The Appen Ltd (ASX: APX) share price is taking a tumble on Friday.
Shares in the All Ordinaries Index (ASX: XAO) AI stock closed yesterday trading for $1.22. That saw Appen shares up a whopping 183% since the closing bell sounded on 29 July.
Today, the stock is giving back some of those gains. In morning trade, shares are changing hands for $1.07 apiece, down 11.9%.
For some context, the All Ords is up 0.4% at this same time.
This underperformance follows the release of Appen's s half-year results for the six months ended 30 June (H1 FY 2024).
Here are the highlights. (Note, all figures are in US dollars.)
Appen share price tumbles on sliding revenue
- Revenue of $113.4 million, down 18.4% from H1 FY 2023
- Underlying earnings before interest, taxes, depreciation and amortisation (EBITDA), including FX losses, of negative $2.6 million, a $15.5 million improvement year on year
- Underlying net loss after tax of $11.8 million, a $22.4 million improvement from H1 FY 2023
- Statutory net loss after tax of $17.8 million, a $25.5 million year-on-year improvement
What else happened with the ASX AI stock in FY 2024?
The termination of Appen's Alphabet Inc Class A (NASDAQ: GOOGL) contract was the biggest headwind to its share price over the six months.
The company noted that excluding the negative impact of Google, revenue over the half-year decreased by only 1.5%.
Appen's Global Services revenue was hit hard by the loss of the Google account, falling 36.5% year over year to $63.6 million. Over the six months, Global Services won 30 new projects, including an early-stage large language model (LLM).
New Markets performed strongly, offering some support for the Appen share price, with revenue up 28.3% from H1 FY 2023 to $49.8 million. The company credited the increase to strong growth in China and Global Product revenue.
Global Product revenue was up 79.4% year on year to $10.9 million. The boost was mostly driven by new generative AI projects for one of the Global customers delivered on Appen's technology.
In other core financial metrics, gross margin improved by 0.4% to 37.7% due to customer and project mix.
And Appen had a cash balance of $34.7 million as at 30 June.
What did management say?
Commenting on the results pressuring the Appen share price today, Ryan Kolln said, "H1 FY24 was pleasing given we reacted swiftly to the Google announcement, executed on cost out, and the early positive indicators of LLM-related growth have started to develop into significant opportunities."
Kolln added:
Appen's success in generative AI is resulting in a positive revenue trajectory. We saw strong growth in China and Global Product driven by generative AI projects, with China achieving consecutive revenue records across the quarters…
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.
What's next?
Looking at what might impact the Appen share price in the months ahead, the company said that revenue momentum was positive, excluding Google's impact.
Appen said its tight cost controls would remain in place to keep costs in line with revenue opportunities, adding that FY 2024 will be the first full year to benefit from its $60 million FY 2023 cost reduction program.
"Appen continues to target reaching cash EBITDA positive on a run-rate basis in early H2 2024," Kolln said.
Appen share price snapshot
With today's intraday losses factored in, the Appen share price remains up 73% in 2024.
