The company expects to post a loss for the first half of 2022.
The post Appen share price on watch as ‘challenging’ first half dints earnings appeared first on The Motley Fool Australia. –
The artificial intelligence and machine learning data provider outlined a disappointing six months that saw demand for digital advertising wane and some of its major customersâ spending slow while it continued to invest in transformation activities.
The Appen share price is $5.71 as of Mondayâs close.
Letâs take a closer look at todayâs news from the tech favourite.
Appen share price in focus amid earnings update
The Appen share price is in focus on Tuesday amid news the companyâs earnings took a hit in the first half of 2022 and didnât recover much in July.
The company expects to post revenue of US$182.9 million for the six months ended 30 June â a 7% drop on that of the same period of 2021. Thatâs expected to dint its earnings before interest, tax, depreciation, and amortisation (EBITDA).
Appen assumes it will post underlying EBITDA (after foreign exchange impacts) of US$8.5 million â a 69% drop.
The company also expects to suffer a statutory loss of US$9.4 million and an underlying loss of US$3.8 million. Thatâs compared to the prior corresponding periodâs respective profits of US$6.7 million and US$12.5 million.
But it wasnât all bad. The companyâs business in China grew while its enterprise business showed momentum.
The first half â¦ has been characterised by challenging external operating and macro conditions.
This has especially impacted our global division, particularly those customers with a high exposure to digital advertising. While only 26% of our first half global revenue supports digital advertising, we are seeing a flow on effect to non-ad-related projects and some of our core programs, as our customers reduce their overall spend.
Looking to the futureâ¦
Appen expects seasonal projects and a ramp up in existing projects to drive volumes in the current half.
Though, it noted a lack of improvement in July means thereâs still uncertainty surrounding its global customersâ spending and their exposure to weaker digital advertising demand.
That means the conversion of forward orders to sales is less certain than it has been in previous years.
The company does expect its earnings to pick up in the second half, however. It also noted that while its customersâ spending has slowed, its AI product development is expected to increase.
Appen is set to release its audited half year earnings on 25 August.
Appen share price snapshot
This year has been particularly rough on the Appen share price.
The stock has tumbled 49% year to date. For comparison, the S&P/ASX All Technology Index(ASX: XTX) has slumped 28% and the S&P/ASX 300 Index (ASX: XKO) has fallen 8% so far this year.
The companyâs stock is also 52% lower than it was this time last year. That leaves it having underperformed the All Tech Index by 26% and the ASX 300 by 45%.
The post Appen share price on watch as ‘challenging’ first half dints earnings appeared first on The Motley Fool Australia.
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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Appen Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.