Highlights

  • Appen generated US$73.9 million Revenue in Q3 FY26, up 34% on the prior corresponding quarter.
  • Underlying EBITDA before foreign exchange rose to US$10.3 million, from US$1.0 million a year earlier.
  • Appen China revenue climbed 61% to US$46.1 million, with its annualised run-rate exceeding US$190 million in September.
  • Two leading US frontier AI model builders joined the customer base, although their FY26 revenue is expected to be modest.

Demand from AI model builders in both China and the United States lifted Appen Limited (ASX:APX) to US$73.9 million in revenue for the September 2026 quarter, a 34% increase on a year earlier and 13% higher than the June quarter.

The provider of data services for Training and evaluating AI models also reported a sharp rise in underlying EBITDA, while maintaining its guidance for FY26, the year ending 31 December 2026.

Margins Widen Across the Group

Gross Margin for Q3 FY26 reached 43.3%, up 410 basis points from 39.2% a year earlier. Underlying EBITDA before foreign exchange, which excludes restructure and transaction costs, increased to US$10.3 million from US$4.4 million in the June quarter and US$1.0 million in the prior corresponding period.

For the nine months to 30 September 2026, revenue was US$193.8 million, up 23%, and underlying EBITDA was US$15.7 million, compared with a loss of US$1.2 million a year earlier. These year-to-date figures are unaudited.

China Business Powers Ahead While Global Returns to Profit

Appen China delivered revenue of US$46.1 million, up 61% on the prior corresponding quarter, with underlying EBITDA of US$6.7 million and a 14.5% margin. Growth came from generative AI projects, including work for Chinese technology companies expanding overseas, and higher-margin prebuilt datasets. EBITDA eased slightly from the June quarter because of the Mid-Autumn Festival, government rebates that applied only in Q2 and higher growth-related costs.

The Global division grew revenue 17% on the June quarter to US$27.9 million and swung to underlying EBITDA of US$5.6 million from a loss of US$1.3 million. Revenue outside its largest customer rose 70% quarter on quarter, while operating expenses fell 19% year on year to US$10.8 million.

New Frontier AI Customers Broaden the Base

During the quarter, Appen added two leading US-based frontier AI model builders, including a former large customer. Initial projects have started, but management expects their FY26 revenue contribution to be modest. The company now serves seven of the eight largest US-based AI model builders and has a project pipeline for the eighth.

Its work increasingly spans coding, STEM, finance and robotics alongside established speech and search relevance services.

FY26 Guidance Held With a Lean Towards Margin

Appen maintained FY26 revenue guidance of US$270 million to US$300 million, now likely in the lower half of the range, and an underlying EBITDA margin of about 5% to 10%, likely in the upper half. Management is targeting about US$12 million in additional annualised cost savings from greater use of AI in operations, with roughly 70% expected to be executed by the end of FY26 and the remainder by the end of Q1 FY27.

Cash stood at US$42.6 million at 30 September 2026, down from US$44.7 million at 30 June, and the company has no borrowings.

Shares were priced at A$1.18 on 2 November 2026, up 11.85% on the day, giving a Market Capitalisation of A$317.44 million. The stock was up 52.26% over 12 months.