Appen delivers full-year result broadly in line with guidance.

Leading global provider of high-quality language data and services to major technology companies and government agencies, Appen (ASX: APX) has delivered a full-year profit of $10.6 million from revenues of $111 million for the 12 months to December 31, 2016.

This was only slightly shy of Bell Potter’s profit forecast of $10.9 million, and given that management has guided to EBITDA growth in the order of mid to high teens in fiscal 2017 the focus is likely to be more on the coming 12 months.

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Having only listed on the ASX in 2015, Appen has made substantial inroads in a short period of time, having forged relationships with global technology giants and consistently under promised and outperformed.

Appen’s customers include eight of the top 10 global technology companies, including the most prominent social media players.

The company’s consistent outperformance has been reflected in its share price which increased from 56 cents on the day it listed to an all-time high of $3.62 in August 2016, representing a gain of 550%.

Appen has traded in a relatively tight range between $2.75 and $3.00 in 2017, and it is difficult to see this result triggering any sharp share price variation, unless investors were factoring in another period of outperformance.

Headline growth numbers were impressive with underlying revenue, EBITDA and net profit up by 33%, 22% and 23% respectively. Importantly, revenue growth was in part organic, but there were also contributions from new clients.

The only flaw in the result was a slight contraction in margins due to the impact of volume discounts on its Content Relevance business.

Summing up the result, Appen’s chairman, Chris Vonwiller said, “This is another outstanding result for Appen as we have built on last year’s strong performance by focusing on our customers and delivering quality work which has led to revenue growth from new projects and existing programs”.

In discussing industry conditions, Chief Executive, Mark Brayan noted the increasing use of machine learning and artificial intelligence as key drivers of demand for quality data, effectively providing new opportunities for Appen going forward.

Natural language processing, machine learning and artificial intelligence is being increasingly harnessed to automate business processes and personal tasks. These align with Appen’s core product offerings.

The group is debt free with a strong balance sheet and ample cash reserves, leaving it well-positioned to fund internal growth and/or make acquisitions.

Year-to-date revenue plus orders in hand currently total $70 million, more than 60% of last year’s full-year revenues. Management’s full-year EBITDA growth guidance implies a mid-range of $20.1 million, broadly in line with Bell Potter’s fiscal 2017 forecast of $20.7 million.