Slide 1: ASX Release: Investor Presentation
ASX Release 27 February 2024 Investor Presentation Further to the Appen Limited’s (ASX:APX) announcement to the market today on its results for the year ended 31 December 2023, please find attached the presentation to be delivered to investors and analysts at 11:00am. The briefing will be webcast li
Slide 2: 2023 full year results investor presentation
2023 full year results Investor presentation 27 February 2024 Appen
Slide 3: Important information
For personal use only 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 part
Slide 4: Agenda
For personal use only Agenda RON = Introduction & FY23 overview FY23 financial performance Growth strategy & FY24 priorities FY24 outlook Appen
Slide 5: Introduction & FY23 overview
Introduction FY23 overvie Ryan Kolln CEO 4
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For personal use only 4.0 400.0 200 3.2 388.1 2.0 160 300.0 159 273.0 0.2 120 0.0 -0.6 200.0 80 99 -2.3 -2.1 -2.0 100.0 40 -3.1 0.0 0 -4.0 FY22 FY23 FY23 start FY23 end Jul Aug Sep Oct Nov Dec • • • • •
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60.0 12.0 12.0 For personal use only 11.1 50.0 10.0 10.0 10.8 9.0 9.0 40.0 8.0 8.0 8.5 38.2 8.1 8.1 26.8 30.6 23.1 7.1 30.0 6.0 6.0 20.0 4.0 4.0 21.9 23.3 10.0 19.1 18.3 2.0 2.0 0.0 0.0 0.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Google Total excluding Google • • • •
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• For personal use only • • • $2m+ exit run rate with a leading generative AI model builder for LLM prompt- response annotation in 9 languages. 3-year program of work.
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Slide 11: FY23 financial performance
FY23 1! mlatelatel(e] heron Justin Miles CFO
Slide 12: FY23 financial summary
For personal use only 2. FY23 FINANCIAL PERFORMANCE FY23 financial summary FY23 FY22 change Revenue 273.0 388.1 -380% Gross Margin'% 36.3% 37.6% -130bps Underlying EBITDA 2 (24.5) 11.0 nm% Underlying EBITDA 2 before FX (20.4) 13.6 nm% Underlying NPAT 8 (52.8) (22.8) nm% Statutory NPAT 4 (118.1) (239
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For personal use only 400.0 400.0 100.0 388.1 80.0 88.4 300.0 300.0 81.5 299.8 273.0 60.0 200.0 200.0 191.5 40.0 100.0 100.0 20.0 0.0 0.0 0.0 FY22 FY23 FY22 FY23 FY22 FY23 • • • • • • •
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For personal use only 60.0 60.0 60.0 54.5 40.0 40.0 40.0 20.0 20.0 20.0 17.5 13.6 0.0 0.0 0.0 -20.4 -20.0 -20.0 -20.0 -32.7 -36.5 -40.0 -40.0 -40.0 -60.0 -60.0 -60.0 FY22 FY23 FY22 FY23 FY22 FY23 • • • •
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For personal use only 30.0 4.0 4.0 25.0 3.2 2.0 2.0 2.3 20.0 18.5 0.2 16.0 15.0 14.1 0.0 0.0 14.0 13.0 13.1 -0.6 -0.7 -1.0 10.0 -2.1 -2.0 -2.3 -2.0 -2.5 -2.7 5.0 -3.1 7.5 7.6 7.8 8.1 7.5 6.8 -3.4 0.0 -4.0 -4.0 Jul Aug Sep Oct Nov Dec Jul Aug Sep Oct Nov Dec Jul Aug Sep Oct Nov Dec Google Total exclu
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For personal use only 140.0 • 120.0 10.9 • 100.0 8.5 3.5 • 80.0 9.1 13.2 4.1 5.3 5.3 60.0 109.7 3.4 2.5 • 2.7 1.1 86.2 85.5 40.0 76.6 76.5 72.2 68.8 69.1 53.9 46.2 43.9 47.6 20.0 0.0 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Global services Globa
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For personal use only 12.0 • 11.1 • 9.9 9.0 9.1 • 9.0 8.1 8.1 8.1 7.4 7.5 7.1 • 6.0 • 4.5 3.0 2.9 0.0 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23
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For personal use only 14.0 • 12.0 • 11.6 10.8 10.0 9.9 • 9.0 9.2 9.0 9.0 8.9 8.0 8.6 8.5 8.2 • 7.2 6.0 • 4.0 2.0 0.0 Q1 FY21 Q2 FY21 Q3 FY21 Q4 FY21 Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23
Slide 19: Balance sheet
For personal use only 2. FY23 FINANCIAL PERFORMANCE Balance sheet US$M Cash Receivables Contract assets Other current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Net Assets Total equity Dec 2023 321 49.9 15.6 91 48.5 155.2 477 147 62.4 92.8 92
Slide 20: Cash flow summary
