(Reuters) – Appen Ltd on Wednesday flagged a soft start to the year due to unfavourable economic conditions, although the Australian AI training provider expects to be profitable by the end of 2023 on the back of its cost-saving and diversification measures.
Shares of the company tanked as much as 19.4% to A$2.570 in early trade.
Appen said revenue for the four months ended April 30 dropped about 21% to $95.7 million from a year-ago period, while its gross profit fell 25% to $35.8 million.
The company took a hit to its earnings last year from spending cuts by its major customers including Facebook, Google and Amazon.com due to inflation and higher borrowing costs.
Appen, one of the world’s largest AI training providers, announced on Wednesday a raft of cost-saving initiatives expected to deliver annualised cost savings of about $36 million in fiscal 2024.
“Going forward, costs will be managed in line with the revenue opportunity and market conditions,” it said in a statement.
It further launched a set of data products and services in a push to diversify its revenue by tapping into the hot generative AI market, on the back of its partnership with NVIDIA Corp to offer AI solutions to the latter’s enterprise customers.
Appen said it had “multiple projects underway that relate to generative AI model development and evaluation for both large tech and enterprise customers.”
(Reporting by Savyata Mishra in Bengaluru; Editing by Sherry Jacob-Phillips)
