Australia’s Appen Ltd warned on Thursday of a decline in annual profits of up to 84% due to spending cuts from its major clients, bringing its shares to a nearly 5-and-a-half-year low.
The company, which conducts AI training for tech giants like Facebook, Google, and Amazon.com, has seen its digital ad revenue decline as customers cut costs to handle rising inflation and costs. of advanced loans. .
Shares of the artificial intelligence company have lost nearly three-quarters of their value so far this year, well below the tech sub-index, which is down 31%. The stock fell 18% to AU $ 2.73, the lowest level since May 2017.
Appen’s business model involves outsourcing hundreds of data verification projects to contractors who manually verify and tag online content, which customers then input into their algorithms.
In August, the company reported lower-than-expected annual earnings and said the underlying annual EBITDA is expected to decline from the previous year, citing weak demand for digital advertising and higher capital costs.
Appan said there was no improvement in trading conditions in August and September after the interim results.
“Limited revenue visibility continues to be an issue for revenue and earnings forecasts,” said RBC Capital Markets analyst Gary Sheriff.
Appen now expects full-year underlying EBITDA to be between $ 13 million and $ 18 million, down from $ 78.9 million a year ago. It maintained its revenue prospects from $ 375 million to $ 395 million, up from $ 447.3 million last year.
Plans to increase the utilization of offshore facilities and reduce costs are gaining momentum, but not all of the benefits will be evident this year, said Mark Bryan, CEO of Apen.