Data services business Appen has warned its core business is under pressure as it shifts its focus to generative AI.
Appen’s core business is under pressure as customers cut back spending.Shares in troubled technology business Appen collapsed 32 per cent on Monday, after the company’s gamble on new generative artificial intelligence products failed to offset the pain in its core business of supplying Silicon Valley’s mega caps with processed data., after work from its largest customers dried up.
At its peak in August 2020, Appen was fetching more than $40 a share and had a market capitalisation around $5 billion. On Monday, the stock closed at $1.52, down 34 per cent in the year-to-date.Appen’s chief executive Armughan Ahmad stepped into the role at the beginning of the year with a turnaround plan that included a $60 million capital raising, $US46 million cost-cutting program, and an overhaul of its sales team.
However, the generative AI projects tended to be much smaller pilots or trials which are yet to generate revenue to offset the decline in income from its deep learning projects. Appen reported it had achieved 63 per of its $US46 million cost reduction target and Mr Ahmad reiterated the company reiterated the company’s goal to be underlying EBITDA and cash EBITDA positive by December 30.
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