Insights

Appen share price sinks 25% as earnings tank amid uncertain outlook

Lower revenue and higher costs saw the company’s earnings tank in the first half.
The post Appen share price sinks 25% as earnings tank amid uncertain outlook appeared first on The Motley Fool Australia. –

The Appen Ltd (ASX: APX) share price is tumbling on Tuesday after the company updated the market on an anticipated dint in its first-half earnings.

And while the artificial intelligence and machine learning data provider believes the second half of 2022 will be brighter, a lack of improvement in July means uncertainty remains.

The Appen share price opened 21% lower at $4.49 before tumbling to trade at $4.25 – representing a 25.57% fall. At the time of writing, Appen shares are trading at $4.37 each.

Let’s take a closer look at the news driving the ASX tech favourite into the red.

Appen share price plunges 25% on Tuesday

The Appen share price is plummeting after the company announced it expects to post a loss for the six months ended 30 June.

It said weaker demand for digital advertising caused some of its major customers to slow spending, bringing the company’s unaudited revenue for the first half to US$182.9 million. That marks a 7% drop on the first half of 2021, mainly driven by Appen’s global division.

Lower revenue, foreign exchange impacts, and investments in the company’s transformation activities caused its earnings to nosedive in turn.

Appen expects to post US$8.5 million of underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) – a 69% fall on that of the prior corresponding period.

It also expects the first half to have brought an after-tax loss of US$9.5 million. That’s down from a US$6.7 million profit in the first half of 2021.

In late May, Appen told the market its EBITDA would be “materially lower” in the first half.

Looking to the future, the company expects volumes to increase in the second half on the back of seasonal projects and a ramp-up of existing projects.

However, a failure to improve in July means uncertainty remains about a continued slowdown in its global customers’ spending and their exposure to weaker digital advertising demand.

As such, the conversion of forward orders to sales is less certain than it has been in previous years.

What did management say?

Commenting on the news dragging the company’s share price lower, Appen CEO Mark Brayan said:

The first half of the financial year has been characterised by challenging external operating and macro conditions.

[C]osts in this half are higher primarily due to transformation costs, and investment in product and technology … Together with lower-than-expected revenue, this has impacted earnings and margins.

The fundamentals of our business remain strong and our operational performance and the quality of our service we provide customers continues to improve … we remain committed to our longer-term growth strategy and confident of our prospects in the high growth AI market.

The post Appen share price sinks 25% as earnings tank amid uncertain outlook appeared first on The Motley Fool Australia.

Should you invest $1,000 in Appen Ltd right now?

Before you consider Appen Ltd, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Appen Ltd wasn’t one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

See The 5 Stocks
*Returns as of July 7 2022

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

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

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.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

  • This field is for validation purposes and should be left unchanged.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Rebate Rewards

Level 2 Rebate

Deposit $2,000 and get $200 Rebate
$ 200 Rebate
  • 3 Simple Steps
  • 1. Register Using The Link Below (Promo-Code: WEBREBATE)
  • 2. Deposit $2,000 and place one trade at any non-Austalian market within 30 calendar days
  • 3. Receive Your $200 Rebate
Popular

Level 1 Rebate

Deposit $1,000 and get $100 Rebate
$ 100 Rebate
  • 3 Simple Steps
  • 1. Register Using The Link Below (Promo-Code: WEBREBATE)
  • 2. Deposit $1,000 and place one trade at any non-Austalian market within 30 calendar days
  • 3. Receive Your $100 Rebate

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex Securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

EASY QUALIFICATION & LOW ENTRY
NEW CLIENT REBATE OFFER
EARN UP TO $200 CASH REBATE
Act Fast - Promotion Ends In
Click Here To Get Started
EASY QUALIFICATION & LOW ENTRY
NEW CLIENT REBATE OFFER
EARN UP TO $200 CASH REBATE
Act Fast - Promotion Ends In
Click Here For More Info