Appen has lost its lustre, reporting a further decline in financial performance in the first half of 2023 despite a global boom in artificial intelligence, a tool that the technology company offers in its packages.
The AI lifecycle data company saw its underlying net loss after tax widened to US$34.2 million in the six months to June 30, 2023, from a net loss of US$3.8 million in the same period a year ago.
The statutory net loss worsened to US$43.3 million from US$9.4 million. This includes one-off restructuring expenses of US$5.0 million associated with a cost-reduction program and US$1.3 million related to leadership changes reflecting refreshed strategy and turnaround focus.
Overall, Appen’s revenue fell 24 percent to US$138.9 million from US$182.9 million, which they have largely attributed to lower contributions from the global services and new markets divisions as “customers optimise their spend, cut costs and evaluate their AI strategies in response to global headwinds.”
The company said that its revenue from China declined 15.2 percent to US$15.3 million due to the extended impacts of the COVID-19 pandemic and challenging external factors.
“Against this backdrop, we remain focused on resetting Appen. This includes instilling operational rigour across the business, releasing new generative AI (GAI)-focused products, refreshing our go-to-market and sales, establishing ecosystem partnerships and continuing with our AI for Good,” Appen’s CEO and President Armughan Ahmad said on Monday.
Losses Suggest Quick Turn Around Not on the Cards
In the first half of last year, the company swung to a net loss from a net profit in the comparative period of 2021 and posted a seven percent annual drop in revenue to US$182.9 million.“To post increasing losses year on year in the AI space, a space which is only ever getting hotter, suggests a company that is executing poorly. The company’s report offers little hope for a quick turnaround,” Toby Walsh, the chief scientist at UNSW AI Institute, told The Epoch Times in an email.
Moving forward, Appen said that it will focus on exiting the year with a return to underlying EBITDA and underlying cash EBITDA profitability on an annualised, run-rate basis.
“We will achieve this by prioritising our growth investments into a smaller set of higher potential areas. This will simplify our business and deliver incremental cost savings but may have a negative impact on 2024 revenue.”
Currently, Appen provides content relevance, data collection, computer vision, NLP and speech, chatbots and conversational AI, AR/VR, audio, and linguistics services.
The company forecasted its revenue for the second half to be close to the first half. It estimated lower than $113 million annualised run-rate operating cost base by the end of 2023.
“The pace at which Australia adopts GAI will determine how the potential opportunity is translated into tangible economic growth. If we accelerate adoption, the total gains can be up to $115 billion annually by 2030. If adoption in Australia grows more slowly, the total benefit would be approximately $45 billion annually,” the report said.
