Appen Ltd. · ASX:APX
Appen — FY2021 Earnings Presentation
40 slides from Appen's earnings presentation, Feb 24, 2022
Slide 1: 2021 Full Year Results Presentation
Appen Limited 2021 Full Year Results Presentation 24th February 2022
Slide 2: Important information
Important information The forward-looking statements included in these materials involve subjective judgement and analysis and are subject to significant uncertainties, risks and contingencies, many of which are outside the control of, and are unknown to, Appen Limited. In particular, they speak onl
Slide 3: Agenda
Agenda 1. FY21 Highlights 2. Market Overview 3. Our business 4. Growth strategy 5. FY21 Financial performance 6. Outlook 7. Questions 3
Slide 4: Highlights
mile laliceaiss 4
Slide 5: Make AI work in the real world
Our Company Mission & Vision Products Performance Make AI $447M Record revenue in FY21 work in the $78.9M FY21 EBITDA Before FX Impact Data Data Model real world collection preparation evaluation 40% Annualised revenue growth since 2016 #1 Data for the AI Technology Platform 32% Global Services grow
Slide 6: Our Impact
Our Impact Crowd People Environment Impact sourcing 38% Scope 1 and 2 Creating opportunities for people in GHG emissions inventory completed developing countries1 female representation amongst senior leadership 17% up from 30% in 2020 Net zero were long-term unemployed (>1 year) before joining Appen
Slide 7: Our Impact: We are making AI work for everyone
Our Impact We are making AI work inWe theare realmaking AI world, for work for everyone everyone We helped our customer Wereduce helpedbias ourin AI with a customer diverse reduce crowd bias in AItesting their by testing language their model language model with a diverse crowd 7
Slide 8: Market overview
appen overview 8
Slide 9: AI is accelerating
AI is accelerating 52% 86% 72% of companies accelerated of companies say AI is of business leaders their AI adoption plans becoming a “mainstream are positive about the because of COVID2 technology” for them2 role AI will play3 AI will be a AI will help alleviate If companies don’t ubiquitous and sk
Slide 10: The AI training data market is growing rapidly
The AI training data market is growing rapidly Large volumes of human-annotated data remain critical for AI success Growing need for labelling What customers are saying Data labelling market forecast (US$B) 1 22 • Vast, high-quality data sets are required for AI models to work perfectly 17 • Humans
Slide 11: Appen is the market leader
Appen is the market leader Leading market share Why we win AI data revenue by competitor 1 Data privacy compliant, with platform option Trust for secure, onsite data labelling Platform quality controls ensure unbiased, Quality low-error and globally representative results Usability Easy to integrate
Slide 12: Appen is strongly positioned against competitors
Appen is strongly positioned against competitors Competitive landscape Our differentiators Workforce • Unique combination of leading annotation capacity technology and global crowd • Trusted by global AI leaders to support both in-deployment and emerging AI enabled products Scale crowd + platform Te
Slide 13: Our business
business 13
Slide 14: Our vision: #1 Data for the AI Lifecycle
Our vision: #1 Data for the AI Lifecycle Who we are #1 Data for the AI Lifecycle Trust Quality Usability Scale Speed Data privacy compliant, with option Unbiased, high-quality and Easy to use, with simple UX Breadth and depth of tools to enrich In-built automation that for secure, onsite data labell
Slide 15: Growth strategy
appen strategy 15
Slide 16: Our growth strategy
Our growth strategy Vision #1 Data for the AI Lifecycle Core strategic pillars Grow Automate Expand Evolve revenue and diversify crowd and labelling processes our product offering how we do business Drive growth in target Leverage AI and ML in our Expand our TAM by adding new Improve the scalability
Slide 17: Delivering against our strategy
Delivering against our strategy High-level roadmap Delivering outcomes by FY26 FY21 FY22 and beyond New and expanded delivery Maintain growth through customer and project At least double FY21 centres in Dalian and Wuxi, China diversification revenue Leverage China success into Japan and Korea
Slide 18: Automate: Improving crowd productivity
Automate: Improving crowd productivity Full service requires a mix of human-based and automated services Data Sourcing Data Preparation Model Evaluation Data Prelabelled Synthetic Data Knowledge Model Testing Model Collection Datasets Data Annotation Graphs (incl. Relevance) Benchmarking Human invol
Slide 19: Expand: Impact of new products
Expand: Impact of new products China autonomous vehicles annotation product AI in Computer Vision Market (US$B)1 95 9 2021 2027 • Autonomous vehicles (AV) requires • Successfully developed and • Eleven auto AV customers vast amounts of training data deployed AV data annotation technology • >20 other
Slide 20: Expand: Impact of new products
Expand: Impact of new products Geo-locational data • Accurate location data is essential • Quadrant Geolancer: efficient, • Location data will converge with for maps, ecommerce, ride-sharing, crowd-sourced, in-field point- augmented and virtual reality real estate, delivery… of-interest (POI) data (
Slide 21: Financial performance
Financial performance 21
Slide 22: Two reporting segments, five customer-facing business units
