Appen released its full year results today and there was a lot to like. Highlights for me include the following:
Core business revenue of 536 million a 47% increase on FY18. They further break this down into: Speech and image 67.7M (+32%) Content relevance 430M (+37%).
Figure 8 ARR of 33.7M (56% CAGR over last 4 years) – Acquisition now performing strongly and expected to positively contribute to EBITDA from second half 2020 but possibly even in current half.
Underlying EBITDA growth of 42% to $101M excludes figure 8 contribution.
EBITDA margin slightly lower from 19.6% to 18.8%. On call stated one large customer had agreed to fixed pricing for next five years which management were happy with stating that it relieved margin pressure although said they would be lower in first half due to investment in sales and marketing before returning to mid to high teens in second half. Interesting according to CEO business efficiencies will be reinvested in the business rather than allowing significant margin expansion.
Very positive commentary regarding growth avenues with two US facilities opening up allowing work with more sensitive US data. China office sounds well set up but low expectations being set for growth there. US government work and LIDAR 3d data set annotation also mentioned as areas for new contracts (lookout Pointerra).
Regarding corona virus seemingly little expected impact so far...
The Company’s full year underlying EBITDA for the year ending Dec 31st 2020 is expected to be in the range $125M - $130M (at A$1 = US$0.70, Feb-Dec 2020)
25th February 2020
HIGH PERFORMANCE UNDERPINNED BY STRONG ORGANIC GROWTH Figure Eight rebounds
Significant insider selling in the last few days. Could be nothing but chair, CEO and director all selling large chunks concerns me. In light of this Any downgrade or bad news in the near term would break my thesis in terms of management and quality and would lead to my exit. If i hadn't already bought I would prob have avoided.
An interview with Appen CEO Mark Brayan regarding the AI side of the company, how crowdsourcing (or humans) and AI is used together, what the data requirements are and what AI does and doesn't do well among other things.