Appen Limited Stock

Good morning, everyone, and welcome to Appen's First Half FY '26 Results Webinar. I'm Sam Wells from NWR.

And joining me from the company today is CEO and Managing Director, Ryan Kolln; and Chief Financial Officer, Justin Miles. [Operator Instructions]

And with that, I'll pass it over to you, Ryan.

Thanks, Sam, and good morning, everyone. Thanks for joining us today for our H1 FY '26 results presentation.

My name is Ryan Kolln. I'm the CEO and Managing Director at Appen, and with me is Justin Miles, our CFO.

Today's presentation covers 4 sections. I'll start with the results overview. Justin will then walk through the detailed H1 FY '26 financial performance. Then I'll return to cover our strategy and operational update, and we will close with an FY '26 outlook and guidance before opening up for questions.

Let me start now with an overview of our H1 results on Page 5 of the presentation. The first half delivered on the themes that we've been building towards. At the group level, we delivered $119.9 million in revenue. This is 17% growth on the prior corresponding period. Appen China was a standout for the half. Revenue grew 80% to $76.2 million and achieved an annualized revenue run rate exceeding $175 million in June. That is up from $135 million at the end of 2025. The sustained growth reflects the strength of our relationships with the Chinese model builders and the ongoing demand for our data services in the region.

Appen Global continues to make progress. Outside of our largest client, Q2 revenue grew 65% on Q1. We're progressing well in our ambition to expand across frontier AI labs in the U.S.A. Capturing cost efficiencies via AI-enabled operations remains a focus for Appen Global. We have identified an incremental $12 million in operational efficiencies. 70% of the $12 million will be executed before the end of the year and the remainder in Q1 FY '27. It's important to note that the cost-outs don't impact the ability to grow within Appen Global.

On profitability, we delivered an underlying EBITDA before FX of $5.3 million for the half, a $7.5 million improvement on the first half of last year. EBITDA margins for the half were 4.5%. Our cash balance at 30 June was $44.7 million, equivalent to AUD 64.8 million.

I'll now hand over to Justin, who will take us through the financials.

Thank you, Ryan, and good morning, everybody. A reminder that we report in U.S. dollars and that all comparisons are to the half year ended 30 June 2025, unless stated otherwise.

Starting with the H1 FY '26 profit and loss on Page 7. As Ryan already mentioned, revenue increased 17.5% to $119.9 million. Within our operating segments, Appen China revenue grew by 80.4% to $76.2 million, with Appen Global down 26.9% to $43.7 million. Appen Global made solid progress during the half. However, growth in new areas has not yet offset a reduction in traditional work.

Gross margin reduced slightly, down 30 basis points to 36.7%. The decrease reflects a change in customer and project mix, noting China margins are traditionally lower compared to Appen Global. Underlying EBITDA before FX improved $7.5 million to $5.3 million. The increase reflects revenue and gross margin growth, prudent cost management and operational leverage within Appen China.

I won't talk to Slide 8 as we have just covered this data. So, over to Appen Global revenue and EBITDA on Slide 9. The chart on the left shows quarterly revenue and on the right-hand side, it is underlying EBITDA. The charts demonstrate the progress made during the half. Q2 FY '26 revenue reflects growth from expanding projects with leading AI labs. Pleasingly, outside the largest customer, Q2 FY '26 revenue grew 65% compared to Q1 FY '26. However, as just mentioned, growth in new areas has not yet offset a reduction in traditional work, resulting in revenue of $43.7 million for the half, which is down compared to H1 FY '25.

An important point to note is that traditional work has currently stabilized. EBITDA reflects some investment in winning new customer projects and does show improvement during the period. Ryan has already mentioned this, but again, noting that approximately $12 million in operational efficiencies have been identified in the Appen Global segment, with 70% to be executed by the end of this year and the remainder in Q1 next year.

Over to Slide 10, which shows quarterly revenue and underlying EBITDA for Appen China and reflects the strong market position Appen China continues to hold. Revenue grew each quarter, with Appen China achieving $76.2 million revenue for H1 FY '26, which was 80% growth on H1 FY '25. Growth continues to be driven by new and expanding LLM-related projects. Appen China exited the half with annualized revenue exceeding $175 million.

Pleasingly, in addition to revenue growth, profitability has improved, with increased gross margins due to a greater mix of GenAI projects and increased revenue from high-margin pre-built data sets. Appen China is also capturing scaling efficiencies due to tight OpEx controls as revenue expands.

Turning to Slide 11 for the profit and loss summary. I won't talk to all line items. However, there are a few additional points to highlight. There was a decrease in employee and in other expenses in Appen Global, and this is highlighted later in the presentation. Employee expenses for Appen Global were down 19% on PCP and other expenses down 29% on PCP. The decrease was achieved through technology innovation and automation.

The decrease in Appen Global was offset by additional expense from the Appen China segment to enable the delivery of strong revenue growth. The $14.9 million NPAT improvement and $8 million improvement to underlying NPAT reflects the improved performance for the half as well as a decrease in amortization.

I'll finish up with the cash flow summary on Slide 12. The cash balance at the end of the period was $44.7 million. The Australian dollar equivalent cash balance is AUD 64.8 million. Despite the decrease in balance compared to the prior period, a strong balance remains. Cash flow used in operations was $2.7 million. In comparing to the prior period, it is important to note that H1 FY '25 was positively impacted by the receipt of a payment from a major customer in the first week of January '25 versus December '24 as scheduled.

Cash flow used in operations for the period was impacted by the timing of customer receipts, annual payments during the period and working capital required to support strong Appen China growth. Cash used in investing activities was $1.9 million higher compared to H1 FY '25, due to higher investment in product development and new facilities for the Appen China division. Cash used in finance activities of $2.7 million reflects lease payments. Cash was used to fund operations and CapEx.

That concludes the financial performance slides. I'll now hand back to Ryan.

Thanks, Justin.

I'll now cover our strategy and operational progress that we've made in the half. So turning to Page 14. To understand Appen's services, it helps to start where the value sits in AI development. There are 3 fundamental building blocks for AI development; compute, algorithms and data. So, compute is abundant and commoditizing. Algorithms are increasingly open and largely commoditized, while unique data is becoming scarce and is a major source of differentiation for AI model performance. But not all data is equal. There are many facets of data used to train models, all with different uses.

Public data is largely exhausted and it's already been captured in existing models and offers little ability to differentiate. Synthetic data is reliant on other models to produce, does not solve new or novel situations and can result in model collapse if overused. Real-world bespoke data, the kind that Appen creates, enables new AI approaches. It brings human expertise and interactions that improve and evaluate models in ways that alternatives can't replicate. This is the market that Appen serves.

Primary way that we serve our clients is through a managed services approach, where we build custom and high-value data sets that are specific to the AI model needs. The usual first step is that a researcher comes to us with their data needs. It can be a description of the task, expertise requirements, quality rubrics, data volumes and time lines. Our delivery experts work very closely with clients to deeply understand their intentions and translate that into a data workflow that typically coordinates a set of complex and iterative handoffs between humans and AI models to generate the data.

We deliver through a combination of our research and delivery experts, our proprietary software stack and our expert workforce marketplace. The output we provide is high-quality data for leading AI organizations, including the global Tier 1 AI labs. What differentiates Appen is the combination of the platform, people and our global reach. Our workforce is a core competitive asset. More than 1 million contributors across 200-plus countries and over 500 dialects and languages covered.

We focus on building out our domain expertise in our workforce. We now have contributors covering more than 100 specialist fields from computer science and mathematics to law, medicine and the creative disciplines. Generative AI demands a different type of contributor. It requires people who can reason, evaluate and provide expert level feedback. Our workforce has rapidly evolved to support the new expert level requirements of our customers. And our service offering continues to expand and covers 9 categories, and it's evolving rapidly with the needs of our customers.

Some of the areas that we're working in include LLM training data covering supervised fine-tuning, RLHF and preference annotation; multi-modal data across text to image annotation, aesthetic scoring, video labeling, embodied intelligence; speech and audio across a broad set of languages; domain expert annotation in medical, scientific, legal and financial fields amongst many others; model evaluation covering LLM and vision benchmarking and search quality performance; computer vision and physical AI for autonomous driving, robotics, smart home, AR/VR and embodied AI. And we also offer reinforcement learning environments, off-the-shelf data sets and platform and tooling solutions.

The breadth of our offering allows us to evolve with the needs of the leading AI labs. We have recently expanded our data set offering significantly. These are the existing data sets that we either own or resell with value-added services on top. We are seeing an increase in the demand for these data sets, and we are building out our catalog to meet the specific needs of model builders.

Some of the areas we have recently added data sets include reinforcement learning tasks, code repositories, book corpuses, enterprise data for Agentic AI and many other standalone data sets covering unique areas like medical dictation, STEM Q&A and infographics. These products accelerate time-to-value for our customers and often also come alongside managed service projects to add value to the data sets. We anticipate this to be a solid growth driver in the near future.

A unique proposition of Appen is our coverage of the 2 AI epicenters, namely China and the U.S.A. We operate 2 dedicated businesses to cover these markets, each purpose-built for the specific customer requirements. Appen Global serves the U.S.A. and Europe, targeting hyperscalers, foundational AI companies and vertical AI builders. Demand drivers include AI capabilities, new customer expansions and new data modalities. Appen China serves China, Japan and Korea, targeting Chinese big tech, foundational AI and vertical AI builders. In addition to the demand drivers, international expansion is an increasing driver of Chinese model builders look to complete in the global markets.

Each business has its own dedicated operations and technology stack. That separation allows us to optimize for the distinct requirements of each market without compromise. As Justin mentioned earlier, Appen Global's technology road map has continued to deliver operational efficiencies. Employee expenses in H1 FY '26 came in at $14.4 million, down from $17.7 million in H1 FY '25.

Other expenses were $8.1 million compared to $11.4 million in H1 FY '25. We continue to be highly focused on driving technology-led efficiencies across our operations, particularly through the use of AI. We have identified approximately $12 million in incremental annualized cost efficiencies. Around 70% will be executed over the remainder of FY '26, with the balance by the end of Q1 FY '27. Importantly, there's been no operational impact from the cost-out work executed to date. We are capturing efficiencies through AI-enabled operations, not by reducing our ability to deliver high-quality data at speed.

Let me now turn to our outlook and guidance statement for the full year. We remain confident in the AI data market and Appen's ability to contribute meaningfully to the development of leading foundation models. We continue to see positive signals on LLM-related growth from both Appen Global and Appen China customers. We're winning new work with leading AI labs and expanding existing programs.

We remain focused on driving technology-led efficiencies across our operations. And as in previous years, Appen Global revenue is predominantly project-based and seasonality continues to skew revenue towards H2. Considering all of this, we reaffirm our FY '26 guidance of group revenue of $270 million to $300 million and underlying EBITDA before FX margin of 5% to 10%.

That concludes our presentation for today. Thank you for your time and your continued interest in Appen. Justin and I are now happy to take questions.

Great. Thank you very much, Ryan and Justin. [Operator Instructions] We'll kick off with some pre-submitted questions before getting to any analyst questions today.

