make that repeatable standardized offerings.
So now we're open to questions. And do we have a couple of questions?
Yes. The first question is actually for Jeff. Jeff, how would you describe the Nuix culture and how has it evolved since you became involved with the company?
It's a good question. I think the Nuix culture has always been smart and scrappy. And I think that is that was true at the beginning and is very much true today. I think originally there was more of a friends and family feel to it. But now As we have matured as a company and taken on the kind of responsibilities that we have and brought in more and more professionals, it's matured more to a team.
But in terms of the attitude, the commitment, the sense of mission, York. The caliber of the people has just gone from strength to strength. So I think my One of the things that impresses me about Nuix is I listen to Steven now And Danny, we're just brilliant and really, really tremendous and been here for a long, long time. I look at David Sitzky, who is the genius behind the engines, and I know he's been here forever. I look at Ethan and Jonathan, who are leading our global teams, Ethan in the U.
S. And there is a sense of permanence and continuity and strength and people who are They are tough and strong and they don't rattle and they just they keep delivering and producing. So I think That's the culture.
Thank you, Jeff. Do we have a follow-up question?
Yes. What is driving your priorities In moving the whole Nuix software platform to the cloud?
Is that for Danny? Maybe that's it. Danny, you want to take that question?
Yes, sure. I think there are a couple of elements that are taking us to the cloud. One is, quite frankly, our customers are asking us to give them the ability to process data that is already moving to the Cloud. So the big trend of 49% of All data moving to the cloud by 2025, our customers recognize that they don't see the point of bringing that data back on prem, processing it on prem and then pushing it back up to the Cloud. So they want to process data in place.
Another big trend for us frankly is As I mentioned in the talk track, we want to really align our growth to the growth of data and getting to the cloud Gives our customers not only deployment choice, but gives Nuix optionality on new and innovative pricing models to capitalize on that opportunity.
Thanks, Danny. And I think it's important that we like to use the term that we give our customers choice. Some customers will have a hybrid of on premise Consumption and SaaS, and that seems to be a key differentiator for us. Do we have another question?
Yes. This question might be for Steven Stuart, what are competitors doing in the platform space that Nuix isn't? And where they have similar products, What is Nuix's point of difference?
Yes, perfect. So again, that's a great question. And really sort of Nuix's point of differentiation has always been our engine. Nuix is unquestionably the leader in processing. When it comes down to extracting Text and Metadata and then doing all of the other sort of wonderful workflows.
As we think about sort of our cloud journey and sort of it dovetails into Danny's response, The key thing is being able to do that efficiently and at scale. And so we've been doing some tremendous work with the engine, David Tsitsky, our Chief Scientist on being able to break down those boundaries to be able to consistently and repeatedly scale up elastically to be able to handle huge volumes. So when I think about what our competitors are doing, you know, they're basically retrofitting their processing environments To try to take advantage of horizontal scale. Nuix already had pre existing high performance capability. We're now optimizing it to be able to run at True cloud scale.
And some of the factors that lead into that are improved disk, better compute environments. But again, if you go back to the basics, it's the ability to get tremendous volumes of data in and out or into some type of investigative lens as quickly as possible. And so, you know, the one thing that we speak to that no one ever seems to have enough of, and that's time. So Nuix's key differentiator is, again, the ability to Allow organizations to move very, very quickly and quite frankly target the data where it lives. So as Danny and Rod have both mentioned, whether it be in the cloud or whether it be on premise, There are lots of ways in which we can target that data and really get at it quickly.
Thanks, David. That's Greg.
And next question. What is the current Split of on premise versus cloud, what timeframe would you expect your transition to SaaS and what Product investment would be required to enable that transition?
That's a big question. I think the first thing is that it's a natural journey for us into the cloud, but It will be paced by the it will be paced by how customers are willing to embrace it. So I think we've said in a number of sessions that the bulk of our revenue today comes From subscription or module licensing, but we're providing those options already. And we've seen early customers take advantage of consumption, Whether it be gigabytes processed through the engine or whether it's a first step into SaaS with our current SaaS offering, which is Nuix Discover. And we're really pleased about the fact that Just taking Nuix Discover, 25% of the new clients that have joined us in the last year to date period have actually embraced a SaaS Implementation on the new logos.
So we're seeing some uptake. But as always you would know, in software as a service, you start off Small amounts of data and you grow rapidly over time as you have more work. So we're not committing to a specific timeframe. We are investing already in SaaS products that we brought to market. And in parallel to that activity, we'll be making more of our platform products, if you like, cloud friendly or SaaS enabled.
Thanks, Rod. Next question. How should we think about the frequency with which your customers use your products? It seems that you have High powered software that your clients use on an infrequent basis for complicated matters, but that it doesn't really work for most people's day to day requirements. Is there any ability to become a solution that your clients rely upon on an everyday basis?
Well, certainly our customers rely on Nuix every day, Every hour of every day, we are targeted, our software at the biggest users of processing data in this investigatory space, whether it's the big advisory firms, large law enforcement, government agencies like the Department of Justice. So it is designed as an enterprise software offering For large data sets that need to be processed rapidly across thousands of data, more than a 1,000 data types. All of our customers Tend to have more and more work than they can get through. And that generates In a good period, that generates them having to add more capacity. And that's another reason why the SaaS journey is a good one, because It's much easier if a service provider, say, in the United States wants to expand their business into Europe, working with Nuix's SaaS instances today for Nuix Discover, they can spin up new customers very rapidly and take on more work.
So I'm very, very happy about The usage of our software on a day every day basis by our law firm customers, advisory service providers, government and corporate entities.
Jeff, this is a question for you. What do you see as the strength of Nuix's global leadership team?
I think people are seeing some of it. Rod is tough and he is smart and he is adaptable, built a really disciplined team. And I look at the quality of the work that Danny and Steve and others produce year in, year out. And I think York. The proof of the pudding is in the eating.
You see it in the people that we're attracting. I think Oliver and Aptis are 2 enormously valuable hires. And it just gives me great confidence in where we're going has a global leadership team that not only are we retaining that kind of top talent over long periods of time, but we're attracting extraordinarily new great new talent. And that's And I think the strength of the leadership team and that's what the Board is very much committed To seeing is that we continue to expand and develop that being the best in class approach.
Thanks, Jeff. Next question, what has been the feedback from your partners about Nuix's move into SaaS?
I think it's been very strong. It's an interesting question for the big partners because they've enjoyed over the years the opportunity to Put as much Nuix through there, if we call it sort of an all you can eat type license in the past, which means that no matter what amount of work they had, as long as they had the time And the system size capacity they can process much work. So to some extent, moving to consumption, there is a stronger alignment for our partners to their revenue growth and to our opportunity to grow. So it's a very good transition for us to align our revenue model to as customers get more work. It does change as you'll hear from Stephen Doyle later in the session, how sometimes how We recognize that revenue in terms of upfront versus multiyear versus software as a service.
We're going to talk specifically to that. But the service providers know inevitably for them to be able to pivot and grow and enter new markets and take on new use cases, They need to be more nimble, more flexible. And so we have a couple of the very large advisory firms already engaged with us doing software as a service around our Discover offering, which is available today. And we have other service providers, even in not only the big advisories, but the legal support vendors using consumption. So we're starting to gather the data that enables us to understand how quickly this trend will happen.
