Slide 1: ASX Announcement: Investor Presentation
For personal use only ASX ANNOUNCEMENT 25 August 2022 INVESTOR PRESENTATION Further to the Company’s announcement to the market today on its results for the half year ended 30 June 2022, please find attached the presentation to be delivered to investors and analysts this morning. A results briefing
Slide 2: Appen Limited Half year results presentation
For personal use only Appen Limited Half year results presentation 25 August 2022
Slide 3: Important information
Important information For personal use only 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 part
Slide 4: Agenda
Agenda For personal use only • Results and overview • 1H 22 financial performance • Outlook • Q&A 3
Slide 5: Results and overview
For personal use only Results and overview Mark Brayan 4
Slide 6: 1H FY22 snapshot
1H FY22 snapshot1 Performance Current state For personal use only § Our major customers are facing headwinds, cutting costs $182.9M H1 FY22 Revenue and re-prioritising spend, impacting our large Global program revenue $9.6M H1 FY22 EBITDA before FX § We remain committed to our long-term strategy inc
Slide 7: State of play
State of play For personal use only Downturn in digital ad market Need for diversification Market remains strong § Impacting some global customers § Revenue from non-Global § Data labelling market forecast to customers1 represent 19% of grow by 32% per annum from § Lower spend on our large global to
Slide 8: Maintaining our strategy with focus on near-term returns and costs
Maintaining our strategy with focus on near-term returns and costs For personal use only Maintain strategy Grow Automate Expand Evolve revenue and diversify crowd and labelling processes our product offering how we do business Focus on near- § Focus investments in New Markets on high impact opportun
Slide 9: 1H FY22 Financial performance
For personal use only 1H FY22 Financial performance Mark Brayan and Kevin Levine 8
Slide 10: Financial highlights
Financial highlights For personal use only Revenue performance primarily reflects lower contribution % US$M 1H FY22 1H FY21 from the Global division due to weaker digital advertising change demand and a resultant slowdown in spending by some of our Group Revenue 182.9 196.6 (6.9%) large customers Gl
Slide 11: Global Services
Global Services For personal use only Revenue and EBITDA (US$M) Revenue by half (US$M) § Challenging external operating and macro 148.8 195.9 conditions resulted in § 1H22 revenue of 137.8 weaker digital advertising $137.8M, down 7% 165.0 163.9 164.2 148.8 and a slowdown in spending 144.0 § GP% incr
Slide 12: New Markets
New Markets For personal use only Revenue and EBITDA (US$M) Revenue by half (US$M) 54.7 § Excluding global product, 47.8 New Markets 1H22 45.0 § 1H22 revenue of 48.2 47.8 45.0 revenue of $34.4m, up 35% $45.0M, down 6% on 1H21 36.3 § Growth mainly driven by 34.0 China § Growth impacted by 29.0 lower
Slide 13: Global customers
Global customers For personal use only Revenue by half (US$M) Global project count 300 § Global services 1H22 revenue of 215.2 $137.8M, down 7% on 1H21 due 190.2 19.3 to weaker digital advertising 250 183.3 § Global project count at all-time 171.1 demand and slowdown in 19.4 26.0 spending by some of
Slide 14: Enterprise, China, Government and Quadrant
Enterprise, China, Government and Quadrant For personal use only Revenue by half (US$M) Performance summary § 1H22 revenue of $34.4M, up 35% on 1H21 § Revenue represents 19% of total revenue, up from 13% 35.4 34.4 § Growth supported by strong performance in China § Major wins for Enterprise, includi
Slide 15: China
China For personal use only China revenue by half (US$M) Performance summary § 1H22 revenue of $18.0M, 141% up on 1H21 as team secured new project and logo wins 18.0 17.2 § Shanghai office experienced three-month COVID lockdown in 69% CAGR1 1H FY22 § Gross margin % continues to improve § Achieved IS
Slide 16: Revenue, EBITDA and NPAT summary
Revenue, EBITDA and NPAT summary For personal use only § Total revenue down 6.9%, impacted by some Global customers’ reduced US$M 1H FY22 1H FY21 % change spending in response to their lower revenues and weaker digital advertising Global Services 1 137.8 148.8 (7.4%) demand New Markets 2 45.0 47.8 (
Slide 17: Strong and resilient balance sheet
Strong and resilient balance sheet For personal use only US$M Jun 2022 Dec 2021 § Decrease in receivables due to lower volumes and excludes Cash 42.2 47.9 work done in June not invoiceable as billing milestones not Receivables 45.3 89.2 met (shown in contract assets) Contract assets 30.3 10.5 § Non-
Slide 18: Investment in product development
Investment in product development For personal use only Investment in product development1 § 1HFY22 investment of $18.3M reflects continuing focus Product development (ex amortisation) as a % of revenue on product development to drive customer wins, 10.0% scalability, repeatability, quality data and
Slide 19: Solid cash flow conversion
Solid cash flow conversion For personal use only US$M 1H 22 1H FY21 § Cash balance (vs pcp) decreased by $23.8M mainly due to upfront Receipts 207.0 210.4 payment for Quadrant of $25.3M in Sep 21 Payments and other (189.1) (182.5) § Cash conversion impacted by working capital timing (cash collection
Slide 20: Outlook
For personal use only Mark Brayan Outlook 19
Slide 21: FY22 trading performance and outlook
FY22 trading performance and outlook For personal use only § YTD revenue plus orders in hand for delivery in FY22 is approximately US$360M1 as at August 2022, in line with August 2021, with customer delivery schedule skewed to the fourth quarter of FY22 § Conversion of forward orders to sales occurr
Slide 22: Questions
For personal use only Questions Thank you for your attendance appen.com/investors 21
Slide 23: Appendix
For personal use only Appendix 22
Slide 24: Reconciliation between statutory and underlying results
Reconciliation between statutory and underlying results Half-year ended 30 June 2022 Half-year ended 30 June 2021 For personal use only Change - USD $000 USD $000 1. Underlying results are a non-IFRS measure Underlying net profit after tax (NPAT) 1 (Less)/add underlying used by management to assess
Slide 25: Conservative approach to amortisation
Conservative approach to amortisation For personal use only • Product development is amortised over 3 years • Amortisation expense reflects our strategic focus on product development. 1H22 amortisation is based on spend in FY20, FY21 and 1H22. Amounts amortised 100% Year of amortisation US$’000 90%
Slide 26: Our growth strategy
Our growth strategy For personal use only Vision #1 Data for the AI Lifecycle Core strategic pillars Grow Automate Expand Evolve revenue and diversify crowd and labelling processes our product offering how we do business Leverage AI and ML in our Expand our TAM by adding new products Improve the sca
Slide 27: The AI training data market is growing rapidly
The AI training data market is growing rapidly For personal use only Growing need for labelling What customers are saying Data labelling market forecast (US$B) 1 22 § Vast, high-quality data sets are required for AI models to work perfectly 17 § Humans will continue to play a significant role in the
Slide 28: Appen is strongly positioned against competitors
Appen is strongly positioned against competitors For personal use only Competitive landscape Our differentiators Workforce § Unique combination of leading annotation capacity technology and global crowd § Trusted by global AI leaders to support both in-deployment and emerging AI enabled products Sca