First, on profit sustainability. Can you clarify how much of the recent EBITDA improvement is driven by a permanent structural cost reduction versus temporary project-based revenues?

Yes. Thanks, Sam. So, we're definitely focused on a sustainable cost base and profitable growth across the business. The good thing is that, particularly for China, we are seeing improved margins. That's coming through the gross margin of China improving, but also we're getting the leverage of scaling efficiencies in the China business. And as we've called out, we've continued to drive OpEx improvement in Appen Global. So, a multitude of factors, but we see this as a sustainable and ongoing trend in the business.

Okay. Great. And just a follow-up there. What baseline quarterly revenue is currently required to maintain positive EBITDA through the second half of FY '26?

Look, I think it's fairly similar to where we're at today in Q2. As we said, we've made some efficiencies across the business. So, there's not a material uplift required to deliver profitability through the remainder of -- at a quarterly basis.

Great. And on cash runway and free cash flow, given the cash balance, what's the current projected time line to achieve consistent positive free cash flow?

I'll throw that one to Justin.

Thanks, Ryan. Thanks for the question, Sam. Obviously, part of the strategy, we're talking about the efficiencies and the performance of the business and the growth in Appen Global, we're well towards -- heading in the right direction and well towards achieving that. That is the goal, sustained profitability and free cash flows. So, we've got enough cash. We've got a strong cash balance. There's enough working capital. We're confident that the runway is there. There's no additional funds required to manage the growth. So, we're definitely heading towards it. We're heading in the right direction, and we're not too far off.

Okay. And another follow-up there. Should shareholders expect the current cash reserves to be sufficient to fund operations until self-sustainability is reached?

Based on everything we know today, yes.

And just one more pre-submitted question before we get to the analysts. On revenue diversification, outside Appen's core hyperscaler clients, what specific momentum or contract wins are we seeing in the broader enterprise AI market? And how long are these -- sorry, are the typical sales cycles for these newer revenue streams?

So, we're very focused on the large foundation model builders and the Neo Labs that are popping up, typically spun out of the research division of these large AI labs. So, that remains the focus of Appen at the moment. That's where the bulk of the spend is in the market. and it's highly aligned to the capabilities that we're building. In terms of the deal cycle time, it can vary quite extreme. Some of the deals are very, very short lead time. If researchers are contemplating specific areas they want to work through and there's a good amount of back and forth that can introduce a longer sales cycle, but it's certainly trending towards much, much shorter sales cycles.

Okay. Great. Next question comes from Nicola Willmette at Barrenjoey. Nicola Willmette at Barrenjoey, would you like to ask a verbal question?

It's Josh Kannourakis here. Can you hear me?

Yes.

Cool. Sorry. Nicola's just looking at me a bit funny here. All good. No worries. So, just the first couple of questions to get kicked off. First one, just around in the global business. So I know, obviously, there were some reasonably chunky customers in terms of -- that you had contracts for that you ended last year on. Some of those contracts were potentially coming back.

Like what have you seen in terms of the start? I know visibility is obviously not high. But what are some of the, I guess, the conversations and scope for work that you see from both, some of the traditionally big customers that you have, but also, as we said, some foundational other customers into the second half. And just to talk a little bit about what confidence you have in that deliverability to deliver into the second half there?

Yes. Thanks, Josh. So, there are a few things that are giving us some really good confidence at the moment. So, first is we've been able to penetrate into some new areas within existing customers that are really focused on the foundation model build. And we've started in specific areas that -- starting with the first project in a specific domain. And now what we're seeing is a much broader set of conversations around growth opportunities, not just within the projects that we're working on, but across a broader set of domains. And a lot of these growth opportunities are in areas that we've been strategically investing our capabilities in. So, some of the things that we've called out like coding, finance, health care, really pushing into the more valuable part of the market at the moment to support AI development in specific data modalities.

Got it. That's helpful. And traditionally, the margin on those sorts of projects as well versus maybe where the historical gross margin is. Can you give a bit of context on that?

Yes, it can vary, but you should think about them broadly similar to the traditional margins that we've seen in the business.

Got it. And just while we are on global, just the competitive environment in terms of what you're seeing out there. Obviously, there's a number of players. What are you guys seeing in terms of when you are in those new markets, what the competition is? Is there price? Is price coming into it? Is it more around the deliverability or the quality? Maybe just to talk through some of those frameworks that you think customers are using to choose the vendors in that space.

So the ability to deliver high-quality data is always number one. We don't see price as a major factor, particularly for the AI labs. We see quality and speed being the 2 primary considerations. And we used to call out, there are some competitors that are growing very rapidly. And that's built on a lot of -- they're established within the companies. They have got the trust of the researchers. And the researchers go directly to them because they trust their ability to deliver quality and they trust -- it speeds up the cycle rather than running an RFP process.

And that's what's giving me a lot of confidence in the Appen Global momentum that we're seeing is because of the conversations that we're having in specific labs, and it's across multiple labs. They're really satisfied with our work. The quality is really great. That's leading to bigger opportunities. But it is on the back of their confidence that we are delivering high quality and that we can turn around the data really quickly for them. So the thematic that we're seeing with some of our competitors is really starting to play out within Appen Global.

Great. And just moving on to Appen China, another stellar result, obviously. But when we look at that business, now it looks and we've seen, I think, probably one thing that's changed a little bit since we last talked is just the rapid release, including, I think, even yesterday, one of the sort of GLM-3 coming in one of the Chinese models coming in at sort of record thing. And then Qwen and the like as well coming out with some fantastic models. I mean, there's been a lot of talk around the geopolitical aspects here, but it does feel like the Chinese models are definitely trying to accelerate into the U.S. and other markets as fast as possible.

And I think some of the OpenRouter stuff was saying it's over 60% of the tokens are coming through from those models. So like, I mean, I'm just interested in maybe under the hood what the trends you're seeing? And how should we sort of think about the breakup of that work, the continuation of that trend? It looked like, obviously, in the Q4, there was a bit of an acceleration and then margins are also tracking. So, maybe just a bit of a context around the type of work you're seeing, the type of customers, your confidence in revenue momentum and then confidence around the margin upside there.

Yes. And look, it's some incredibly exciting and impactful work coming out of from the open source model builders in China, which I think we all get a lot of visibility into and we can all kind of predict that, that's going to be a continued focus. I think some of the things that we see on the ground in China, which don't get as much exposure outside is the real focus on, I'll call it, consumer-based AI, where through the super apps, the companies in China, the AI labs, the focus on things like health care advice, financial advice. We're starting to see a lot of video generation, AI video generation, particularly in short-form videos. And I think they're a fair way ahead of the U.S. on the video generation side.

We're at least getting the applications out that are supported by these models. And then the third really big driver in what we're seeing in China is the international support required to support Chinese technology companies that are heavily reliant on AI. So, you can think about social media companies, e-commerce companies. There's a really big driver for supporting their international ambitions.

Okay. Great. And just a final comment there just on margins. Obviously, that fourth -- sorry, the second quarter margin was very strong. Do you think that can continue? And how should we think about, I guess, the cost base versus margin perspective there in terms of what further expansion we could see across this year from China?

Yes. We certainly expect that trend to continue. And we're seeing good operating leverage come out of the China business, and that's a trend we expect to continue also.

Thanks, Josh. Next question. Sticking with China. Is your Chinese lab revenue recurring in nature, a valuation and data that's refreshed every model cycle or one-off data set builds? And a follow-up to that, roughly how much of the $175 million run rate would repeat if customers shift to new models next year?

Yes. Thanks, Sam. So it is a mix of what we do. There is work that is directly related to the development of new models. There's a lot of work that we do, which is related to the evaluation of existing models, making sure that they're working in applications, et cetera. There's also a lot of work that we do that is very experimentative with the researchers that actually may never make it into a model. So it's a difficult one to dissect because the needs at a project level change and vary on an ongoing basis. But I think what we're seeing in both the Chinese and the U.S. market, there's certainly no slowdown in the model advances and the model release cycles. If anything, it's speeding up.

So, I think the notion of, if China stop building models, what would happen is not one that we're too worried about. We're very focused on supporting them as they evolve into new models. But as I called out, also different applications, particularly on things like short-form video, robotics, speech. There's a coding development. There's a very rich ecosystem of applications that sit on top of the existing models.

Okay. Great. And just a follow-up there. Does anything built in China like data sets, tooling capacity gets sold back to global customers? Or does sovereignty and customer requirements keep the 2 segments commercially separate?

It is largely separate and the data export controls in China kind of mean that there's no data that's sold back into the global customers.

Okay. Great. And switching to Appen Global. Can you just elaborate on the Board's long-term strategy for the global business? Will growth be primarily organic? Or is there the ability for acquisition-led growth? And if organic, which higher-value services and initiatives will drive growth to improve gross margin?

Yes. We're certainly focused on growth in Appen Global, profitable growth. We think there is a significant pathway and runway through organic growth in the business. So, inorganic growth right now isn't a high priority for us. And in terms of the services that we provide, it's continuing to work very closely with the AI labs to meet their needs. And we called out in the presentation some of the ways that we're evolving. That is in kind of really close response and feedback to what we're hearing and getting requests for from the AI labs. So, we will continue to evolve to meet the needs of the data for AI training, for AI evaluation across LLMs and the future variants of AI models.

Great. And sticking with Appen Global, how deep and durable are Appen's relationships with core clients? Is Appen pursuing frontier AI companies such as Anthropic? And how does it convert pilots into recurring larger scale work?

Yes. So, our target customers are all of the leading AI labs. We work with a real majority of them today. There are a few that we're targeting and making really good progress on to break into. In terms of how we convert a pilot into a larger project, it is really -- and this is a very typical sales cycle where we come in and do a small piece of work. And based off the ability to deliver really high quality at speed for that piece of work, building the trust with the researchers and then showing them our capabilities and the work we're doing across different clients, that confidence that we build based off the project, based off what we're seeing elsewhere and the conversation that we have and the way that we bring value to the AI labs is the best way to get up that, we'll call it the revenue curve as quickly as possible.

Got it. Just a follow-up question from Josh at Barrenjoey.

Just a follow-up guys on the robotics side of things. There's been some interesting news this week. Figure, one of the big humanoid robot companies has come out with a platform for building real-world training data. And I mean, I'm just interested, obviously, they're big. They're very well funded. But what's the opportunity you guys see in robotics? And if you think about the capability and the muscle you've had to build, like, are there any other options to create a specific sort of more white label product or a specific product for robotics that could be used by some of these humanoid companies, both in the U.S. but also in China, which is obviously a huge focus for the government there?

Yes. Thanks, Josh. Good question. So, you can think about 3 sources of data that are needed to train, particularly the humanoid robotics, which are getting a lot of focus at the moment. So, one is what's called eco-centric data collection, where data is being collected by humans who would typically have cameras strapped to their body, sometimes on the forehead, sometimes in different positions on the body. And this is capturing what humans are doing in the real world around things like anything that requires some type of physical manipulation, particularly with the hands and arms. That's a really big focus, and that's some of the data that Figure AI released was around these ego-centric data sets. This part of the market is very interesting. It's a little bit of a commoditizing really quickly because there are many companies that are out there and going and collecting the data, et cetera.

