Appen Limited (APX) 2024年年度報告「ASX」.pdf

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1、2024 Annual ReportOverview02 About Appen04 2024 at a glance06 Chair message08 CEO messageValue drivers10 How we create value 12 Technology,processes,systems 15 Crowd,social and environment 22 Customer and brand 25 Our people 28 FinancialGovernance33 Identifying and managing risks44 Our approach to g

2、overnance46 Board of Directors48 Executive teamDirectors report52 Directors report 55 Remuneration reportFinancial report73 Financial report118 Directors declaration119 Independent auditors reportOther information123 Additional information126 Materiality assessment127 Prioritised United Nations Sust

3、ainable Development Goals128 Non-financial data metrics131 Corporate directoryAppen LimitedABN 60 138 878 298All amounts in this report are in United States(US)dollars unless otherwise stated.ContentsAbout this reportThis Annual Report combines our financial and non-financial performance,linking env

4、ironmental,social and governance matters to our strategy and business performance.In preparing our Annual Report,we have used the International Integrated Reporting Council(IIRC)Framework,the Sustainability Accounting Standards Board(SASB)and the Task Force on Climate-related Financial Disclosures(T

5、CFD)to guide our disclosures on how Appen creates value for shareholders and which topics are most material to our business.Underlying results are alternative measures to those recommended under International Financial Reporting Standards(IFRS)and are used by management to assess the underlying perf

6、ormance of the business.Underlying results have been derived from statutory measures contained in the financial statements but have not been subject to audit.A reconciliation between statutory and underlying results is detailed on page 32 of this report.Sustainable Development goalsWe support the Un

7、ited Nations Sustainable Development Goals(SDGs),and by doing our part to contribute to the success of the SDGs we believe we can help contribute to a more sustainable future.On page 127 we have identified five SDGs as priority SDGs where we believe we can best contribute.Reporting currencyAppen rep

8、orts its financial results in United States(US)dollars.Forward-looking statementsThis report contains forward-looking statements.These statements involve subjective judgement and analysis and are subject to significant uncertainties,risks,and contingencies,many of which are outside the control of Ap

9、pen.In particular,they speak only as of the date of this report,they are based on particular events,conditions or circumstances stated in the materials,they assume the success of Appens business strategies,and they are subject to significant regulatory,business,competitive,currency and economic unce

10、rtainties and risks.Except as required by applicable regulations or by law,Appen does not undertake to publicly update or review any forward-looking statements,whether as a result of new information or future events.Past performance cannot be relied on as a guide to future performance.Material issue

11、sA matter is considered material if senior management and the board believe it could significantly impact the value created and delivered in the short,medium,and long term.We identify and capture material issues through stakeholder engagement and our annual risk and materiality assessment.The outcom

12、e of these processes and our material issues are described on page 126.Operating and Financial ReviewThe sections of this report from pages 6 to 45 titled the Chair message,CEO message,How we create value,Identifying and managing risk and Our approach to governance,comprise our Operating and financi

13、al review(OFR),and form part of the Directors report.1Real world AItransforming the lives of our customers and crowdAppen 2024 Annual Report1AppenAboutAppen is a global market leader in data with expertise in deep learning and generative AI.With almost three decades of experience in data sourcing,da

14、ta annotation,and model evaluation by humans,Appen specialises in developing highquality data that enable the training,finetuning,and deployment of world-class AI models and applications.Our expertise includes a global crowd of more than 1 million skilled contractors who speak over 500 languages 1,i

15、n over 200 countries 2,with over 100 domain specialisations,and our advanced AI-assisted data annotation platform.Our products and services serve over 80%of the worlds leading LLM foundation model builders and cutting-edge AI industry applications of traditional AI and machine learning models and ge

16、nerative AI applications.In 2024,Appen continued its focus on capturing growth in the generative AI space,successfully expanding from our traditional market to capture new opportunities in generative AI.Appens growth vision captures a full set of AI data services for deep learning and generative AI,

17、enabling expansion of our addressable market and deliver a strong return on investment.1 Self-reported.2 Self-reported,includes territories.Appen AI data solutions supportCore AI lifestyle servicesAI SolutionsPlatform capabilitiesLanguageEnglishGermanSpanishFrenchHindiMandarinPortugueseJapanese500+O

18、thersGlobal delivery modelsAppen CrowdGen PlatformAppen Secure WorkplaceClient Internal TeamsLLM&GenerativeData AnnotationQuality Assurance&Workflow ManagementAI Chat Feedback(Model API)GenAI Evaluation&A/B TestingModel MateAI DetectorText,Audio,Image,Video,DocumentMultimodal DataTest QuestionsQuali

19、ty&Productivity Monitoring&DashboardsValidatorsCustom Quality Assurance WorkflowsPersonalized recommendationsProduct CataloguingAd RelevanceNews Feed EvaluationContent RelevanceSearch EnginesContent ModerationSentiment AnalysisMetaverse AR/VRAutonomous VehiclesComputer Vision ModelsTranslation&Local

20、izationAudio&Speech ModelsMultimodal AI ModelsLLM Foundation ModelsMultimodal Generative AIEnterprise LLM CustomizationEnterprise LLM Red TeamingData Sourcing Custom Data Collection Off-the-shelf or Prelabeled DatasetsData Preparation Data Annotation(Traditional AI/ML,Relevance)Supervised Fine Tunin

21、g(General,Multilingual,Domain-Specific)Human Preference Ranking(RLHF/DPO)Model Evaluation Model Evaluation A/B Testing Benchmarking Red Teaming Application and User Testing2We unlock the power of AI for good to build a better worldOur valuesOur purposeCustomer obsessedWe believe our customer relatio

22、nships are the ultimate differentiator and the foundation of our success.Action orientedWe take decisive action,fast pace and make informed decisions quickly to drive progress and achieve results.Courage to innovateWe have the courage to innovate and foster breakthrough thinking and make it our engi

23、ne for growth,success,and progress.Winning togetherWe foster teamwork and collaboration,celebrate each others success,and work together towards common goals.3Appen 2024 Annual Report2024at a glance1 Excludes the impact of Google contract termination.Revenue(US$M)$234.3M 14.2%from$273.0M in FY23Adjus

24、ted revenue 1$220.9M 16.0%from$190.4M in FY23Underlying EBITDA$7.8Mcompared to$(24.5)M in FY23 57Customer NPS from 35 in FY23 26LLM model builders as customers 80%Worlds leading LLM foundation model builders as customersUnderlying EBITDA excluding FX$3.5Mcompared to$(20.4)M in FY23Underlying NPAT$(1

25、0.5)Mcompared to$(52.8)M in FY23Statutory NPAT$(20.0)Mcompared to$(118.1)M in FY23FINANCIALCUSTOMERS4 79%Employee engagement from 75%50%Female representation amongst our board 23%Female representation amongst our senior leadership 33Crowd NPS from 27GlobalEthical and Modern Slavery PolicyEthical AIt

26、hrough our crowd code of ethics$19.6Min product development99.9%uptime across all platformsISO 27001certifications upgraded to latest editionCrowd experience Improving with technology upgradesSignatory to theUN Global CompactNet Zeroby 2030OUR PEOPLEOUR CROWD,SOCIAL&ENVIRONMENTTECHNOLOGY5Appen 2024

27、Annual Report 79%Employee engagement from 75%50%Female representation amongst our board 23%Female representation amongst our senior leadership 33Crowd NPS from 27GlobalEthical and Modern Slavery PolicyEthical AIthrough our crowd code of ethics$19.6Min product development99.9%uptime across all platfo

28、rmsISO 27001certifications upgraded to latest editionCrowd experience Improving with technology upgradesSignatory to theUN Global CompactNet Zeroby 2030OUR PEOPLEOUR CROWD,SOCIAL&ENVIRONMENTTECHNOLOGY5Appen 2024 Annual ReportImproved financials through FY24 For the 2024 financial year,Appen announce

29、d a Statutory Loss of($20.0)million,an improvement of$98.1 million compared to the prior year.Total operating revenue declined 14.2%to$234.3 million and Appen recorded underlying EBITDA(before foreign exchange)of$3.5 million,compared to a loss of($20.4)million in the prior year.Revenue was significa

30、ntly impacted by the loss of Google in Q1.Non-Google revenue in 2024 grew 16.0%compared to the prior year.Appen experienced strong growth in H2 with non-Google revenue for H2 up 36.1%compared to H2 2023.Pleasingly,China annual revenue grew 70.7%to$58.9 million,largely due to generative AI opportunit

31、ies.Global Product experienced strong growth due to Global customers utilising Appens software platform(ADAP).Revenue grew 221.9%to$31.3 million compared to 2023.Appen remained focused on maintaining adequate balance sheet flexibility.In support of working capital requirements,Appen raised A$65 mill

32、ion during the year.A$50 million fully underwritten institutional placement completed on 14 October 2024,and A$15 million Share Purchase Plan completed on 7 November 2024.At the end of the year,Appen had$54.8 million(equivalent to A$88.3 million)1 in cash.Once again,the Board made the decision not t

33、o declare an interim or final dividend in 2024 to ensure an appropriate allocation of capital.2024 was a pivotal year for Appen,driven by generative AI as a key growth engine.Disciplined cost management and sharpened focus on execution have resulted in improved growth and profitability throughout th

34、e year.With a positive market outlook and a strong foundation,Appen is ready to seize future opportunities and deliver long-term value for shareholders.Returning 6Chair message1 31 December 2024 exchange rate AUD/USD 0.6204.to profitable growth6Significant progress to reset AppenThroughout 2024,Appe

35、n was highly focused on resetting the business to achieve profitability.In response to Googles decision to terminate its global services contract by 19 March 2024,Appen reduced the cost base by$13.5 million.At the beginning of 2023,we began a transformation process to reset Appen to better capture t

36、he growth in generative Al and improve performance of our core business.This included a new strategy to deliver long term growth and revenue diversification along with a$60 million cost reduction program.Some of the key areas identified for improvement included a leadership and strategy refresh,oper

37、ational improvements to project delivery and crowd management and strengthening of Appens sales and marketing functions.We remain committed to sizing our cost base in line with our revenue opportunity.Change in leadershipOn 5 February 2024,we appointed Ryan KolIn as our new CEO and Managing Director

38、.In his first year as CEO,Ryan has led Appen to capitalise on the generative AI market opportunity while delivering improved financial results.His focus on operational excellence and cost controls have been instrumental to the performance of the business.Board governanceThere have been no changes to

