Appen’s Q4 Revenue Up 37% Excluding Google, Underlying EBITDA Hits $4.7M
Appen's Q4 FY24 results reveal a robust 37% revenue increase excluding Google, alongside improved EBITDA profitability, driven by generative AI projects and strategic cost management.
- Q4 FY24 revenue of $66.7 million, down 7% overall but up 37% excluding Google
- Underlying EBITDA rose to $4.7 million, a 70% improvement year-on-year
- Underlying cash EBITDA reached $3.2 million, nearly quadrupling prior year
- Quarter-on-quarter revenue growth of 23.3% fueled by generative AI initiatives
- Healthy cash balance of $54.8 million despite $12.4 million net operating cash outflow
Strong Revenue Growth Beyond Google
Appen Limited (ASX: APX) closed out FY24 with a compelling Q4 performance that underscores its evolving position in the AI data services market. While total revenue for the quarter was $66.7 million, representing a 7% decline compared to the prior corresponding period (pcp), this figure masks a significant underlying growth story. Excluding $23.3 million of revenue from Google in the prior year, Appen’s revenue surged 37% year-on-year, highlighting the company’s success in diversifying its client base and expanding its footprint beyond a major customer dependency.
Profitability Gains Reflect Operational Discipline
Appen’s underlying EBITDA (before foreign exchange impacts) improved markedly to $4.7 million in Q4 FY24, up 70% from $2.8 million in the same quarter last year. This positive momentum extended to underlying cash EBITDA, which nearly quadrupled to $3.2 million from $0.7 million a year earlier. The company attributes these gains to the completion of cost reduction programs and a sharpened focus on profitable growth, signaling a disciplined approach to managing expenses while scaling operations.
Generative AI Projects Drive Quarter-on-Quarter Growth
Quarter-on-quarter revenue growth of 23.3% was largely driven by burgeoning demand for generative AI projects, an area where Appen has positioned itself as a key data provider. CEO Ryan Kolln emphasized that the company is capitalizing on the rapid expansion of large language model (LLM) applications, which continue to fuel revenue growth. Additionally, strong performance in China and confidence in the Enterprise and Government divisions provide further tailwinds for sustained growth.
Cash Position and Operating Cash Flow Dynamics
Appen ended the quarter with a healthy cash balance of $54.8 million, up from $30.3 million at the end of Q3 FY24, bolstered by a recent capital raising that netted $42.1 million. However, net cash used in operating activities was $12.4 million, a reversal from the modest positive cash flow in the prior quarter. This was primarily due to the timing of customer receipts and working capital demands following strong revenue growth. Management notes that these cash flow fluctuations are expected and aligned with operational cycles.
Outlook and Strategic Positioning
With cost out programs now complete and a clear trajectory toward profitable growth, Appen’s leadership expresses confidence in the company’s ability to sustain momentum. The CEO’s commentary highlights a transformative year for the business, with a strengthened foundation to capture ongoing opportunities in AI data services. Investors will be watching closely how Appen leverages its global crowd workforce and intellectual property investments to maintain competitive advantage amid accelerating AI adoption.
Bottom Line?
Appen’s Q4 results mark a pivotal step toward sustained profitability, but cash flow timing and market diversification remain key watchpoints.
Questions in the middle?
- How will Appen sustain revenue growth beyond generative AI projects and China’s market?
- What impact will timing of customer payments have on future operating cash flows?
- Can Appen maintain margin expansion while scaling its global crowd workforce?
