MACQUARIE downgrades APX to Underperform from Neutral, page-115

I am not privy to the report but this commentary provides some insight:

"Macquarie has been speaking to industry participants and notes that there is an emerging trend which has seen some big tech companies look to bypass Appen and directly crowdsource for data annotation services. It notes that this has been driven by tighter privacy and data retention standards, which has resulted in companies revising their strategies and developing their own crowd-sourcing solutions. Macquarie believes this will reduce demand for Appen’s services. As a result, it has downgraded its earnings and sales estimates to reflect this change, which has ultimately led to a sizeable cut in its valuation for the Appen share price."

I sold out earlier this year as I came to the realisation that I did not really understand the dynamics of the business. I could not get my head around the model which takes a team of over one million contractors to provide their data services.