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APX

Appen Beats On Full Year Results, Share Price Surges 8.2%

Max Molinari

Max is an Equity Analyst with ASR Wealth Advisers. He has studied a Bachelor of Business and a Bachelor of Laws at the University of Technology, Sydney. Max currently holds RG146 qualifications.

Appen Limited (ASX: APX) has released its full year results to the market, for the period ending 31 December 2019. The business has reported underlying EBITDA of $101m, which is ahead of its provided guidance and consensus expectations of $98.2m. Cash conversion for the business was softer than last year due to an increase in receivables. Since majority of revenue is derived from the US, there is also a positive currency impact of $7.8m. APX has also guided underlying EBITDA for FY20 to be in the range $125-130m – with consensus expecting $130m. Furthermore, there is now a team in place in China (unaffected by coronavirus) with a rapid pipeline.

 

APPEN

Appen (ASX: APX) released their full year results this morning. The company reported EBITDA of $101m, a beat on market expectations of $98.2m. The share price has surged 8.2% on the back of the result. (Credit: AiThority.com).

 

Looking at the divisional performance, Speech and Image revenue grew 32% for the full year, while it grew at 85% in the first half. Similarly, full-year Content Relevance revenue grew 37%, compared to first half growth of 48%. These drop in growth rates implies a weak operating performance over the second half. That being said, APX is renegotiating contract pricing terms with a large existing client and has brought on-board government contracts which tend to be sticky.

While this result is a beat on expectations for this year, there are slightly concerns about the slowdown in top line growth. However, investors are instead choosing to focus on the new contracts being signed and the pipeline in China.

 


Disclaimer:

This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)

(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law, we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.

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