Appen shares tumble on revenue slide
Make us a preferred source
Make us a preferred source on Google
More news: Appen shares slumped on the ASX after revealing receding revenue in FY24 which continued to soften into FY25 after losing its Google contract.
Appen shares were down 13.6% to $1.05 by 1:40pm AEST.
Appen revenue falls despite new AI business
The news: Appen is struggling to turn around its data services business, revealing receding revenue in FY24 which continued to soften into FY25 after losing its Google contract.
The numbers: Announcing its half-year results, Appen's total revenue fell 18.5% to $113.4 million, with global services revenue contracting 36.5%. The top line figure was offset by Appen's expansion into new markets, including China and Korea, which contributed almost $50 million on the back of "new generative AI projects".
While falling revenue was expected following the loss of Appen's business with Google, the company's early FY25 results show things do not appear to be improving in the new financial year.
Appen brought in just $17 million revenue in the month of July, a sharp 20% fall from the $21.1 million recorded just one month prior.
The company has pursued cost cutting programs, largely responsible for reducing its losses for the half. Underlying net loss after tax was $11.8 million, a $22.4 million improvement on the previous half.
Underlying EBITDA before FX was a loss of $2.3 million, a $13.4 million improvement on the back of lower costs.
The context: Appen has spent the last year trying to sell a turnaround story as it looks to recover from the loss of Google and rebrand as a data provider for artificial technology and large language models (LLMs).
That idea appeared to gain traction in the last few weeks as the stock soared on no news, and resulting in questioning from the ASX.
Appen CEO Ryan Kolln said the company had moved quickly to cut costs following the Google announcement and that it was seeing "early positive indicators" of LLM business growth.
What they said: “Appen’s success in generative AI is resulting in a positive revenue trajectory. We saw strong growth in China and Global Product driven by generative AI projects, with China achieving consecutive revenue records across the quarters," Kolln said, adding that the enterprise software market was "yet to see material traction".
“Profitability is a key focus for Appen. Underlying cash EBITDA loss before the impact of FX has improved month-on-month as we continue to manage costs in line with the revenue opportunity. Appen continues to target reaching cash EBITDA positive on a run-rate basis in early H2 2024.”
The source: ASX announcement