39、 the Board in 2024.Vanessa Liu and Robin Low were re-elected to the Appen Board by shareholders at our AGM held in May 2024.Executive remunerationAppens short-term incentive(STI)scorecard for key management personnel represents a combination of financial and non-financial metrics.Appen will always r

40、egard its financial performance as paramount.Given the 2024 focus on resetting the business to achieve profitability,the STI weighting for the financial performance metrics increased to 80%from 70%.Non-financial metrics reflect Appens focus on its customers,crowd and people and are assigned an STI w

41、eighting of 20%.The 2024 STI equates to 85.9%of the maximum payable,with all measures above the minimum payout threshold.I would encourage shareholders to read the remuneration report,commencing on page 55.Sustainable operationsOur commitment to our stakeholders including our crowd,our customers and

42、 people remain as strong as ever.We recognise the value of crowd and the benefit it provides to our customers.This year we undertook a significant digital transformation to improve our underlying crowd management platform.Crowd NPS improved due to the platform and increasing earning opportunities as

43、 our business grew throughout the year.The high ethical treatment of our crowd remains a key priority.We stand by our commitment to the crowd as defined in our Crowd Code of Conduct,and our Global Ethical Sourcing and Modern Slavery Policy.Promoting a diverse and inclusive culture across all aspects

44、 of Appens business has been a long-held priority.In 2024 Appen achieved 57%female representation among its employees.We maintained female representation of 50%among directors,and female representation among the senior leadership team increased to 23%from 22%.Appen remains committed to supporting in

45、ternational initiatives to transition to net zero emissions.We have completed our initial Net Zero Roadmap and have committed to net zero by 2030.We continue to work towards assurance for our emissions data and remain committed to the Science Based Target initiative.ClosingWe are pleased with the pr

46、ogress made throughout 2024 to reset the business and return to profitable growth.There is significant opportunity for Appen,largely driven by the potential of generative AI opportunities.Our constant focus remains on improving the companys performance and delivering better returns for shareholders.

47、We thank shareholders for their ongoing support.RICHARD FREUDENSTEINNon-executive Chair7Appen 2024 Annual ReportPositioned for CEO message2024 has been a transformative year for both Appen and the AI ecosystem we serve.Through our focus on operational efficiency,innovation,and data quality fundament

48、als,we have strengthened our business and are well positioned for sustained growth.Market Opportunity:The Generative AI RevolutionGenerative AI marks a once-in-a-generation paradigm shift.Machines are evolving from simple search and retrieval capabilities to demonstrating deep understanding and crea

49、tive generation.The applications are vast and powerful,ranging from personalised customer experiences to complex content creation.At the heart of this revolution lies high-quality data a critical foundation that we provide.This is an incredibly exciting time,and we are honoured to play such a pivota

50、l role in shaping this transformative future.2024:Challenges and ResilienceThe past few years have tested Appens resilience.We faced reduced spending from a major customer and experienced the financial impact of Googles decision to terminate their contract in early 2024.These challenges required rad

51、ical changes to our business,including disciplined cost management.We took decisive steps to streamline operations,significantly reduce expenses,and improve financial efficiency.At the same time,we maintained our commitment to prioritising data quality and building a team capable of delivering excel

52、lence.Our efforts paid off.In 2024,we successfully passed several rigorous customer assessments for generative AI projects.We also reached new benchmarks in data quality for our traditional work with a major customer.By shifting our go-to-market strategy to prioritise LLM model builders the primary

53、drivers of market spending we grew revenue and positioned ourselves to capture significant growth opportunities.Innovation with ImpactInnovation remains the cornerstone of our success.This year,we enhanced our technology platform to meet the evolving needs of generative AI.Notable improvements inclu

54、ded the onboarding of domain experts and significant advancements to our AI Data Platform(ADAP).These updates allowed us to tackle the sophisticated demands of generative AI projects with precision and efficiency.ADAP has become a cornerstone of our strategy,enabling scalable,accurate,and timely del

55、ivery of complex data tasks.sustained growth82024 Outcomes:Growth Amidst ChangeOur full-year operating revenue for 2024 was$234.3 million,reflecting a decline of 14.2%compared to 2023,inclusive of Googles departure.However,when excluding Google,revenue grew 16.0%year-over-year.Quarterly performance

56、showed consistent improvement,with Q3 and Q4 revenue(excluding Google)increasing 34.6%and 37.2%respectively compared to the prior year.Generative AI projects emerged as a key growth driver,contributing 35%of total revenue in Q4,up from 9%in Q1.At the divisional level,our Global division(excluding Go

57、ogle)and China were standout performers.Revenue from Global increased 14.6%,while China achieved a breakout year with revenue reaching$58.9 million an impressive 70.7%growth over 2023.We solidified our position as the largest AI data company in China,with run-rate revenue nearly double that of our n

58、earest competitors.Alongside revenue growth,we achieved significant cost optimisation.Compared to 2023,employee expenses 1 were reduced by 29.2%,and all other expenses 2 were reduced by 19.6%.This combination of top-line growth and disciplined cost management led to a turnaround in profitability.We

59、improved underlying EBITDA(before foreign exchange)from a loss of$20.4 million in 2023 to a gain of$3.5 million in 2024,with quarterly profitability throughout the year rising from a$2.9 million loss in Q1 to a$4.7 million gain in Q4.Strengthening Our Balance SheetIn October 2024,we raised A$65 mill

60、ion in capital to bolster our balance sheet and provide additional liquidity to fund working capital.This capital infusion brought our year-end cash balance to$54.8 million(equivalent to A$88.3 million)3,ensuring we are well-positioned to pursue growth opportunities and navigate market dynamics.Stra

61、tegic Focus for 2025As we look to 2025,our focus remains clear:delivering high-quality data that powers cutting-edge AI models.Customers are increasingly demanding faster turnaround times and higher-quality data,which requires seamless integration of our project delivery teams,advanced technology pl

62、atforms,and skilled crowd workforce.Key strategic priorities include:Target Customer Segments:Our efforts will centre on providing high quality data for companies building or utilising leading AI models.The market segments we address will remain the same as 2024,focusing on US hyperscalers,China,gov

63、ernment entities,and other technology enabled enterprises.Technology Evolution:Continuing to advance ADAP to meet the sophisticated requirements of generative AI projects,while enhancing our crowd management platform to support faster ramp times and specialised expertise.Technology is key to our del

64、ivery operations,this is a major focus for 2025,however we will maintain our current spend.Operational AI:Leveraging AI within our operations to drive efficiency in quality assessment,workforce onboarding,and support functions.Talent Development:Investing in our people by fostering growth and attrac

65、ting new talent to meet the evolving demands of the AI landscape.Financial discipline:Continued cost control remains a high priority to deliver profitable growth.Looking Ahead2024 was a pivotal year for Appen.Amid challenges,we demonstrated resilience,adaptability,and an unwavering commitment to exc

66、ellence.As we move into 2025,I am confident in our ability to build on this momentum,drive growth,and deliver exceptional value to our stakeholders.RYAN KOLLN CEO and Managing Director1 Employee expenses per management reporting.Excludes direct project workers included in gross margin calculation(i.

67、e.crowd expenses).2 All other expenses excludes non-cash share based payment expense but all other expenses included in underlying EBITDA before FX.3 31 December 2024 exchange rate AUD/USD 0.6204.9Appen 2024 Annual ReportHow we create valueValue DriverPrincipal risksHow we deliver valueCreating and

68、measuring valueSDGsTechnology,processes systems Investment in technology,innovation and transformation Compliance with security,privacy and other data regulations Through our technology and innovative solutions,we look to streamline and automate processes so we can deliver AI training data at scale

69、Our engineering,privacy,and cyber security teams work to ensure that data availability targets are met,and data is protected and secure Invested$19.6 million in technology and systems,including enhancements to ADAP and a new crowd management platform(CrowdGen)to support LLM products,and better suppo

70、rt our crowd and customers Further development of China MatrixGo platform releasing many new features enhancing the capabilities of annotation tools,and improved user experience and crowd management Met or exceeded 99.9%uptime across all our platforms Maintained certification for ISO 27001 and SOC 2

71、,including upgrading to latest ISO 27001 certificationsPages 1214Global crowd Crowd conditions Crowd supply meets customer demand We are committed to treating our crowd fairly in accordance with our Crowd Code of Ethics Whistleblower and Speak Up Policy is available to support crowd grievances Our I

72、mpact Sourcing strategy provides jobs to people who have limited prospects for secure employment We provided flexible,work-from-home opportunities to our global crowd of one million+contractors We help make AI ethical and fair through our Crowd Code of Ethics Enhanced crowd experience with the launc

73、h of CrowdGen a next-generation crowd management platform Prioritisation of health and wellbeing via wellness resources,counselling services,and flexible work optionsPages 1521Social and environment Compliance with legal,statutory and ethical obligations Environmental,social and governance(ESG)risks

74、 and performance We are taking steps to reduce the impact of our operations on the environment Our platform removes traditional barriers to work and increases global participation and representation in the development of emerging technologies We are committed to achieving fair AI and creating respon

75、sible AI standards Continued disclosure of scopes 1,2 and 3 and commenced work on assuring the data Continued implementation of our Net Zero Roadmap and working towards net zero emissions across operations by 2030 Reporting on progress against United Nations Global Compact commitmentsPages 1521Custo

76、mer and brand Changing customer strategy and needs Ability to execute on operational requirements We deliver high-quality data at speed for our customers and provide a superior customer experience Our LLM capabilities provide solutions for customers across the core AI data lifecycle(data sourcing,da

77、ta preparation,model evaluation)Constantly monitoring relevant market and customer trends to meet the evolving needs of customers Improved customer satisfaction with a significant uplift in our Net Promoter Score Enhanced the customer experience through the launch of many new ADAP features We demons

78、trated leadership in promoting responsible and ethical AI which helps to enhance our brandPages 2224Our people Talent strategy and employee value proposition Managing a culture of growth through change By focusing on making Appen a great place to work and creating a culture where our people can thri

79、ve,grow and feel valued Investing in our people and HR systems to build a workforce for the future and optimise the employee experience Embedding diversity principles across our business via our Diversity and Inclusion policy We have a target of 30%female representation of women in senior management

80、 positions and on the board.We exceeded this target at board level Continue to respond to employee feedback to drive future engagement scores higherPages 2527Financial Strategic direction of the business Financial sustainability We aim to grow the business and to deliver increased revenue and earnin