How much training or onboarding do your customers require to effectively make use of the capabilities of the Nuix engine Given its inherent complexity.
Steven, do you want to take
that one? Yes, absolutely. I mean, so at its most basic level, you can have someone up and running in, I'd say, 15 minutes, you know, to be able to download the software installed and get going. You know, the actual workstation user interface, as powerful as it is, allows you to install it with basically a handful of clicks, Point it to some files and make that information searchable all relatively quickly. Once you move into sort of more advanced capabilities, sure, you can add some time to that.
To make it even sort of simpler, we actually offer Nuix Discover via SaaS. And so all that effectively takes is an account that you need that you can subsequently log into. So when we think about sort of that spectrum, it really has a lot to do with the role of the operator. So when I was speaking earlier about the practitioners, Nuix has a lot of different types of operators. We have attorneys, we have law enforcement officers, and these law enforcement officers Our true police officers, they are out, they may be potentially walking the street, and so they're not highly technical users.
So we actually have user experiences that are geared towards them. Nuix Investigate is focused on that role and that user. Nuix Discover Has the user experience that is familiar to an attorney. Workstation has the user experience that's familiar for a digital forensics investigator. So when we think about all of those different roles, if I were to take an attorney and ask them to sit in front of workstation, They may perceive a significant barrier.
However, if I put an attorney in front of Nuix Discover, they will feel completely at home. Everything is lined up. The terminology is So I guess sort of the reality is as you think about the different type of customer and the role and their expectations, we really have a variety of different sort of user Experience is geared towards their persona.
Thanks, Stephen. Do you have another question? Yes.
I think we have time for one more question. What are you going to do to win back Investor Trust and improve its governance?
I guess, maybe Jeff should take that one.
Yes. No, I think, as I said, we've got some work to I think the having to restate our forecast is disarming for everyone. I think we need to do a much better job of explaining our business to people. And I think this is a good start with the Investor Day, so people understand More clearly, how the business functions and what sorts of headwinds they that we've identified in the past that they need to pay close attention to, for example, exchange rates, other things that can impact those forecasts. I think the As a Board, we're very committed to making sure that we live up to the highest levels of government.
And that means I'm putting into place all of the internal controls that The one would expect from for a significant public company, we also need to make sure that we're evaluating ourselves and Board members, having our committees do proper scrutiny of the of Every aspect of our leadership and how we're operating, we always strive to improve. And I think we're Taking on board the information that we're getting from all of you, from investors, we are paying close attention and We're committed to making sure that, as I said, not only are we doing good work, but we're explaining it well. And to the extent that we We make mistakes, we own up to them and that we have the kind of long term relationship with our investors that builds the trust and confidence that's necessary to build a great company. We're not here for a short term gain. We're here for a long term commitment.
And I think that's driven most of all by the Board's commitment to being the company you expect us to be. So when I look at the other Board members, we've got deeply experienced people who have done other Board leadership roles like C. Thomas. We've got the former Spy Chiefs of the UK, Ian Lovett. And I think these are people who take their responsibilities extraordinarily seriously, I know I do.
And one of the ways that you earn other people's confidence is by demonstrating that every day by the way we conduct ourselves as a Board and as a company.
Thank you, Jeff. And thanks, Danny and Stephen. We've got to the coffee break. We do have a couple of Leftover, which we'll try and fit in when we get to the 2nd session. So we'll reconvene right at 10:30 and Jonathan Rees will introduce the next session.
So please take a break and look forward to reconnecting in about 14 minutes' time. Thank you.
I am Jonathan Rees and I'm responsible for our customer and partner growth across our international division, which covers a large geography, all of Asia Pacific, Japan, Europe, Middle East and Africa. I'm based in London And now into my coming up on my 5th year of supporting our go to market organization in increasing our customer footprint through geographic Expansion and extending our partner network across this vast geography. So, so far today, we've heard from Danny and Steven on the amazing products that we build, the amazing software that we build and how we innovate. Now we want to explain how we take the horizontal, the generalizable and turn that into In order to find truth in the data and address the vertical market segments through our solutions. If we move to Slide 46, please, operator.
I'm joined by my colleagues today, Abdes, Bill and Oliver, to discuss our market segments of Investigations, eDiscovery and Governance, Risk and Compliance, GRC. So these colleagues, my team members, they are the voice of the customer. They are the bridge between my relationship with a customer and a partner and how the wants and desires are then passed into the product and engineering team. They partner with me and the go to market team to take the Nuix software that Danny and the team developed and translate that into solutions In the language of our customers and partners. So we will focus on 3 key questions and address each of investigations, e discovery and governance, risk and clients across the market segment.
There will be opportunity for further Q and A at the end of the session. So firstly, I'd like to welcome Abdes to discuss investigations, so digital forensics. So hi, Abdes, and It's an hour later on in Frankfurt than it is here in London. So thank you for taking the time. Look, we'd like to Perhaps you could give an introduction on yourself and cover what you see is the market opportunity for Nuix and what is our original heritage in the digital forensics investigation space?
Excellent. Good morning. Yes, it's quite early here. Really excited to be here. As Rod mentioned, I joined Nuix to lead the investigations domain and 2 months now here.
And I've been in the business, especially investigations and EDISCAR before over 10 years. And because of that, I know the market needs really well. And so to go into the first question, I Because I know the market well, I tend to look at the market opportunity more broadly in order to strengthen our value proposition going to the key verticals, Including the corporate and government markets who want and that's what has developed throughout the years, Want an end to end workflow from endpoint detection response all the way through digital forensics and instant response. What I'm What we see is the market for DIR or digital forensics and incident response alone will be close To $2,000,000,000 over the next 4 years. And if we couple that with the expected growth in the EDR Endpoint Data Protection and Response, which is SEK 12,000,000,000 we can see a big market or total addressable market for that.
And this is being driven by a number of factors, including not only massive Use of devices like mobile and IoT devices. The interesting part here is we see that in law enforcement as well as corporate. So The corporate world has obviously a lot of mobile devices, but also in law enforcement. And what we also see is that the IoT devices are increasing. And that's the beauty of investigations in the business that There is always a need for investigations tool.
It's moving from mobile forensics into IoT forensics and then there is vehicle forensics. So and we want to be prepared for all the needs in the investigation markets. And I think what we've already talked about, which is obvious that There will be
or there is a lot
of needs on demands for cloud and we differentiate in 2 ways that there is more data being stored And the cloud repository is creating a need to have to collect. And secondly, related to cloud, we're seeing more public Sector customers considering using cloud based platforms and the corporates have been moving to the cloud for a while now. And there is more the need for more forensic tools in highly regulated industries like Banking, finance, insurance, healthcare, pharma, and that is a good link to the GRC platforms We are working on and another interesting topic in the investigations, what's it's also a good A market opportunity is the rising cryptocurrencies that have opened more opportunities for investigations. And I think that's pretty new for the whole world is the pandemic. But coming out of the pandemic, we still see working from home being a long Term trend, which is creating a demand for more endpoint collection and monitoring.
