Appen Ltd (ASX: APN) jumps nearly 30% as AI momentum drives a sharp Q4 turnaround

Key highlights

• Appen shares surge 28.5% to $1.39 on heavy volumes after a strong quarterly update
• Q4 FY25 revenue lifts 33% quarter on quarter to US$73.4 million
• Underlying EBITDA jumps to US$13.3 million, marking a clear profitability inflection
• Generative AI projects and China growth emerge as key earnings drivers
• Cash balance strengthens to US$59.8 million, improving financial flexibility
  
   

Appen (ASX: APN) delivered one of the ASX’s standout moves on Thursday, with shares in the artificial intelligence data specialist jumping almost 30% after the company reported a sharply improved December quarter, signalling that its long-running turnaround is beginning to take hold.

The stock last traded at $1.39, up 28.47%, with more than 23 million shares changing hands, as the market reacted to a rare combination of revenue growth, margin expansion and stronger cash generation.

Appen Stock Price Data: MarketIndex

A quarter that changed the narrative

For the December quarter, Appen reported revenue of US$73.4 million, up 10% year on year and 33% higher than the September quarter. More importantly, underlying EBITDA before foreign exchange surged to US$13.3 million, compared with US$4.8 million a year earlier.

Gross margins expanded to 45.6%, reflecting a shift toward higher-value generative AI work and the benefits of tighter cost controls introduced earlier in the year.

Chief executive Ryan Kolln described the quarter as a turning point.

“Q4 was a strong finish to the year for both our China and Global businesses,” Kolln said, pointing to improved execution and stronger demand across Appen’s AI data offerings.

China steps forward as a growth engine

One of the clearest positives in the update was Appen China, which continues to gain scale and consistency.

China revenue climbed 81% year on year to US$32.0 million, while underlying EBITDA improved to US$4.3 million, marking the seventh consecutive quarter of profitability for the division. The business exited the year with an annualised revenue run rate above US$135 million, underpinned by demand for generative AI training data from technology companies expanding overseas.

Kolln said margin expansion and operating leverage were becoming more visible as volumes increased, reinforcing confidence in the sustainability of the growth.

Global business shows signs of recovery

Appen’s Global division also showed a notable rebound, with revenue rising 56% quarter on quarter to US$41.4 million. While still below last year’s levels, profitability improved sharply, with underlying EBITDA lifting to US$10.2 million.

Management attributed the improvement to new project wins in generative AI, including a contract worth more than US$10 million, alongside progress on a US$10 million annualised cost efficiency program.

In simple terms, Appen is doing less low-margin work and more projects that better reflect the value of its data and AI expertise.

Balance sheet adds confidence

The improved operating performance flowed through to cash generation. Appen finished the quarter with US$59.8 million in cash, up from US$50.9 million three months earlier, and recorded US$14.7 million in net operating cash inflow.

That stronger balance sheet provides breathing room as the company continues to reposition itself in a competitive AI services market.

Why the market reacted

Thursday’s rally reflects a reset in expectations. After several difficult years marked by revenue volatility and earnings pressure, Appen has delivered clear evidence that its strategy is gaining traction.

With generative AI demand accelerating globally, the market is now reassessing Appen’s ability to participate profitably in that growth.

The challenge ahead is consistency. But for now, Appen has given the market something it has not seen in a while: momentum backed by numbers.