81、gs to support returns forshareholders Capture the potential of generative AI10Creating and measuring valueSDGsTechnology,processes systems Investment in technology,innovation and transformation Compliance with security,privacy and other data regulations Through our technology and innovative solution

82、s,we look to streamline and automate processes so we can deliver AI training data at scale Our engineering,privacy,and cyber security teams work to ensure that data availability targets are met,and data is protected and secure Invested$19.6 million in technology and systems,including enhancements to

83、 ADAP and a new crowd management platform(CrowdGen)to support LLM products,and better support our crowd and customers Further development of China MatrixGo platform releasing many new features enhancing the capabilities of annotation tools,and improved user experience and crowd management Met or exc

84、eeded 99.9%uptime across all our platforms Maintained certification for ISO 27001 and SOC 2,including upgrading to latest ISO 27001 certificationsPages 1214Global crowd Crowd conditions Crowd supply meets customer demand We are committed to treating our crowd fairly in accordance with our Crowd Code

85、 of Ethics Whistleblower and Speak Up Policy is available to support crowd grievances Our Impact Sourcing strategy provides jobs to people who have limited prospects for secure employment We provided flexible,work-from-home opportunities to our global crowd of one million+contractors We help make AI

86、 ethical and fair through our Crowd Code of Ethics Enhanced crowd experience with the launch of CrowdGen a next-generation crowd management platform Prioritisation of health and wellbeing via wellness resources,counselling services,and flexible work optionsPages 1521Social and environment Compliance

87、 with legal,statutory and ethical obligations Environmental,social and governance(ESG)risks and performance We are taking steps to reduce the impact of our operations on the environment Our platform removes traditional barriers to work and increases global participation and representation in the dev

88、elopment of emerging technologies We are committed to achieving fair AI and creating responsible AI standards Continued disclosure of scopes 1,2 and 3 and commenced work on assuring the data Continued implementation of our Net Zero Roadmap and working towards net zero emissions across operations by

89、2030 Reporting on progress against United Nations Global Compact commitmentsPages 1521Customer and brand Changing customer strategy and needs Ability to execute on operational requirements We deliver high-quality data at speed for our customers and provide a superior customer experience Our LLM capa

90、bilities provide solutions for customers across the core AI data lifecycle(data sourcing,data preparation,model evaluation)Constantly monitoring relevant market and customer trends to meet the evolving needs of customers Improved customer satisfaction with a significant uplift in our Net Promoter Sc

91、ore Enhanced the customer experience through the launch of many new ADAP features We demonstrated leadership in promoting responsible and ethical AI which helps to enhance our brandPages 2224Our people Talent strategy and employee value proposition Managing a culture of growth through change By focu

92、sing on making Appen a great place to work and creating a culture where our people can thrive,grow and feel valued Investing in our people and HR systems to build a workforce for the future and optimise the employee experience Embedding diversity principles across our business via our Diversity and

93、Inclusion policy We have a target of 30%female representation of women in senior management positions and on the board.We exceeded this target at board level Continue to respond to employee feedback to drive future engagement scores higherPages 2527Financial Strategic direction of the business Finan

94、cial sustainability We aim to grow the business and to deliver increased revenue and earnings to support returns forshareholders Capture the potential of generative AI Completed an equity raising in Q4 2024 to provide additional liquidity to fund working capital Returned to EBITDA profitability in H

95、1 2024 Decided not to declare a dividend to ensure an appropriate allocation of capitalPages 2832To deliver on our purpose and unlock the power of AI for good to build a better world we draw our technology,scale and flexibility of our Crowd and deep expertise.We offer our customers highly flexible o

96、fferings from fully tailored solutions to pre-labelled datasets and LLM solutions.We have a strong track record of AI deployment across many data types and a proven ability to meet production needs that achieve high benchmarks for data quality.The outcomes delivered for each value driver determines

97、our ability to create value for our stakeholders including Our Crowd,Our customers,Our people,shareholders,and the community more broadly.Even though we conduct our work with an innovative mindset and embrace new ways of doing things,our decisions are always supported by a disciplined approach to go

98、vernance and risk management.We support the United Nations Sustainable Development Goals(SDGs).By doing our part to contribute to the success of these goals we believe we can help contribute to a more sustainable future and create value for our stakeholders.We have identified the following six core

99、priority SDGs where we believe we can best contribute.11Appen 2024 Annual ReportCreating and measuring valueSDGsTechnology,processes systems Investment in technology,innovation and transformation Compliance with security,privacy and other data regulations Through our technology and innovative soluti

100、ons,we look to streamline and automate processes so we can deliver AI training data at scale Our engineering,privacy,and cyber security teams work to ensure that data availability targets are met,and data is protected and secure Invested$19.6 million in technology and systems,including enhancements

101、to ADAP and a new crowd management platform(CrowdGen)to support LLM products,and better support our crowd and customers Further development of China MatrixGo platform releasing many new features enhancing the capabilities of annotation tools,and improved user experience and crowd management Met or e

102、xceeded 99.9%uptime across all our platforms Maintained certification for ISO 27001 and SOC 2,including upgrading to latest ISO 27001 certificationsPages 1214Global crowd Crowd conditions Crowd supply meets customer demand We are committed to treating our crowd fairly in accordance with our Crowd Co

103、de of Ethics Whistleblower and Speak Up Policy is available to support crowd grievances Our Impact Sourcing strategy provides jobs to people who have limited prospects for secure employment We provided flexible,work-from-home opportunities to our global crowd of one million+contractors We help make

104、AI ethical and fair through our Crowd Code of Ethics Enhanced crowd experience with the launch of CrowdGen a next-generation crowd management platform Prioritisation of health and wellbeing via wellness resources,counselling services,and flexible work optionsPages 1521Social and environment Complian

105、ce with legal,statutory and ethical obligations Environmental,social and governance(ESG)risks and performance We are taking steps to reduce the impact of our operations on the environment Our platform removes traditional barriers to work and increases global participation and representation in the d

106、evelopment of emerging technologies We are committed to achieving fair AI and creating responsible AI standards Continued disclosure of scopes 1,2 and 3 and commenced work on assuring the data Continued implementation of our Net Zero Roadmap and working towards net zero emissions across operations b

107、y 2030 Reporting on progress against United Nations Global Compact commitmentsPages 1521Customer and brand Changing customer strategy and needs Ability to execute on operational requirements We deliver high-quality data at speed for our customers and provide a superior customer experience Our LLM ca

108、pabilities provide solutions for customers across the core AI data lifecycle(data sourcing,data preparation,model evaluation)Constantly monitoring relevant market and customer trends to meet the evolving needs of customers Improved customer satisfaction with a significant uplift in our Net Promoter

109、Score Enhanced the customer experience through the launch of many new ADAP features We demonstrated leadership in promoting responsible and ethical AI which helps to enhance our brandPages 2224Our people Talent strategy and employee value proposition Managing a culture of growth through change By fo

110、cusing on making Appen a great place to work and creating a culture where our people can thrive,grow and feel valued Investing in our people and HR systems to build a workforce for the future and optimise the employee experience Embedding diversity principles across our business via our Diversity an

111、d Inclusion policy We have a target of 30%female representation of women in senior management positions and on the board.We exceeded this target at board level Continue to respond to employee feedback to drive future engagement scores higherPages 2527Financial Strategic direction of the business Fin

112、ancial sustainability We aim to grow the business and to deliver increased revenue and earnings to support returns forshareholders Capture the potential of generative AI Completed an equity raising in Q4 2024 to provide additional liquidity to fund working capital Returned to EBITDA profitability in

113、 H1 2024 Decided not to declare a dividend to ensure an appropriate allocation of capitalPages 2832To deliver on our purpose and unlock the power of AI for good to build a better world we draw our technology,scale and flexibility of our Crowd and deep expertise.We offer our customers highly flexible

114、 offerings from fully tailored solutions to pre-labelled datasets and LLM solutions.We have a strong track record of AI deployment across many data types and a proven ability to meet production needs that achieve high benchmarks for data quality.The outcomes delivered for each value driver determine

115、s our ability to create value for our stakeholders including Our Crowd,Our customers,Our people,shareholders,and the community more broadly.Even though we conduct our work with an innovative mindset and embrace new ways of doing things,our decisions are always supported by a disciplined approach to

116、governance and risk management.We support the United Nations Sustainable Development Goals(SDGs).By doing our part to contribute to the success of these goals we believe we can help contribute to a more sustainable future and create value for our stakeholders.We have identified the following six cor

117、e priority SDGs where we believe we can best contribute.11Appen 2024 Annual ReportAppens technology processes and systems deliver AI training data at scale.We leverage advanced tools and methodologies to source,prepare,and evaluate data,ensuring the highest quality datasets for our clients.With the

118、ability to support large language model(LLM)capabilities we are at the forefront of generative AI,providing our customers with the resources they need to finetune their AI models and achieve optimal performance.Our comprehensive range of technology products and data services encompasses both deep le

119、arning and generative AI.This includes four major platforms 1)CrowdGen,the interface for our crowd workers to apply for tasks,2)Mercury,the backend for all our crowd management tasks,3)AI Data Platform(ADAP),a solution that allows internal teams and external customers to design and manage human anno

120、tation projects,and 4)China MatrixGo,the bespoke annotation platform to provide specialised services for the Chinese market.Priority SDG$19.6Min product development99.9%uptime met or exceeded across all platformsTechnology processes,systemsChina Platform&ServicesMatrixGo and Generative AI data annot

121、ation platformAI data services for China marketsOff-the-shelf datasetsAI Data Annotation Platform(ADAP)Data collection and annotationLLM&Generative AI workflows(fine-tuning and evaluation)AI automation toolsCrowdGen Crowd PlatformSourcing and recruitmentQualification and smart matchingCrowd Payments

122、Crowd supportAI Data SolutionsLLM&Generative AI Data Solutions(SFT,RLHF,Evaluation,Red Teaming)AI training data(data collection,data annotation,off-the-shelf datasets)Global Services,Global Product,Enterprise,GovernmentChinaValue drivers1 Previously known as China A9.12Product developmentIn FY24 we

123、undertook a major replatform of our core crowd management software,called Appen Connect.Appen Connect was introduced through the acquisition of Leapforce,and while it provided significant benefits to the business,the technology was built using legacy architecture and was inhibiting our ability to ma