And an increasing number of cyber attacks It's been talked about already by Danny and Stephen making it essential for organizations to adopt an end to end Plan from proactive security to investigation. And last but not least, which is for traditional forensics In law enforcement, we're also seeing a significant lack of technical investigators, and which requires more intuitive and easier to use Interfaces that also leverage AI and machine learning, all of these are significant global trends driving the need For Forensic Investigation
Tools. But one of our core strengths, Avdes, is obviously The footprint that we have around the world and being close to the customers living where the customers live, as we said. So Newark. From a regional view, what are you seeing from a regional view? And then also from Customer segmentation, how governments are changing in national security agencies, for instance.
Yes, that's a really good question to see. I mean, you could always summarize To say investigation is an investigation and they will need a strong platform. But looking through all The different areas, whether it's North America, but North America has always been most receptive to the adoption of digital forensics And most organizations in North America have adopted the cloud, for example, for streamlining work processes. In Europe, you will see specifically driven by the GDPR regulators regulations, but Europe compromises the major growing economies Of the UK, Germany and France and Europe has been exhibiting continued growth in the adoption of digital forensics. And the you see that in all the regions that The need of an end to end platform is the same, but one area that I see Has changed or is a bit different.
The threat landscape in APAC is increasing at an alarming rate with increase in network So in recent years, the APAC region has undergone tremendous economic growth, political transformation and social changes. I think that's where we see some differences. And then in the Middle East and Africa region, government regulations related to Internet, media, publications, violence and monitoring are raised stringent. However, businesses in this region are at Risk for cyber attacks due to the widespread trends of 5 gs, bring your own devices and cloud computing. And then the last region that we've been doing some analysis and we see is Latin America, and it's currently among the developing adopters of digital Forensics.
So the intensity of cyber attacks in the region has increased recently due to the proliferated use of the Internet. But overall, I see investigations being needed in the it doesn't matter in which region you are. In some areas like in India, for example, it's an increasing market when it comes to standalone forensics, But the regions are growing faster when it comes to bigger lab, forensics lab for
example. Okay. Thank you for that. Look, I just want to sort of finish off on investigations with from your perspective 2 months into the in What's Nuix's competitive advantage from your perspective 2 months in?
So 2 months in and before that, obviously, The new Nuix as a great software company or investigations, e discovery company. But what's the obvious answer is, here is the engine. And the market knows Nuix very well for its engine, which ingest in process structured, semi structured and unstructured data. But interesting for me is to see the competitive Advantage is even stronger. So we are there is no other tool that can close to the
processing power that
the Power that the engines got. And it can the great thing is it's fast, It can process a structured, semi structured and unstructured data. And it's enabling quick analysis Nuix. And using our patented parallel processing engine, users can make Critical decisions early in the case, finding relevant evidence while it's still processing. And that's an important thing for investigations because time matters.
And you can while it's processing, you can already start to do your investigations. And But to further that answer, our analysis allows investigators to gain deeper insights across current and historic cases. So with powerful visualizations, which is a must have when it comes to investigations and analytics, users can answer the most critical Questions faster. So divide it into who was involved, when the events happened, where the events It took place what happened like piecing together the sequence of an event and why or how establishing Root Cause Analysis. And you'll probably say there are other tools in the market or they message Something similar, but the tools are incomplete solution as no existing only solution enables This adds scale, speed and across all data formats within a single user experience and putting and that's what From my perspective before I joined Nuix to see that from an investigation point of view, the heart of A solution is processing engine.
And that's what every other vendor in this market is trying to get to, to have a stronger and faster processing engine.
Thanks, Abdes. Look, I think the scalability that we've got, the extensibility of the engine is obviously key and I Thoroughly enjoy working with our customers from an investigations point of view. The critical nature of their work He's always cutting edge in trying to stay 1 step ahead of the criminals in the market and allows us to innovate across the engine. Thanks for that, Abdes. I'd like to come to Bill now, if I can, please, and touch on e Discovery, if we can pull Bill's video up.
Hey, Bill. So look, it's the first time you've had the chance to publicly speak about Newix. Can you give us an overview of what you see in the as the market And what your role is in helping Nuix to achieve that?
Sure. I'd love to, Jonathan. Thank you. So just to provide a little context for my comments, a little bit about myself. I live just outside Washington, D.
C, in the States. I'm a lawyer. My love of technology won out over my interest in the law, I ended up going to FTI Consulting, a small business advisory firm. And in my 20 years there, eventually, I became responsible for Ediscovery Consulting. In my last two years there, I was responsible for the ringtail product, which we purchased in 2004.
And then we also purchased a 10x, an analytics product in 2,008 that we had merged together. The first goal was to get Ringtail what became Discover to a software company. And Nuix was the obvious choice, especially since we had already integrated the world class processing engine into our end to end SaaS solution. I'm now responsible for the success of the Discover platform. I help drive sales and I make Sure, customers are thrilled with services and support.
A little bit about how we sell Discover. So we sell Discover both on premises and SaaS. We sell direct. We sell to law firms, corporations and government entities. We also sell through partners.
In the on premise commercial model, we primarily charge for instances and the number of users using Discover. In the SaaS based commercial model, we charge based on data under management. Our on premise partners are a mix. Some of them are based on the amount of data they're hosting for customers in their environments. And in some instances, we charge them based on the number of users and the number of locations where they've installed Discover.
There is no doubt in my mind that the market opportunities with SaaS with the primary goal to drive data under management. Since the acquisition, that number has my screen just went out, That number has tripled. We've gone from having data in 2 regions, Jonathan, to now having data in 5. This not to say that on premise isn't important, it is still important. In fact, Rod talked about customer choice and we give our customers choice.
They can be on premise, they can be SaaS or they can be some hybrid. Our on premise customer base continues to grow, And we've recently signed a large law enforcement agency in the U. S. But I guess what I'd say, Jonathan, is I'm most proud of our growth in what we call SaaS partners. A SaaS partner is a Nuix partner who has their own customers, but they bring those customers and that customers' data to our SaaS environments and rely on us to provide the intellectual property of the application and The backing of our technical operations and infrastructure, which works very well.
When we were first acquired, we had 0 of these types of partners and now we're approaching 20. So things that I'm really proud of those achievements.
Yes. Our ability to extend our reach through that partner network and then speed up the growth of customer onboarding into our SaaS is obviously critical there and Been really successful on that, Bill. So sort of second question really around so with Nuix's dominance in the processing space, what advantage do you C4 for Discover and the integration that we have now across the platform.
Sure, sure. Discover is a review platform. It's the It's the final destination that a subset of data that is crucial to any kind of matter, whether it's litigation, investigation or Regulatory matter goes. Nuix's advantages in the on premise market for collection and processing Provide a major on ramp for Discover, and we've already seen this mechanic work. The workflow we created called Promotion Facilitates the movement of processed and investigated data from the on premises environments that our customers have directly to SaaS for structured review.
We have corporations, governments, law firms and partners all using this new capability and it really tied together our on premise capabilities where Nuix is very strong with Discover SaaS in our SaaS environments. The work that Nuix is doing to supercharge the delivery of processing services in the cloud is going to be another major on ramp York for data coming to Discover.
Externally, I mean, the sector I'm guessing everybody would refer to as e discovery, but the actual application for discovery is wider than that as traditional market. We've got regulators, for York. Can you extend on that view a little, please?
