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Appen Ltd. (AU:APX)
ASX:APX
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Appen
(Sydney:APX)
Select Model
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Rating:41Neutral
Price Target:
AU$1.00
▲(16.28% Upside)
Appen Ltd.'s overall stock score reflects significant financial challenges, with declining revenues and profitability. The technical analysis indicates a bearish trend, and the valuation is unattractive due to a negative P/E ratio. While the earnings call provided some positive insights, the overall outlook remains cautious.
Appen (APX) vs. iShares MSCI Australia ETF (EWA)
Market Cap
$229.75M
Dividend YieldN/A
Average Volume (3M)3.26M
Price to Earnings (P/E)―
Beta (1Y)2.98
Revenue Growth-9.02%
EPS Growth80.67%
CountryAU
Employees1,130
SectorTechnology
Sector Strength88
IndustryInformation Technology Services
Share Statistics
EPS (TTM)-0.07
Shares Outstanding265,610,630
10 Day Avg. Volume3,039,830
30 Day Avg. Volume3,255,307
Financial Highlights & Ratios
PEG Ratio0.21
Price to Book (P/B)3.27
Price to Sales (P/S)1.60
P/FCF Ratio-94.34
Enterprise Value/Market Cap0.95
Enterprise Value/Revenue0.62
Enterprise Value/Gross Profit7.18
Enterprise Value/Ebitda-21.14
Forecast
1Y Price Target
$1.62Price Target Upside88.76% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
Appen Business Overview & Revenue Model
Company DescriptionAppen Limited (APX) is a global leader in the development of high-quality, human-annotated datasets for machine learning and artificial intelligence (AI). Operating primarily in the Information Technology sector, Appen provides services that improve the accuracy and reliability of AI systems through data collection, data annotation, and data labeling. The company serves a diverse range of industries, including technology, automotive, financial services, and healthcare, helping clients enhance their AI-driven applications and products.
How the Company Makes MoneyAppen makes money through a combination of project-based and subscription revenue models. Their primary revenue stream comes from providing data annotation and data labeling services to clients who are developing AI and machine learning models. This includes tasks such as image and video annotation, text-to-speech data collection, and linguistic annotation. Appen also generates income from long-term contracts with major technology companies, which rely on Appen's scalable and flexible workforce to handle large volumes of data. Significant partnerships with tech giants and the increasing demand for AI and machine learning solutions contribute to Appen's earnings. Additionally, Appen has expanded its revenue streams by integrating machine learning technologies to enhance its service offerings, providing end-to-end AI solutions for enterprises.
Appen Earnings Call Summary
Earnings Call Date:Aug 27, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Mar 02, 2026
Earnings Call Sentiment Neutral
Appen's earnings call highlighted positive growth in revenue, particularly driven by the China market and cost efficiency initiatives. However, challenges remain due to losses in EBITDA, volatility in the U.S. market, and uncertainty in large LLM projects. The strong cash position and positive contributions from the China market provide a solid foundation for future growth.Q2-2025 Updates
Positive Updates
Revenue Growth
Appen recorded revenue of USD 102.1 million, representing a 2% year-on-year growth when excluding the impact of Google. 24% of this revenue was from generative AI-related projects.
China Market Success
Revenue in China grew 67% year-on-year, with an annualized run rate revenue exceeding $100 million, highlighting strong momentum in the region.
Cost Efficiency Initiatives
Appen identified approximately $10 million in annualized cost efficiencies, with 70% to be realized by the end of Q3 FY '25.
Positive EBITDA Contribution from China
China contributed $2.9 million to underlying EBITDA, a $2.8 million improvement compared to H1 FY '24.
Strong Cash Position
Appen ended the half with a cash position of USD 60.9 million or AUD 92.9 million.
Negative Updates
Losses in EBITDA
Group underlying EBITDA before FX recorded a loss of $2.2 million despite improvements compared to the previous period.
Short-Term Volatility in U.S. Market
Global Services and New Markets segments were impacted by volatility in the U.S. AI market, leading to lower revenue and gross margin.
U.S. Government Division Challenges
Due to U.S. policy uncertainty, meaningful short-term revenue opportunities within the U.S. Government division are challenging, leading to a decision to wind back investment.
Uncertainty in Large LLM Projects
There is limited visibility regarding the timing of the resumption of large volume LLM projects.