The second part of data needs are related to the annotation of that data. And it's less about the annotation of what we saw with autonomous driving, which is putting a bounding box around all of the images. It's more assessing and filtering for quality standards, making sure that the instruction set matches the image because there is really vast quantities of data. There are LLMs being run across it. But what we're finding is that there is demand for human involvement in the quality assessment of that data that's being captured.

The third data source is more simulation-based, where it's getting humans to describe in a simulated environment, the task that the robot should be completing as a way to provide the training data. There is one fourth bucket, which is related to teleoperations, which we don't really play in too much, but that's another interesting evolution of the market. So like the LLM front, it's evolving very quickly and the needs of the robotics builders are changing really quickly. And we're trying to find the best place, as you say, Josh, that's got a durable and long-standing value add, but is also going to generate good margins for the business.

Great. And just final one for me. Just in terms of obviously being quite a bit of movement and change in strategy from one of your potentially big social media customers out there. I know you had a fair bit of work from them towards the end of last year. Have you seen any of those larger projects start to resume or get any signaling on when you expect some of those projects to resume?

Yes. So, we're still, I mean, in close communication with all of our clients on their needs. And what we find is that these shifts can come very, very quickly. So, there's a lot going on across all our clients. They're changing strategy really quickly, and we stay super close to meet their needs.

Got it. But yes, not -- hasn't sort of resumed some of those larger ones as of yet, just more so a second half story?

Yes. Look, there's always a -- there is a traditional skew to the second half. So, we're confident that we'll see that growth come through.

Next question comes from Conor O'Prey at Canaccord.

Yes. Hopefully, I have managed the technology. Ryan, a couple of questions. Maybe if we go back to the -- I guess if we go back a few years to the previous peak of the business, one of the defining characteristics was a heavy customer concentration really around 2 customers driving a lot of the revenue growth. I'm wondering -- and I think you and I were both -- you are in the business, me observing the business from the outside. We're both around that. And I'm wondering what -- at that time, I wonder what lessons you're taking from that, especially in the China business, which is going through a sort of similar analogous kind of growth path? Are you able to diversify the revenue across more customers to sort of lessen those risks?

Yes, Conor, it's certainly a focus for us. And I think the difference between what that period that you're explaining, where there were a couple of big customers that contribute a lot of the revenue, the China AI ecosystem, there are some very dominant players, but there's a decent number of them that it's not market skewed towards too big kind of customers like it was traditionally. So the focus for us is we want to serve the big accounts to the best that we can. There's a huge amount of growth potential there. We also work with a really large number of customers in the China business. This covers the Tier 1 labs, Tier 2 labs, start-ups that are getting into the space. So, I'm less worried about that diversification risk that we had previously vis-a-vis what's happening in China at the moment.

And then just back on Global. Is it fair to characterize the revenue trends there as the kind of the legacy business deal, I guess, we would call it the content relevance piece? Is that in a sort of a structural decline? Is that decline? How would you characterize that? On one hand, we're still seeing that possibly swamp all the other kind of good stuff that's going on? Or is it, I'm guessing it's more complicated than that, but maybe you can sort of break that apart a little bit for us?

So, there's certainly an element of that, Conor, where we've seen some of our more traditional work decline as its LLMs are able to replicate some of that work. But what we have seen, particularly in the first half of this year, some good stabilization across some of the vast majority of that work that we're doing. And we are seeing the uptick in the newer areas related to LLM development. So it is certainly a factor what you're describing there and quite accurate. But we are, as we called out in the presentation, seeing the stabilization of some of the revenue from more of our traditional work.

Thanks, Conor. Next question, just on cost-out. You've identified $12 million in annualized cost efficiencies in Appen Global, with 70% to be executed by the end of Q4 this year. At what point does the incremental margin benefit of this program start to visibly flow through the P&L?

Yes. Justin, I'll pass that one to you.

Yes. Thanks, Sam. So, there will be some benefit towards the end of the year, but it's not going to be material the way the timing works. So, I think there will be incremental benefits in the second half and in Q1 with the full benefit from the start of Q2 next year.

Great. And just a couple of final questions here. Is the Board considering acquisitions or other strategic transactions? If so, what capabilities or businesses would Appen specifically target?

Yes. Like I called out, M&A isn't -- we're very happy with the organic capabilities that we're building. The market is changing very quickly, and we need to be dynamic and responsive to the need. So, we're largely focused on organic growth in the business.

Okay. And final question. As profitability and cash flow recover, would the Board consider share buybacks, dividends or other capital returns?

So the Board will closely look at the capital allocation and consider all options as we continue to improve the cash reserves in the business. So yes, that's certainly for consideration.

Okay. That's all the time we have allocated for questions today. If you do have any follow-ups, please feel free to send them through to me via e-mail, and we'll endeavor to get back to you.

And maybe with that, Ryan, I'll just pass it back to you for any closing comments.

Yes. Thank you, everyone, for your time today, and thank you for your continued interest and support in Appen. We continue to play a major role in the AI ecosystem. It's a very fast and rapidly evolving space, as I'm sure you are keen interest in. But Appen's role is for over 30 years now has been at the forefront of AI, and we look forward to continuing to supporting our customers and delivering great financial results for our shareholders.

Great. Thank you. Thanks very much for joining. That concludes Appen's first half FY '26 results call. Enjoy the rest of your day. Thank you, and goodbye.

Good morning, ladies and gentlemen. My name is Vanessa Liu, and it is my pleasure as Chair of Appen Limited to welcome everyone joining us today for our Annual General Meeting.

I'd like to begin by acknowledging the traditional custodians of the land on which we gather, the Gadigal people of the Eora Nation. I also acknowledge the traditional custodians of the various lands on which you are joining us from and the First Nations people participating in our meeting. I pay my respects to their Elders, past, present and emerging.

It is now just past 10 a.m., the nominated time for the meeting, and I've been informed that a quorum is present. I note that the meeting has been validly constituted, and I'm pleased to declare the meeting open.

I would like to begin by introducing my fellow directors that are present with us today. Robin Low, Non-Executive Director and Chair of the Audit and Risk Management Committee; Stuart Davis, Non-Executive Director and member of the Audit and Risk Management Committee; and our Chief Executive Officer and Managing Director, Ryan Kolln. Lynn Mickleburgh, Non-Executive Director and member of our People and Culture Committee is joining us by phone as she is based in the U.S. Steve Hasker, our Chair, our Non-Executive Director and Chair of our People and Culture Committee, is unable to be live with us today, but has prepared his remarks. We also have various Appen executives present representatives from the company's auditors, KPMG, and representatives from the company's share register, MUFG Corporate Markets.

There are 4 components to today's meeting. First, I will provide you with an update on the business from a strategic perspective. Second, our CEO, Ryan Kolln, will provide a market overview, a recap of the group's 2025 performance and outlook. Third, we will open the meeting for questions on general business. Fourth, we will then move to the formal business of the meeting, where the items set out in the Notice of Meeting and addendum will be put to shareholders. We will also allocate time for questions on each of the items of business when they are considered. So thank you to those shareholders who have submitted questions prior to the meeting. We've endeavored to address these during the upcoming presentations.

So as you might see, this is my first AGM as Chair of Appen, having been appointed to the role on the 1st of January 2026, following Richard Freudenstein's retirement from the Board on the 31st of December 2025. I'd like to take a minute to recognize Richard's contribution. He joined the Appen in Board in 2021, became Chair during one of the most challenging periods in the company's history and stayed the course with discipline and determination. Under his stewardship, we positioned Appen to participate in the generative AI market and his creative foundation from which we now grow. I and the entire Board are grateful to Richard for his leadership and his support during the transition.

I've had the privilege of serving on the Appen Board since 2020. Over the years, I've seen the qualities that make it genuinely special the depth of its data expertise, the scale of its global crowd, the strength of its technology and the culture of the people who show up every day to deliver for our customers. I take on this role with clear eyes, high expectations and genuine excitement about what lies ahead, and we'll continue to work very closely with Ryan and the executive team as we continue to execute on our strategy.

Before I invite Ryan to speak in more detail about the performance of our business, our strategy and the outlook, I'd like to reflect on Appen's context in the market and then our progress over the past year. I will then provide commentary on the items of business we are asking shareholders to vote on today.

We are living through one of the most consequential technology transitions in human history. Artificial Intelligence is being interwoven into the fabric of daily life into the way we communicate, the way we work, the way businesses make decisions, the way scientific breakthroughs happen. The models powering the transformation are becoming more capable, more multilingual and more autonomous with every iteration.

At the heart of this transformation is a key point. AI models learn from data. Specifically, they learned from high-quality human-annotated, carefully curated data, the kind that Appen has been creating for nearly 3 decades. As models become more sophisticated, the data requirements do not diminish, they grow. For AI to become even more reliable, the data needs become more complex, more domain-specific, more demanding of genuine human expertise and judgments. This is a great opportunity for Appen because we have the scale, the infrastructure, the global crowd the reliability and the institutional knowledge that this moment requires.

So with this context, let's turn to our performance over the last year and note that values referred to are in U.S. dollars unless stated otherwise. In 2025, Appen recorded total operating revenue of $230 million -- $230.8 million, representing growth of 4.5% on the prior year when excluding the impact of the Google contract termination in FY '24. Underlying EBITDA before FX improved significantly to $12.2 million, an increase of 250.8% compared to $3.5 million in 2024.

The Board once again made the decision not to declare an interim or final dividend to ensure capital is allocated appropriately as we pursue growth opportunities. Throughout 2025, the business remained focused on maximizing growth while managing costs. We successfully executed against a $10 million cost reduction program largely through technology-enabled efficiencies, which contributed meaningfully to the improvement in gross margins. Revenue from generative AI grew considerably. It's now representing 33% of total revenue by the end of the year, up from 22% in 2024.

We also sharpened our customer focus, which contributed to strong new project wins in generative AI throughout the year and particularly in the second half. The combination of revenue growth, improving gross margins and disciplined cost management, delivered continued EBITDA growth across the year. We remain committed to managing our cost base in line with the revenue opportunity while continuing to invest in the technology and talent required to capture significant opportunity that's represented by generative AI.

Ryan Kolln has continued to lead Appen with strong operational discipline and a clear focus on growth. His leadership has contributed directly to our improved financial and operational performance. During the year, we strengthened our executive team with key additions across delivery, sales, crowd operations and legal functions. These additions reinforce our capability in the areas most critical to our future growth, particularly in developing complex data solutions that are relevant for generative AI and to delivering consistently strong outcomes for our customers. I want to thank the entire executive team and Appen employees around the world for their continued efforts and commitment.

Appen remains committed to delivering strong social, governance and sustainability outcomes. Customer satisfaction improved meaningfully in 2025 with customer NPS rising up to 68, up from 57 in the prior year. This result reflects the quality of our project delivery and the strength of our customer relationships. Our crowd Net Promoter Score, NPS, declined to 22 from 33 in the prior year, primarily due to project availability and earnings stability during certain periods of the year. We recognize the importance contributors place on having a steady, reliable source of income and improving the contributor experience remains a top priority. We continue to uphold the principles outlined in our Crowd Code of Conduct and our Global Ethical Sourcing and Modern Slavery Policy. Employee engagement increased to 83% up from 79% in 2024, and diversity continues to remain a priority. Women represented 58% of our total workforce and female representation amongst our senior leadership team increased to 54%, exceeding our target of 30%.