Sure, sure. The term e discovery tends To connote a litigation context and Discover isn't used for just litigation. Discover is a document review and knowledge management capture platform. And this is the tool that $1,000 an hour lawyers use to capture their thoughts on why certain documents are important. And then the platform is used to disseminate that knowledge.
So it's used multiple times across the enterprise. So it can be used in a situation where data needs to be put through in a workflow, including structured review across multiple teams to production to opposing counsel, A regulator or in some instances, prosecutors preparing for a case. So it can be used in all those contexts and not just in litigation.
So another window of data analytics and intelligence. Yes. So Look, with the next 12 months in mind, what are you most excited about? And I will caveat that, that you only got a couple of minutes.
Yes, yes. I'm watching the clock closely, Jonathan, and I'd like to talk. Okay. So it's first important to know that Discover is developed with continuous integration and continuous delivery. We release new versions every 2 weeks.
This gives us the freedom to be nimble and to innovate quickly to capture opportunities when they come along. It's important that data under management be sticky. Processing is a necessary first step for review. But once data is in review, we want customers to find that our platform continues to add value as a result of the data being in the platform. So I'm excited about the things we're going to do this year that are going to enhance the reasons why customers continue to keep their data In our review platform, one of these features is data models, which customers use to build fact chronologies and evidence summaries.
We're also deepening our support for other review cases such as bulk redaction for DSAR use cases And case to case migrations. And of course, it's already been mentioned that a lot of work has gone into FedRAMP being ready for FedRAMP readiness.
So obviously FedRAMP is very important for the U. S. Government space, but obviously U. S. Centrix, so how do you see that benefit in our global customer base?
Sure. As a lot of the work behind FedRAMP, A lot of it increased some of the capabilities in terms of features and functionality in the platform, specifically around auditing, Heightened concerns, security concerns, review applications like Discover must be able to support being able to report on Content access changes, captured knowledge changes, feature permission changes. So in other words, a lot of the work that we did for FedRAMP will have an effect of enhancing the platform from a global perspective.
Super exciting. Thanks, Bill. I'd like now to come to Oliver, please, operator. Oliver is our newest executive team member and my newest colleague. So, Oliver, it'd be great to get your insight into market potential and your new role in helping Nuix realize that growth.
Jonathan, thank you and thank you, everybody. As Jonathan mentioned, I'm a recent joinee of Nuix, Having joined 2 weeks ago prior to that, I performed the role of Chief Supervisory Officer at the Australian Securities and Investments Commission, which is Australia's a corporate regulator. And the market opportunity and what drew me to Nuix was the consistent experience I had with Risk professionals and governance professionals and compliance professionals right across the largest organizations in our financial services industry and including board members and chairs who consistently ask themselves how do I get to find the needle in the haystack at the quickest possible point in time so that I can jump on
the issue, Deal with it at
the earliest stage, minimize any governmental and regulatory risk, minimize reputational damage to me as an organization. And For me, when I look at Nuix and the value proposition that the search engine in particular can provide, it's an extraordinarily compelling answer to that question. And the primacy of asking that question has been driven by a number of things and an increasing area of focus. We've already touched on the fines that have been imposed on organizations who've failed to manage those risks upfront. But I think just as important and Danny mentioned this But briefly, it's the reputational cost that missing risk can have on large organizations, very, very difficult to build and very, very difficult to retrieve one that's lost.
But equally in this incredibly fast moving digital world in which we now operate, the opportunity cost of missing risks When they're available to you, you fail to identify them and then find yourself needing to deal with historical legacy matters 3, 4, 5, 6 years ago, When your competitors are very much forward looking and you're looking to build your business and attack them on the basis in which they're attacking you is something that Board's group executives, Chief Risk Officer is very much focused on as an aspiration. And once again, I think Nuix's Our software solution and search engine capability can provide people with the kind of tools and leverage and opportunities they need to Play in the kind of space they want to be playing and identify those risks at the earliest possible point in time.
We sort of see ourselves, I suppose, from a more global regulation, Which is being implemented on a local scale and then different maturity levels of markets. So How do you see that playing out on being an opportunity for Nuix to address?
Well, firstly, Pointing to Nu X's competitive advantage, I think we've already touched on that. But I think it's an important thing to just continuously reemphasize. The market leading features of the Nu X engine We'll always position us in whatever space we wish to play well, so to the generalizable nature of our Processing capability, which allows us to point to all number of use cases in whatever number of jurisdictions and perform in a very, very competitive way. What I do see in the global regulatory space is an important set of observations that I think worth Sharing, particularly consistent with, you will have heard those who have had exposure to Nuix, our land and expand Expiration. When you look at the way in which regulatory obligations are landing and expanding across the globe, you will see GDPR obviously in Europe and a number of American states now taking up a version of that.
You were seeing things like Cybersecurity obligations, again, landing in one particular jurisdiction and spanning out across the globe, which again gives us opportunity and further chance to pursue those market potentials in a range of different jurisdictions. One of the important things I think about the The regulatory expansion of a number of key regulatory focus points for Nuix is not Just that they expand typically across geographies, which gives us a greater opportunity in the market, but they also expand across industries. So you will be committed with the open banking obligations, for example, in Europe, which first landed in the financial services space and then expanded to the energy and telecommunications sector, something similar is happening Here in Australia and again, of course, obviously all the cyber obligations and regulations are spanning across the industry as well as the privacy and Data Obligations, which again are not industry specific, but give us a lot of opportunity from a market development perspective.
Thanks, Rod. Sorry for the technical issues there, team. Good morning to everyone and thanks for joining us. Welcome back to those with whom we've connected before. Some of this material is going to be familiar, so I just ask for patience where it's a repeat.
Okay, operator, let's spring out of the starting box and move to Slide 48. With a track record of success spanning 15 years, Nuix is capable of successfully navigating growth phases. For those of you who do not yet know Nuix, it Often comes as a surprise when people learn that Nuix has grown on a lifetime institutional capital for the platform of $11,500,000 Around 90% of the revenue comes from outside Australia, 75% of our people work outside Australia And our life to date billings is getting close to $1,000,000,000 And of what we are particularly proud is that from 2,008 until today, Nuix has remained EBITDA and cash flow positive. As discussed in prior releases, FX headwinds plus government randomness Accounts for around $16,000,000 of downward revision to our statutory revenues versus what we said we were going to do in the prospectus forecast. As an international company with 60% of our revenue approximately generated from in USD, The FX movement over time from $0.69 to $0.77 has dealt a $9,000,000 FX headwind Or circa 5% revenue suppression.
Over 10 years of USA government Ex. Selling, we've traditionally seen strong September December quarters. However, the USA election randomness witnessed order decision delays in those quarters, which created a $7,000,000 USG headwind or again around about 3%. Nonetheless, our strong gross margins and solid operational Management have enabled us to hold pro form a EBITDA forecast with a slight uptick of $1,000,000 to $3,000,000 or a 5% improvement. In any other given year, our diversified business would have been able to manage earnings' variability with these 1 or 2 headwinds.
However, transitionary phenomena at play have caused a 3rd and 4th headwind to near term revenue. Operator, would you please move to the next Slide 49. The consumption and multiyear deal phenomena over the mid to long term are good for the business, and I'll explain why shortly. But before I do, please allow me to outline 3 business fundamentals that strategically augur well for Nuix's future growth. Firstly, we've stayed pure play technology since 2006 with a rare 96% of revenue emanating from software only.
