Ann: FY20 Half Year Results, page-38

AFR today

Appen revenue jumps 25pc, as AI investment continues

Yolanda Redrup

Artificialintelligence data services business Appen is proving hardy to the COVID-19crisis, with demand for annotated AI training data from the tech giantscontinuing to boom.

On Thursday the company maintained its already upgraded full-year guidance of underlying EBITDA in the range of $125 million to $130 million, at a $1 equals US70¢ conversion rate, having already booked $475 million of revenue, plus orders in hand, as of August.

Appen CEOMark Brayan said the impact of COVID-19 on the business in the first half wasnegligible.

Appen chief executive Mark Brayansaid the adoption of its newly re-branded Appen annotation platform (formerlyFigure Eight) was one of the highlights of the result, with four out of five ofits biggest customers already signed up to it.

"Figure Eight is firmly partof Appen now," Mr Brayan said.

"The almost fully integratedbusiness is delivering on our strategic thesis... Four of our five majorcustomers are now using our annotation platform and we signed anenterprise-wide platform agreement with one of them that included an $US80million annual commitment. This increased our total ACV (annual contract value)at the end of the half to $US103 million."

The $5.3billion business provides the world's biggest technology companies with the crowd-sourceddata needed to train the AI algorithms that power everythingfrom search engines to voice assistants and image recognition technology.

It has a crowd of more than 1million workers who annotate the data, but thanks to the Figure Eightacquisition it also now has a tech platform which uses machine learningalgorithms to speed up the data annotation process.

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Mr Brayansays Appen is on track to meet its full-year guidance. Louie Douvis

It has also created an automatedcrowd applicant checking algorithm, which reduces the onboarding time of a newcrowd member from up to 20 hours to a matter of minutes.

For the first half Appen grewrevenue by 25 per cent to $306.2 million. At the same time its net profit aftertax increased to $22.3 million, up 20 per cent.

On an underlying basis its netprofit would have slipped 3 per cent to $28.9 million, when various items suchas after tax impacts related to acquisitions, share-based payments, transactioncosts and milestone payment adjustments connected to the Figure Eightacquisition were excluded.

On the back of these results, thecompany increased its interim dividend by 12.5 per cent to 4.5¢, of which 50per cent is franked.

The company has been trading atrecord highs this week, as investors buy into the fact that the business hasbeen relatively unscathed by the pandemic. For the year-to-date the business isup more than 96 per cent to $43.50.

In the first half the companyreported negligible impact from the coronavirus, but a slowdown in new businessdevelopment and deferred renewals by smaller customers amounted to low singledigit percentage point hit to revenue.

In the second half it isexpecting a small hit to Appen's ad-related revenue thanks to the globalslowdown in online advertising spend.

Of its divisions, contentrelevance remains Appen's growth engine, with revenue up 34 per cent to $273.9million. Its substantially smaller speech and image data segment was down 20per cent from a bumper first half in 2019, but up on the second half of 2019.

Appen co-founder and chairmanChris Vonwiller said the business was "especially pleased" with theresult given the current environment.

"The strength of ourbusiness model, market exposure, competitive position and our consistentexecution give us the confidence to push forward with our investments to solidifyfuture growth.