Just wanted to touch on governance. So as noted, this is my first AGM as Chair following Richard's resignation in December 2025. During 2025, Mini Peiris also retired from the Board due to the increasing demands of her executive role in the United States. Mini joined us in 2023 and brought valuable perspective on the digital marketplace in our key market, and we thank her for her contributions and also wish her well. The Board currently comprises 5 Independent Nonexecutive Directors and our CEO, Ryan, and we maintain 50% female representation at the Board level. I'm satisfied that the Board has the right skills, the diversity of thought and industry depth to guide Appen through this next phase, and we remain committed to maintaining a well-balanced high-performing board.

Our governance practices continue to align with the ASX corporate governance principles and recommendations. The People and Culture Committee chaired by Steve Hasker, continues to carefully consider the skills and composition required to drive the company's future growth. This year, Steve Hasker and Lynn Mickleburgh, are standing for reelection in accordance with the company's constitution and ASX listing rules. Both Steve and Lynn will be addressing shareholders on their candidacy later in the meeting. The Board recommends shareholders vote in favor of both reelections.

Before we cover current remuneration matters, I would like to address the first strike against last year's remuneration report. The Board take shareholder feedback very seriously, and we acknowledge the concerns that were expressed. We have reflected carefully on that feedback. And as you will hear from the Chair of the Board's People and Culture Committee later in the meeting, we are committed to ensuring that our remuneration framework is transparent and clearly aligned with shareholder outcomes. Appen and the Board remain committed to the highest standards of governance and to demonstrating through our actions that executive remuneration is tied directly to the performance that we deliver for you.

Turning briefly to remuneration. The 2025 short-term incentive framework was weighted 80% of financial performance and 20% to nonfinancial metrics. The final STI outcome for KMPs, so our Key Management Personnel was 10% of, reflecting a year in which our financial metrics did not meet the minimum achievement thresholds despite both showing substantial improvement over our prior year. Customer NPS was a strong result, achieving 119% of target, reflecting the high quality of service and project delivery that our customers have experienced. Crowd NPS was below the minimum payout threshold.

Under Item 5 of today's agenda, we are seeking shareholder approval to grant 3,024,260 performance rights to Ryan under the fiscal year '26 long-term incentive plan valued at $1.5 million. The number of performance rights was calculated using the December 2025 VWAP of AUD 0.746 per share. These rights are subject to vesting conditions based on absolute total shareholder return and revenue CAGR, measured over a 3-year period to the 31st of December 2028. Ryan's total remuneration includes a fixed component of $600,000, and STI opportunity of $600,000 and an LTI opportunity of 250% of fixed pay. The Board believes the structure is appropriately rigorous, competitive for the global technology sector and aligned with shareholder interests.

Under Item 6 and 7, we are also seeking shareholder approval for the issue of deferred STI shares to Ryan. Item 6 relates to 223,777 shares deferred from Ryan's fiscal year '24 STI award and Item 7 relates to 15,640 shares deferred from its fiscal year '25 STI award. These deferred share issues are consistent with the terms of the STI framework approved by shareholders and reflect the Board's commitment to aligning executive remuneration with the long-term interest of shareholders. Later in the meeting, Steve Hasker, Chair of the Board's People and Culture Committee will speak to the remuneration report in more detail.

In closing, I am pleased with the progress Appen made in 2025. We delivered a materially improved financial results with underlying EBITDA growing 250.8% and cash generation turning strongly positive. We grew our China business significantly, strengthen our customer relationships and deepened our position in the generative AI market. There is much more work to do, but the foundations are strong and I'm excited about the opportunity ahead for Appen. The next chapter of AI is not about bigger models, but about models that work reliably in the real world across languages, cultures, domains and contexts. Human judgment is more important than ever to make AI trustworthy, safe and effective.

So on behalf of the Board, I would like to thank all of our shareholders for your continued support. We remain deeply committed to building a business that creates genuine durable value for our shareholders. And we also thank our executive team and Appen employees around the world for their commitment and contributions during what has been another very important year in Appen's evolution.

I now welcome Ryan to give a CEO address.

Thank you, Vanessa, and good morning, everyone. Thanks for joining us today. I'll cover 3 areas this morning. First, the AI market and Appen's role in it; second, our FY '25 results; and third, our growth strategy and guide for FY '26.

Let me start with the market. Appen plays a critical role in the AI ecosystem by providing high-quality data that is used to build and monitor AI models. AI development depends on 3 inputs: algorithms, compute and data. Algorithms are the way that the models are configured. This approach is highly complex and is how researchers are able to define new techniques for model development. You can think of this as the blueprint for AI development. Compute is what is required to train and run the models. This is the raw horsepower that is in large demand across model builders. The third ingredient is data. These are the examples that are used to inform the models how to behave and that is increasingly has the largest influence on how models perform. Appen's role in the AI ecosystem is to provide the world's leading AI builders with a high-quality, human-generated data they need to build and improve their models.

To understand why that role matters, it helps to look at what data is actually available to model builders. There are 3 types. Public data is the text, images and audio that has been collected largely from the Internet. The world's leading AI labs have mostly exhausted this source. It's already captured in their existing models and training on it provides little ability to differentiate. Synthetic data, generated by other AI models, carries a different set of risks. Models trained on it can struggle to solve novel or real-world situations, and in some cases it leads to model collapse, where model quality degrades over successive generations. That leaves real-world, human-generated data. This is the input that brings genuine expertise, diverse perspectives and real-world nuance into model performance. It's the only data type that can push a model into new capabilities and into new domains. And this is not a temporary gap. Every new model capability needs from reasoning, domain expertise to multilingual fluency and physical real-world understanding, requires fresh human data to unlock it.

Appen's role is to create high-quality data that is used to build the world's best AI. The models that power the products, billions of people use, the assistance, the search engines, coding tools, translation services were all built with data that companies like Appen provide. And AI training is not a singular task. The techniques and approaches required to build and improve a model are varied, numerous, and constantly changing as the field evolves. Teaching a model to write better code requires human expertise, reviewing its outputs and explaining what is right or wrong. Teaching a model to understand Japanese or Arabic requires native speakers providing examples in those languages. Teaching a robot to pick up objects requires humans demonstrating the task and having every moment carefully labeled. Each application requires a different approach, different skills, different quality standards and as AI evolves, new techniques emerge that we need to support.

Appen supports the full set of human data techniques used in AI development today. We have deep expertise delivering high-quality data across each of them, and we continue to evolve our capabilities as the demands of our customers change. That ability to move with the market is one of the things that sets us apart.

Three structural trends are driving sustained demand in the AI market. The first is consumer AI globalization. The global digital advertising market is approximately $740 billion. As AI-powered products are deployed across different countries and cultures, they need human data to reflect local nuance. This work requires Appen's global workforce. Second is enterprise AI adoption. McKinsey estimates $2.6 trillion to $4.4 trillion in annual value potential from enterprise AI use cases. Embedding domain expertise into enterprise models require specialist human data. The third is new form factors. Humanoid and industrial robotics is projected to be a $60 billion to $100 billion market by the early 2030s, models that interact with the real world need training data that reflects it. The important point is that as data demand scales with model development, as AI adoption grows, so does the demand for what we do.

Now let me give some concrete examples of where we are winning in FY '26. The first example is supporting robotics. We annotated egocentric human video to build data sets for physical AI training, delivering over 50,000 units of data across annotation and evaluation workflows. The second is related to verifying coding outputs from AI models. We worked with a leading coding foundation model to evaluate coding outputs, identifying vulnerabilities and errors. We have a direct relationship with our research team and technical leaders and the program has expanded multiple times since the initial signing in Q1.

The third is related to enterprise AI solutions. We developed reinforcement learning environments across 20 domains, delivering 1,000 synthetic artifacts with domain experts validating outputs and removing errors and hallucinations. The fourth is AI for music. So we evaluate the ability for a model to generate music, spanning multiple countries and musical genres. The final example is coding the development of a multilingual speech model. We delivered data across approximately 60 languages for a leading AI lab. That program has since been expanded into its next phase.

So what's -- also worth noting is that physical AI, coding models and reinforcement learning are amongst the fastest-growing and most heavily invested areas in AI right now. The fact that we are not only winning initial projects in these areas, but expanding them is a really strong signal. It tells us that our customers value what we deliver and that we are well positioned to grow as these markets scale.

Appen is really well positioned to capture growth at global scale. We have a deep track record supporting the globalization of AI models for consumer-facing applications. We've been doing this for 30 years, and the next wave of large-scale AI data demand is in areas where that experience is directly relevant. We're combining that 30-year legacy with new technical capabilities required for the next phase of AI. In the last 12 months, we've added more than 20 industry experts with deep technical backgrounds across AI and machine learning. These are the people who understand our customers' problems from the inside, and they're directly contributing to the new projects we are winning and expanding.

Our market position in China is one of strength. Appen China revenue is significantly larger than the leading local Chinese listed competitor, and we are the vendor of choice for top Chinese technology companies and model builders. Finally, we have built to scale. Our products and processes are built to adapt with customer requirements and technology is central to how we operate and drive operational efficiencies.

Now let's turn to our financial results for FY '25. FY '25 was a year of meaningful progress for Appen. At the group level, we delivered $230.8 million in revenue, up 4.5% on FY '24 when you exclude the impact of Google. Growth was driven predominantly by new project wins and expansions in generative AI. Generative AI is the clear growth driver for the market and a positive signal that we are executing well against our strategy. On profitability, we delivered $12.2 million in underlying EBITDA, excluding FX. The full year margin was 5.3%, with a strong end to the year, with Q4 coming in at 18.2% EBITDA margin. We also continue to capture operational efficiencies through technology, innovation and automation.

Now looking at our 2 segments. On Appen Global, the full year revenue was $127.9 million, which was down year-on-year. However, we ended the year on a high note, with Q4 revenue of $41.4 million, up 56% on Q3 and EBITDA of $10.2 million at a 24.6% margin. Appen China had an exceptional year, delivering $102.9 million in revenue, up 75% year-on-year, with EBITDA up 640% to $10.6 million. Growth is driven predominantly by new and expanding generative AI-related projects. Across the group, 44% (sic) [ 44.1% ] of Q4 revenue came from generative AI, up from 34.8% a year ago. Finally, we closed the year with $59.8 million in cash on hand. We continue to drive operational efficiencies across the business. In FY '25, we realized $10 million in annualized cost efficiencies through technology and automation.

In summary, FY '24 (sic) [ FY '25 ] was a year that demonstrated real progress, revenue growth, improved margins and exceptional performance from Appen China.

As mentioned, group performance -- group revenue was $230.8 million for the full year. Gross margin improved to 40.3%, up 100 basis points on FY '24, driven by a higher mix of generative AI projects across both divisions. Underlying EBITDA before FX was $12.2 million, up 251% on the prior year. Appen Global revenue for FY '25 was $127.9 million, down 21% on FY '24, excluding Google, reflecting lower volumes through Q1 and Q3.