Many software companies have a large percentage of revenue that comes from professional services and perhaps that's because there's significant product customization required for each of their In contrast, Nuix delivers a standard product that requires little configuration and if any at all, The implementation work is performed by certified consulting firms and partners that are affiliated with Nuix. Staying pure play Has forged long term trusted relationships and created a valuable reseller network that diffuses and distributes our technology internationally. Secondly, the optionality that we provide our customers is key. We are easy to work with and the customer voice, customer choice is a key differentiator in the Nuix offering. The 3rd business model fundamental accounting for our consistent growth over time Is that Nuix has considerable versatility when it comes to structuring commercial arrangements.
Depending on the industry vertical and or the use case, The Nuix pricing model can be structured around 4 pricing drivers, the number of cores, the modular cores, the amount of data under management, the number of users.
Look, can we sum up What excites you about the next 12 months from your perspective for Nuix?
Thanks, John. It really is It's the growth story and there are a couple of metrics that sit behind that. Firstly, the astronomical spend on risk York. And compliance that we see in the Financial Services and Industries more broadly, and just to use one example, Commonwealth Bank. In its annual report for the year 2020, identified $1,400,000,000 of investment spend across the organization, up 70% of that was just within the space of Compliance and that was up almost 10% on the prior year.
There is a significant amount of money being invested in the industry and a significant advertiser consequence to do stuff Better in a more effective and more dynamic way. And as I said, identify that needle in the haystack in a quicker, more time effective and efficient fashion. And partly to pick up on some of that commercial opportunity, we've seen a significant investment in Redtec, which again is really important signal of the potential growth. I feel I can see in this industry and the potential opportunities that Nuix has to offer. And then finally, the breadth and development of the regulatory initiatives, which we've already touched on, which go to real core issues that Nuix Performance and performance well in privacy, data, areas like cyber, and more broadly identifying issues at the earliest possible point in Time in the digital environment, those regulatory requirements are increasingly global and increasingly converging and like I said, not just in the context of One particular geography, but also not just right across geographies, but right across industries as well.
So I see massive Opportunity from a commercial perspective from Nuix continue to grow and develop and that's what really excites me over the next 12 months.
Super. Thank you, Oliver. And so just Summing up, really, I'd like to thank everybody for the vertical solution view of the amazing software that the guys built. And The extensibility and flexibility we provide really allows us to win and address new markets and new growth opportunities. And our distribution model Meld's between direct enterprise sales and solution consulting and then our extensive partner network.
Harnessing the innovation and transformative Service wrappers, our partners can deliver on top of our software will further extend our reach and growth opportunity. I'm really excited to Continue to work with everybody. So I'll hand back to Rod now.
Thank you.
Thank you, Jonathan, and thanks, Bill, Atis and Oliver. I think what you hear here is you're hearing 4 of our execs that really represent the voice of our customers. Every day our salespeople, our solution consultants And Bill Abdes and all of his teams are out there understanding what direction our customers want us to take in terms of leveraging the processing platform and bringing it to life with these different use cases. We've talked before about bending the technology and Oliver used an example of how we can take out What's often seen by the market as traditional e discovery type software and apply it into the GRC space. And as we get more and more core requirements in, We're going to improve those user experiences and that's a big part of where we're investing our R and D going forward.
So thank you very much and the guys will be available for some Q and A. But this the next thing we're going to turn to is the last formal presentation of the day, which is for our Chief Financial Officer, Stephen Doyle, to talk a bit about the revenue model And some recent changes that in customer buying preference, which we talked about in our recent release, but we'll go a little deeper on. And we think these have a long term and a medium term benefit to both our customers and for ourselves and also for our shareholders. So Stephen, I'll hand over to you. And at the end of this presentation, we'll take questions across the panel and also your presentation.
Thank you very much.
Good morning to everyone and thanks for joining us. Welcome back to those with whom we've connected before. Some of this material is going to be Familiar, so I just ask for patience where it's a repeat. Okay, operator, let's spring out of the starting box and move to Slide 48. With a track record of success spanning 15 years, Nuix is capable of successfully navigating growth phases.
For those of you who do not yet know Nuix, it often comes as a surprise when people learn that Nuix has grown on a lifetime institutional capital for the platform of $11,500,000 Around 90% of the revenue comes from outside Australia, 75% of our people work outside Australia and our life to date billings is getting close to $1,000,000,000 And what we are particularly proud is that from 2,008 until today, Nuix has remained EBITDA and cash flow positive. As discussed in prior releases, FX headwinds plus government randomness accounts for around $16,000,000 of downward revision to our Statutory revenues versus what we said we were going to do in the prospectus forecast. As an international company with 60% of our revenue approximately generated From in USD, the FX movement over time from $0.69 to $0.77 As Delta 9 millimeters FX headwind or circa 5% revenue suppression. Over 10 years of USA government selling, we've traditionally seen strong September December quarters. However, the USA election randomness York.
Order decision delays in those quarters, which created a $7,000,000 USG headwind or again around about 3%. Nonetheless, Our strong gross margins and solid operational management have enabled us to hold pro form a EBITDA forecast with a slight uptick of $1,000,000 to $3,000,000 or a 5% improvement. In any other given year, our diversified business would have been able to manage earnings There is variability with these 1 or 2 headwinds. However, transitionary phenomena at play have caused a 3rd and 4th headwind to near term revenue. Operator, would you please move to the next Slide, number 49.
The consumption and multiyear deal phenomena over the mid to long term are good for the business, And I'll explain why shortly. But before I do, please allow me to outline 3 business fundamentals that strategically augur well for Nuix's future growth. Firstly, we've stayed pure play technology since 2006 with a rare 96% of revenue emanating from software only. Many software companies have a large percentage of revenue that comes from professional services and perhaps that's because there's significant product customization required for each of their In contrast, Nuix delivers a standard product that requires little configuration and if any at all, The implementation work is performed by certified consulting firms and partners that are affiliated with Nuix. Staying pure play has forged long term trusted relationships and created a valuable reseller network that diffuses and distributes our technology internationally.
Secondly, the optionality that we provide our customers is key. We are easy to work with and the customer voice, customer choice is a key differentiator in the Nuix offering. The 3rd business model fundamental accounting for our consistent growth over time Is that Nuix has considerable versatility when it comes to structuring commercial arrangements. Depending on the industry vertical and or the use case, The Nuix pricing model can be structured around 4 pricing drivers: the number of calls, the modular calls, the amount of data under management, the number of users And or the amount of data processed, reviews and analyzed. Nuix pricing and packaging is tied to data And this acts as a force multiplier that will accelerate growth in the mid to long term.
The impact in the short term from consumption based pricing transitions Can be negative to statutory and AC revenue as we have seen. However, the Nuix business model fundamentals are strategically and structurally aligned You can see some real case studies on the left hand side. Customer A is an advisory firm with more than 5 years of tenure. The software is used for their end customer consulting engagements. The software was originally all you can eat modular core licensing with an annual contract value of 7 figures.
