Appen FY19 Results (ASX: APX)

Appen FY19 Results (ASX: APX)

Appen (ASX: APX) has reported its full-year results for FY19. We take a look at the company’s headline figures, key commentary and guidance outlook, plus review the share market’s reaction across the trading day.


Headline result

In its full-year results for FY19, Appen has reported a 47% increase in revenue to $536m.

The company’s bottom line, measured as underlying net profit after tax, rose 32% to $64.7m, while underlying EBITDA climbed 42% to $101m.

A final dividend of $0.05 has been declared by management, with the stock set to trade ex-dividend February 28, 2020. Meanwhile, the record date will be March 2, 2020, and shareholders will receive proceeds from the dividend on March 20, 2020.

After a shaky start, where the company’s shares were trading as much as 10% lower within the first 15 minutes of trade, Appen shares rebounded strongly as the market pared some of its major losses. By the end of trade, APX closed 6.5% higher at $25.40, signifying a remarkable turnaround and suggesting investors needed time to digest the results before conviction took hold.


Key commentary

At the core of Appen’s FY19 result is organic growth in revenue that has translated into “improving margins and earnings growth”.

Organic revenue jumped 37% to $498.1m, with organic underlying EBITDA outpacing that, growing by 51% to $107.3m.

Key operational performances saw ‘Figure Eight’ achieve a year-end ARR of $33.7m on the back of low churn and large customer contract wins. As far as the ‘Speech and Image’ segment, revenue leapt 32% on the FY18 result to reach $67.7m. Historically, the Speech and Image business has grown at an average of 17.9%, demonstrating a strong performance from this area of Appen’s business. Meanwhile, the ‘Relevance’ business put in another robust performance, with revenue up 37% to $430m and margins increasing by 440 basis points.

Management has noted strong progress in new growth markets, including the likes of China and the US.


Guidance outlook

Beyond the company’s target growth markets, Appen is eyeing an expansion in customer numbers over coming years. The business will set out to achieve this through additional investment, which is expected to weigh on margins during 1H20.

Appen anticipates that underlying EBITDA for FY20 will be in the range of $125-130m.


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