The Appen Ltd (ASX: APX) share price could surge higher on Monday after the release of a positive announcement.
What did Appen announce?
This morning the global leader in the development of high-quality, human annotated datasets for machine learning and artificial intelligence announced an increase to its FY 2019 guidance.
Appen's previous guidance range for underlying EBITDA was $85 million to $90 million. This compares to the underlying EBITDA of $71.3 million that it achieved in FY 2018.
Pleasingly, the company's performance has been stronger than expected since its half year result.
In light of this, it now expects full year underlying EBITDA to be in the range of $96 million to $99 million. This implies year on year growth of 34.6% to 38.8%.
Furthermore, this forecast is based on a foreign exchange rate of A$1 to US$0.74 for November and December. Whereas at current exchange rates, management estimates that it could add a further $1 million to $1.5 million to underlying EBITDA.
What are the drivers of this upgrade?
The release explains that Appen's improved FY 2019 earnings guidance is driven by increases in monthly relevance revenues and margins. This is largely from existing projects with existing customers.
Management has also reinforced its high conviction for the acquisition of the Figure Eight business. It confirmed its previous 2019 ARR guidance of $30 million to $35 million (at A$1=US$0.74).
As always, the company warned that its full year earnings are susceptible to upside or downside factors. These include the timing of work from major customers and Australian dollar fluctuations.
Also in the news on Monday has been fellow WAAAX member Altium Limited (ASX: ALU). The PCB design software company's shares will be on watch after announcing the resignation of a key director.
Ms Wendy Stops has resigned with immediate effect from the Altium board due largely to scheduling conflicts. Stops is also a board member of Commonwealth Bank of Australia (ASX: CBA) and Coles Group Ltd (ASX: COL).
