Massive upside for Appen

• Priced at ~2.5x last year's core revenue (as the no.1 player in the space), while Lionbridge AI (as the no.2 player in the space) was acquired at ~5x revenue. The SP500 is up 30% since Lionbridge AI was acquired, with a general derisking in the market demanding higher valuations.
• Priced at a very undemanding ~23x last year's underlying NPAT, ~12x EBITDA/EV.
• EBITDA to grow 18-28% this year.
• Two WAAAX stocks have now been the subject of takeover offers (Altium and Afterpay). Wisetech and Xero have strongly recovered since Covid. Appen is the only WAAAX stock to not announce a takeover offer (yet) or recover from Covid (yet).
• Key customers (Google and Facebook) recently announced massive rebounds in ad revenue, with relevance data essential to that performance. Amazon ad business growing at massive rates from a lower base.
• Committed/recurring revenue increasing at a massive pace (from 0% a couple of years ago to 31% end of last year).
• $420M in revenue and orders in the first 4 months of this year - more than two thirds of last year's core revenue
  
• New tech is escalating demand for data sets and entrenching its need in the broad technology ecosystem (eg Apple's new iOS allows you to hold down on an image of a cat and it will tell you the precise breed of the cat; Apple has announced plans to have crytographic AI detect the content of images uploaded to iCloud).
• AI spending increasing at a CAGR of 28%+.
• Strong thematics in autonomous technology already visible today and growing into the future (cars, smart bots / digital assistants - think telcos, financial services, health, Siri, Google Assistant, Alexa, Spotify, Home, Portal, etc).

The opportunity to buy Appen at current levels is utterly compelling - 65% upside without a takeover premium & 100% upside with a takeover premium.