Appen share price on watch as interim dividend scrapped

Appen shares could be in for a big day on the back of the company's first half earnings.

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Key points

  • The Appen share price could be in for a wild ride on Thursday after the company posted its earnings for the first half 
  • It recorded US$182.9 million of revenue – a 6.9% fall – and a US$9.4 million after-tax loss 
  • That saw the tech stock scrap its interim dividend 

The Appen Ltd (ASX: APX) share price is in focus after the machine learning and artificial intelligence data provider released its earnings for the first half.

The Appen share price closed Wednesday's session at $4.17.

Appen share price on watch as dividend ditched

Here are the key takeaways from the tech company's earnings for the six months ended 30 June:

  • Posted US$182.9 million of revenue – a 6.9% fall on that of the prior corresponding period (pcp)
  • Underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) before foreign exchange of US$9.6 million – a 66% fall
  • Underlying EBITDA after foreign exchange came to US$8.5 million – a 69.3% tumble
  • Recorded an after-tax loss of US$9.4 million for the period – representing a 240% fall
  • Declined to pay an interim dividend

Appen's global services division saw revenue fall 7% to US$137.8 million last half. Though, it won 99 new deals compared to the pcp's 75 deals.

Its new markets division recorded US$45 million of revenue, a 6% drop, mainly due to its global product's revenue falling 52% to US$10.6 million. Revenue from its non-global customers grew 35% to US$34.4 million.  

It's worth noting the company was signing new and larger deals last half. Bookings in the period were up 9% and its average deal size increased 37% to US$91,000.

The company ended the half with US$42.2 million of cash and no debt.

What else happened in the first half?

The half year just been, saw Appen booted from the S&P/ASX 200 Index (ASX: XJO) and its share price plummet 50%.

The company also announced a strategic investment in the creator of Chameleon, Mindtech, in March.

What did management say?

Appen CEO Mark Brayan commented on the company's earnings, saying:

Appen's first half results have been impacted by external headwinds …. some of our global customers have cut costs and re-prioritised their spend which has impacted some of our large global programs.

We are highly focused on implementing our long-term strategy, including investments in new markets to diversify revenue. We are also reviewing all areas of the business to accelerate productivity improvements and prioritise near-term high impact change and tightly managed costs

While the current operating conditions remain challenging and some of our customers face numerous headwinds, we remain committed to our long-term strategy and confident of our prospects in the high growth AI market.

What's next?

Appen didn't provide new earnings guidance today. Though, it did note its revenue order book stands at around US$360 million, in line with that of August 2021, with customer delivery skewed to the December quarter.

It expects the second half to bring higher revenue but doesn't think it will surpass that of prior years. Thus, its 2022 EBITDA and EBITDA margin is expected to be materially lower than those of 2021.

Appen share price snapshot

The Appen share price has tumbled 62.5% since the start of 2022. It has also dumped 70% since this time last year.

For comparison, the S&P/ASX All Technology Index(ASX: XTX) has slumped 28% year to date and 31% over the last 12 months.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Appen Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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