AI vendor Appen cuts costs, loses CTO in tough market
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The news: Australian artificial intelligence software vendor Appen will cut costs further and is raising capital for the second time this year as customers baulk at spending on technology. Appen also announced the departure of chief technology officer Saty Bahadur.
The numbers: Appen on Tuesday said it will cut $US14 million in FY23 costs - in addition to $US46 million in savings announced in May. The Sydney-based business, which also has offices in the US, did not elaborate on how the cost-cutting would be achieved.
A fully underwritten share sale beginning next week will raise $AU30 million from shareholders and institutional investors. The business raised $AU60 million from a share sale earlier this year.
A trading update for the 10 months to 31 October showed sales down 37 per cent to $US21.9 million, compared to the same 2022 period.
However earnings have improved during FY23. October earnings before interest, tax, depreciation and amortisation (excluding foreign exchange) showed a loss of $US0.6 million, compared to a loss of $US3.1 million in August.
The context: Appen says customers are spending less amid a wider spending slowdown on technology that has persisted through FY23.
The cost-cutting and share sale are part of a long term plan to return to profit, the company said. The business had a statutory net loss after tax of $US239.1 million for FY22.
What they said: Chief executive Armughan Ahmad: "We are taking action on the items that are within our control and, notably, we have taken steps to remove more cost than previously announced".
The source: Appen ASX release
