Appen (ASX:APX) Limited, a provider of AI training and human data for generative and frontier AI models, reported revenue of US$73.9m for the third quarter of FY26, the quarter ended 30 September 2026. The company said that was 34% higher than the prior corresponding period and 13% above the second quarter. Year-to-date revenue was US$193.8m, up 23%. All figures are in US dollars and the FY26 numbers are unaudited, according to the quarterly activity report released on 29 October 2026.

Earnings and margins

Underlying EBITDA before foreign exchange effects was US$10.3m for the quarter, US$9.3m higher than a year earlier, and US$15.7m year to date. Appen said these figures exclude restructuring and transaction costs. Gross margin was 43.3%, which the company said was 410 basis points higher than the prior corresponding period.

Appen China and Appen Global

Appen China generated revenue of US$46.1m, up 61% on the prior corresponding period, with EBITDA of US$6.7m, a 14.5% margin. The company said the annualised revenue run-rate for September exceeded US$190m. It also noted that China margins were affected in the quarter by the Mid-Autumn Festival, lower utilisation and the timing of government rebates.

Appen Global recorded revenue of US$27.9m, up 5%, and returned to profit with EBITDA of US$5.6m, compared with a US$1.3m loss in the second quarter. Appen said seven of the eight largest US-based AI model builders are now customers, with two frontier model builders added during the quarter. It cautioned that new frontier-lab projects are expected to add only modestly to FY26 revenue. The company also said that growth outside its largest customer was 70% quarter on quarter, although the largest Appen Global client remains significant to results.

Guidance and cost programme

Appen maintained its FY26 guidance of revenue between US$270m and US$300m and an underlying EBITDA margin of roughly 5% to 10%. The company said current visibility points to the lower half of the revenue range and the upper half of the margin range. It chose to keep the ranges rather than narrow them because projects can begin at short notice and at scale.

Separately, Appen is working through about US$12m of annualised cost efficiencies at Appen Global. It expects to deliver around 70% of that by the end of FY26 and the balance by the end of the first quarter of FY27.

Cash position

Cash on hand was US$42.6m at 30 September 2026, compared with US$44.7m at 30 June 2026. Operating cash flow was positive US$4.0m for the quarter, against US$7.9m used in the second quarter, and was around break-even year to date at negative US$0.1m. Investing outflows were US$5.1m, including US$3.9m of capitalised intellectual property spending. The company reported no undrawn financing facilities.

Points to watch

The report highlights several dependencies. Revenue remains concentrated among a small group of large AI customers, and the timing of new projects can be difficult to predict. Guidance sits in the lower half of the revenue range on the company's own assessment, so delivery will depend on how much work from newly added customers is recognised before the end of the financial year.

Appen's own statements point to the delivery of the Appen Global cost programme and the conversion of recent customer wins as the main items to track through the remainder of FY26 and into the first quarter of FY27. The company has not provided any new guidance beyond the ranges set out in this report.

The quarter shows both divisions contributing to growth, with Appen China providing most of the revenue increase and Appen Global returning to positive EBITDA after a loss in the second quarter. The company continues to describe its position as one of managing concentration and timing risk, since projects can ramp up or pause quickly and the cash balance of US$42.6m is the only liquidity reported.