Highlights

  • Group revenue reached US$73.9 million for the September quarter, up 34% on the prior corresponding quarter and 13% above the June quarter.
  • Appen Global returned to underlying EBITDA of US$5.6 million after a US$1.3 million loss in Q2, with operating costs down 19% year on year.
  • Two leading US-based frontier AI model builders, including a former major customer, joined Appen's active roster, bringing its US frontier customer count to seven of the eight largest.
  • FY26 guidance is maintained at US$270–300 million revenue, with Appen now expecting to land in the lower half of the revenue range and the upper half of the 5–10% EBITDA margin range.

Seven of the eight biggest US frontier AI model builders are now Appen customers — and the eighth is in the pipeline. Appen (ASX:APX) delivered its strongest quarterly revenue in several periods as its September 2026 update showed both divisions contributing positive EBITDA, two new frontier AI customers onboarded, and a cost structure that has been cut meaningfully. The result reflects a business that has undergone significant restructuring while demand for AI training data has expanded sharply with the rise of generative AI development.

Two Divisions Both Contributing

Group revenue was US$73.9 million, up 34% on the prior corresponding quarter and 13% above the June quarter. Gross margin rose to 43.3% from 39.2% a year earlier, reflecting both product mix and cost actions. Year-to-date revenue is US$193.8 million and underlying EBITDA is US$15.7 million.

Appen China generated US$46.1 million of revenue, up 61% on the prior year, with underlying EBITDA of US$6.7 million and a margin of 14.5%. The company attributes growth to generative AI projects — including support for Chinese technology companies expanding internationally — and to higher-margin prebuilt datasets that do not require the same labour-intensive annotation workflows as bespoke projects.

Appen Global posted revenue of US$27.9 million, up 17% on the June quarter and 5% on the prior year. Underlying EBITDA was US$5.6 million, compared with a US$1.3 million loss in Q2. Operating expenses were US$10.8 million, down 19% year on year. Revenue from customers outside the largest grew 70% on Q2, indicating broader demand is developing alongside the concentrated frontier AI segment.

Seven of Eight Frontier AI Customers

During the quarter, Appen added two leading US-based frontier AI model builders. One of them is a former major customer that had previously reduced its engagement and has now returned with new project work. The company now counts seven of the eight largest US-based frontier AI model builders among its active customers, with a pipeline engagement under way for the eighth.

Revenue from the two new customers is expected to be modest in FY26, as initial projects are in early stages. About US$12 million of incremental annualised cost savings announced at the half-year are on track, with 70% expected to be executed by the end of FY26 and the remainder by the end of Q1 FY27, through greater use of AI in Appen's own operations — a model of using AI to serve AI developers.

Cash and FY26 Guidance

Net operating cash flow was US$4.0 million for the quarter, compared with an outflow of US$7.9 million in Q2, supported by receipts from customers of US$64.4 million. Closing cash was US$42.6 million. The company reports no external financing facilities. Capitalised product development accounted for US$3.9 million of investing outflow during the quarter.

FY26 guidance of US$270–300 million revenue and underlying EBITDA margin of around 5–10% is maintained. On current visibility, Appen expects to finish in the lower half of the revenue range and the upper half of the EBITDA margin range. The company keeps ranges wide because new large-scale AI projects can start at short notice and ramp quickly. These remain management forecasts and not guarantees.