124、ke rapid improvements,including automations.In September we launched our new crowd management platform that consists of two deeply integrated components.The first is CrowdGen.This is the interface that our crowd workers use to interact with Appen to assess available work,apply for projects,and manag

125、e their accounts including payments.The second is Mercury.This is the backend system that we use internally to set up projects and manage our crowd workforce.The evolution to Mercury enables us to significantly improve the level of automation in our project management approach,and provides better in

126、sights into our workforce,leading to improved outcomes for our customers.For CrowdGen and Mercury,we utilised best of breed software across the ecosystem to improve the return on investment in our software development resources and ensure access to the latest innovations.Our AI Data Platform(ADAP)is

127、 the software we use to set up and administer project tasks.It is also the interface for our crowd workers to work on projects.We use ADAP for our managed service projects,and is also offered as a SaaS platform.With the growth of generative AI related projects in FY24,we saw a significant increase i

128、n the volume of work utilising our ADAP platform.Revenue from Global Product,representing projects from our large Global customers that utilise ADAP,increased to$31.3 million in FY24,a 221.9%increase on FY23.Customers selected ADAP over internal annotation tools for the ability to rapidly set up and

129、 customise annotation tasks.We released many new ADAP features in FY24 to support generative AI related projects,including:AI Detector that improves data quality by identifying non-human generated content,specifically where contributors are using LLMs to generate responses.Retrieval-augmented genera

130、tion(RAG)capabilities that cover end-to-end data requirements for preparing data and evaluating performance.AI Chat Feedback enhancements,that allows connections with third-party endpoints directly from inside an ADAP project,to run a multi turns live conversation with a model,and to evaluate and li

131、ve-correct completions.Appen China released many new MatrixGo features in FY24,with a focus on enhancing the capabilities of the annotation tools,improving user experience and crowd management,and boosting data processing efficiency through algorithms.New features and enhancements include:MatrixGo I

132、nstant Messaging System,that allows project managers and annotators to interact in real time.It can handle one million transactions per second(TPS)in message throughput and supports dynamic scaling.The system is integrated into the MatrixGo platform and is accessible via web and mobile.Self-Operated

133、 Crowd Module,that groups contributors based on language,skills,and project experience.It fosters talent development through dedicated project managers and continuous project opportunities,increasing platform loyalty and work enthusiasm.Point Cloud 2.0,that supports very dense point cloud data with

134、hundreds of millions of points per frame and supports various annotation tasks on 4D data.This reinforces our leadership in the computer vision point cloud annotation field.Automated Data Annotation Loop,that combines pre-annotated foundation models with project-level fine-tuning.It boosts 2D annota

135、tion efficiency by up to five times and improves 3D annotation efficiency by around 25%.Audio Classification Model,that can identify noise,music,speaker age and gender across multiple languages,providing a powerful tool for quality screening and feature extraction in the production of audio datasets

136、.Investment in product developmentIn FY24,investment in product development(excluding amortisation)decreased 43.3%to$19.6 million and represented 8.4%of revenue(2023:$34.6 million or 12.7%of revenue).Managing and protecting dataAt Appen,we manage and protect massive amounts of data in line with secu

137、rity,privacy,and regulatory requirements.We recognise the critical importance of meeting our customers expectations and fulfilling contractual obligations related to data security.Additionally,we remain vigilant against the increasing risk of cyber security attacks,continuously adopting industry bes

138、t practices to safeguard our systems,data,and customer trust.13Appen 2024 Annual ReportSystem and data securityManaging data security is an essential and a core competency of our business.Our approach is comprehensive and involves people,processes,and technology.As a minimum we adhere to industry re

139、cognised standards,such as the International Organisation for Standardisation(ISO)and National Institute of Standards and Technology(NIST)and implement global best practices.Mandatory security awareness and privacy training is provided to all employees on annual basis.We also conduct regular synthet

140、ic phishing tests to promote employee awareness of the threats and their responsibilities in managing data security.These tests also provide an indication as to the effectiveness of our training programs.We provide customers with a range of secure technology solutions.Our SaaS customers can maintain

141、 their data in their environment and do not need to physically move it to our environment.For maximum data security,our software can be deployed in the customers air-gapped environment or private cloud and provides flexibility to cater to clients expectations.Customers with even higher data security

142、 requirements can use one of our ISO 27001-certified secure facilities in the Philippines,the UK,and China.In FY24,we successfully upgraded our ISO 27001 certifications to the most recent edition(ISO 27001:2022).Data privacyOur engineering,security and privacy teams work closely together to ensure t

143、hat data privacy is integrated into our systems.We also work to comply with specific data privacy requirements in the markets in which we operate,including the California Consumer Privacy Act,the Philippines and Australian Privacy Acts,and the EU/UK General Data Protection Regulation.Mandatory data

144、privacy training is provided to all employees on an annual basis.In FY24,there was one non-material security incident involving and limited to Quadrant,a subsidiary of Appen.We promptly identified the root cause and resolved it following established protocols.Additional safeguards were implemented t

145、o further strengthen our security posture,reinforcing our commitment to protecting our customers.Platform availability,reliability and resiliencePlatform availability,reliability and resilience is a key focus of our engineering teams.The team works to strict system availability targets and ensures t

146、hat our systems can safely scale in response to changes in demand.In FY24,we continued to meet or exceed 99.9%1 uptime across all our platforms.Cyber securityOur cyber security risk management framework is based on internationally recognised NIST standards and is structured to identify,detect,protec

147、t against,respond and recover to cyber security threats.Security penetration testing is conducted annually by third-party specialists.Our operational facilities are ISO 27001:2022 certified,and our ADAP and CrowdGen(Mercury)platforms are SOC 2 Type 2 attested.Additionally,our UK and China facilities

148、 hold ISO 9001 certifications,and our UK facility is Cyber Essentials Plus certified,meeting UK requirements.Appen also has Payment Card Industry(PCI)compliance for its ADAP platform.Our IT security policies and standards are adhering to ISO 27001 controls and the incident response procedure is alig

149、ned with the NIST CSF(Cyber security Framework).We conduct incident response tabletop exercises annually.We have adopted a practice of engaging third-party cyber security maturity assessments for our organisation every two years.The latest assessment,conducted by PwC in FY24,demonstrated consistent

150、improvement in our scores,which exceed the industry benchmark for organisations of similar size and scope.The results of this review continue to form the program of works to further mature Appens cyber security capability.Appen has cyber security insurance in place.Data encryption is in place when d

151、ata is at rest and in transit for critical systems as per SAL(Secure Algorithm List).We have centralised access controls via SSO(Single Sign On)and MFA(Multi Factor Authentication)for additional layers of protection.Security logs from our critical systems are captured and monitored in a SIEM(Securit

152、y Information and Event Management)tool.We also have top tier network,perimeter,and end point security tools protecting the assets and monitoring inbound and outbound network traffic.Privileged access and vendor security reviews are conducted as per our standards.1 Based on report from third-party w

153、ebsite monitoring company,StatusCake.FY25 focusAppen is committed to innovation and excellence.We remain focused on continuing to enhance the crowd experience to foster a more engaging environment,advancing our ADAP and MatrixGo platforms to support the evolving generative AI market,and strengthenin

154、g our deep learning capabilities.We also remain dedicated to further automating processes through AI-driven productivity enhancements.Cyber security continues to be a key priority.We are advancing our cyber security maturity through dedicated programs,as well as prioritising data classification and

155、loss prevention projects.14At Appen,our commitment to creating a positive social and environmental impact is a cornerstone of our mission to enable responsible and inclusive AI development.In 2024,we made significant strides in supporting our global crowd and embedding sustainability into our operat

156、ions.Governance Our social and environmental frameworks remain underpinned by a steadfast commitment to high standards of corporate governance,ensuring transparency,accountability,and sustainability in all facets of our operations.The Board of Directors provides strategic oversight,while management

157、ensures operational alignment with these principles.Responsibilities of the Board of Directors:Evaluating the environmental and social impacts of our business activities and decisions.Setting and monitoring adherence to social and environmental standards that align with global best practices.Oversee

158、ing the management of risks and opportunities related to climate change,biodiversity,and environmental sustainability.Approving climate-related disclosures,ensuring transparency and alignment with emerging regulatory requirements.Tracking progress against defined goals and targets for climate,social

159、,and governance-related issues.Audit and Risk Management Committee:Integrating environmental,social,and governance(ESG)considerations into the companys broader risk framework.Reviewing quarterly risk reports to ensure effective management of climate-related and environmental risks.Supporting the ide

160、ntification and mitigation of emerging risks,such as supply chain vulnerabilities and compliance gaps in ESG areas.Providing recommendations to the Board for continuous improvement in governance and risk oversight.Crowd,socialand environmentPriority SDGEthical AIthrough our Crowd code of ethics33Cro

161、wd NPS 6 points from 27 FY23Value drivers15Appen 2024 Annual ReportAt Appen,our commitment to creating a positive social and environmental impact is a cornerstone of our mission to enable responsible and inclusive AI development.In 2024,we made significant strides in supporting our global crowd and

162、embedding sustainability into our operations.Governance Our social and environmental frameworks remain underpinned by a steadfast commitment to high standards of corporate governance,ensuring transparency,accountability,and sustainability in all facets of our operations.The Board of Directors provid

163、es strategic oversight,while management ensures operational alignment with these principles.Responsibilities of the Board of Directors:Evaluating the environmental and social impacts of our business activities and decisions.Setting and monitoring adherence to social and environmental standards that

164、align with global best practices.Overseeing the management of risks and opportunities related to climate change,biodiversity,and environmental sustainability.Approving climate-related disclosures,ensuring transparency and alignment with emerging regulatory requirements.Tracking progress against defi

165、ned goals and targets for climate,social,and governance-related issues.Audit and Risk Management Committee:Integrating environmental,social,and governance(ESG)considerations into the companys broader risk framework.Reviewing quarterly risk reports to ensure effective management of climate-related an

166、d environmental risks.Supporting the identification and mitigation of emerging risks,such as supply chain vulnerabilities and compliance gaps in ESG areas.Providing recommendations to the Board for continuous improvement in governance and risk oversight.Crowd,socialand environmentPriority SDGEthical

167、 AIthrough our Crowd code of ethics33Crowd NPS 6 points from 27 FY23Value drivers15Appen 2024 Annual ReportGood Business Practice Good business practice at Appen is defined by ethical leadership,integrity,and responsible decision-making.These principles guide how we interact with stakeholders,manage

