Appen (APX) H1 2025 earnings summary

Executive summary

• H1 FY25 revenue was $102.1 million, up 2% year-over-year excluding Google, but down 10% including Google due to contract termination; China revenue surged 67% and annualized run-rate exceeded $100 million.

• Generative AI projects contributed 24% of group revenue, with strong momentum in China and a recent project win with over $10 million annual revenue potential.

• Operational improvements and technology transformation drove $10 million in annualized cost efficiencies, with 70% to be realized by Q3 FY25.

• Cash balance at June 30, 2025, was $60.9 million, up $6.1 million from December 2024, reflecting prudent cost management and a $10 million customer payment.

• No interim dividend declared to prioritize capital allocation.

Financial highlights

• New Markets revenue rose 20% to $59.6 million, driven by China’s 67% growth; Global Services revenue fell 33% to $42.4 million due to US market volatility and Google contract loss.

• Underlying EBITDA before FX was a $2.2 million loss, a slight improvement year-over-year; China contributed $2.9 million in underlying EBITDA.

• Gross margin declined by 0.7 percentage points to 37.0%, reflecting a shift in customer and project mix, with China margins lower than group average.

• Statutory net loss after tax widened to $19.3 million, including a $3.3 million accelerated amortization charge.

• Cash from operating activities improved to $13.2 million.

Outlook and guidance

• FY25 revenue is expected toward the low end of the $235 million–$260 million range, with positive full-year underlying EBITDA reaffirmed.

• Limited visibility on timing for resumption of large LLM projects and reduced short-term US Government revenue due to policy uncertainty.