Why the Appen (ASX:APX) share price fell 7% last time it reported

Appen is set to report its half-year earnings next week….

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Next week, we will get to take a look at how the artificial intelligence company Appen Ltd (ASX: APX) has been faring of late. Yes, next Thursday, 26 August, Appen is set to report its half-year earnings for the 6 months to 30 June 2021. And it will be one that many ASX investors will be watching.

Appen has been a disappointing ASX tech share so far in 2021. The human-annotated dataset provider is currently down a nasty 52.8% so far in 2021, and is also down almost 70% over the past 12 months.

So there will be more than a few investors looking for a silver lining or two next Thursday. So while we wait, it’s a good time to cast our minds back to Appen’s last major appointment with its investors. That was back in February, when the company released its full-year earnings numbers for the 2020 calendar year.

Let’s dig in.

So here’s a summary of what Appen reported back in February:

  • Revenues of $599.9 million, up 12% over the previous period
  • Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $108.6 million, an increase of 8%
  • Underlying earnings margin of 18.1%, a slight decrease on the previous year’s margin of 18.8%
  • A net profit after tax (NPAT) of $64.4 million, which was a fall of 1% against the previous year
  • EBITDA guidance of $120 million to $130 million for 2021 calendar year

How did the Appen share price react?

As we covered at the time, the reaction from investors to this earnings report was not kind. The day it became public, the Appen share price fell by 7% at one point. A week later, the company was down more than 18% from its pre-earnings share price. 3 months later, it was down 33%, and today, it remains down more than 40% from those levels.

It’s worth pointing out that Appen has subsequently downgraded its 2021 guidance again. Back in May, the company gave a trading update, which stated that Appen is now expecting EBITDA for 2021 to come in the range of US$83 million to US$90 million (or $116.4 million to $126.2 million at the current exchange rate).

Appen shares have been living under the cloud of this last earnings report since February. As such, next Thursday is probably a day that’s circled on many an Appen investors calendar. Shareholders will undoubtedly be hoping for a better market reaction this time around.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Appen Ltd. The Motley Fool Australia owns shares of and has recommended Appen Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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