Q4 told a different story. Revenue of $41.4 million was up 56% on Q3, driven by new project wins. Underlying EBITDA for Q4 was $10.2 million, reflecting a 24.6% EBITDA margin for quarter. We also executed $10 million in annualized cost efficiencies across Appen Global through automation and operational improvements.

Appen China grew 75% in FY '25, delivering $102.9 million in revenue. Growth was driven by new and expanding LLM-related projects, including work supporting the international expansion of Chinese technology customers. The profitability improvement was significant. Underlying EBITDA before FX was $10.6 million for the full year, up 640% on FY '24, reflecting a 10.3% EBITDA margin. Q4 FY '25 delivered a record $4.3 million at 13.5% margin.

With that financial context, let me turn to our growth strategy and what we are focused on in FY '26. Our FY '26 strategy is focused on 4 priorities. First is data quality. This remains the north star across our operations, technology and talent. Quality is what drives repeat business and program expansion with our customers. The second is customer growth. We are focused on market segments with the highest account potential, predominantly hyperscalers and newer foundation model builders. We have more than 20 industry experts added in the team in the last 12 months who are supporting that growth. Third is new data segments. We're expanding into additional modalities and techniques through co-innovation with our customers. Coding is a real high priority for us in FY '26. Fourth is operational efficiencies. We're continuing to embed AI-led efficiencies across our operations, which I will cover on the next slide.

On operational efficiency, the progress we have made is tangible, and I want to walk through them. In project delivery, we have built custom tools to access data faster, deployed AI quality agents to improve annotation accuracy, and automated workflows to reduce time to deliver. In our workforce operations, we use AI-assisted interviewing to validate contributor performance and provide real-time feedback, improving onboarding speed and contributor quality. Across the organization, company-wide AI usage and increasingly agentic operations are reducing our operating costs and accelerating our output. We continue to invest in how we are using AI across every part of the business, and we see significant potential for further efficiencies in many areas. This remains an active and high priority area of focus for us.

I'll now cover our outlook and guidance statement for FY '26. We remain confident in the AI data market and in Appen's ability to meaningfully contribute to the development of leading foundation models. We continue to see positive signals on LLM-related growth from both Appen Global and Appen China customers. Tight cost controls remain in place, in keeping with our focus on managing costs in line with revenue opportunity. As in previous years, Appen Global revenue is predominantly project-based and seasonally skewes to H2. Shareholders should expect to see that pattern to continue. Considering this, Appen reaffirms the following FY '26 guidance: revenue of $270 million to $300 million and underlying EBITDA margin before FX of approximately 5% to 10%.

The data market is large and growing. We're laser-focused on the fundamentals of delivering high-quality data for our clients and evolving as their data needs change. I'm very confident in our ability to capture growth in this fast-paced market. I want to thank you for your continued support.

I'll now hand back to Vanessa.

Thank you very much, Ryan. I would now like to open the meeting to general business questions. You'll have the opportunity to ask questions pertaining to each resolution when we get to the formal business of the meeting. Before we begin, visitors are reminded that this is a shareholders meeting, and therefore, only shareholders, proxy holders, body corporate representatives or attorneys are able to ask questions at this meeting. Visitors have been issued a red card. If shareholders holding a blue or yellow card wish to make comments or questions, you should raise your admission card. When called upon, please state your name, or if you're acting as a proxy, identify whom you are appointed to represent and prior to making a comment or asking a question. So in the interest of all shareholders, I would also ask that you be concise in your question or comments, and we will endeavor to respond in the same way.

I will now take general business questions. The microphone is coming.

Thank you, Vanessa and Ryan, for your talk. The question is, could panel share some remarks in terms of the lesson learned from the lost of Google contract? Is it reflected in perhaps the Appen China success so far?

I think just some general remarks before I take it to, Ryan. So maybe just for all shareholders. The Google contract we had lost that a few years ago where the last bit of the revenue we saw in fiscal year '24. I will pass it on to Ryan, who could talk more about the discussions we have been having ongoing with not just Google, but many other customers.

Thank you. When we look at the success of Appen China, I'll start there. It's really driven by continued focus on our customers, delivering really high-quality data. And the lesson learned for us from the Google loss is making sure we have that discipline and that laser focus across our counts at Appen Global. And I can confidently say that the quality and the depth of relationship we have with our customers is exceptionally high at the moment. We are laser focused on the fundamentals. And that is the best way to avoid situations like Google happening again, but it's also the best way to deliver continued sustainable growth in the business. So a key focus on the fundamentals, I think, is the big lesson for us.

Other questions? Yes please.

Owen Morgan, shareholder. Ryan, congratulations on the progress you're making. It's really encouraging to see the focus on the fundamentals. I'm interested about the U.S. and what your thoughts might be in relation to expanding revenue there and your customer base? And I also note you have a balance sheet that you could leverage.

Thank you for the question. The U.S. market is -- has massive potential for us clearly, and it's a really high focus to make sure that we're growing revenue in the U.S. part of the market. What we are really focusing on at the moment is building out capabilities and winning projects in areas that are growing. And I think some of the areas that we demonstrated today like coding, robotics. We are seeing a resurgence in the demand for things like even speech recognition models, which we have very deep expertise in.

So we're starting to see a really a lot of positive momentum from our existing clients and in new clients in these areas that we think are very high growth. The quality feedback we're getting at the moment is really high. We're seeing expansion opportunities on these projects. So we're really confident in the progress that we're making. I think it's only a function of time before we start to see these turn into materially large projects.

In terms of the balance sheet, I think we feel pretty comfortable with the level of investment that we have at the moment. We do need some working capital to support the projects because of the differential between when we pay the crowd and when we receive payments from our customers. So that's -- we want to make sure that we have a sufficient buffer as larger projects come in to support that.

Are there other questions? Okay. Seeing no further questions, thank you so much for those questions.

We'll now progress to the formal business of the meeting. The Notice of Meeting and addendum were made available to all registered shareholders in advance of the meeting, and I will take those documents as read. During the course of the meeting, I will present various resolutions to the meeting. We will strive to ensure that shareholders who wish to speak have an opportunity to do so.

I've been advised that all proxies received for the meeting have been checked, and I declare them valid for voting. I will disclose proxy votes on your screen prior to the vote being taken for each item. These figures include the results as recorded at the closing time for receipt of proxies, which was 10:00 a.m. on Wednesday, the 20th of May 2026.

There are a number of voting exclusions that apply to the resolutions being presented at today's meeting. These were outlined in the Notice of Meeting and addendum. Voting on all resolutions will be decided by a poll, which I now declare open. The poll will be taken at the end of the meeting and the results announced to the ASX shortly after the close of the meeting.

As Chair of the meeting and as detailed in the Notice of Meeting and addendum, I will vote, where authorized, all undirected proxies in favor of the resolutions in Items 2 to 7 and against the conditional resolution in Item 8.

So the first item of notified business is to receive and consider the financial report, the directors' report and the auditor's report for the year ended 31 December 2025. There is no formal resolution required for this item, but I invite shareholders to ask questions or make a comment on the financial report or the reports of the directors and auditors. Ask questions of or make a comment on the management of the company or ask any questions of the auditor relevant to the conduct of the audit, the preparation and content of the auditor's report, the accounting policies adopted by the company in relation to the preparation of the financial statements or the independence of the auditor in relation to the conduct of the audit.

I will now take questions on the company's financial statements, the performance of the company over the last year, the director's report or the auditor's report.

No questions. Seeing no questions, I will now move on to the next item of notified business, the remuneration report. Before we move to questions and a vote on the remuneration report, I would like to hand over to Steve Hasker, Chair of the People and Culture Committee for his report.

Thank you, Vanessa, and good morning, everyone. As Chair of the People and Culture Committee, it's my pleasure to present Appen's remuneration report for year ended 31 December 2025. The report outlines our remuneration framework, the outcomes achieved for the year and how those outcomes align with Appen's performance and strategy. It's included as part of the director's report in the 2025 Annual Report and is the subject of Item 2 of business at today's meeting.

The People and Culture Committee is responsible for overseeing Appen's approach to people, to culture, to leadership development to succession planning as well as executive remuneration. In fulfilling this role, the committee aims to ensure that our remuneration practices are transparent, competitive and closely aligned with the interest of our shareholders. We seek to reward performance that delivers sustainable long-term value, and we are committed to sound governance and continuous engagement with our stakeholders.

In 2025, Appen delivered substantial improvements in profitability. The business grew underlying EBITDA before FX by 250% to $12.2 million, and operating revenue grew 4.5% to $230 million, driven by new project wins in generative AI and operational efficiencies across the group. Notwithstanding this progress, the company did not meet its financial performance targets for revenue and EBITDA in 2025. Short-term incentive outcomes for FY 2025 reflected this performance. The group STI performance scorecard included 80% weighting on financial metrics and 20% on nonfinancial measures.

Financial measures comprise EBITDA at 50% weighting and revenue at 30% weighting. Both financial measures fell below the minimum achievement threshold of 90% of target, resulting in 0 payout for financial measures. For the nonfinancial outcomes, customer NPS achieved 119% of target. However, crowd NPS was below the minimum threshold. Nonfinancial outcomes were capped at 100% of target. Hence, the results translate into a final STI outcome of 10% of target for Key Management Personnel. And in line with policy, 75% of the STI was delivered in cash and 25% in deferred equity for the CEO.

The Board believes these outcomes reflect the disciplined application of our remuneration framework. With respect to long-term incentives, legacy grants award in relation to previous roles held by current KMP were tested during 2025. The 2022 Award tranche 4 lapsed in full as the 20% UBEBS performance condition was not met. With respect to the 2022 Awards tranche 3 and the 2023 Annual Awards tranche 2, the service conditions were met during FY '25 and the performance rights vested. There were no changes to Appen's executive key management personnel during the year.

Richard Freudenstein retired from the Board effective 31 December 2025, and Mini Peiris resigned as a Non-Executive Director on the 16th of May 2025. And we thank them both for their significant contributions to Appen. Vanessa Liu was appointed the Non-Executive Chair effective the 1st of January 2026.

Subject to shareholders' approval under Item 5, the Board has approved a long-term incentive award for Ryan Kolln for FY 2026. The grant has a face value of USD 1.5 million equivalent to 3,024,260 performance rights. The number of performance rights is calculated using December 2025 VWAP of AUD 0.746. These rights were vested over a 3-year period from the 1st of January 2026 to the 31st of December 2028, with 2 equally weighted performance hurdles, absolute total shareholder return, or TSR, and revenue compound annual growth rate or revenue CAGR.

Vesting for TSR will begin only if the company delivers at least 95% TSR and full vesting at 120%. For the purposes of calculating TSR, the starting share price will be AUD 1.43. For revenue, vesting begins at 26% CAGR and reaches full vesting at 33% or greater. The grant includes malus and clawback provisions.

Turning to nonexecutive director fees. The total amount paid in 2025 was $616,145. This remains well within the shareholder approved fee pool of AUD 1.4 million, unchanged since the 2021 AGM. There will be no changes to nonexecutive director fees in 2026. The fees are benchmarked against ASX-listed peers to ensure they reflect the scale and complexity of Appen's operations. Nonexecutive directors do not receive short or long-term incentives. The minimum shareholding policy requires that all non-executive directors hold shares equal to at least 1 year's base fee to be achieved within 3 years of appointment. All directors who have served for at least 3 years are compliant.