168、 our workforce,and deliver services to customers.Code of Conduct and Ethical Standards Our Code of Conduct outlines the minimum standards for ethical behaviour,emphasising fairness,respect,and accountability.It applies to all employees,contractors,and business partners.Anti-Corruption and Anti-Bribe

169、ry Our Anti-Corruption and Anti-Bribery Policy reinforces a zero-tolerance approach to bribery and corruption.Strictly prohibits the use of corporate funds for political donations or advocacy unrelated to our core mission.Mandatory annual compliance training ensures employees are aware of their resp

170、onsibilities.In FY24,90%of employees completed this training,compared to 95%in FY23.UN Global Compact and Ethical SourcingAs a proud signatory of the United Nations Global Compact(UNGC),we continue to embed its ten principles on human rights,labor,environment,and anti-corruption into our strategies

171、and operations.We have also completed our first Communication on Progress during the year.Human Rights:Conducted risk-based supplier reviews,focusing on compliance with our Global Ethical Sourcing and Modern Slavery Policy.Labour:Set diversity targets,including 30%female representation in senior man

172、agement roles.Environment:Advanced our net-zero emissions roadmap,maintaining flat emissions despite the opening of new facilities.Anti-Corruption:Continued to support our whistleblower hotline that enables anonymous reporting.Training and AccountabilityTo drive accountability across all levels of t

173、he organisation:Short-term incentives for senior leadership are directly linked to compliance metrics,including training completion rates and ESG performance.Mandatory ethical sourcing training for key procurement and supply chain staff.Empowering Contributors Through Economic OpportunitiesHuman inv

174、olvement is not just a stage in AI development it is its foundation.Keeping humans in the loop ensures that AI systems remain aligned with human values,helping to minimise hallucinations,bias,and toxicity.By embedding diverse human perspectives at every stage of the AI lifecycle,we aim to create sys

175、tems that augment human potential,solving complex challenges and unlocking opportunities for positive societal impact.In 2024,we connected over 1 million contributors in 170 countries with projects spanning 20 domains,creating a truly borderless workforce.For almost 50%of our contributors in the US,

176、this work served as a primary source of income,helping contributors support their families,fund education,or invest in their future goals.A significant portion of our contributor base resides in emerging markets,where access to remote work opportunities is critical.Crowd EngagementIn FY24,our Crowd

177、Net Promoter Score(NPS)increased to 33 from 27,reflecting the resilience of our contributor community and the impact of our targeted improvements.This growth comes despite challenges associated with the rollout of our new contributor platform,CrowdGen,and demonstrates the crowds trust in our efforts

178、 to enhance their experience.Key Highlights of NPS FeedbackContributors highlighted areas where we can further enhance their experience:Project availability and relevance:Continued focus on increasing and better matching contributors to suitable projects is essential.System challenges:Initial issues

179、 with the new system caused some frustration,particularly around transparency and ease of use.Support and communication:Contributors appreciated ongoing updates but expressed a desire for faster resolution of queries.Crowd,social and environment16Championing Fair Labor PracticesThe well-being and di

180、gnity of our contributors are at the forefront of our efforts to improve the gig economy.Key milestones in 2024 included:Minimum wage commitment:We ensured that all contributors were paid at least the local minimum wage equivalent.This commitment reflects our dedication to promoting fair pay and red

181、ucing financial uncertainty.Enhanced payment options:We introduced a suite of payment methods,including direct bank transfers,gift cards,and local payout systems,giving contributors greater flexibility and control over how they receive their earnings.Collaborative advocacy:Our partnerships with orga

182、nisations like Fairwork and PAI have allowed us to contribute to global conversations on ethical labor practices and help set new benchmarks for fairness in the gig economy.Enhanced Contributor Systems and SupportIn FY24,we launched CrowdGen a next-generation platform designed to address contributor

183、s concerns and deliver a superior experience.The new system focuses on creating a seamless,efficient,and transparent environment for contributors,addressing pain points highlighted in past feedback.Key features include:Better project matching:Contributors are now matched to projects more effectively

184、 based on their skills,experience,and preferences.This improvement ensures that individuals have access to more relevant opportunities,increasing satisfaction and engagement.Streamlined user experience:CrowdGen simplifies onboarding,qualification processes,and project participation,reducing friction

185、 and saving contributors time.Expanded payment options:Offering flexible,transparent payment methods tailored to contributors preferences.New features allow contributors to track payments with greater visibility,providing details such as hours worked,project breakdowns,and estimated timelines for fu

186、nd availability.Prioritising Contributor Health and Well-BeingIn recognition of the challenges that come with gig work,we have implemented several initiatives to support the mental,emotional,and physical health of our contributors:Wellness resources:We expanded access to wellness programs,including

187、monthly newsletters with tips on resilience,mental health,and stress management.Counselling services:Contributors working on sensitive or high-risk projects,such as content moderation,were provided with on-demand access to counselling and wellness services to safeguard their mental health.Flexible w

188、ork options:By encouraging project structures that accommodate varying schedules,we empowered contributors to balance work with personal responsibilities.Modern Slavery and respect for Human RightsAt Appen,we believe that any form of modern slavery and human rights abuse is unacceptable,and we are c

189、ommitted to playing a proactive role in eradicating these practices.Our commitment is detailed in our Global Ethical Sourcing and Modern Slavery Policy,which outlines our expectations for ethical behaviour across all levels of our supply chain.This policy reinforces our zero-tolerance stance on forc

190、ed labor and prioritises fair employment practices,safe working conditions,freedom of association,non-discrimination,and robust whistleblower protections.Appen 2024 Annual Report17Championing Fair Labor PracticesThe well-being and dignity of our contributors are at the forefront of our efforts to im

191、prove the gig economy.Key milestones in 2024 included:Minimum wage commitment:We ensured that all contributors were paid at least the local minimum wage equivalent.This commitment reflects our dedication to promoting fair pay and reducing financial uncertainty.Enhanced payment options:We introduced

192、a suite of payment methods,including direct bank transfers,gift cards,and local payout systems,giving contributors greater flexibility and control over how they receive their earnings.Collaborative advocacy:Our partnerships with organisations like Fairwork and PAI have allowed us to contribute to gl

193、obal conversations on ethical labor practices and help set new benchmarks for fairness in the gig economy.Enhanced Contributor Systems and SupportIn FY24,we launched CrowdGen a next-generation platform designed to address contributors concerns and deliver a superior experience.The new system focuses

194、 on creating a seamless,efficient,and transparent environment for contributors,addressing pain points highlighted in past feedback.Key features include:Better project matching:Contributors are now matched to projects more effectively based on their skills,experience,and preferences.This improvement

195、ensures that individuals have access to more relevant opportunities,increasing satisfaction and engagement.Streamlined user experience:CrowdGen simplifies onboarding,qualification processes,and project participation,reducing friction and saving contributors time.Expanded payment options:Offering fle

196、xible,transparent payment methods tailored to contributors preferences.New features allow contributors to track payments with greater visibility,providing details such as hours worked,project breakdowns,and estimated timelines for fund availability.Prioritising Contributor Health and Well-BeingIn re

197、cognition of the challenges that come with gig work,we have implemented several initiatives to support the mental,emotional,and physical health of our contributors:Wellness resources:We expanded access to wellness programs,including monthly newsletters with tips on resilience,mental health,and stres

198、s management.Counselling services:Contributors working on sensitive or high-risk projects,such as content moderation,were provided with on-demand access to counselling and wellness services to safeguard their mental health.Flexible work options:By encouraging project structures that accommodate vary

199、ing schedules,we empowered contributors to balance work with personal responsibilities.Modern Slavery and respect for Human RightsAt Appen,we believe that any form of modern slavery and human rights abuse is unacceptable,and we are committed to playing a proactive role in eradicating these practices

200、.Our commitment is detailed in our Global Ethical Sourcing and Modern Slavery Policy,which outlines our expectations for ethical behaviour across all levels of our supply chain.This policy reinforces our zero-tolerance stance on forced labor and prioritises fair employment practices,safe working con

201、ditions,freedom of association,non-discrimination,and robust whistleblower protections.Appen 2024 Annual Report17Crowd,social and environmentClimate changeWe acknowledge the significant risks posed by climate change and are committed to supporting the global transition to net-zero emissions.Our alig

202、nment with the Science Based Target initiative(SBTi)reflects our pledge to limit global warming to 1.5C.We have developed a Net Zero Emissions Roadmap to provide actionable pathways toward achieving our targets.The roadmap,approved by management,includes funding(excluding offsets)and will be applied

203、 across the business,focusing on sustainable energy use,operational efficiency,and targeted supplier engagement.Environmental footprintOur environmental and climate commitments are outlined in our Environment Position Statement(EPS).This statement reaffirms our dedication to engaging external stakeh

204、olders,such as suppliers,clients,and contractors,to reduce our environmental impact.It also ensures transparency in our progress and establishes a governance structure to oversee the management of environmental risks and compliance.Given the relatively small environmental footprint of our direct ope

205、rations,our focus remains on minimising the impact of our offices,facilities,travel,and data centre usage by:Reducing electricity consumption and increasing the use of renewable energy Optimising data centre requirements by collaborating with a cloud provider committed to 100%renewable energy Reduci

206、ng water consumption and waste generation while increasing recycling and reprocessing of used technology equipment Minimising travel through enhanced digital collaboration tools Partnering with suppliers to pursue sustainable procurement solutions.StrategyOur Net Zero Carbon Roadmap outlines key str

207、ategic actions to achieve net-zero emissions by 2030 for our broader value chain.These actions include:Sustainable office design and operational efficiency Better energy management and sourcing renewable energy Partner engagement to achieve shared net-zero goals Procuring carbon offsets aligned with

208、 our values,providing additional social and economic benefits beyond carbon reductions.Our offset strategy includes:Current and forecasted greenhouse gas emissions for Appen Scenario modelling and budget planning for offsets Criteria for selecting carbon offsets to align with our company values and

209、sustainability objectives.ProgressWe have continued the implementation of our net zero strategy this year and achieved the following:1.Renewable energy Signed green electricity contract for our corporate office in Australia2.Energy efficiency Finalised installation of LED lightings in our Philippine

210、s offices3.Sustainable office design Applied sustainable design specifications to new office locations Closed underutilised office spaces to reduce emissions4.Carbon offsets Procured carbon offsets to offset our business travel emissions Commenced discussions with customers on best offset strategies

