Ann: Update on cost management, page-2

ASX ANNOUNCEMENT
12 February 2024
Update on cost management
Appen Limited (Appen) (ASX: APX) advises that it has now finalised details of
additional measures to mitigate the impact of the loss of a material customer contract.
As disclosed to the market on 22 January 2024, Appen advised that it had received
notification from Google LLC, that as part of a strategic review process it will be
terminating its global inbound services contract with Appen, resulting in the cessation
of all projects with Appen by 19 March 2024. In FY23, Appen’s revenue from Google
was $82.8 million1 at a gross margin of 26%2
.
Appen remains focused on returning to profitability and is committed to managing
costs in line with the revenue opportunity. In keeping with this, Appen will implement
measures to achieve $13.5 million in annualised cost savings. The cost initiatives
represent direct and indirect costs associated with the delivery of Google projects.
Appen expects to complete 80% of the cost initiatives by March 2024 and the
remainder by June 2024. The bulk of the costs are direct costs, however indirect costs
have been further scrutinised resulting in the eventual closure of the Toronto and
Bellevue offices in North America.
The first full year benefit of these cost savings is expected to be realised in FY25. The
one-off costs associated with implementing the cost reduction initiatives are expected
to be approximately $1.5m–$2.5m and will be reported as a non-recurring expense and
excluded from underlying EBITDA for FY24.
The above initiatives are in addition to the total annualised cost savings of $60 million
from initiatives completed over the course of FY233 which enabled Appen to achieve
its cash EBITDA profitability objective in December 2023. Achieving cash EBITDA
profitability in FY24 will largely depend on revenue growth from our non-global
customers, the timing of which remains uncertain.
Appen will report its FY23 full year results on 27 February 2024.
Authorised by the Board of Appen Limited.
For more information, please contact:
Rosalie Duff
Head of Investor Relations
+61 421 611 932
[email protected]
1 All amounts stated are in US$, unless otherwise