Full year result for the AI business missed the mark today – revenue at $600m was a ~4% miss to expectations and while EBITDA was in line for 2020, guidance of $120-130m was around 10% below consensus for FY21. The company saying the work from home trend that was accelerated by COVID impacted their ability to sell, though this rebounded in the final quarter as more people returned to the office. Appen was trumpeting its competitive moat built up by a wide range of clients and large sets of data, however today’s result and outlook show that perhaps the moat is not as deep nor filled with as many piranhas as many expected. We like the stock longer term, and it is on the radar as it approaches a 52-week lows – however moment clearly on the downside for now.
We remain bearish APX for now
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