211、 to align with their goals18Risk managementWe assess climate risks through our risk management framework,aligned with the recommendations of the Task Force on Climate-related Financial Disclosures(TCFD).Climate risks are incorporated into our Risk Appetite Statement and monitored across all levels o

212、f governance,including the Board.In 2024,we conducted a scenario analysis of physical risks affecting our global offices to identify vulnerabilities and inform mitigation strategies.Further details can be found in the section TCFD-based Scenario Analysis.Metrics and targetsOur 2024 GHG emissions inv

213、entory was completed in accordance with the GHG Protocol,categorising emissions into scopes 1,2,and 3.While direct operations account for a portion of emissions,the majority stem from our supply chain,including contractors and suppliers.Source2024 tCO2e2023 tCO2eScope 1 Natural gas283309Scope 2 Elec

214、tricity Location-Based 1,9451,631Scope 2 Electricity Market-Based1,9901,637Scope 312,50913,515Total Scope 1,2&3 Emissions14,73715,455The reporting boundary for scope 1 and 2 includes all offices globally occupied by Appen employees.Office spaces leased exclusively for the delivery of specific projec

215、ts on a short-term basis and offices that were operational for less than six months in the reporting period have been excluded from this boundary.Further details of our GHG inventory,including category breakdown for scope 3 and emissions by geography can be found in Appendix page 130 of the annual r

216、eport.OutlookWhile we are proud of the progress made in 2024,we know there is much more to be done.Our priorities for 2025 include:1.Improving Advocacy:We will strengthen our efforts to amplify contributor voices,ensuring they have a say in shaping the future of the platform.2.Advancing Fairness:Bui

217、lding on our partnerships with industry bodies,we will continue to advocate for ethical.3.Supporting Innovation:By investing in new technologies and platform features,we will create a more seamless,rewarding experience for contributors and customers alike.4.Expanding Carbon Offset Strategy:Finalisin

218、g and implementing our offset strategy,ensuring carbon credits are sourced from projects that align with our company values and deliver social and economic benefits beyond emissions reductions.Appen 2024 Annual Report19Crowd,social and environmentAnalysis of risks and opportunitiesOur updated analys

219、is indicates significant opportunities and manageable risks associated with climate change impacts.While the dispersed nature of our operations,suppliers,and customers mitigates certain physical risks,emerging challenges such as evolving customer expectations and regulatory landscapes require ongoin

220、g attention.Potential ImpactResponseTransition risksPolicy and legalCustomers increasingly expect suppliers to demonstrate environmentally responsible practices and net-zero commitments within their supply chains.We address these risks by further enhancing energy-efficient operations and reporting o

221、n our carbon footprint transparently.Additionally,we align with customer sustainability programs to mutually advance climate goals.Physical risksAcuteOffices in regions prone to extreme weather events,such as floods,heatwaves,and wildfires,are at risk of disruptions and damage.Short-term disruptions

222、 are mitigated by leveraging remote working capabilities with minimal business impact.Business continuity and disaster recovery plans are regularly updated,factoring in the increasing frequency and severity of weather events.OpportunitiesResource efficiencyTransitioning to resource-efficient process

223、es offers long-term cost reductions,employee satisfaction,and enhanced customer value.We are expanding energy and water efficiency programs across all sites and continuously reviewing operations to identify further efficiency gains.Energy sourceUtilising lower-emission energy sources reduces exposur

224、e to fossil fuel price volatility,potential carbon pricing changes,and enhances reputation.We are scaling our use of renewable energy across operations,focusing on solar,wind,and hydroelectric sources to meet sustainability commitments.Products and servicesAI innovations that reduce emissions and op

225、timise resource allocation increase demand for high-quality training data.We anticipate sustained demand for our AI data services,driven by the need for training models supporting climate-focused technologies.20TCFD-based scenario analysis We have conducted an updated desktop scenario analysis of th

226、e potential physical risks associated with climate change across Appens global offices.This analysis utilised two scenarios from the Intergovernmental Panel on Climate Change(IPCC):Low emissions scenario(RCP 4.5):Represents a 2C warming scenario.High emissions scenario(RCP 8.5):Represents a 4C warmi

227、ng scenario.Physical Risks AssessedFor each office location,the following risks were analysed under both scenarios:Fires:Risk of bushfires and wildfires driven by hotter and drier climates.Heatwaves:Increased frequency and severity of prolonged high temperatures.Drought:Reduced rainfall and water sc

228、arcity due to changing climate patterns.Flooding:Higher risk of floods from more intense storms and storm surges.Inundation:Rising sea levels threatening low-lying areas.Business Impacts IdentifiedKey risks included:Property damage and potential safety concerns.Increased operational costs due to res

229、ource scarcity or infrastructure repair.Disruptions to supply chains and customer delivery commitments.Scenario Analysis OutcomesOur analysis shows that heatwaves and drought pose the greatest risk to our global office network,particularly in a high emissions scenario(RCP 8.5).Mitigation and Adaptat

230、ion InitiativesIn response,we have implemented and expanded the following measures:Energy Efficiency:Installation of LED lighting and efficient HVAC systems in high-risk locations.Water Conservation:Deployment of water-efficient plumbing fixtures to mitigate drought-related risks.Renewable Energy:Ac

231、celerating the transition to renewable energy sources,such as solar and wind,for onsite and offsite energy requirements.Disaster Preparedness:Enhancing business continuity and disaster recovery plans to address site-specific risks,including flooding and heatwaves.By incorporating scenario analysis i

232、nto our risk management framework,we continue to align our operations with the Task Force on Climate-related Financial Disclosures(TCFD)recommendations and ensure resilience against evolving climate risks.21Appen 2024 Annual ReportCustomer and brandAt Appen,our focus is to deliver great outcomes and

233、 experiences for our customers.As a global market leader and trusted partner,we provide high quality,human centric data to promote responsible and ethical AI.Delivering value for customersSince 1996,we have powered innovative AI applications for global brands including Microsoft,Amazon,Pinterest,Sal

234、esforce,Oracle,Adobe and BestBuy.Appen has cultivated trusted partnerships and earned a reputation based on our ability to provide unbiased,high quality,and globally representative data.As the demand for AI continues to grow,we remain committed to our core belief that humans are at the heart of its

235、success.Our focus is helping our customers improve the performance of their models to create stronger,smarter,and more efficient AI systems for our customers and to help shape a future where human intellect and machine learning seamlessly collaborate.We believe that the success of our customers lies

236、 in their ability to leverage data effectively.Our high-quality human-annotated datasets are essential in training and validating AI algorithms,ultimately leading to more accurate and reliable results.AI can be a powerful tool for positive change in the world.The work we do for our customers is impa

237、ctful and we are committed to using our expertise and resources to support initiatives that use AI for social good.From partnering with organisations focused on environmental conservation to supporting projects that promote diversity and inclusion,we are dedicated to making a difference through AI.O

238、ur customers value our unwavering focus to promote responsible and ethical AI.Value driversPriority SDG57Customer NPS 22 points from 35 in FY2380%Worlds leading LLM foundation model builders as customers 26LLM model builders as customers22Net promoter scoreOur key customer satisfaction measurement t

239、ool is Net Promoter Score(NPS).We seek feedback from our customers on a bi-annual basis and monitor NPS across our Global,Enterprise and China clients.This year customer NPS was 57,compared with 35 in FY23.This score was above target and reflected a high level of customer satisfaction with Appens se

240、rvice offerings and project delivery.Customers saw improvements in operational excellence with more streamlined processes to deliver higher quality project outcomes.As model iterations evolved rapidly,there was an increased level of partnership between Appen and our customers,with speed and agility

241、the priority.High-quality data for Large Language Models(LLMs)As generative AI adoption grows,Appen continues to enhance our LLM solutions for foundation model builders and organisations adopting LLMs.These include pre-training data,fine-tuning data to enhance model performance in post-training,benc

242、hmarking and evaluation data to provide insights into model performance,and red teaming for safety assurance.Collectively,these help companies build more complex and high-performing LLMs that provide helpful,harmless,and honest responses while reducing bias and toxicity.In FY23,our projects included

243、 curating prompt-response datasets for fine-tuning,preference annotation and ranking to train LLMs with human feedback,evaluation and benchmarking of generative AI model outputs,and human testing with live model interactions.In FY24,we continued these programs of work and completed increasingly comp

244、lex projects.Notable examples included multi-step reasoning capabilities and tasks requiring deep domain expertise in programming,coding,STEM,and other domains.In addition,our customers expanded the multilingual capabilities of LLMs in 70+languages with large programs of work with demographically di

245、verse crowds to address challenges with language and cultural nuances.As models shifted from text-based to multimodal,we also delivered projects involving multimodal data across text,image,documents,audio,and video.As more models reach deployment,addressing the challenge related to the safety of mod

246、el outputs is more important than ever.In FY24 we expanded our capabilities to conduct systematic and structured testing of models before deployment.By leveraging a curated crowd of our AI training specialists,we help customers conduct a full assessment of model performance and safety.This includes

247、identifying problems like misinformation,privacy leaks,irrelevant content,bias,or toxic content.Our tooling allows real-time multi-turn scenario-based testing,comparison of multiple models,and analysis across key metrics,providing invaluable insights for ensuring the safety of models before deployme

248、nt.Growing and diversifying our customer baseAppen is truly a global business and supports companies that are at the forefront of AI.Our customers include global technology companies,software business that incorporate AI models into their core products,generative AI model builders and enterprise com

249、panies that are adopting AI in their products and operations.In FY24,our top five customers accounted for 67.3%of revenue,down from 74.8%in FY23.Revenue from New Markets(excluding Global Product)accounted for 36.2%of revenue,up from 26.3%in FY23.This year,Appen delivered multiple projects related to

250、 generative AI model development and evaluation,for leading model builders,large tech and enterprise customers.These included expansions with existing customers.Generative AI projects included human feedback for general LLMs,specialised domain training data such as code annotation and generation,and

251、 multimodal training data for video generation.Generative AI revenue significantly increased in FY24,up 601%and accounted for 22%of revenue in FY24 up from 4%in FY23.Many projects are delivered using Appens AI Data Platform(ADAP).Appen is currently working with 26 LLM model builders globally.Taking

252、the industry to new heightsBeyond contributing to the technical growth of the AI industry,Appen plays a significant role in ensuring responsible AI practices.Our dedication to ethical considerations is apparent in every aspect of our work,from strict adherence to privacy and security protocols to re

253、gular reviews and updates of our policies.By instilling these ethical standards throughout the AI lifecycle,we help create a framework within the industry that prioritises responsible AI use.This commitment ensures that the AI technologies we enable are not only advanced but also respect user privac