Company Guidance
In the recent call, Appen provided detailed guidance for the fiscal year 2025, focusing on several key metrics and strategic initiatives. The company reported a 2% year-on-year revenue growth to USD 102.1 million, excluding the impact of Google, with 24% of this revenue coming from generative AI-related projects. Appen highlighted a significant 67% increase in revenue from China, achieving an annualized run rate exceeding $100 million by the half's end. The company has identified $10 million in annualized cost efficiencies in its non-China business, with 70% of these expected to be realized by the end of Q3 FY '25. Appen also mentioned an additional $4 million in annualized OpEx savings due to the wind-down of U.S. Government division investments. Despite a loss of $2.2 million in group underlying EBITDA before FX, the company remains focused on achieving EBITDA positivity for the full year. Appen reaffirmed its FY '25 revenue guidance towards the low end of the $235 million to $260 million range, supported by strong customer relationships and market differentiation in multilingual speech training data and large language model evaluation.Appen Financial Statement Overview
Summary
Appen Ltd. is facing significant financial challenges with declining revenues, profitability, and cash flow generation. Despite a stable equity base, operational inefficiencies and cash flow constraints are evident. Strategic improvements are needed to enhance performance and restore growth trajectory.Income Statement
Appen Ltd. has experienced a significant decline in revenue and profitability over recent years. The gross profit margin remains notably low, and the company reported negative net income for the last three years, indicating challenges in maintaining profitability and revenue growth. The lack of EBIT and negative EBITDA margin highlight operational inefficiencies.40
Negative
Balance Sheet
The company's balance sheet shows a relatively stable equity position, but the debt-to-equity ratio has been increasing due to rising liabilities. The equity ratio remains healthy, suggesting a solid asset base. However, the declining return on equity indicates that the company is struggling to generate returns from shareholder investments.55
Neutral
Cash Flow
Appen Ltd. faces issues with negative free cash flow and inconsistent operating cash flows, reflecting challenges in generating cash from its core operations. The free cash flow to net income ratio is unfavorable, indicating difficulties in converting income into cash flow.30
Negative
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 352.86M | 234.28M | 411.31M | 559.89M | 615.57M | 599.39M |
| Gross Profit | 30.24M | 61.18M | -34.79M | 10.07M | 93.01M | 111.80M |
| EBITDA | -10.27M | 3.34M | -89.37M | 11.77M | 101.30M | 85.71M |
| Net Income | -32.68M | -20.01M | -118.08M | -344.86M | 28.52M | 38.84M |
Balance Sheet | ||||||
| Total Assets | 228.99M | 170.59M | 227.65M | 375.94M | 690.68M | 598.21M |
| Cash, Cash Equivalents and Short-Term Investments | 92.48M | 54.81M | 47.17M | 34.55M | 65.85M | 78.39M |
| Total Debt | 15.03M | 11.04M | 12.43M | 15.01M | 20.71M | 25.23M |
| Total Liabilities | 81.83M | 56.27M | 91.50M | 157.72M | 151.69M | 113.94M |
| Stockholders Equity | 147.16M | 114.32M | 136.00M | 218.22M | 538.99M | 484.27M |
Cash Flow | ||||||
| Free Cash Flow | -1.47M | -3.96M | -42.79M | -14.00M | 41.07M | 63.51M |
| Operating Cash Flow | 1.60M | -1.07M | -22.94M | 26.29M | 71.84M | 94.02M |
| Investing Cash Flow | -21.38M | -19.83M | -31.48M | -46.33M | -67.71M | -70.92M |
| Financing Cash Flow | 56.55M | 57.22M | 79.36M | -13.74M | -18.85M | -11.85M |
Appen Technical Analysis
Negative
0.86
Price Trends
0.88
Negative
1.00
Negative
1.39
Negative
Market Momentum
>-0.01
Negative
45.98
Neutral
45.17
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AU:APX, the sentiment is Negative. The current price of 0.86 is below the 20-day moving average (MA) of 0.87, below the 50-day MA of 0.88, and below the 200-day MA of 1.39, indicating a bearish trend. The MACD of >-0.01 indicates Negative momentum. The RSI at 45.98 is Neutral, neither overbought nor oversold. The STOCH value of 45.17 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AU:APX.
Appen Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
69 Neutral | AU$110.10M | 13.81 | 10.79% | 3.61% | 14.59% | -11.13% | |
67 Neutral | AU$157.71M | 135.19 | 4.26% | ― | 11.90% | 42.11% | |
66 Neutral | AU$297.74M | 30.19 | 4.81% | ― | 23.53% | -23.98% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
61 Neutral | AU$114.66M | 32.14 | 5.74% | ― | 11.72% | ― | |
56 Neutral | AU$367.63M | 33.61 | -10.10% | ― | -3.10% | -236.41% | |
41 Neutral | $229.75M | ― | -24.40% | ― | -9.02% | 80.67% |
* Technology Sector Average
AU:APX
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0.86
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.