The Appen Ltd (ASX: APX) share price could be on the move this morning following the release of the half year result of the global leader in the development of high-quality, human annotated datasets for machine learning and artificial intelligence.
How did Appen perform in the first half?
For the six months ended June 30, Appen delivered a 60% increase in revenue to $245.1 million. This was driven by a 48% jump in Relevance revenue to $193.7 million, an 85% lift in Speech and Image revenue to $39.9 million, and the inclusion of the acquired Figure Eight business for the first time.
Thanks largely to margin expansion in the key Relevance segment, Appen's EBITDA margin expanded by 2.1 percentage points to 18.9% in the first half. This led to the company reporting an 81% increase in underlying EBITDA to $46.3 million. Appen's underlying result excludes transaction costs and share based payment expenses relating to the Leapforce and Figure Eight acquisitions.
On the bottom line the company reported an underlying NPAT of $29.6 million, which was an increase of 67% on the prior corresponding period.
Despite this strong growth, the Appen board only maintained its interim dividend at 4 cents per share, partially franked.
Figure Eight update.
Management provided an update on the recently acquired Figure Eight business.
Appen's Chief Executive Officer, Mark Brayan, said: "Figure Eight is accelerating our technology roadmap, diversifying revenue and expanding markets for us. The number and size of joint opportunities is exceeding our expectations, its technology, including its secure SOC 2 accreditation, is better than we first thought, and its government footprint is unique with very high barriers to entry. This market is emerging as a new growth pillar for the Company."
Outlook.
According to the release, the company's full year underlying EBITDA (including Figure Eight) is trending towards the upper end of $85 million to $90 million. This guidance is based on the Australian dollar averaging US$0.74 between August and December 2019, whereas the local currency is currently fetching 67 U.S. cents.
