The Appen Ltd (ASX: APX) share price is rocketing on Friday morning.
At the time of writing, the artificial intelligence (AI) data services company's shares are up 18% to $1.45.
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Why is the Appen share price rocketing?
Investors have been buying the company's shares today following the release of a guidance update at its annual general meeting.
But before we move onto that, there may be some readers that aren't aware what Appen does.
It describes itself as a global market leader in data for the AI Lifecycle. It has over 28 years of experience in data sourcing, data annotation, and model evaluation by humans, enabling organisations to launch the innovative artificial intelligence systems.
It notes that its expertise includes a global crowd of more than 1 million skilled contractors who speak over 500 languages, in over 200 countries, as well as an advanced AI data platform. This gives leaders in technology, automotive, financial services, retail, healthcare, and governments the confidence to launch world-class AI products.
Guidance update
At the company's annual general meeting, Appen's CEO, Ryan Kolln, spoke positively about the year ahead. He said:
We are optimistic about our FY25 revenue opportunity. This is supported by a few drivers. First is the more predictable project work from large US tech customers, typically H2-skewed. We are delivering very high-quality work for our large customers, and in some instances, quality is at an all-time high. This lays a great foundation for growth.
Kolln also sees China as a key growth driver for the company in FY 2025. He adds:
Second is sustained growth in China. The market opportunity is significant, and we are very well placed to continue to grow in China. And finally, work not yet included in pipeline, including less predictable generative AI related work, which is typically awarded directly with short notice. This is a very dynamic part of the market, and we have strong capabilities that are highly valued by our customers.
In light of the above, Appen is guiding to revenue between $235 million and $260 million. Compared to FY 2024's revenue of $234.3 million, this implies flat to 10.9% growth for the year.
It also expects positive underlying EBITDA for FY 2025. It is unclear if this will be higher or lower than the positive underlying EBITDA of $7.8 million it achieved in FY 2024.
Looking ahead, the company has revealed longer term targets, which appear to have gone down well with investors. Kolln said:
Appen is targeting sustainable and profitable growth, reflected by: greater than 20% 3-year revenue compounded annual growth rate to FY27; and circa 10% Underlying EBITDA margin by FY27.
Following today's gain, the Appen share price is now up 115% since this time last year.
