Why Appen (ASX:APX) shares are trading 16% lower today

2 min read | October 06, 2022 01:06 PM AEDT | By Ritwika

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Highlights:

Appen shared a new trading update on ASX today as per which, company’s revenue is expected to be between US$375-US$395 million in FY22.

The EBITDA and EBITDA margin is expected to be ‘materially low’ in FY22 compared to FY21.

Post this update, Appen’s share fell more than 16% on ASX on Thursday (11:48 AM AEDT).

Linguistic service provider in Australia, Appen Limited (ASX:APX) shares were trading 16.366% lower at AU$2.785 apiece at 11:48 AM AEDT on ASX on Thursday (6 October 2022). Appen has come up with a trading update on ASX today.

Details of Appen’s trading update:

On 25August 2022, Appen shared its H1 FY22 results along with the full year earnings guidance for FY22. Appen had earlier informed that it is anticipating FY22 revenue would weigh heavy on the second half of FY22.

However, today Appen has shared that it has not experienced any improvement in trading conditions in August and September.
Appen was witnessing trouble in furnishing its earnings guidance due to the current worries regarding global customer spending and the effect of economic conditions on new business. However, As a result, Appen has provided additional clarity on its expected FY22 revenue and EBITDA.
Appen’s expected revenue in FY22 stands between US$375 - US$395 million, as stated earlier on 25 August 2022. As far as the EBITDA and EBITDA margin is concerned, Appen assumes that these could continue to be ‘materially lower’ in FY22 compared to FY21.
In its update, Appen mentioned that its expected EBITDA in FY22 will be between US$13 million and US$18 million. This is primarily due to lower gross profit from lower revenue. Furthermore, ongoing investment by the company in product, technology and transformation will keep its EBITDA lower in FY22.

Appen added that challenging external operating and macro conditions have caused weaker digital advertising revenue and a slowdown in expenditure by some of its significant customers. As a result, it has impacted its ad-related programs and had an impact on non-ad-related programs and some core programs.

Mark Brayan, CEO, Appen, said:

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