For personal use only 2. FY23 FINANCIAL PERFORMANCE Cash flow summary US$M Receipts Payments and other Cash flow from operations before interest and tax Net interest Taxes Net cash from operations Cash flows - investing activities Cash flows - financing activities Net cash flow for the period Openin
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For personal use only • 1,400 30% 1304 1,200 1079 25% • 1,000 897 20% 800 728 $ billions 15% • 600 548 12% 10% 399 11% 400 10% 304 9% 217 7% 6% 5% 200 137 5% 40 67 4% 3% 0 0% 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Generative AI Revenue Generative AI as % of Total Technology Spend
Slide 23: Market landscape: Data tools and services are key enabler for Generative AI
3. GROWTH STRATEGY AND FY24 PRIORITIES Market landscape: Data tools and services are key enabler for Generative Al development Cc fo) cr >) o Model Tools Data Tools & Services (7) Propriety models > (©) Hugging Face Appen fy ( ) i scale fo) Model Foundation models WK mosaic™ n 4) ro) 6 Opendl LLAMA
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Slide 25: Growth strategy: high quality data for leading AI
For personal use only 24 3. GROWTH STRATEGY AND FY24 PRIORITIES Growth strategy: high quality data for leading Al *——— Appen’s traditional TAM °° New Generative Al opportunities 1. Next generation crowd and project management platform 3. SaaS platform for LLM customisation 2. Optimise and automate h
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Slide 28: SaaS platform for LLM customisation: opportunity
3. GROWTH STRATEGY AND FY24 PRIORITIES 3. SaaS platform for LLM customisation: opportunity Enterprises will adopt existing LLMs, but customise for Customising LLMs requires investment into enterprise data and inputs Limited tooling exists for efficient collaboration between For personal use only 27
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Slide 32: Tenured management team with industry expertise
For personal use only 31 3. GROWTH STRATEGY AND FY24 PRIORITIES Tenured management team with industry expertise Corporate and shared services Sales and delivery Ryan Kolin Chief Executive Officer Mike Davie Chief Product and Technology Officer Brian Haskett SVP Client management and operations Roc T
Slide 33: FY24 outlook
FY24 outlook Ryan Kolln CEO
Slide 34: Market observations
For personal use only 33 4. FY24 OUTLOOK Market observations * FY23 was a transitional year for the Al market. Many companies experimented with and evaluated the potential of generative Al * The experimental period, along with a broader focus on cost optimisation among tech customers, resulted in ch
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For personal use only 30.0 4.0 4.0 3.2 25.0 25.9 24.1 2.0 2.0 2.3 22.7 21.9 20.0 20.8 20.8 20.5 0.2 15.0 0.0 0.0 -0.6 -0.1 -0.7 -0.2 -1.0 10.0 -2.1 -2.0 -2.3 -2.0 -2.5 -2.7 5.0 -3.1 -3.4 0.0 -4.0 -4.0 Jul Aug Sep Oct Nov Dec Jan Jul Aug Sep Oct Nov Dec Jan Jul Aug Sep Oct Nov Dec Jan
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Slide 38: Appendix 1: Appen reporting structure
For personal use only 37 Appendix 1: Appen reporting structure Services provided to New Markets reflects progress against our Product Led strategy leading US tech companies utilising their platform Includes Global Product (Global customer revenue through Appen products), Enterprise, Govt, China and
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For personal use only 60.0 60.0 54.3 50.0 50.0 48.6 47.2 40.0 40.0 40.2 30.0 30.0 23.3 20.0 20.0 21.9 19.1 18.3 10.0 10.0 0.0 0.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
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12.7% For personal use only • 10.6% 41.2 • 34.6 23.4 • 17.8 • 17.8 16.8 • FY22 FY23
Slide 41: Appendix 4: Reconciliation between statutory and underlying results
For personal use only 40 Appendix 4: Reconciliation between statutory and underlying results Year ended Year ended 31 Dec 2023 31 Dec 2022 Change $000 $000 Underlying net loss after tax (NPAT) * (52,810) (22,739) nm% (Less)/add underlying adjustments (net of tax) Impairment loss (61,663) (204,326) A