Troubled Appen in another dive

SHARES in data company Appen took a dive on Thursday as it warned that earnings would be lower this financial year.

The news saw investors dump the stock, with the shares dropping 18 per cent to a five-year low of $2.73 as the market opened. The shares recovered somewhat to close 12 per cent lower at $2.93.

“FY22 EBITDA (earnings before interest, tax, depreciation and amortisation) and EBITDA margin (are) expected to be materially lower than FY21, mainly due to lower revenue, as well as investment in product, technology, and transformation,” Appen said in a statement to the ASX. The tech company, which sells and progresses data for machine learning, warned it saw no sign of improved trading conditions over the past two months.

Appen said it expected FY22 EBITDA to be between $US13m ($20m) and $US18m on revenue of $US375m to $US395m.

It said the fall in EDITDA was due to lower revenue and a change in the revenue mix, with fewer large higher margin projects and an increase in lower margin projects, as well as ongoing investments in product, technology, and transformation.

RBC said the news from Appen was disappointing and that “the limited revenue visibility continues to be an issue for forecasting revenue and earnings”.

“(Appen’s) share price is now 40 per cent below where it was five years ago to the day and in our view is likely to breach the $3 on the back of this downgrade,” he said.

Over the past 90 days, the share price has fallen 47.4 per cent, with a drop of 61.6 per cent over the past year.

The share price is a far cry from the company’s status in 2018 when many considered it one of the hottest stocks on the ASX. That year the company performed the best of all listed companies, up 230 per cent in 12 months and 2000 per cent higher than its January 2015 listing at 63c.