The Appen Ltd (ASX: APX) share price was on form on Wednesday and hit a record high of $43.66.
Investors appear to have been fighting to get hold of the artificial intelligence company's shares in anticipation of a strong half year update this morning.
Did Appen deliver?
For the six months ended 30 June 2020, Appen delivered a 25% increase in revenue to $306.2 million. This growth was driven entirely by its Relevance segment, which posted a 34% increase in revenue to $273.9 million. The company's increasing irrelevant Speech & Image segment posted a 20% decline in revenue to $31.9 million.
Appen released three separate earnings before interest, tax, depreciation and amortisation (EBITDA) figures with its results.
Underlying EBITDA (including growth investments) was up 6% to $49.1 million, statutory EBITDA was up 44%, and underlying EBITDA excluding growth investments was up 35% to $62.5 million.
On the bottom line, Appen posted a 20% increase in statutory net profit after tax to $22.3 million and a 3% decline in underlying net profit after tax of $28.9 million.
An interim dividend of 4.5 cents per share, 50% franked, was declared. This is up 12.5% from the prior corresponding period.
What else did Appen reveal?
The company advised that 4 out of 5 major customers are now using the Appen annotation platform (formerly the Figure Eight platform).
In addition to this, an enterprise-wide platform agreement with a major customer has been signed. This includes a US$80 million annual commitment. This has underpinned a substantial increase in annual contract value (ACV) to US$103 million at the end of the half.
Appen's Chief Executive Officer, Mark Brayan, commented: "Figure Eight is firmly part of Appen now. The almost fully integrated business is delivering on our strategic thesis. Four of our five major customers are now using our annotation platform and we signed an enterprise-wide platform agreement with one of them that included an US$80M annual commitment. This increased our total ACV at the end of the half to US$103M."
Pleasingly, management is positive on the company's prospects in the future, noting that it is "highly confident in the long-term market for AI and training data."
The company's chairman, Chris Vonwiller, commented on the result and believes its investment in growth will deliver results.
He said: "We are especially pleased with this result amidst the pandemic and the implementation of our growth initiatives. The strength of our business model, market exposure, competitive position and our consistent execution give us the confidence to push forward with our investments to solidify future growth."
Outlook.
While the company notes that the global slowdown in online advertising spend because of the pandemic will have a small impact on its ad-related revenue in the second half, it has reaffirmed its guidance for FY 2020.
It expects its underlying EBITDA for FY 2020 to be in the range of $125 million to $130 million, based on an average exchange rate of 70 U.S. cents.
It also notes that its year to date revenue (plus orders in hand for delivery) stands at ~$475 million.
