Appen, a technology company specializing in AI lifecycle data, has experienced a decline in its financial performance despite the global boom in artificial intelligence. In the first half of 2023, the company reported a net loss after tax of US$34.2 million, a significant increase from the net loss of US$3.8 million in the same period of the previous year.
The overall revenue of Appen also plummeted by 24 percent, dropping to US$138.9 million from US$182.9 million. The company attributes this decline to lower contributions from its global services and new markets divisions, as customers tighten their budgets and reevaluate their AI strategies due to global headwinds.
Furthermore, the extended impacts of the COVID-19 pandemic and challenging external factors led to a 15.2 percent decline in Appen’s revenue from China, totaling US$15.3 million.
Amidst these challenges, Appen is determined to reset its operations by instilling operational rigor across the business, releasing new generative AI-focused products, refreshing its go-to-market and sales strategies, establishing ecosystem partnerships, and continuing its AI for Good initiatives.
However, experts are skeptical about Appen’s ability to turn the tide. Toby Walsh, the chief scientist at UNSW AI Institute, commented that the increasing losses year on year in the AI space indicate poor execution by the company and offer little hope for a quick turnaround.
To overcome these challenges, Appen has set its sights on exiting the year with a return to profitability. The company plans to achieve this by prioritizing growth investments into a smaller set of higher potential areas, simplifying its business, and delivering incremental cost savings. However, this may have a negative impact on its 2024 revenue.
Currently, Appen provides various services, including content relevance, data collection, computer vision, NLP and speech, chatbots and conversational AI, AR/VR, audio, and linguistics.
Looking ahead, Appen forecasts its revenue for the second half of the year to be similar to the first half. The company also estimates a lower than $113 million annualized run-rate operating cost base by the end of 2023.
While the AI boom has proven beneficial for many technology companies, Appen struggles to capitalize on this trend. As the company grapples with the broader technology market slowdown and evolving customer AI strategies, it remains to be seen whether Appen can regain its former financial strength.
In an Australian collaboration report by Microsoft and the Tech Council of Australia, it was highlighted that the adoption of generative AI (GAI) could bring significant economic growth to the country. The report suggests that if adoption accelerates, the total gains could reach $115 billion annually by 2030. However, if adoption lags, the benefit would be limited to approximately $45 billion annually.
Despite the challenges faced by Appen, the ongoing AI boom presents opportunities for growth and innovation in the technology sector. It remains important for companies to adapt and strategize effectively to harness the potential of AI in a rapidly changing landscape.
