Appen's torrid run in the midst of an AI boom continues as the data company records a nine-fold increase in underlying losses for the half.
The company on Monday reported its underlying net loss for the first six months of 2023 widened to $US34.2 million ($A53.3 million) from $US3.8 million the year prior.
The Sydney-based firm provides cleaned-up data sets for artificial intelligence companies to train their models on, but despite a surge in interest in generative AI platforms like ChatGPT, Appen's revenue is drying up.
Group revenue fell 24 per cent to $US138.9 million, which it blamed on customers optimising their spend, cutting costs and re-evaluating their AI strategies in response to external headwinds.
"The first half results reflect a challenging external environment," Appen chief executive Armughan Ahmad said in an announcement to the ASX.
Appen once traded above $43 per share on the Australian stock exchange but has seen its valuation plummet 90 per cent in three years.
The former tech darling's fortunes contrast with companies riding the generative AI wave like Google parent Alphabet and Nvidia.
The latter, a supplier of AI software and hardware, has experienced an almost quadrupling of its share price in the same period to become the world's sixth-largest company by market capitalisation.
Mr Ahmad cited a broader technology slowdown among the challenges faced by the company.
In response Appen is embarking on a $US46 million cost-cutting blitz, of which it says 63 per cent has already been achieved.
Mr Ahmad promised to "reset" Appen, with new generative AI-focused products in the pipeline to exploit the burgeoning trend.
The company inked a million-dollar deal with Nvidia in May, but Mr Ahmad conceded the partnership is in its early days and yet to offset declines in other areas.
Underlying earnings before interest, tax, depreciation and amortisation swung from $US9.6 million to a $US15.7 million loss - when excluding currency exchange variations - as the margin fell to minus 11.3 per cent.
Appen pledged to refocus its investment on quality over quantity. By targeting a smaller set of areas with higher growth potential, the company hopes to simplify its business and drive down costs to achieve EBITDA profitability by the end of its financial year.
The company will also slim down its management structure with Quadrant general manager Mike Davie picking up the chief product officer role, and chief revenue officer Andrew Ettinger taking on sales and marketing responsibilities.
As of June 30, Appen had a cash balance of $US55.2 million and no debt.
RBC Capital Markets analyst Garry Sherriff said the revenue decline was not much of a surprise, with analyst consensus predicting a similar drop. But a roughly 16 per cent downward revision in the forecast for second-half revenue will weigh down the share price, he said.
Appen shares had plummeted 27 per cent to $1.64 by noon.