In year 2, additional modular core licenses were purchased with around a 90% increase in annual contract value. In year 3, the customer migrated to consumption based licensing with a minimum data commit, where the annual contract value actually decreased, driven by demand fluctuations that were being experienced within the customers business. As mentioned, when customers migrate a 4ucaneat fixed pricing contracts And change their licensing mix, there can be a natural flattening or down sell to begin with as customers rebaseline their usage requirements. And that's okay, because as can be seen with customer B, which is also an advisory firm, the consumption pricing eventually Exceeded minimum contractual commitments, which allowed Nuix to participate in the upside from data consumption. Our licensing optionality also works in government and customer C is a regulator that has been with us since the very early days.
The customer uses Nuix for investigative analytics, forensics and litigation. The revenue plateaued for a few years back there until hybrid licensing options were introduced and implemented at the organization. As can be seen, however, The path to success is not always a straight line. And what we've learned over the past 6 months is that we're finding customers are embarking On their data management journey to consumption and the cloud at very different paces. We're seeing certain customers with pronounced down sell in the initial stages of consumption As I re baseline their usage, and that's okay and that's normal.
And whilst we've not yet seen the uptick come back As quickly as we would have expected and would have liked, we are optimistic that we will see strong upsell return to pre existing levels. It's also important to note that we're still seeing languishing impacts of COVID. Our advisory and service providers in the USA, for example, They cannot progress court cases due to closures, which is in turn impacting the demand for Nuix software, especially the upsell component. So it's quite an extensive run through on those transitioning phenomena at play. And operator, I'd like to move now to Slide 50, where I'd like to talk to and discuss 3 instrumental variables that are impacting the accounting for Nuix software: type, time and terms.
All of these teams have an impact on Revrac individually and concurrently. Please allow me to explain. Firstly, licensing type. Nuix sells and distributes software license types as outlined on this slide. It's important to note that the majority of Nuix's revenue comes from annual Subscription licenses, which account for 64% of our revenue.
These are not recognized over time under the accounting standards. Since annual subscription licenses are deployed and installed on customer premises and Nuix does not have ongoing Deliverable, unlike SaaS or consumption, we are required under the accounting standards to recognize revenue upfront. Only a maintenance element is carved out and recognized over time. When it comes to consumption, representing 12% of our revenue, It can get confusing because of the flexibility that is provided to customers. There's in fact 3 components.
Number 1, subscription licensing consumption, Which is charged according to the amount of data processed or the number of modular cores used. Number 2, SaaS licensing charged by the amount of data processed, stored, reviewed or analyzed Either in the client SaaS or in Nuix's SaaS. And number 3, first licensing, which is charged for any overages that the customer may Experiencing situations where they contract in that manner. All consumption licensing generally is accounted for over time and not upfront. Perpetual licensing, it's at 7% of revenue.
It's decreased significantly over the years. However, it will never completely disappear As legislation can obligate providing perpetual license in certain territories. Nuix's standard licensing agreement Stipulates that maintenance is to be charged at the time of the rule at around 20% of the then current licensing list price. This is a reason for maintenance being a significant part of our recurring revenue at 13%. Finally, when it comes to professional services, This represents 4% of total revenue as Nuix only provides training, resale and customer support as and when required.
So that's covered off licensing type. Now let's have a closer look at the second T, which is licensing time. Nuix software can be provided for any timeframe, a day or a decade. The most common timeframes However, annual and 3 year multi year deals. Multi year deals on subscription licensing are the single biggest instrumental variable That are driving revenue variability.
And in most instances, the entire multiyear deal is booked in full, less than maintenance carve out of course. Multi year deals can recognize more revenue than is billed, creating an unbilled revenue asset on the balance sheet. This is a gain required under the accounting standards. Multiyear deals have been a growth lever for Nuix for many years and the percentage of revenue attributable to multiyear deals has consistently increased. During the year, we've been pleasantly surprised by the strength of multiyear deals.
In addition to being a predictable source of funds, multiyear deals Our important insight into customer sentiment, the block to the competition and a way to manage churn and continuously provide for the opportunity for low friction up So if customers choose to enter into long term commitments with Nuix and pay for it in advance, then we're not going to ship the money back. The 3rd and final T I'd like to explain is licensing contract terms. All customers enter into a EULA, That is an end user license agreement and the detail within the EULA often impacts the accounting treatment. Nuix's software can be tested before entering into a licensing agreement and except in very limited circumstances, the EULA creates an unbreakable contract as Nuix Does not sell nor enter into contracts with accepting clauses nor break clauses. A minimum commit of 12 months is a norm.
Renewals are low friction as yours contain automatic renewal courses. And as previously mentioned, All perpetual licenses require maintenances to be paid as a requirement of use. Nuix's payment terms are 30 days with an upper limit of around 60 days. And on average, Nuix's DSO is circa 50 days. It's also worthwhile mentioning that Nuix has less than 1% of bad debt, which again speaks to our marquee customer set.
I want to shift gears now And look at how the tight time and terms of licensing contracts work and 2 key examples, multiyear deals and SaaS. Multi year deals, when we speak to this, we note that it only applies to subscription licensing type contracts. To be recognized as a multiyear deal, the licensing terms must create an unbreakable contract as mentioned, no acceptance clauses, no break contract clauses And no performance warranties. On average, the time for multi year deals is mentioned at 3 years. The above type time and term requirements Under the accounting standards, obligate Nuix to book the $3,600,000 in this example statutory revenue, again less the obligatory maintenance carve out.
And we do this at contract inception. As you can see, when comparing to the ACV metric, the multiyear deal impact has been eliminated. When we think about SaaS and consumption, we know when you look at statutory revenue, the licensing types are booked over time. For stat revenue, even if the licensing terms create an unbreakable contract as previously mentioned, the stat rev is booked over the length of the contract Time. ACV treatment on the other hand, it could be booked at 3 different points.
It could be booked at the upper end of $1,200,000 to ACV. York. At the midpoint, dollars 900,000 could be booked to ACV on account, for example, of multi deal financial discounts that are offered. And even at the lower end, 600 ks could be booked to ACV on account of customers rebaselining usage as they move to consumption, where in those situations they have minimum spend thresholds. As noted in the examples, when customers migrate off all you can expect fixed price contracts, There can be a natural down sell first.
And for the ACV consequences, it's most pronounced because the DAS consumption run rate Uptick has not yet exceeded minimum thresholds in order for the ACV to recognize the annualized prevailing last month's run rate. The statutory revenue, the down sell has been offset as we've seen by continued strong multi year deal results year to date. Operator, would you please now move to Slide 51. Importantly, despite the often complex accounting policy treatments, the best indicator is that stat rev And ACV and customer receipts broadly track over time. Nuix is well positioned for the future with strong balance sheet and cash generating capability.
As evident from our EBITDA guidance, we continue to pay strong operating cash flows on the back of what's a very capital efficient business. 97% of revenue is received during the financial year. We have a very strong invoice yield ratio. Operator, can we please move to Slide 52 for some concluding remarks. We have seen that predicting the exact transition to customers on their data Jay, it can be difficult.
Our approach has been to hedge the transition, thus we've allowed our customers to consume Nuix with choice. We'll continue to provide our technology in whichever model the customer chooses and we see the transition of our customer to consumption as a positive trend. It does, however, require courage and patience because of the short term headwinds created to revenue and ACV. When it comes to operating leverage, Our gross margins are high because we own all the technology that we offer. We built a platform and therefore our future Development is about diffusing that platform into broader and expanding markets and consequently you'll see R and D and G and A as a percentage of revenue decrease over time.
