Appen (APX) H2 2024 earnings summary

Executive summary

• FY24 revenue excluding Google grew 16% year-over-year, with China delivering 71% growth and strong traction in generative AI projects.

• Underlying EBITDA returned to a $3.5 million profit in FY24, up from a $23.9 million loss in FY23, driven by revenue growth and a 26% reduction in operating expenses.

• Generative AI projects accounted for 28% of H2 FY24 revenue, up from 6% in H2 FY23, highlighting strategic market entry.

• OPEX reduced by 26% for the full year, reflecting cost control and operational efficiency.

Financial highlights

• Total FY24 revenue decreased 14% to $234.3 million due to the Google contract termination; excluding Google, revenue grew 16%.

• Global services revenue fell 38% to $118.1 million, while new markets revenue rose 43% to $116.2 million, led by China and global products.

• Gross margin increased 3 percentage points to 39.3% due to a favorable project and customer mix.

• Underlying EBITDA before FX improved by $23.9 million to $3.5 million, reflecting cost reductions and revenue growth.

• Statutory NPAT improved by $98.1 million to a loss of $20.0 million, reflecting cost reductions and no impairment charge.

Outlook and guidance

• High conviction in LLM-related growth for 2025, with positive customer feedback and ongoing market expansion.

• Expect month-on-month revenue variability due to project cycles and customer planning, but confident in full-year growth.

• Non-LLM work is expected to remain stable with no major changes anticipated.

• Tight cost controls and focus on ongoing cash EBITDA positivity will continue.