Today, we are seeking your support for 4 remuneration-related resolutions under Items 2, 5, 6 and 7. Item 2 is the nonbinding advisory vote on the 2025 remuneration report. Item 5 is the approval of the proposed long-term incentive award for the CEO. Item 6, is the issue of the FY '24 short-term incentive shares to the CEO for past performance. And Item 7 is the issue of the FY 2025 short-term incentive shares to the CEO for past performance.

In closing, I would like to reiterate that the Board is committed to good governance and remuneration practice that reflect Appen's business strategy and shareholder outcomes. Appen remains firmly focused on its long-term growth strategy, and we believe our remuneration framework remains fit for purpose. We aim to align structure, framework and outcomes with sustainable shareholder value creation while also attracting and retaining top talent in the North American and Australian technology markets. With this, the Board recommends that shareholders vote in favor of the resolutions.

Thank you, and I will now hand back to the Chair.

Thank you so much, Steve. I will now put the resolution to the meeting as displayed on the screen. Details of votes received for this item are on the screen now. I now open this item for discussion. So are there any questions?

Seeing there are no questions, we'll move on to the next item. The next item of notified business concerns the reelection of Mr. Stephen Hasker as a Non-Executive Director. I put the resolution to the meeting as displayed on the screen.

Before opening this item for discussion, I would just like to say a few words about -- I would like to ask Steve to say a few words about his reelection.

Thank you, Vanessa. I've now had the privilege to serve on the Appen Board for over 11 years. I believe I bring a distinctive set of skills that enable me to add genuine value here.

In my current role as President and CEO of Thomson Reuters, I lead a company of over 27,000 people across more than 75 countries, providing critical news, information and technology to customers around the world. That role gives me direct daily experience in navigating the rapidly evolving intersection of AI, data and Professional Information Services, which is precisely the space in which Appen operates.

Before Thomson Reuters, I served as Chief Executive of CAA Global, a portfolio company of TPG Capital and as Global President and Chief Operating Officer of Nielsen, a global leader in information, data and measurement. Earlier in my career, I spent nearly 12 years at McKinsey & Company as a partner in the global media, information and technology practice, advising some of the world's leading companies on strategy and transformation.

Throughout my career, I've sat at the center of information, data and technology. And I understand firsthand the strategic challenges and opportunities that come with building AI-powered products and services at scale. And I'm deeply committed to helping Appen realize its potential, and it's very donating landscape. I would be honored to be reelected to continue to serve the interests of Appen shareholders. Thank you.

Thank you so much, Steve. I just wanted to say a quick word on Steve. We're just incredibly lucky as a Board to be able to draw upon his expertise. He's obviously in areas that are very relevant when it comes to AI and just also his corporate expertise has been just invaluable for us. So we are just very lucky.

Details of the votes received for this item are now presented on the screen. And I now open this item for discussion. Are there any questions?

Seeing no questions. Thank you. We will move on to the next item, which is the reelection of Lynn Mickleburgh as a Nonexecutive Director. I put the resolution to the meeting as displayed on the screen. And before opening this item for discussion, Lynn will say a few words about her reelection.

Thank you, Vanessa. I've now had the privilege of serving on the Appen Board for over 3 years, and I believe I bring a range of skills and experience that enable me to add real value to this board. In particular, I have deep expertise in finance, business transformation and scaling technology businesses having held senior leadership roles at companies including Adobe, Citrix and Atlassian. At Atlassian, I served as Head of Commerce and Business Optimization during a period of significant growth. I also previously served as a Nonexecutive Director of Altium and ASX 100 public software company, where I was Chair of the Human Resources Committee and member of the Audit and Risk Committee. During my time there, I helped support the company's strategic growth as its market valuation increase from under USD 1 billion to more than USD 6 billion, contributing to the journey that culminated in its acquisition by Renesas Electronics in 2024.

That experience gave me a strong understanding of corporate governance, executive compensation and value creation in high-growth technology businesses. I'm genuinely excited about the opportunities ahead for Appen in the rapidly evolving AI landscape, and I would be honored to continue serving the interest of Appen shareholders through reelection to the Board. Thank you.

Thank you so much, Lynn. Also wanted to comment that Lynn's expertise, particularly in transformation has also been incredibly helpful for the Board over the last few years.

Details of the votes received for this item are now presented on the screen. I will now open this item for discussion. Are there any questions?

Thank you. Seeing no questions, we will move on to Item 5. The next item of business is in relation to the grant of fiscal year '26 long-term incentive performance rights to our CEO and Managing Director, Mr. Ryan Kolln. I put the resolution to the meeting as shown on the screen. Details of the votes received for this item are now on the screen. I'll now open this item for discussion. Are there any questions? No, seeing no questions. Thank you.

We will move on to Item 6. And this next item of business is in relation to the issue of fiscal year '24 short-term incentive shares to our CEO and Managing Director, Mr. Ryan Kolln. I put the resolution to the meeting as shown on the screen. Details of votes received for this item are now on the screen. I now open this item for discussion. Are there any questions?

Seeing no questions, we will move on to Item 7. This next item of the business is in relation to the issue of fiscal year '25 short-term incentive shares to our CEO and Managing Director, Ryan Kolln. I put the resolution to the meeting as shown on the screen. And details of votes received for this item are now on the screen. I now open this item for discussion. Are there any questions?

Seeing no questions, we will move on to Item 8. So this next item of business is a conditional resolution and will only be taken into account if the outcome of Item 2 is such that at least 25% of the votes cast are against the adoption of the remuneration report. I will put the resolution to the meeting as shown on the screen, conditional upon the outcome of item 2.

I now open this item for discussion. Are there any questions? No. Thank you.

And ladies and gentlemen, this concludes the formalities of the meeting -- sorry, the results of the voting. Sorry about that, my first time. Shareholders are asked to now complete your voting card. To cast your vote for, against or abstain, please place a mark in the corresponding box for each item on your voting card. If you place a mark more than one box in relation to a resolution, your vote for that resolution will be invalid and MUFG will collect your voting card now.

[Voting]

We just have a few more here upfront. Okay, I now declare the poll closed. And as I mentioned earlier, the results of this meeting will be announced to ASX as soon as they have been counted and verified.

I now declare the meeting closed. So thank you so much. I would like to take the chance to also thank my fellow directors and Ryan and the management team for their diligence and commitment to this business. I'd also like to thank shareholders for your support and for coming today. I look forward to meeting with you again at next year's Annual General Meeting.

Good morning, everyone, and welcome to Appen's Full Year FY '25 Results Call. I'm Sam Wells from NWR, and I'm pleased to have joining me today from the company, CEO and Managing Director, Ryan Kolln; as well as Chief Financial Officer, Justin Miles.

Following a brief summary of the results released to the ASX this morning, we will have some time for Q&A with the management team. There will be a choice of 2 options. First, research analysts will be able to raise your hand via Zoom, should you wish to ask a verbal question of the management team. and we'll also take written submitted questions via the Q&A function at the bottom of your screen from all investors. We will endeavor to get to the majority of questions asked; in some cases, combining questions on the same or similar topic.

And thank you. Over to you, Ryan.

Thanks, Sam, and hi, everyone. Thank you all for joining Appen's FY '25 full year results presentation. I'll start on Page 3 of the presentation, where I'll walk through some highlights before passing to Justin. FY '25 was a year of meaningful progress for Appen. At the group level, we delivered $230.8 million in revenue, up 4.5% on FY '24 when you exclude the impact of Google. Growth was driven predominantly by new project wins and expansions in generative AI.

Generative AI is a clear growth driver for the market and a positive signal that we are executing well against our strategy. On profitability, we delivered $12.2 million in underlying EBITDA, excluding FX. The full year margin was 5.3% with a strong end to the year with Q4 coming in at 18.2% EBITDA margin. Gross margins are moving in the right direction, driven by wins in higher-value generative AI work. We also continue to capture operational efficiencies through technology, innovation and automation.

Now looking at our 2 segments. On Appen Global, the full year revenue was $127.9 million, which was down year-on-year. However, we ended the year on a high note with Q4 revenue of $41.4 million, up 56% on Q3 and EBITDA of $10.2 million at a 24.6% margin. The Q4 growth was predominantly driven by new project wins, including a $10 million generative AI opportunity that grew faster than we anticipated and has carried into FY '26. We continue to focus on the operational turnaround and talent is a major part of the shift we are making across Appen Global.

In the last 12 months, we have added over 20 experts to the team coming from either customers or direct competitors. Appen China had an exceptional year, delivering $102.9 million in revenue, up 75% year-on-year with EBITDA up 640% to $10.6 million. Growth was driven by both new and expanding generative AI-related projects and the momentum heading into FY '26 is strong. Across the group, 44.1% of Q4 revenue came from generative AI, up from 34.8% a year ago. Finally, we closed the year with USD 59.8 million in cash on hand. We continue to drive operational efficiencies across the business. In FY '25, we realized $10 million in annualized cost efficiencies through technology and automation.

In summary, FY '25 was a year that demonstrated real progress. Revenue growth, improving margins, exceptional performance from Appen China and strong momentum as we head into FY '26. We've built a stronger team, and we're winning in the right parts of the market, and we have the balance sheet to continue executing on our strategy. I'm proud of what the team has delivered, and I'm confident in our trajectory.

With that, I'll hand over to Justin, who will take you through our financials in more detail.

Thank you, Ryan, and good morning, everyone. A reminder that we report in U.S. dollars and that all comparisons are to the year ended 31 December 2024, unless stated otherwise. Starting with the FY '25 profit and loss snapshot on Slide 5. As Ryan has already mentioned, revenue increased 4.5% to $230.8 million. This excludes the impact of Google. Within our operating segments, Appen China revenue grew by 74.8% to $102.9 million, with Appen Global down 21.1% to $127.9 million. Appen Global delivered a strong finish to the year, which was up 56% quarter-on-quarter. Growth in both segments is predominantly driven by new and expanding generative AI projects.

Gross margin improved by 100 basis points to 40.3%, with the improvement driven by a greater mix of generative AI projects. Underlying EBITDA before FX grew 251% to $12.2 million. The increase was driven by gross margin improvement as well as the $10 million cost efficiencies achieved by technology and automation. The cost out is net of talent upgrades.

I won't talk to Slide 6 as we've covered this data. So over to Appen Global revenue and EBITDA on Slide 7. The chart on the left shows quarterly revenue and on the right-hand side, it is underlying EBITDA. The chart shows strong momentum in Q4 for Appen Global. The Q4 growth was driven by new project wins and includes the $10 million-plus GenAI opportunity we previously announced. Gross margin improvement was achieved due to higher priority GenAI projects. In addition to the improved gross margins, the $10 million annualized cost efficiencies were achieved within the Appen Global segment. And as I just mentioned, the $10 million is net of talent upgrades, who along with the continued focus on data quality were a vital factor in winning and delivering new projects. It was a strong finish to the year with good momentum going into FY '26. However, the full year was impacted by lower volumes than expected in Q1 to Q3. Full year revenue was $127.9 million, down 21%, excluding the impact of Google, and underlying EBITDA was $5.8 million, down from $9.2 million in FY '24.

