New blood for AI annotator Appen as longstanding CEO quits

New blood for AI annotator Appen as longstanding CEO quits

Incoming Appen CEO Armughan Ahmad

After a tough year that included an abandoned takeover bid and missed earnings targets, artificial intelligence data sourcer and organiser Appen (ASX: APX) has announced a new path ahead with the shock resignation of long-time CEO Mark Brayan.

Appen, a company that has seen its shares implode from highs above $40 in 2020 to a five-year low of $2.38 last month, has appointed Canada-based technology industry executive Armughan Ahmad as Brayan’s replacement to lead the company’s aspirational growth strategy detailed earlier this year.

Ahmad, managing partner of digital at KPMG in Canada, will assume the role no later than 30 January, while Brayan will stay on at the company until 28 February 2023 to ensure a smooth transition.

The leadership change, which has not been previously flagged by the company, comes at a critical time for Appen as it faces competitive headwinds and a slowdown in spending by some of its major customers which include Salesforce, Boeing, Adobe, Bloomberg, Microsoft and Google.

The spending hit stems from privacy changes introduced by Apple that restrict how much data can be obtained by third parties from apps and browsers. This information was used by the likes of Google and Facebook to create targeted advertising campaigns for customers.

The uncertainty created by the move was one of the reasons analysts say that Canada’s Telus abandoned its $9.50-a-share takeover bid for Appen earlier this year. Appen relies heavily on major tech companies for its business.

The Canadian IT company’s takeover had valued Appen at $1.2 billion, but the market has since savagely marked the company down to about $320 million amid a disappointing half-year result announced in August.  

The departure of Brayan, who has led the company for the past seven years, is understood to have been driven by a desire for leadership renewal at the company after underlying EBITDA slumped 66 per cent to US$9.6 million ($14 million) in the six months to the end of June. Group revenue fell 7 per cent to $US182.9 million ($267.8 million) over the period amid a downturn led by some of its biggest customers.

Appen’s strengths lie in its delivery of data for the AI lifecycle with the company noting that it helps its customers ‘reduce bias in AI by testing their language model with a diverse crowd’.

The process, in part, involves more than one million people around the world being paid to perform web searches from which Appen collates data around their responses for AI purposes.

Appen has recorded annualised revenue growth of 40 per cent since 2016, with revenue in China surging 422 per cent in FY21.

While Brayan has been a big part of that journey, overseeing a rise in revenue from about US$60 million ($87.86 million) in 2015 to more than US$447 million ($654.5 million) last financial year, the company is now pinning its hopes on Ahmad to get it back on track.

Ahmad has more than 25 years of global experience in the technology industry, leading product, sales, and services organisations at KPMG, Dell Technologies and Hewlett Packard.

“As we scale Appen to its next phase of growth, the board felt it was important to appoint a successor with deep technology expertise in international markets,” says Appen chairman Richard Freudenstein.

“Armughan is an outstanding candidate and is ideally suited to be the next CEO of Appen. He is one of the technology industry’s most successful and respected executives having worked in both technology product companies in Dell Technologies, Hewlett Packard and also in the services industry transformation at KPMG.

“Armughan has an incredible track record of driving growth and operational excellence, he is passionate about customers and partners, strongly believes in company culture, and is focused on delivering best-in-class innovation.”

The departure of Brayan is seen as the latest step in a broader overhaul of Appen’s leadership team over the past year.

In August, Appen’s senior vice-president and global general manager Tom Sharkey left the company. Brayan at the time said the move was in support of the company’s transformation. Sharkey’s replacement, Sean Carithers, was announced in November, the same time as Mini Peiris, a Silicon Valley transformation specialist, joined the board as a non-executive director.

Ahmad says he is confident that Appen has the potential to grow its business and service growing demand for AI technology.

“Appen sits at the intersection of how the world is driving human progress forward by leveraging AI to gain further insights into their data and deliver new customer and employee experiences,” he says.

“The impact of AI on every part of our daily lives is changing at an exponential rate. The world needs an AI that is trusted and benefits people and society.

“In my due diligence with industry partners and customers, I’ve found that Appen has the best technology in its category and delivers AI products and services to many of the world’s largest tech companies and Fortune 500 customers globally.”

If the company’s share price is any guide, Ahmad has a way to go to get Appen back on track. The lumpy road ahead is reflected in the company’s decision to no longer offer shareholders annual earnings guidance.

Instead, Appen is taking a longer-term view. The company has affirmed it will ‘aspire’ to at least double FY21 revenue of US$447 million and an EBITDA margin of 20 per cent by FY26.

This target was set by Brayan in May at the company’s AGM. That may all change when Ahmad steps into the CEO’s chair next month.

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