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Appen share price on watch as ‘challenging’ first half dints earnings

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 Appen Ltd (ASX: APX) share price is on watch after the company provided insight on its performance over the first half ahead of its earnings’ release later this month.

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 customers’ spending slow while it continued to invest in transformation activities.

The Appen share price is $5.71 as of Monday’s close.

Let’s take a closer look at today’s 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 company’s earnings took a hit in the first half of 2022 and didn’t recover much in July.

The company expects to post revenue of US$182.9 million for the six months ended 30 June – a 7% drop on that of the same period of 2021. That’s 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 – 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. That’s compared to the prior corresponding period’s respective profits of US$6.7 million and US$12.5 million.

But it wasn’t all bad. The company’s business in China grew while its enterprise business showed momentum.

Appen CEO Mark Brayan commented on the news likely to move the company’s share price today, saying:

The first half … 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 future…

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 there’s still uncertainty surrounding its global customers’ 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 customers’ 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 company’s 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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More reading

Why Appen, EML, Imugene, and Nanosonics shares are sinking
Why is the Appen share price sinking 15% today?
Why is the Appen share price leaping 6% on Wednesday?
Why Appen, Arizona Lithium, Australian Stategic Materials, and Nuix shares are dropping
Why the upcoming first-half result could be pivotal for Appen shares

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.

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