Appen shares nosedived following its update on 1H FY2022 results and FY2022 outlook

Appen Limited issued an update related to its 1H FY2022 results for period ended 30 June 2022 and FY2022 outlook. Post the announced the Company’s shares slipped by 25.218% and are trading at AU$4.27 (at AEST 10:16 AM).

The Company expects the below result in 1H FY2022. These are unaudited and is subject to auditor’s interim review and Board review:

1. Group revenue to decline 7% to US$182.9, driven by lower contribution from the Global Division due to weaker digital advertising demand and a resultant slowdown in spending by some of its large customers.
2. New Markets revenue to go down by 6% to US$45 million, impacted by lower Global Product.
3. Underlying EBIDTA of US$8.5 million, down 6%. It is driven by lower revenue and investments in transformation, product, and technology coupled with FX losses.
4. Statutory net loss after tax is expected to be US$9.4 million. It was a net profit of US$6.7 million in the previous corresponding period.

In FY2022, the Company expects to attain higher volumes in the latter part of the 2H FY2022 due to the delivery of seasonal projects and ramp up in current projects.  However, as there was no improvement in the July trading, the Company believes that there is an uncertainty about a constant slowdown of expenses from the Global customers and their exposure to weaker digital advertising demand.

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