The Appen Ltd (ASX: APX) share price is heading to the moon today.
Shares in the All Ordinaries Index (ASX: XAO) AI stock closed yesterday trading for 43 cents. Shares were just trading for 62 cents apiece, up more than 44%. After some likely profit-taking, shares are currently changing hands for 56 cents each, up 30.2%.
That performance is even more impressive, taking into account that the All Ords is down 1.0% at this time.
Here's what's happening.
(*Note: all figures below are in US dollars.)
What's boosting the Appen share price?
ASX investors are bidding up the Appen share price after the All Ords AI stock released its quarterly update for the three months to 30 June (Q2 FY 2024).
While quarterly revenue of $55.0 million was down 16% from Q2 FY 2023, the company noted the prior corresponding quarter included $18.3 million of revenue from Alphabet Inc Class A (NASDAQ: GOOGL).
Excluding Google, Appen achieved significant revenue growth, reporting a positive month on month trajectory. With June revenue reaching $21.1 million, management said Q2 revenue growth had largely offset the loss of its Google account. Taking Google out of the picture, Q2 FY 2024 revenue increased by 16% year on year.
The company said it achieved "significant traction in multiple generative AI projects", which contributed to Q2 revenue growth for China and one of its global customers.
The Appen share price could also be getting a boost with underlying earnings before interest, taxes, depreciation and amortisation (EBITDA), before foreign exchange movements, coming in at a profit of $600,000, up from a loss of $7.2 million in Q2 FY 2023.
Underlying cash EBITDA (before FX) was a loss of $2.9 million, an improvement of $8.2 million on the $11.1 million loss reported in the prior corresponding quarter.
Appen said it is aiming to reach cash EBITDA positive on a run-rate basis in early H2 2024.
As at 30 June, the ASX AI stock had cash on hand of $34.7 million.
What did management say?
Commenting on the results sending the Appen share price soaring today, CEO Ryan Kolln said, "Q2 FY 2024 was promising as the early positive indicators of LLM-related growth have started to develop into significant opportunities."
Kolln added:
Generative AI development depends on vast amounts of high-quality data. The competitive edge for model builders is largely based on accessing unique and superior data. Appen's expertise, platform, and global crowd workforce are becoming crucial sources of data for many leading model builders.
As for the return to profitability, Kolln said, "Underlying cash EBITDA loss before the impact of FX has improved month-on-month as we continue to manage costs in line with the revenue opportunity."
With today's big intraday lift factored in, the Appen share price remains down 9% in 2024 and 72% over 12 months.