Over to Slide 8, which shows quarterly revenue and underlying EBITDA for Appen China and reflects the strong market position Appen China continues to hold. Revenue grew each quarter with Appen China achieving $102.9 million in revenue for FY '25, which was 75% growth on FY '24. Growth was driven by new and expanding LLM-related projects. Appen China exited the year with annualized revenue exceeding $135 million. Pleasingly, in addition to revenue growth, profitability improved throughout the year with improved gross margins due to a greater mix of GenAI projects and increased revenue from high-margin prebuilt data sets. Appen China is also capturing scaling efficiencies due to tight OpEx controls as revenue expands.

Turning to Slide 9 for the profit and loss summary. I won't talk to all the line items. However, there are a few additional points to highlight. The decrease in employee expenses reflects the benefit of cost-out efficiencies achieved in the Appen Global segment. It was partially offset by some incremental OpEx in Appen China to enable China's delivery of the strong revenue growth. Underlying NPAT improvement was minimal despite the EBITDA improvement due to an increase in noncash amortization. Statutory NPAT was impacted by an additional $5 million acceleration of noncash amortization in relation to acquired platforms.

I'll finish up with the cash flow summary on Slide 10. The cash balance at the end of the period was $59.8 million, up $5 million from December 2024. The Australian dollar equivalent of the cash balance is AUD 89.5 million. Cash flow from operations improved by $23.4 million to $22.4 million. The year was positively impacted by the receipt of a payment from a major customer in the first week of January versus December 2024 as scheduled. However, adjusting for this still results in approximately 100% conversion of EBITDA to cash flow from operations. Cash flow used in investing activities was $3.5 million higher compared to FY '24 due to a slightly higher investment in product development and new facilities for the Appen China business. Cash used in financing activities of $4.9 million reflects lease payments. Cash was used to fund operations and CapEx.

That concludes the financial performance slides. I'll now hand back to Ryan.

Thanks, Justin. I'll now provide an update about the market opportunity and our strategy. I'll start on Page 12 and explain why we're confident about the market that we're operating in. There are 3 structural trends that are driving demand for the kind of work that Appen does. And importantly, all 3 are linked to major economic drivers. The first is the globalization of consumer AI. As AI products are deployed across different countries and cultures, you need human data that reflects the cultural nuance. This is also directly linked to the digital advertising market. As AI powers more personalized, localized advertising experiences across global platforms, the demand for culturally and linguistically accurate data grows with it. That creates a sustained need for the kind of multilingual, multicultural data that sits at the core of what Appen has been doing for a very long time.

The second is enterprise AI adoption. McKinsey estimates $2.6 trillion to $4.4 trillion of economic value as its stake across enterprise use cases. As companies move from experimentation to deployment, they need AI models that understand their industry and that requires expert-generated data. And layered on top of that, we're seeing real momentum in agentic AI. These are the systems that don't just answer questions, they take action autonomously. The model builders we work with are focusing heavily on agentic AI right now.

It's still very early and moving very quickly, and these labs are actively experimenting and figuring out what good looks like. What's exciting for Appen is that we're in the room with them as they experiment, working closely alongside some of the leading AI labs as they explore and build out these capabilities. We have high expectation that this work will continue to evolve and be a major growth driver for Appen. The third is new form factors, particularly humanoid and industrial robotics. Models that interact with the physical world need data grounded in real-world examples. This is an area where we're already active in with projects covering robotic simulation and real-world data collection. The work we're doing now positions us well as this market develops and investment in robotics continues to grow.

Moving on to Page 13. The market opportunity is clear, but what matters is whether we're actually winning projects in the right areas. This slide gives you a concrete view of where we're competing and where we're winning. These are examples of projects that either started in Q4 FY '25 or are commencing in Q1 FY '26. A few things stand out. We're landing projects with new frontier lab customers. That's meaningful because these relationships tend to expand over time. We're also expanding within existing relationships, winning new data modalities and new capabilities like coding with customers that we already work with.

The previously announced $10 million-plus opportunity is worth highlighting. It grew faster than we anticipated, driven by the quality of our delivery. The customer expanded the project specifically because we exceeded their quality goals. This is the kind of outcome that builds long-term relationships and is currently ongoing with potential for continued expansion. We're also moving into more advanced projects, including domain-specific coding, robotic data simulation, multispeaker voice model training. These aren't commodity data tasks. They require specialist capabilities, and that's where Appen is increasingly competing and winning.

On to Page 14. Winning the kind of work described on the prior page requires the right people with the right technical expertise. And over the last 12 months, we've made deliberate investments in our team. We've added more than 20 industry experts across go-to-market, operations and workforce management. On the go-to-market side, Brian Jenkins leads our sales team and bring experience from Scale AI and Snorkel, and a track record in enterprise sales at Salesforce and Oracle. On the operations side, Jeanine Sinanan-Singh brings a background in AI research from Surge AI and Microsoft with a computer science degree from Harvard. Francisco Rivera leads workforce operations, with experience scaling complex marketplace operations at Uber and Angi. We continue to grow the capability of the team to complement our historical strength at Appen.

Moving on to Page 15. Underpinning our ability to deliver high-quality data to our clients is an asset that is difficult to replicate, our global workforce. This is no longer just a generic crowdsourced workforce. It's increasingly a verified pool of domain experts in fields ranging from computer science and law to finance, health science and engineering. When a customer needs domain-specific expertise at scale and with global reach, there are very few organizations that can deliver it. That's a structural advantage and it deepens as our workforce grows and our domain coverage expands.

Bringing this together on Page 16, I want to be clear about why we think Appen is structurally well positioned and it comes down to 4 things. First, the next wave of AI data is squarely in our area of expertise. The shift towards generative AI, multimodal models and enterprise AI deployment requires exactly the type of complex domain-specific human-generated data that Appen specializes in.

Second is our track record. 30 years of delivering complex large-scale data projects for the world's leading technology companies is not something that the newer competitors can replicate quickly. Particularly as the demand for AI globalization grows, our experiences operating across languages, cultures and regions at scale is a genuine differentiator.

Third, our position in China. Appen China's revenue is now significantly larger than our nearest established local competitor. We're the top vendor of choice for Chinese technology companies and model builders. And as that market continues to grow, we are very well placed to grow with it.

Fourth is technology. Our platforms and processes are built to scale and adapt with customer requirements. Technology is not just an efficiency lever for us. It's what allows us to take on more complex workflows, deliver them consistently and continue to improve our cost base.

I'll now describe our 2026 focus areas and provide an outlook statement. On to Page 18. Our FY '26 priorities are focused and deliberate. There are 4 areas where we believe execution will drive the most value. Data quality is first and it sits above everything else. The reason customers choose Appen and expand with us is because we deliver quality. That doesn't happen by accident. It requires consistent investment in our processes, technology and people.

Second is customer growth. We're directing our go-to-market effort towards the segment with the highest spend potential, hyperscalers and foundation model builders. These are the organizations driving the next wave of AI investment and deepening those relationships is where we see the greatest opportunity.

Third is new data segments. We're actively co-innovating with our customers to expand into new data modalities and techniques. Working closely with our customers ensures we have close visibility into new growth vectors. And fourth is operational efficiency. We'll continue to drive technology-led efficiencies across the business, building on the $10 million in annualized cost savings we achieved in FY '25.

We head into FY '26 with strong Q4 momentum, a clear strategy and a balance sheet that gives us the flexibility to execute. We're focused on building our trajectory and continuing to grow our position in the market. I'll close on Page 19 with an outlook statement. As shared throughout the presentation, we remain highly confident on the AI data market and the potential for Appen to meaningfully contribute to the development of leading foundation models. We continue to see positive signals on LLM-related growth, including from Appen Global and Appen China customers. Tight cost controls remain in place in keeping with the company's focus on managing costs in line with the revenue opportunity. As in previous years, Appen Global revenue continues to be mostly derived from project-based work and seasonality skews revenue to H2. Considering this, we provide the following FY '26 group guidance. Revenue of $270 million to $300 million and underlying EBITDA before FX margin of 5% to 10%.

That finalizes our presentation today. I'll now hand back to Sam, who will moderate the Q&A.

Great. Thanks very much, Ryan, and thank you, Justin. [Operator Instructions] Our first question comes from Josh Kannourakis at Barrenjoey.

First question, just with regard to talent. It's obviously been a big focus for you guys, and you have capitalized on some of the disruption at some of the other peers in the market. That obviously translated through to some good deals that have happened towards the end of last year. But can we talk about into '27 as you think to the pipeline, how much of these talent hires really opened up the pipeline and some of the customer relationships you've been able to do?

Yes. Thanks, Josh. Good question. The talent that we've brought into the business has enabled us to do far more technical work with our customers. So what it means is that we're really at the bleeding edge of the work and a lot of that work is very early with the customers. And how the LLM development cycles work at the moment, there's a lot of experimentation when we see a model technique that has a positive impact, those projects can expand really, really quickly. So what we're seeing at the moment is a lot more activity across the business in terms of the projects that we're doing, particularly in some of the more advanced types like we laid out in the presentation. And we're really confident that those early relationships we're building with the researchers, getting in on the ground floor on these new modeling techniques, will evolve into much, much larger projects over time.

Perfect. And then just with regard to guidance, like obviously, you have stayed away in more recent times from doing it. So bringing a guidance range out there suggests a heightened level of confidence in this year. But can you talk us through a little bit more just around what needs to happen at maybe the upper and lower end of that guidance? And if there is continued development of some of these new customer relationships, what that means in terms of when there's upside risk to that as well?

Yes, sure. So look, we are feeling more confident and there's a few factors there. One is as China becomes a larger portion of our revenue, that is less variable to quarter-on-quarter shifts because it's -- in China, our customers come to us and ask more for an allocation of resources rather than a specific project base. So that gives us a lot more confidence in putting guidance. But in terms of the swings, we just need to be executing well against the projects that we have and making sure that we're catching the next wave of growth in the market that comes through these, like I said earlier, more innovative projects in areas that we know that there's market opportunity that we need to be breaking into. So with the team that we've got, with the projects that we're seeing at the moment, we feel really confident about the opportunity.

Got it. The final one for me, just on the ad side of the business, like obviously, that's going to be a big focus, OpenAI specifically have noted that, you guys have a lot of specific expertise. Can we just flesh that out? I think it's worth fleshing out a little bit more around exactly how you would play into that and what you think that ecosystem might end up looking like effectively where you end up being able to be in that value chain going forward?

We're super bullish on continuing to support the digital advertising market. And there's 2 factors to it. Right now, my take is that there's going to be a pretty strong arms race in major U.S.-based technology companies. So I think Meta and Google, who have the dominant position in the market, but also OpenAI and X, formerly known as Twitter as an outsider. There's 2 real things that these companies are going to be focusing on. So one is building great consumer experiences and products, so people are spending their time on the platforms. And the second is building out a really effective digital advertising ecosystem, which makes it easier for advertisers to place ads on the systems, but they're also more effective and targeted. This is very similar to the search and ad relevance that Appen has been doing for a very long time.

