Appen (APX) AI Stock Analysis

• Market Cap: AU$302.80M
• Dividend Yield: N/A
• Average Volume (3M): 1.76M
• Price to Earnings (P/E): ―
• Beta (1Y): 2.92
• Revenue Growth: -9.02%
• EPS Growth: 80.67%
• Country: AU
• Employees: 1,130
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): -0.07
• Shares Outstanding: 265,610,630
• 10 Day Avg. Volume: 1,778,676
• 30 Day Avg. Volume: 1,764,209
• PEG Ratio: 0.21
• Price to Book (P/B): 3.27
• Price to Sales (P/S): 1.60
• P/FCF Ratio: -94.34
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: AU$0.52
• Price Target Upside: -33.33% Downside
• Rating Consensus: Moderate Sell
• Number of Analyst Covering: 1
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 46 Neutral
• Price Target: AU$1.00 ▲(28.21% Upside)

The score is held down primarily by weak financial performance, especially ongoing losses and poor free cash flow. Technicals are supportive in the short term but look overextended (overbought), while valuation remains challenged due to a negative P/E. The earnings call adds some support via China-driven momentum and cost reductions, but ongoing negative EBITDA and limited project visibility keep risk elevated.

Positive Factors

China Market Growth and Scale

Sustained 67% YoY growth in China and a >$100m annualized run rate indicate durable market traction and geographic diversification. A large, growing regional revenue base supports scale, local client relationships and long-term margin improvement as operations and data sourcing become more efficient.

Strong Liquidity Buffer

A cash balance near $61m provides runway to execute restructuring, realize cost savings, and fund strategic investments during uncertain LLM project timing. This liquidity reduces short-term solvency risk and offers flexibility to support recurring program delivery and operational scaling over several quarters.

Meaningful Cost Efficiency Program

A targeted $10m of annualized savings, with a high share realizable within the next quarter, materially improves the path to EBITDA positivity. Structural cost reductions enhance margin sustainability and give management time to rebuild higher-margin revenue streams without eroding cash reserves.

Negative Factors

Negative Free Cash Flow and Cash Conversion

Persistent negative free cash flow and poor conversion of income to cash undermine the company's ability to self-fund growth or absorb shocks. Over months, this pressures liquidity, may require external financing, and constrains investment in data collection capacity and workforce scaling needed for AI projects.

Multi-year Losses and Weak Margins

Multi-year net losses and chronically weak gross and EBITDA margins point to structural profitability challenges. Without durable revenue mix shift to higher-margin services or sustained cost discipline, the business risks continued erosion of returns on equity and limited reinvestment capacity.

Uncertain Timing of Large LLM Projects

Dependence on sporadic large LLM engagements creates material revenue visibility risk. Delays or uneven resumption of these projects lead to utilization gaps, uneven cash flow and strategic underinvestment. This structural uncertainty complicates planning and dampens long-term revenue predictability.

Appen Business Overview & Revenue Model

Company Description

Appen Limited, together with its subsidiaries, operates as an AI lifecycle company that collects and labels image, text, speech, audio, video, and other data used to build and enhance artificial intelligence systems. It operates through two segments, Global Services and New Markets. The company offers data sourcing services, including image, video, speech, and text data collection services pre-labeled datasets of audio, image, video, and text; and language-based AI solutions. It also provides data preparation services comprising machine learning assisted data annotation tools, which include image annotation, video annotation, text, sensor, audio annotation, and other solutions; enterprise-ready data annotation platform, which offers smart labeling, workflows, in-platform audit, and enterprise analytics; and knowledge graph and ontology support services. The company was formerly known as Appen Holdings Pty Limited and changed its name to Appen Limited in October 2014. Appen Limited was founded in 1996 and is headquartered in Chatswood, Australia.

How the Company Makes Money

Appen generates revenue primarily through its data services, which are sold to technology companies and organizations requiring high-quality training data for their AI and machine learning applications. The company's revenue model is based on project-based contracts, where clients pay for specific data collection and annotation projects. Key revenue streams include contracts with major tech firms, government agencies, and enterprises in various industries. Additionally, Appen benefits from partnerships with leading AI companies and platforms, enabling it to expand its reach and service offerings. The company's ability to leverage a global crowd of workers for data tasks allows it to scale operations efficiently and meet diverse client needs, contributing significantly to its earnings.

Appen Financial Statement Overview

Summary

Appen Ltd. is facing significant financial challenges with declining revenues, profitability, and cash flow generation. The company has a stable equity base, but operational inefficiencies and cash flow constraints are major concerns. 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.

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.

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.

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	16.83M	17.01M	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

• Technical Analysis Sentiment: Positive
• Last Price: 0.78
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AU:APX, the sentiment is Positive. The current price of 0.78 is below the 20-day moving average (MA) of 0.87, above the 50-day MA of 0.76, and below the 200-day MA of 0.91, indicating a bullish trend. The MACD of 0.09 indicates Negative momentum. The RSI at 83.68 is Negative, neither overbought nor oversold. The STOCH value of 86.00 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AU:APX.

Appen Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
COS	70 Outperform	AU$92.81M	11.64	10.79%	4.66%	14.59%	-11.13%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
CCR	61 Neutral	AU$120.29M	29.76	5.74%	―	11.72%	―
ATA	60 Neutral	AU$244.25M	25.38	4.81%	―	23.53%	-23.98%
KYP	56 Neutral	AU$105.02M	88.89	4.26%	―	11.90%	42.11%
APX	46 Neutral	AU$302.80M	-8.88	-24.40%	―	-9.02%	80.67%
DUG	40 Neutral	AU$297.91M	-45.17	-10.10%	―	-3.10%	-236.41%