254、y and promote fairness.We remain dedicated to shaping a future towards positive and ethical progress of AI.In addition to supporting customers directly,we provide industry information and resources that monitor trends and developments in AI.In FY24,Appen released its State of AI Report,partnering wi

255、th The Harris Poll to deliver the research.The report surveyed over 500 IT decision-makers,revealing that while the adoption of AI technologies continues to grow,progress is being hindered by a shortage of accurate,high-quality data.The report found that with the increasing complexity of AI use case

256、s,data management has become the leading challenge.Companies report a 10%rise in bottlenecks related to sourcing,cleaning,and annotating data,a 9%drop in data accuracy,and a 7%increase in data availability challenges.Appens research also uncovered the importance of human oversight and custom data co

257、llection.97%of respondents agree that data diversity,bias reduction,and scalability are vital components for building AI models.Custom data collection remains the top method for sourcing AI training data.The report can be accessed on the web:2024 State of AI Report().1 Excludes Google.23Appen 2024 A

258、nnual ReportCase Study:Training an LLM Image Generator for Graphics Design in 20+LanguagesIntroductionA leading graphic design software company created a multimodal AI model to generate original images from text prompts serving 20+languages.To ensure these AI-generated images met high standards of v

259、isual quality and cultural relevance,they partnered with Appen to evaluate the AI-generated images and ensure successful alignment with user expectations.Appen supported the company in expanding their model capabilities to 20+languages and producing high-quality AI-generated images across diverse cu

260、ltural contexts.ChallengeThe generated designs were assessed based on over 15 different criteria to arrive at a final rating,which included cultural relevance to the localized prompts,as well as the format and style of the images.The complexity of this project arose from the need to accurately evalu

261、ate prompts covering 20+different countries and languages,ensuring that all design outputs were appropriate and effective in their respective cultural contexts.SolutionAppen executed a two-step approach to address this challenge with the LLM image generator:1.Prompt LocalizationAppens network of nat

262、ive-language translators localized the prompts from English into 20+languages,applying cultural expertise to ensure accurate adaptation.Beyond direct translation,this phase also required transcreation in cases where certain cultural events or visual elements needed adaptation to better resonate with

263、 the local audience.This process was essential in capturing culturally specific celebrations,symbols,and habits to ensure the prompts accurately reflected each target languages unique characteristics.2.Design EvaluationIn the second phase,Appens expert reviewers evaluated each LLM-generated image ag

264、ainst a set of detailed criteria including cultural relevance,adherence to prompt instructions,design style,and format.The English version of each prompt also underwent evaluation,serving as a benchmark to ensure consistency across 20+languages.By providing clear and consistent feedback on each imag

265、e,Appen enabled the client to refine their model and improve the quality of the AI-generated designs.ResultsThrough this detailed,culturally sensitive evaluation approach,Appen helped the client achieve high-quality,culturally relevant graphic outputs that met user expectations.By refining the AI mo

266、dels ability to produce contextually appropriate designs,Appens collaboration ensured an improved user experience for this global design software application,enhancing user satisfaction and product engagement across a diverse,international audience.Customer and brandFY25 focusIn a dynamic and fast-p

267、aced AI market,new opportunities are endless.As AI adoption accelerates,Appens role as a provider of high-quality,human-sourced data is more critical than ever.Appen will continue to leverage its position as a global leader in high-quality data to deliver great outcomes for its customers.In FY25,we

268、will continue to build on our expertise in generative AI projects and evolve our offerings,including multilingual and domain-specific datasets,through advancements to our annotation platform and automating processes through AI-based initiatives to enhance quality and optimise productivity.From advan

269、cing multilingual AI to supporting agentic systems and multimodal innovations,Appen will continue to drive meaningful progress in the development of cutting-edge AI systems.24Value driversOur peopleEvery day,our people strive to unlock the power of AI for Good to build a better world.Our aim is to s

270、upport their ability to do so,by providing continuous learning,empowerment and autonomy and an inclusive work culture to allow them to perform at their best.2024 employee distributionAppens people are based in North America,Asia Pacific,UK,Europe,and Australia.Global and diverse work forceAs of 31 D

271、ecember 2024,we had 835 full time equivalent employees(FTE),313 fixed term,8 casual employees,and 15 interns.Full time employees total 1,130 and part time employees total 41.1,171employees1,171employees1,171Employees from 1,037 in FY2379%Employee engagement from 75%in FY23 Asia Pacific 824 North Ame

272、rica 224 Australia/NZ 52 UK/Europe 71 Permanent 835 Fixed term 313 Casual 8 Interns 15 Full time 1,130 Part time 41Priority SDG25Appen 2024 Annual ReportOccupational profileOur people have deep industry expertise,particularly in the areas of project delivery,crowd management and engineering.We have

273、developed specialised industry capabilities which we embed into our products and processes.We also rely on deep domain expertise in the areas of large language models,linguistics,machine learning,data science and computer science.AI is fast paced and dynamic,and with rise of generative AI we recogni

274、se that ongoing upskilling and reskilling is required to meet and exceed stakeholder expectations.Employee engagement 1We recognise that an engaged and high performing team is essential for the success of our business.To ensure we are listening and responding to our people,we conduct bi-annual engag

275、ement surveys followed up with action plans.We continue to receive good employee participation rates that allow us to leverage insights to drive further improvements.In 2024 our average engagement score was 79%,up from 75%in the prior year.The increase reflects the focus on employee communication,sp

276、ecifically providing clear,transparent and regular updates from the CEO and senior leaders.2024202379%78%82%76%75%202220212020Cost reduction and the impact on our peopleFollowing the decision by Google to terminate its global services contract,Appen reacted quickly to reduce costs.Unfortunately,this

277、 impacted approximately 100 of our valued people,and they exited Appen during H1 FY24.The impacted employees were directly and indirectly associated with the delivery of Google projects.1 Measures the likelihood of employees(including those in PEOs)referring a friend or colleague to Appen based on t

278、heir employee experience.The scale is a 5-point Likert resulting in 12 Detractor,3 Passive and 45 Promoter.NPS is calculated by subtracting the%of total detractors from the%of total promoters.Survey results are provided by Workday Peakon.2 Based on HR report for all employees(excluding casuals and i

279、nterns)generated by Workday.Commitment to diversity and inclusionAt Appen,we strive to create a diverse and inclusive workforce that drives better performance and represents the communities we serve.We value the strength of a global team and celebrate the unique perspectives,experiences,and backgrou

280、nds our people bring.Our diversity and inclusion policy supports inclusive practices and focuses on increasing gender and ethnic diversity across our employees,senior management,and board.The Board has continued to set a target of 30%female representation at all senior leadership levels.Female repre

281、sentation at the executive team and senior vice president(SVP)level has increased from the prior year however will continue to be a focus in FY25 as we prioritise our efforts towards talent management and Executive succession planning.As of 31 December,women represented:%female 220242023Overall work

282、force5755Board director5050Executive team/SVP2322 Vice President5735Senior Director3647Director5040Manager5661Our people Delivery 613 Product,technology and engineering 163 Corporate 125 Crowd 212 Revenue,solutions and marketing 45 Executive 13261 Data from Appen University.2 Data from Appen Univers

283、ity,excludes China employees.Training and developmentIn FY24,our employees averaged 2 hours of training per month via Appen University,with a total training time of 29,280 hours 1.Our courses focused on building knowledge about AI and large language models,along with leading teams and team managemen

284、t.Working ethicallyOur people are required to complete mandatory annual training in critical areas such as data privacy,security awareness and sexual harassment.Our Business Ethics training which sets out employees obligations to act honestly and ethically is also mandatory for all employees and con

285、tractors.In FY24,we achieved an 90%completion rate for our Business Ethics and Code of Conduct training 2.Impact through inclusion and volunteeringThis year,our Employee Service Committee(ESC)team led impactful initiatives that celebrated diversity,promoted employee well-being,and strengthened our c

286、ommitment to giving back.We hosted TedChat sessions on topics such as emotional intelligence,mental health,and leadership,fostering meaningful conversations and professional growth across the organisation.Our health and wellness programs included the annual flu vaccination drive,our inaugural fitnes

287、s challenge,and the Steptember activity,which encouraged physical activity while supporting disability-focused causes.Key highlights included the Biggest Morning Tea fundraiser,where employees came together to support cancer research,and our Community Outreach Program in the Philippines,which brough

288、t meaningful support to local communities.These efforts exemplify our dedication to creating a positive impact beyond the workplace.Diversity and inclusion remained at the heart of our initiatives,with celebrations like Womens Month,Pride Month,and National Disability Week fostering awareness and be

289、longing.Cultural and community-building events,such as Flores de Mayo and Juneteenth,strengthened employee engagement and connection.A standout initiative this year was our partnership with Naamal,through which employees mentored refugees and underrepresented communities in Ethiopia and Kenya.This p

290、rogram provided vital guidance and support for mentees as they developed digital skills and pursued remote work opportunities.Through these programs and more,the ESC team has continued to inspire connection,growth,and meaningful impact,reflecting our shared commitment to making a difference.FY25 foc

291、usWe remain focused on creating an environment where our employees can thrive,grow,and contribute to Appens success.In 2025,our emphasis will be on creating additional learning opportunities including investing in leadership development,and enhancing our overall employee experience.27Appen 2024 Annu

292、al ReportUS$M(unless stated otherwise)FY24FY23ChangeGroup revenue and other income 235.7274.2-14.0%Operating revenue234.3273.0-14.2%Adjusted operating revenue 1220.9190.416.0%Gross Margin%239.3%36.3%3.0ppUnderlying EBITDA 37.8(24.5)nm%Underlying EBITDA 3 before FX3.5(20.4)nm%Underlying NPAT 4(10.5)(

293、52.8)nm%Statutory NPAT 5(20.0)(118.1)nm%Dividend cents per shareNilNilFinancialAppens financial results reflect a transformative year for the company.A strong focus on cost and operational efficiency whilst capturing revenue growth enabled Appen to achieve its cash EBITDA profitability objective in

294、early H1 2024.Appen is now well positioned for profitable growth.Financial performance summaryAppens financial performance was impacted by the termination of the Google contract which ended on 19 March 2024.Following the loss of the contract,a$13.5 million incremental cost out program was announced