Two reporting segments, five customer-facing business units Global Services New Markets Services provided to New Markets reflects progress against our Product Led strategy leading US tech companies utilising their Includes Global Product (Global customer revenue through Appen products), platform Ent
Slide 23: Financial highlights
Financial highlights US$ FY21 vs FY20 Record full year revenue performance driven by strong Group revenue $447.3M +8% 2H Global Services contribution and uplift in New Markets Global Services 1 $344.7M +5% • Global services revenue reflects second half revenue New Markets 2 $102.5M +21% growth of 32
Slide 24: Global Services
Global Services Record full year revenue driven by strong second half Revenue and EBITDA (US$M) Revenue by half (US$M) 196 344.7 328.1 165 164 164 Strong 2H FY21 144 149 Delivered into Full year Global projected 2H skew, Services revenue of 32% growth on 1H $344.7M, up 5.0% Growth underpinne
Slide 25: New Markets
New Markets Maintains strong growth Revenue and EBITDA (US$M) Revenue by half (US$M) FY21 revenue of 55 $102.5M, up 21% 48 48 102.5 Growth supported by Strong growth 84.5 strong performance 34 36 half on half, up in China 29 15% EBITDA loss of Record half for $11.5M due to New Markets inve
Slide 26: Global Customers
Global Customers Record 2H revenue - solid annual growth Annual revenue (US$M) Revenue by half and project type (US$M) 300 90% 77% Record 2H revenue, 74% 75% 80% 386.3 250 69% 68% 70% returns Global to growth 373.5 61% trajectory 41.6 Full year 2021 revenue 215 45.4 200 60% of $386.3M, up 3.4% o
Slide 27: Digital advertising market trends
Digital advertising market trends Appen continues to support existing companies and new entrants Digital ad spending worldwide (2020-2025) Market observations and implications Billions, % change, and % of total media ad spending 785 Digital Ad Market continues to grow 717 Market dynamics include
Slide 28: Enterprise, China, Government, Quadrant
Enterprise, China, Government, Quadrant Growth continues Annual revenue (US$M) Revenue by half (US$M) 35 60.8 FY21 revenue of 27 25 $60.8M, up 55.4% 22 39.1 on FY20 Record revenue Growth supported by 16 17 in 2H FY21 strong performance in China 2H FY21 up 59% on PCP Enterprise, China, Govt
Slide 29: China
China Breakout growth in FY21 China revenue by quarter (US$M) Summary of performance FY21 revenue of $24.7M, 422% up on FY20 9.8 Customers include tech giants, social media, mobile providers and autonomous vehicle (AV) companies 7.4 11 leading auto AV companies as customers >20 other tech cu
Slide 30: Enterprise, Government and Quadrant
Enterprise, Government and Quadrant Building for high-growth Growing Enterprise Ongoing opportunities Quadrant delivering customer base with Government early wins Wins with Salesforce, Boeing, • Selected in a partnership for • Quadrant well received by Adobe, Bloomberg the Joint Artificial Intelli
Slide 31: Revenue, EBITDA and NPAT summary
Revenue, EBITDA and NPAT summary % US$M FY21 FY20 change Revenue growth of 8%, underpinned by strong half-on-half growth of 28%, following a 1H decline of 2% versus pcp Global Services 1 344.7 328.1 5.0% New Markets 2 102.5 84.5 21.3% Major contributor was Global Services which delivered into the st
Slide 32: Strong and resilient balance sheet
Strong and resilient balance sheet Increase in receivables due to increased volumes US$M Dec 2021 Dec 2020 around year end and includes invoices raised on Cash 47.9 60.5 31 December 21, as time-based billing milestones satisfied, resulting in reduction in contract assets Receivables 89.2 50.6 Cont
Slide 33: Investment in product development
Investment in product development Investment in product development 1 (US$M) FY21 investment of $30.2M reflects continuing focus on product development to drive customer Product development (ex amortisation) as a % of revenue wins, scalability, repeatability, quality data and margin expansion 3.6%
Slide 34: Solid cash flow conversion
Solid cash flow conversion US$M FY21 FY20 Cash balance decreased by $12.6M due to upfront payment for Quadrant of $25.3M Receipts 434.3 413.6 Payments and other (374.2) (335.6) Cash balance and cash conversion impacted by timing issues Cash flow from operations - working capital cycle impact of
Slide 35: We are guiding to long-term shareholder value creation
We are guiding to long-term shareholder value creation FY26 financial targets We are highly focused on long-term revenue growth At least double Our revenue order book including year-to-date revenue plus orders in hand stands at ~$190M at FY21 revenue February 20221 FY22 half on half revenue skew exp
Slide 36: Questions?
Questions? appen
Slide 37: Appendix
Appendix 37
Slide 38: Conservative approach to amortisation
Conservative approach to amortisation • Product development is amortised over 3 years • Amortisation expense has increased due to the strategic focus on product development, which commenced in FY19. FY21 amortisation is based on spend in FY19, FY20 and FY21, with the nominal spend in FY18 being repl
Slide 39: Reconciliation between statutory and underlying results
Reconciliation between statutory and underlying results Year ended 31 December Restated Year ended 31 1. Underlying results are a non-IFRS measure used by Change 2021 USD $000 December 2020 USD $000 management to assess the performance of the business and have been calculated from statutory Underlyi
Slide 40: appen.com/investors
appen.com/investors