The market is moving towards us. We're only early in our penetration of our $1,000,000,000 team entitlement and we are seeing stronger than ever new business Revenue come through and increasing average order values. Our market customer set is the envy of many and our customers are speaking to this as evidenced by our High renewal rates and our low churn. I'd like to thank you for the opportunity to connect and I'll hand it back now to Rod for any Q and A that he may like to table. Thank you.
Thanks, Stephen. There is a lot to take on there. And I think the key point that we want to get across here is that the flexibility we provide our customers and how they consume our software. And we understand that that Creates some further explanation for on this call. So Stephen wanted to go through the detail with you and I hope that's helped with the understanding.
So it's very important now that we open up for some Q and A. And we can we've received some questions in. So where would you like to start?
First up about R and D, which parts of the Nuix offer are less unique and require additional engineering investment As alleged in the AFR today.
Okay. Do we have Danny on for that one?
Yes, I'm here.
Do you want to take that, Denny?
Yes, yes. No problem. Sorry, I was just confirming you can hear me. Look, frankly, I think I disagree with the premise of the question about Which part of the portfolio is less unique. The value of Nuix is not only the engine, but the end to end workflows we enable.
So you think about The workflow I discussed during my part of the presentation that is everything from collections all the way through to processing, all the way through to Looking at it from an investigative perspective or in e discovery. So I don't look at the individual Products per se as a any one of them has a particular weakness, it's the end to end workflow that is the value of the overall platform.
Thanks, Danny.
Next question. Is there a product or module that sits on top of the Nuix engine That is specifically designed to help organizations with GRC applications.
Danny, do you want to take that one as well?
Yes. There, well, there's a couple of ways to answer that question. I think the first is, there is an existing offering that we have that sits on top of Nuix today. It's essentially called sensitive data finder and that allows us to go and York. Search across vast quantities of data and surface anything that might violate company policies.
But what we're doing is York. Productizing additional offerings. So as we mentioned earlier, our e comm surveillance offering will be specifically targeted to the GRC works Market and also our compliance scanner offering. So as Stephen discussed in his part of the presentation, we We'll be bringing those to market very shortly.
And I think it's good to add to that, that we talked earlier about bending the existing products into new use cases and we've got Quite a few examples of that. But also to add that we're encouraging our service partners, particularly the large advisories and organizations with deep capability To build their own use cases on top of the Nuix engine and they range from quite a broad set of Customer requirements, we have one large partner that's actually built an expense management use case on top of the engine, Fairly narrow use for what they use it for in house, but it just shows the power of being able to get it that the nice granular level of data and then bring it to life in different use cases. So we are certainly focused on prioritizing based on market opportunity those use cases that we will bring to market with our own R and D, Those that will do jointly with our partners and those where partners will establish their own revenue models in and around leveraging their processing capability. Do we have another question?
Yes. If Nuix is the market leader in its respective markets for over 2 decades, How come it is still a $200,000,000 revenue company in a multibillion dollar industry?
Yes, it's a great question. I think as some of you would have known from previous discussions, one of the things that Nuix has always focused on is being a company that's remained profitable throughout its genesis period from 2,006 to now. And we've essentially run the business on a very low amount of institutional capital. And that puts some constraints on distribution, on set number of salespeople and investments in and so on. We're also working in subsegments of the data market like eDiscovery, which is traditionally labeled in the areas of Litigation and law firms and so on, I mean, it's a very fragmented market in terms of number of vendors.
If you look at e Discovery being About a $3,000,000,000 TAM, and you could take a view that a reasonably good view that processing is about $1,000,000,000 and a bit of that And review, as Bill outlined, is about $2,000,000,000 of it. You would find that given our revenues in and around processing, which where we started in the space, We would be in that sort of 10 plus percent of that space. And if you then look at review, this is a new area for us and there are Very strong players in that review space, but we're a challenger brand, if you will, in that. So we're starting the journey on review And we continue to grow our position in processing. But it is a long tail of competitors that some of which have now got legacy products that we hope Replaced with our ability to expand in our distribution with our partners and expand in our distribution with our own sales forces, which is what we've been doing over recent months.
And a similar profile to some extent in forensic investigations, which is a smaller overall TAM. And of course, the big TAM that we're talking about is GRC, which is relatively new for us. But we have, as Danny, I think, and Stephen called out earlier, some Really positive signs with early customer implementations using our current technology. And with the currency of Nuix today, we hope to be able to make Internal investments in engineering, which we are doing right now in the areas that Danny talked about before, as well as working with partners and An external organization. So that will probably also at a point in time lead us into a bit of technology M and A that will speed up our time to market.
It appears that you compete with have the same no break clause or cancellation policy in their contracts.
It's not for me to comment on how our competitors sell it to their customers. One of the things that we've always focused on is that Our customers should enjoy all of the enhancements and develop feature enhancements to the Nuix processing engine, for example. So if you have a current license And you maintain your maintenance and support. We provided a download site where you can get the next release of the software. And so This enables us to have one version of Nuix, if you will, out there for each area.
And it's not we do not build Customized or bespoke versions of Nuix for individual customers. We do give them the ability through extensions to the platform, through APIs and connectors To be able to do other things, we also allow them to have a scripting tool where they can enhance their workflows. But generally speaking, the Nuix licensed products like eDiscovery and forensics Products that enable us to have those types of no break relationships on licensing.
How much investment is required to make the platform fully cloud based?
The investment on the journey to SaaS, I'll get Danny to talk on. But essentially, we continue to investing in all of the products through new file formats, new connectors To other products in the market, new data types and so on. And part of that is also to invest in moving to SaaS. So maybe Danny, you'd like to add a bit more color to that.
Yes, thanks. Just confirming off mute again. Look, As I described earlier, it's a journey to SaaS and we continue to hire the best and brightest engineers to help us get there faster. And that's Essentially, our overall strategy is to continue to build out the R and D team to Bringing our solutions and our SaaS to market as quickly as possible.
Thanks, Denny. And I think it's important for everyone that As we bring as we get to early customer adoption, that allows us to refine the requirements and build that into the platform. So it is a journey and we have some customers on that Today, as I mentioned earlier in the day, we've been pleasantly surprised with the adoption of our SaaS Discover product, which has processing within it And a large percentage of new customer acquisition in that space is moving to the SaaS. So the learnings from the customers will Influence the focus and the timeline. Next question?
Can you talk to the revenue profile over the next 3 to 5 years as more customers migrate to SaaSconsumption based licenses.
Well, I
think we've learned from other companies that have made this journey that it's very difficult to predict adoption rates. We had the True to mention that we work in a very specialist area of investigative work. And some of our customers are quite cautious about What data they want to put behind the firewall? What data they're prepared to put out into the public environment, etcetera, or in the cloud? So we'll be guided a lot by our customers, but I think it's a little different than generic software going into the cloud.
So at this stage, we're not making Forecast or predictions on the ramp up of SaaS, but we expect that it will become a material part About revenue over the next few years for sure.
If more of your customers are taking up multiyear deals, Why has the revenue guidance declined in FY 2021?
Stephen, do you want to take that one?
