Slide 1: ASX Announcement: Investor Presentation
Appen Limited Level 6, 9 Help Street Chatswood NSW 2067 Tel: 02 9468 6300 www.appen.com For personal use only ASX ANNOUNCEMENT 27 February 2023 INVESTOR PRESENTATION Further to the Company’s announcement to the market today on its results for the year ended 31 December 2022, please find attached the
Slide 2: Powering Real World AI
27 February Powering Real World Al ) < ce) p) ae ) or - © LL
Slide 3: Important information
Important information The forward-looking statements included in these materials involve subjective judgement and analysis and are subject to significant uncertainties, risks and contingencies, many of which are outside the control of, and are unknown to, Appen Limited. In particular, they speak onl
Slide 4: Agenda
Agenda O 1 | FY22 Financial Performance O 2 | CEO Introduction 03] aaa << appen
Slide 5: FY22 Financial Performance
For personal use only
Slide 6: FY22 snapshot
FY22 snapshot FY22 FY21 change Revenue 388.5 447.3 -13% Underlying EBITDA" 11.0 777 -86% Underlying EBITDA margin 2.8% 17.4% Underlying EBITDA ' before FX 13.6 78.9 -83% Underlying EBITDA margin before FX 3.5% 17.6% Underlying NPAT (22.8) 40.6 Statutory NPAT ? (239.1) 28.5 Underlying EBITDA excludes
Slide 7: FY22 Highlights
FY22 Highlights a. 184 new clients oO 9/10 Leading auto customers in China 1. Customer NPS m & 25 non-global deals over $250k 36% revenue growth in China easured at end of FY22. & Average deal size for enterprise >$120k yo 57% of employees are female rZ oll Second largest customer up 20% 22 Customer
Slide 8: For personal use only
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Slide 9: For personal use only
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Slide 10: No debt on balance sheet
No debt on balance sheet Dec 2022 Dec 2021 Ce Cash 23.4 479 A * Receivables impacted by lower Receivables 64.3 89.2 revenue volumes and time based Contract assets 30.4 105 billing milestones (shown in contract assets) Other current assets 6.5 14.4 4 * Non-current assets reduction Non-current assets
Slide 11: Investment in product development
Investment in product development Investment in product development’ Product development (ex amortisation) as a % of revenue 10.6% 6.8% 57% capitalised 43% expensed 9.6 FY21 FY22 Product development relates to investment in engineering to ensure that the collection, annotation and evaluation product
Slide 12: Solid cash flow conversion
Solid cash flow conversion Cash balance decreased in line with lower revenue and increased investment in people, product and technology Cash conversion from EBITDA increased from 77% to 135% Positive working capital impact and lower tax payments, somewhat offset impact of lower volumes and higher pa
Slide 13: Armughan Ahmad
Armughan Ahmad “e appen
Slide 14: Appen powers the world's leading AI
@ < S) p) ae @) Q, - © IL Appen powers the worlds leading Al Google N,\ Adobe Linked BEST You amazon HE Microsoft Bloomberg @pPinterest nextdoor SIEMENS = ORACLE pa Dolby HOME 8 Qiseenc DEPOT AIRBUS + many more 8 out of 10 largest global big tech companies by market capitalization 184 new clients in
Slide 15: Appen is an AI platform services business
Appen is an Al platform services business 2) We provide Fortune 500 clients Our Al data Al platform value our expertise platform services to most and consultative underpins our advanced big approach services tech companies @ < S) p) ae @) Q, - e) IL
Slide 16: Immediate focus on managing costs and delivering growth
Immediate focus on managing costs and delivering growth @ 6 @® @© E& Operational Product World class Ecosystem #AlforGood rigour velocity go to market partnerships Establish business Launch products Build consultative Expand our partner _ Deliver trustworthy management that capture new sales and go-
Slide 17: Operational rigour improvements
Operational rigour improvements ©) New product and engineering Generative Al automation in our ===|) measurements to drive delivery and annotation processes business impact Cost review underway across all Re Business Management System for business areas mliil7 — financial and operational metrics £4
Slide 18: AI is changing the world