295、and was fully executed by the end of H1 FY24.With disciplined cost management,streamlined operations,and strong a focus on data quality and speed,Appen returned to EBITDA profitability in H2 FY24.A summary of Appens financial performance for FY24 is as follows:Operating revenue decreased 14.2%to$234

296、.3 million,reflecting the loss of the Google contract.Excluding the impact of Google,operating revenue grew 16.0%to$220.9 million.Global Services revenue down 38.3%to$118.1 million.Excluding the impact of Google,down 3.9%to$104.7 million.New Market revenue grew 42.6%to$116.2 million,driven by strong

297、 growth in China and Global Product.China finished the year strongly with Q4 revenue of$17.7 million representing a quarterly record and quarter on quarter growth across all four quarters.Product development investment(excluding amortisation)decreased 43.3%to$19.6 million and represented 8.4%of reve

298、nue.Underlying EBITDA(before the impact of foreign exchange losses)increased$23.9 million to$3.5 million due to revenue growth,and cost out programs executed in FY24 and FY23.Priority SDG1 Excludes the impact of Google contract termination.2 Gross margin refers to revenue less crowd expenses.3 Under

299、lying EBITDA excludes impairment loss,earn-out adjustment,restructure costs,transaction costs,and acquisition-related and one-time share-based payment expense.4 Underlying NPAT excludes after tax impact of impairment loss,earn-out adjustment,restructure costs,transaction costs,acquisition-related an

300、d one-time share-based payment expense,amortisation of acquisition related intangibles,and deemed interest on earn-out liability.5 FY23 includes non-cash impairment of$69.2 million.Value drivers28 Underlying EBITDA(including the impact of foreign exchange gains and losses)increased$32.3 million to$7

301、.8 million.Underlying net loss after tax improved by$42.3 million to$10.5 million from an underlying net loss of$52.8 million in FY23.The improvement was driven by revenue growth,and cost out programs executed in FY24 and FY23.Statutory net loss after tax improved by$98.1 million to$20.0 million fro

302、m a net loss of$118.1 million in FY23.FY23 includes a non-cash impairment charge of$69.2 million.No dividend was paid to ensure appropriate allocation of capital.Cash balance of$54.8 million at 31 December 2024 and no debt.Operating revenue Group operating revenue decreased 14.2%to$234.3 million,ref

303、lecting the loss of the Google contract.Excluding the impact of Google,operating revenue grew 16.0%to$220.9 million,largely driven by generative AI related projects within our Global and China divisions.In FY24,generative AI related work represented 22%of group revenue,compared to 4%in FY23.On 22 Ja

304、nuary 2024,Appen advised that it had received notification from a material customer,Google LLC,that as part of a strategic review process it was terminating its global inbound services contract with Appen.All Google projects ceased on or before 19 March 2024.Appens FY24 revenue from Google was$13.4

305、million compared to$82.8 million in FY23.Group revenue,excluding Google was$220.9 million,compared to$190.2 million in FY23.Revenue by operating divisionGlobal Services revenue decreased 38.3%to$118.1 million(FY23:$191.5 million)and was impacted by the Google contract termination.Excluding the impac

306、t of Google,revenue decreased 3.9%to$104.7 million(FY23:$108.9 million).The small decrease excluding the impact of Google reflects a continuation of the stabilisation of the revenue in H2 FY23 following the declines experienced H1 FY23.Compared to H2 FY23,H1 FY24 increased 5.9%to$50.8 million and H2

307、 FY24 increased 7.7%to$54.5 million.Growth within our Global customers is primarily driven by generative AI related projects.For these projects we saw a significant increase in the volume of work utilising our AI Data Platform(ADAP).This growth is reported in the New Markets segment.New Markets reve

308、nue increased 42.6%to$116.2 million,driven by strong growth in China and Global Product.Second half revenue from New Markets grew 55.6%to$66.4 million from$42.6 million in H2 FY23.Global Product revenue increased 221.9%to$31.3 million due to growth in generative AI related projects.These projects ut

309、ilised our AI Data Platform(ADAP).Customers selected ADAP over internal annotation tools for the ability to rapidly setup and customise annotation tasks.China which includes Japan and Korea grew 70.7%to$58.9 million compared to$34.5 million in FY23.The business grew quarter on quarter throughout FY2

310、4 and finished the year strongly,delivering a record Q4 revenue performance of$17.7 million.Growth in China was largely driven by continued traction in generative AI related projects,with China continuing to support leading LLM model builders.Growth came from expansion within existing large technolo

311、gy customers as well as new customer wins.China remained focused on growth and maintaining its position as a leading AI data company.Enterprise and Government revenue combined decreased 30.2%to$26.0 million compared to$37.3 million in FY23.Enterprise was impacted lower volumes within existing large

312、projects.Government revenue was impact by limited opportunities during FY24 given awards are generally linked to infrequent government budget cycles.Further detail can be found in the Customer and Brand value driver on page 22.1 Excludes Google.29Appen 2024 Annual ReportProduct developmentTechnology

313、 continues to play a critical role in Appens business and underpins our ability to deliver large scale data requirements for our customers.Investment in product development in FY24(excluding amortisation)decreased 43.3%to$19.6 million and represented 8.4%of revenue(FY23:$34.6 million or 12.7%of reve

314、nue).While the quantum of our product development spend was lower in FY24,we remain committed to the development of industry-leading products and tools.For more information on these initiatives see the Technology processes and systems value driver on page 12.Amortisation of product development was$1

315、1.8 million down from$19.7 million in FY23.The decrease predominately reflects lower spend in relation to product development in FY24 and FY23.Underlying financial performance Underlying earnings before interest,tax,depreciation,and amortisation(EBITDA)was$7.8 million,a$32.3 million improvement from

316、($24.5 million)in FY23.Before the impact of foreign exchange gains or losses,underlying EBITDA was$3.5 million,a$23.9 million improvement from($20.4 million)in FY23.The significant improvement was driven by revenue growth,and cost out programs executed in FY24 and FY23.Crowd expenses was down as a p

317、ercentage of revenue at 60.7%compared to 63.7%for FY23.This is primarily due to a change in customer and project mix,resulting in improved gross margin 1(FY24:39.3%,FY23:36.3%).Employee expenses 2,excluding direct project workers(included in crowd expense)decreased 29.2%to$55.1 million from$77.8 mil

318、lion in FY23.All other expenses 3 for FY24 decreased 19.6%to$30.3 million compared to$37.6 million in FY23.The decrease in employee and other expenses reflects the benefit of the cost reduction programs completed over the course of FY23 and FY24.The Global Services segment reported EBITDA of$14.7 mi

319、llion down 15.8%from$17.5 million in FY23.Despite the loss of the Google contract,the impact on EBITDA was minimised due to improved gross margins and cost out programs executed during FY24.The New Markets segment EBITDA improved by$24.6 million to($8.1 million)compared to EBITDA of($32.7 million)in

320、 FY23.The improvement reflects revenue growth and improved gross margin in both China and Global Product.Underlying net loss after tax improved by$42.3 million to($10.5 million)compared to($52.8 million)in FY23.Increase predominately due to the factors noted above as well as lower depreciation and a

321、mortisation in FY24 compared to FY23.Statutory net loss after tax improved by$98.1 million to($20.0 million)and includes one-off restructure costs of$3.0 million associated with the implementation of the cost reduction program and a leadership refresh implemented during FY24.Included in FY23 is non-

322、cash impairment of$69.2 million in relation to the Global Services cash generating unit.Cost reduction program In response to the loss of the Google contract,the Group announced and delivered a$13.5 million 4 cost savings program that was executed in H1 FY24.The initiatives completed enabled Appen t

323、o achieve its cash EBITDA profitability objective in H2 FY24.Balance Sheet Net assets at 31 December 2024 were$114.3 million(31 December 2023:$92.8 million).The increase in net assets was a result of equity raised in H2 FY24,offset by trading performance during the year.Trade and other receivables c

324、ombined with contract assets were$0.9 million higher at 31 December 2024 compared to 31 December 2023 due to the timing of customer receipts.Current liabilities were$3.8 million lower at 31 December 2024 compared to 31 December 2023.The decrease was mainly due to finalisation of the Quadrant earnout

325、 liability,settled via the issue of ordinary shares in January 2024.Cash balance increased by$22.7 million to$54.8 million at 31 December 2024 from$32.2 million at 31 December 2023.The balance includes net proceeds of$42.1 million from the issuance of shares during the period.The cash balance as at

326、31 December 2024 was impacted by foreign exchange,working capital requirements from a strong Q4 FY24 as well as timing of customer receipts,with$10.0 million received from a major customer on 4 January 2025 versus last week of December as scheduled.In H2 FY24,Appen raised A$65 million equity.A$50 mi

327、llion fully underwritten institutional placement completed on 14 October 2024,and A$15 million Share Purchase Plan completed on 7 November 2024.Net proceeds of$42.1 million through the issue of 33,854,167 shares.Financial1 Gross margin refers to revenue less crowd expenses.2 Employee expenses per ma

328、nagement reporting.Excludes direct project workers included in gross margin calculation(i.e.crowd expenses).3 All other expenses excludes non-cash share based payment expense but all other expenses included in underlying EBITDA before FX.4$13.5 million annualised cash opex savings(comparing June 202

329、4 vs January 2024 planned opex.Cash opex refers to opex included in underlying EBITDA calculation,adding platform development capitalised from the profit and loss,less non-cash share-based payments expense.30Growth strategy and FY25 priorities Appen plays a key role in powering both deep learning ap

330、plications and generative AI.Appens strategy remains focused on delivering high-quality data that powers cutting-edge AI models.Customers are increasingly demanding faster turnaround times and higher-quality data,which requires the seamless integration of our project delivery teams,advanced technolo

331、gy platforms,and skilled crowd workforce.Appens AI data services for deep learning and generative AI is illustrated on page 2 in the About Appen section.Appen is focused on the following to support its customers and deliver profitable growth.1.Target Customer Segments:Appens efforts will centre on p

332、roviding high quality data for companies building or utilising leading AI models.The market segments we address will remain the same as FY24,focusing on US hyperscalers,China,government entities,and other technology enabled enterprises.2.Technology Evolution:Continue to advance ADAP to meet the soph

333、isticated requirements of generative AI projects,while enhancing our crowd management platform to support faster ramp times and specialised expertise.Technology is key to our delivery operations.3.Operational AI:Leveraging AI within our operations to drive efficiency in quality assessment,workforce onboarding,and support functions.4.Talent Development:Investing in our people by fostering growth an