Appen (APX:ASX) reported group operating revenue fell 18.4% year over year to USD 113.4 million in the first half of its fiscal year ended 30 June. The primary driver of the decrease was the termination of a contract with Google. Excluding the impact of the Google contract loss, revenue was down 1.5%. Appen reported earnings on 30 August. The Australia-based talent platform is focused on AI training data occupations and has a cloud of 1 million contractors who speak more than 500 languages in more than 100 companies.

The first half “was pleasing given we reacted swiftly to the Google announcement, executed on cost out, and the early positive indicators of [large language model]-related growth have started to develop into significant opportunities,” CEO and Managing Director Ryan Kolln said in a press release.

Revenue by Division

• Global services revenue fell 36.5% year over year to USD 63.6 million and was impacted by the termination of the Google contract in the first quarter. Excluding Google, revenue fell 20.1% to USD 50.8 million. Global services won 30 new projects in the first half.
• New markets revenue rose 28.3% to USD 49.8 million with strong growth in China and global product revenue. New markets added 58 new customers, including 37 across China, Japan and Korea and 21 for its enterprise operations.

The company reported gross margin improved to 37.7% from 37.3% a year ago because of customer and project mix.

Appen reported statutory net loss after tax of USD 17.8 million compared to a new loss after tax of USD 43.3 million a year ago.

Guidance

Appen noted that revenue momentum is positive excluding the impact of Google.

Share price

Following the announcement, shares in Appen fell by 18% to AUD 1.00 (USD 0.67) but have subsequently recovered to close at AUD 1.14 (USD 0.77) in Australia on 5 September. They are still 27.71% below their 52-week high set on 26 August.