Yes, thanks for the question. We'll certainly benefit from multiyear deal tailwind, which is really good. The point that we I can tell you what we would like to talk to again is that our customers are coming to us with some continual strong renewals. We're seeing churn is at really low rates around 4.2%. So it's not to do with the installed base of customers that we have.
In addition to that, our new business is doing better than ever. We're on track to achieve our prospectus forecast of around about $29,000,000 of new. So to put a final point on the question, it's around the upsell. And that upsell pertains to the migration that customers are going through from on prem to consumption and or SaaS And the impacts that that has in terms of how the accounting treatment looks at the revenue. Thank you.
Could you provide color on integrations and APIs, whether those are important for the functionality by clients that use the Nuix platform?
Would you, Danny?
York. Yes, look, as I mentioned in the presentation, the building out the software development kit is Critical to the success of the business, we've already got a comprehensive API across the portfolio. My team is Now working on building out the kit that allows our customers very quickly ramp up on the API, with code samples, etcetera. So that's a work in progress right now. We expect to have that out toward the latter part of this year.
And at the end of the day, we believe that it's going to be not only Nuix that delivers solutions to market, but as Rod mentioned and I mentioned in my talk earlier, Our customers enabling our customers and partners to build out the solutions specific to some of their unique use cases.
Thanks, Danny.
What proportion of sales do you need to invest on a medium to long term basis? And what kind of revenue growth rate could that achieve?
York. Well, I think that's a question related to how we're investing in new markets, in expanding our existing markets. And for example, We've decided to in the last 12 months to start the process of entering into new areas within Europe, in France And Spain and Italy. We've also expanded out of the UK, some more work in the Nordic area and we're having very strong growth in the dark area as well. So First is a geographic focus.
And the way that we typically do this is that we focus on the regulators or the central policing or one of our global partner customers that take us into those markets and at a point where we think there is critical mass, we will deploy on field Sales and Solution Consulting Resources. And over the last since the beginning of this financial year, we've added some 37 people in distribution. Many of those are going into these new territories. Some, of course, are replacing people that haven't performed, etcetera. But generally speaking, it's Growing into those new markets.
In the U. S, we're investing in expanding into other large cities. An example would be that We see quite a lot of potential coming off some successes we've had in oil and gas within the areas like Houston. So we're deploying resources on the ground there. We're seeing with some of these new solutions that Danny talked about around compliance and e comms surveillance and financial services that will add more resource in The centers where financial services are based.
And as we come out the end of this calendar year, hopefully with our first Full this first agreement from the government to our FedRAMP certification, that will open up more opportunities for us beyond what we do Today, we do a good business in government when the governments got access, but we have expanded opportunity, particularly in security areas once we get FedRAMP. So on the sales and distribution side, it is tepid with opportunity, but we are definitely investing. On the engineering side, we actually went through a process in FY 2020, where after the bedding down of the integration of Ringtail, which became Discover. We had a few overlapping roles in engineering around DevOps and various different support activities, which we synthesized just prior York. To June 2020.
And then since then, once we did the full integration, we've been working on programs to Continue to add to Air and Engineering throughout the first half, and we've got quite a substantial investment program over this half of FY 2021, particularly around some of these new use cases we talked about, adding the journey to the cloud with SaaS and also continuing to provide feature functionality parity and making sure our platform stays current with all the latest releases of our partners like You know, Elastic and Amazon and so
on. Is the e discovery TAM currently growing? And how should we think about Nuix's revenue growth beyond the Just period.
Yes, I tend to I'll answer that one too, if I may. I tend to think of e discovery getting put into the wrong box Sometimes, because it's traditionally the measurements are done around law firms and in house litigation and so on. But the basic definition of electronic Discovery is much broader than that. And in fact, what underpins a lot of work that we do and our competitors in the GRC space is the fact that you want to get at the relevant data faster, You want to be able to take action on that data. So depending on how you define the e discovery space, it very quickly leaks to the right, if you will, into DRC, if you want to talk to it in the specific area of law firms, in house litigation, the growth is in corporates bringing their litigation work more in house, Having more control over their own data and then having choice in terms of how they partner with our service provider partners on delivering that.
So we see reasonable growth, but at the lower end of scale, but bigger growth as we extend e discovery into those horizontally into those new use cases.
Can you please address the staff churn as reported by the media?
Well, there's a lot of data in the media that I'd have to say. I'm not sure how they came up with it. We have a very stable team, but particularly now in sales and distribution as we've Made those changes we've made last year. As I mentioned, we did do some synergies around synthesizing of the workforce with the engineering, which I suppose it was appropriate for two reasons. 1 is we had some overlapping roles.
Secondly, we had the situation with COVID and we We want to make sure that we had the right people with the right skills doing the right things. And then we started immediately investing in the people that we wanted to grow the business. And as recently, as early this year, we've with the confidence we have in the business, we've improved The addition of more engineering resources. So we have we're not sure how that number comes up. It depends where you're talking about voluntary and involuntary.
And we think that we have a very stable engineering workforce today that and we're attracting some really, really top talent Because of the social good we do and the purpose of what we do, and I was congratulating a number of engineers who joined us This month, this morning on the Internet. I have a meanwhile. I
think that's it. No more questions from my end.
Well, I'd like to, given the timeframe we have, I'd like to sum up, by firstly thanking all of you for attending And to the members of the Nuix team from around the world for doing their part in this and for you having the opportunity for you to meet them. To sum up, Nuix's Future growth prospects remain strong. It will be based on maintaining our position as a leader in the investigative analyst space. Of course, winning new customers is the oxygen of the business in terms of being able to generate more renewals and opportunity to add more capacity And a very strong addressable market across all segments, which if you look at the different three segments we call out, it's about 27,000,000,000 I do qualify that in the endpoint area, we're not focused on the broad based endpoint protection and EDR endpoint detection response, perimeter Protection. Our Endpoint Technologies, although they do those sort of things, are really focused in enhancing and adding value to our near real time investigations And being able to do behavioral analytics that support our investigator heritage.
We continue to Add functionality to the platform as I just described. Our operational efficiencies continue to drive the strong performance in terms of our profit returns as Stephen called out. And we are very focused on building out a network of strategic partners to provide complementary delivery and market expansion capabilities. So and we should probably, I'm not sure if we actually got to show chart number 55, but that's where we should be. And the last part of that is assessing M and A opportunities based on strategic fit, technology synergies.
We're about Adding technologies enhance our ability to move into spaces like natural language processing and AI and in a sense being able to have The software do more of the work and enable the very experienced practitioners to focus on getting to the relevant data faster. So we have a pipeline of those opportunities. And you may have heard this before, but Nuix shows that we can achieve as a team and as individuals. We're I'm very proud of the Nuix team that we've built and I'm proud of the work we do for social good, the way we contribute to make the world a better place. That concludes our Investor Day today.
But I also would like to just add that I'd like to thank everyone involved in putting this event together, including those behind the scenes. We had a few couple of technical glitches, but bringing together a worldwide investor summary is pretty difficult. But we appreciate your support and hope this event has given you a better understanding of Nuix. There will be a replay of this webcast available on our website shortly. And if you have any further questions or we didn't get to your questions, please get in touch with the Nuix Investor Relations team at investornuix.com.
We plan the next update to the market to be at the end of August when we present our fiscal year 2021 results, And we look forward to speaking to you then. Thank you. Enjoy the rest of your day.