Al is changing the world The total contribution of Al to the global economy is expected to reach ~$16 trillion 2:0: e Al is one of the most important things humanity is working on. It is more profound than electricity or fire. Alphabet Inc. CEO Sundar Pichai 'y Alis just at the beginning of the S- c
Slide 19: Exponential change
Exponential change ChatGPT reaches 100M users in 2 months Time to reach 100M global users facebook P| 4.5 years
Slide 20: Generative AI growth opportunity for Appen
Generative Al growth opportunity for Appen Data collection Relevance Data annotation ee) Deep learning feedback ¥ Generative Al Automated NLP Labeling Reinforcement learning with human feedback Document intelligence << appen
Slide 21: New customer experiences
new customer experiences 80% of enterprise data is unstructured >80% of data scientist time spend on preparing data Creating new Al experiences often requires new or external data Many enterprises do not have data infrastructure to support production Al appen
Slide 22: High-growth products follow S-curves
High-growth products follow —_ > WERVIEW | S- CUINE Ss POST-LAUNCH
Slide 23: Sustainable growth requires stacking S-Curves
Sustainable growth requires stacking S-Curves Microsoft
Slide 24: S-Curves: Industry vertical AI solutions
en is S-CUrVes Industry vertical Al solutions
Slide 25: Growth vision
Growth vision Al enabled customer experiences Data preparation 1 aah Enterprise data mc) Uitwissisl clei! | A is difficult | g Data is incomplete | inclines are nascent Deep learning Generative Al sew Appen Al ia \ wink Data for the cinforcement Automated Platform | . Learning with c Document Al lif
Slide 26: 20x TAM expansion
20x TAM expansion Why we can win Front-row seat on latest Al innovation from leading tech companies Deep industry vertical expertise © © Al training data market by 2026 5 eeoct Global Al spend in wees 2026 (IDC) alia Partnerships with Al ecosystem leaders 3 Execution focused leadership ® appen
Slide 27: We create a positive impact
We create a positive impact #AlforGood Pp wy OS Sa We provide flexible, work-from-home opportunities to our global crowd of 1 million+ contractors. We help make Al ethical and fair through our Crowd Code of Ethics. @: United Nations ECONOMIC . J Global Compact FORUM Our Crowd Code of Ethics: or — Fa
Slide 28: 2023 outlook
2023 outlook Carrying over from 2022, we see a soft start to 2023 Immediate focus on instilling discipline and greater operational rigour to recover margins and drive sales Annualised cost savings of ~$10 million identified - benefit from cost savings and increased operational rigour expected to com
Slide 29: Wrap up
Wrap up Five key take aways Al is changing the world. Generative Al is creating new experiences like we have not seen before. The future is with us Appen is well positioned to capture growth. Generative Al requires human feedback to turn impressive Al into next generation customer experiences. Ethic
Slide 30: Thank you for your attendance
Thank you for your attendance
Slide 31: Appendix
For personal use only
Slide 32: Reconciliation between statutory and underlying results
Reconciliation between statutory and underlying results |, Underlying results are a non-IFRS measure used by management to assess the performance of the business and have been calculated from statutory measures. Non-IFRS measures have not been subject to audit. Underlying EBITDA excludes the impairm
Slide 33: China revenue
China revenue China revenue by half ($M) * Covid lockdown restrictions created 17.2 18.0 challenging operating environmentt in FY22 15.6 Despite challenging environment revenue 36% YoY growth China won 80 new clients Japan and Korea won 15 new clients 7s 2H revenue declined 14% due to impact of COVI
Slide 34: New Markets revenue
New Markets revenue New Markets division revenue by half ($M) 547 » Excluding Global Product, 15% YoY 48.2 478 growth 45.0 43.4 * Global Product down 56% in FY22, 36.3 78 driven mostly by end of a large project 18.1 16.4 20.2 18.0 18.7 187 72 18.0 166 |_| Ls | 1H20 2H20 1H21 2H21 1H22 2H22 @ China E
Slide 35: Non-cash asset impairment charge
Non-cash asset impairment charge Indicators of impairment were identified for assets relating to the New Markets (ex-China) group of cash generating units (CGU) High conviction remains in the future growth prospects of the New Markets (excluding China) business, however given the FY22 performance, f