And what becomes really important to get these models to work, both on the experience side and the digital advertising side is making sure that they work at a global scale because what many of kind of the engineers and researchers would consider works well in the West Coast of the U.S. is very different to what's going to happen in Pakistan and India, in Southeast Asia. So getting the models to work at a global scale requires a lot of feedback about cultural nuance and specific training to make sure that the models are working in those geographical areas. Appen has got a tremendous amount of strength there, and we're already seeing some customers really lean into that. So we're super bullish on this next phase of the digital advertising arms race.

Next question comes from Conor O'Prey at Canaccord.

Just -- maybe just a question on the -- how you see the unit economics stacking up for this year. China business, strong revenue trajectory, the ex China, the global business, less so. So would you expect a lower gross margin this year? And then with the sort of 23% revenue growth approximately at the midpoint of the range, do you need to invest in the cost base, the OpEx base to support that growth?

So I'll start with the second one. We don't see any requirement for any investment in the OpEx base to support the growth. So we're really confident in our OpEx base at the moment. In terms of the gross margin, look, it will play out on the mix between China and non-China, but also the gross margins that we see within the global business unit. But we're pretty comfortable when you look at the FY '25 gross margins, that that's something that we can achieve in FY '26.

Next question, we've got a couple coming through around the China business. Firstly, can you just elaborate on what's driven this growth, please? And specifically what type of customer?

Yes. So good question. We work with almost all of the major technology companies in China, which includes companies that are building the foundation models and incorporating them into their applications. So a big driver of growth has been the development and the implementation of generative AI models on 2 horizons. One is for the domestic China use, but it's also for Chinese companies that have international operations where we're helping them expand through data that represents the international markets that they operate in. So very heavily focused on generative AI, both for domestic applications in China and the international expansion.

And just in terms of concentration, specifically within that app in China business, can you elaborate on that at all with respect to top customer?

I can talk at a high level. It's a reasonably diversified mix of customers that make up our app in China revenue. Like I said, we work with many of the large players over there. So we're very comfortable with the composition of revenue, and we'll continue to look to drive revenue from those customers.

And with respect to, I think, the relative valuation you pointed out against the domestic peer, what's the company doing to realize this value discount?

So we point out the peer in terms of the relative market share that we're getting. We just continue to focus on operating the business. We think we've got a great asset in China. There's a great market opportunity. So it's heads down on focusing on the potential for China.

And just one final question on China. When you think about the performance of the China business versus the, I guess, the contrast this financial year with the Appen Global business, how do you think about allocation of resources into the Appen Global business versus Appen China?

Yes. So we do look at a divisional standpoint, and we look at the needs of both of the business units and what we consider appropriate investment, and we make our decisions appropriately. We've been investing in growing China for a while now. We're starting to see the payoff now, which is great. We look to get operational leverage. China -- sorry, Appen Global, we have, as seen through last year, a bit more of a lumpy profile, which is driven by the project nature, but we're confident that the spend levels that we've got at the moment that we can deliver meaningful growth in Appen Global.

Okay. Great. And just on seasonality, can you elaborate on historical seasonality, including first half, second half skew, both on a revenue and EBITDA perspective? And in relation to EBITDA, what specific initiatives have you got in place to drive EBITDA margins through the balance of [ FY '26 ]?

Yes. I'll start on the EBITDA margin. Look, we are focused on revenue growth in the business. And as I said, we don't need to add any cost to the business from an OpEx standpoint. Clearly, our crowd costs flex up and down, but we feel really strong about the operating leverage that we can get in the business, which will drive EBITDA as revenue grows. In terms of the first half, second half skew, look, traditionally, as a business, we have seen a skew towards the second half, typically what we see in January and February from some of our customers that run a calendar year planning cycle that there is a bit of replanning that can occur, and that's kind of one of the main factors that drives the skew.

Next question is coming from Jennifer at Jefferies.

Just a couple from me. Probably you already touched on some already. So the first one is still about the skew. What you're talking about is traditionally in line with previous. But how do we look at the global and China 2 segments individually?

Yes. So China is a little bit harder to call out because it has been driving in the right direction. I would think of it more of an Appen Global skew where we see the mix -- we see more of a H2 being a bit heavier than H1.

All right. And on the margins, could you also give us a bit more color on China margin going forward, like financial year '26 and beyond given the customers and the product mix dynamics?

Like I said, we're starting to see some operating leverage in the China business, which is really good, and we see that through the kind of improving EBITDA lines. So we feel really confident about kind of that margin trend continuing as revenue grows.

Next question just on cash balance. Do you expect your cash balance to continue to grow further by the end of this calendar and financial?

I'll take that one, Ryan. So the cash on the balance sheet is there to support the working capital requirements. Obviously, it's a decent amount of working capital required as we grow quickly. And that's because we pay the crowd ahead of getting customer receipts in the door. So there is some working capital needed. Obviously, timing impacts it, too, when we're looking at it as at date, at the end of the year or whatever. But as we've kind of called out, we're very confident in the year, we're driving towards profitability. So naturally, you would expect the cash balance to go up over time.

Great. Thank you. How is Appen adapting to the rise of synthetic data and automation? And specifically, is there any second order impact of these observations or trends?

Yes, great question. So synthetic data is a really important part of the market. And we're incorporating that into a lot of the projects that we're delivering for our customers, where there's a mix of synthetic data and human data. So it really comes through the solutioning that we're bringing, which is far more, as I called out in the presentation, far more consultative, much more tech-led in the solutioning. So we're definitely incorporating all of the techniques that we can to deliver data for our customers that are high quality, good unit economics, which definitely includes synthetic data.

Thank you. And maybe just time for one more question, more around the longer term. How does Appen -- what areas does Appen see the biggest growth opportunities over the next few years? And how do you think about long-term margins for the business once fully scaled and automated?

I think I'll refer back to the presentation where we called out 3 areas that we see really significant growth potential. So first is the B2C market, which is fueled by the digital advertising spend. So we think there's huge opportunity for the globalization of consumer-based AI models. Secondly is the enterprise focus with a real steer towards agentic AI. We are seeing agentica has been around for a while, but we're seeing huge focus from the foundation model builders on domain and expert-specific agentic AI models. We think that's a real area of growth.

And then new form factors like robotics, like new language models, AR/VR. I think there's many things that will continue to evolve in the AI market that we don't have great visibility of at the moment, which is really exciting for us as we look towards the future. In terms of margin, we're looking to build a high-growth business with sustainable margins and supporting our customers, delivering high quality. We've put out a longer-term end of FY '27 target of 10%. So I'll leave that point out there now. But over the longer period, again, just driving a healthy business is the focus.

Great. Thank you. I think that's all the time we have for questions today. If you do have any follow-ups, please feel free to e-mail them through, and we'll endeavor to come back to you. And maybe with that, Ryan, I'll just pass it back to yourself and/or Justin for any closing comments.

Yes. Thanks, Sam. So thanks, everyone, for joining the call today. We really appreciate the support. I'll just summarize FY '25. Look, it was a year where we demonstrated real progress at Appen and strong momentum heading into FY '26. We're highly confident on the AI data market and the potential to meaningfully contribute to the development of leading foundation models. We've built a stronger team, and we're winning in the right parts of the market, which gives us huge confidence in both FY '26 and beyond. I'm super proud of what the team has delivered and really confident in our trajectory. So thanks again for your support. We really appreciate it and looking forward to seeing you at our next market update.

Great. Thank you very much for joining today's Appen FY '26 results call. Thank you, and enjoy the rest of your day. Goodbye.

Good morning, everyone, and welcome to Appen’s First Half FY '25 Results Webinar. My name is Sam Wells from NWR, and joining me from the company today is CEO and Managing Director, Ryan Kolln; as well as Chief Financial Officer, Justin Miles.

Following a brief summary of the results released to the ASX this morning, we will have some time for Q&A from the management team. There will be a choice of 2 options. First, research analysts will be able to raise your hand via Zoom should you wish to ask a verbal question or we’ll take written submitted question via the Q&A function at the bottom of your screen. We will endeavor to get to the majority of questions asked; in some cases, combining questions on the same or similar topic.

And with that, I'll pass it over to you, Ryan.

Thank you, Sam. Hello, everyone, and welcome to Appen's half year results. I'm joined today by our CFO, Justin Miles. I'll now start with the presentation.

So turning to Page 3. I'll start with an overview of the agenda for today. There will be 4 sections to the presentation. First, I'll share some highlights of our H1 results. Second, Justin will provide greater detail on our financial performance. Third, I'll provide an update on our progress against our strategic initiatives. And finally, I'll provide an FY '25 outlook and guidance statement.

Turning now to Slide 5. I'm pleased to report that Appen delivered continued momentum in the half. We recorded revenue of USD 102.1 million, representing 2% year-on-year growth when excluding the impact of Google. 24% of our revenue for the half was from generative AI-related projects, demonstrating our continued success in supporting foundation model builders.

Our performance in China was a standout. Revenue grew 67% year-on-year, and we exited the half with an annualized run rate revenue exceeding $100 million. This highlights the consistency and strength of our momentum in China.

The turnaround in our core business is progressing well. We're deepening customer relationships, successfully entering new target accounts and improving our operations. We're also seeing green shoots and recently secured a new generative AI engagement with potential annual revenue exceeding $10 million.

Our technology transformation is delivering tangible operational benefits. In our non-China business, we have identified approximately $10 million in annualized cost efficiencies. Around 70% of these will be realized by the end of Q3 FY '25 with the balance to be executed by the end of the year.

In terms of the market, we are seeing customers' data requirements shift to areas where Appen has clear market differentiation. Demand is increasing for large multilingual speech training data, a domain where Appen has deep expertise. We are also seeing positive market signals for LLM model evaluation, which is very similar to the search relevance projects we have been performing at scale for many years. China remains a key sector of the market, supported by growing demand for domestic and international operations.

Finally, our balance sheet remains strong. We ended the half with a cash position of USD 60.9 million or AUD 92.9 million. We remain focused on delivering EBITDA positivity and are well capitalized to support our growth objectives.

In summary, the first half of FY '25 shows encouraging momentum across the business. We're executing against our strategic priorities, diversifying revenue sources and leveraging our technology and expertise to capture opportunities in the evolving AI ecosystem. We enter the second half with confidence and strong foundation to build on.

I'll now hand over to Justin, who will walk through the H1 financials in greater detail.

Thank you, Ryan. Good morning, everyone. A reminder that we report in U.S. dollars and that all comparisons are to the half year ended 30 June 2024, unless stated otherwise.

Starting with the H1 snapshot on Slide 7. Revenue increased 2% to $102.1 million. This excludes the impact of Google. Within our operating segments, New Markets revenue grew by 20% to $59.6 million due to strong growth in China, which was 67% up on the prior corresponding period. The remainder of the New Markets segment was impacted by short-term volatility due to the dynamic nature of the U.S. AI market.

Global Services was also impacted by the short-term volatility as well as the termination of the Google contract in H1 FY '24. The decrease in gross margin percentage reflects a change in customer project mix compared to H1 FY '24. It is noted that China margins are traditionally lower versus the rest of the group. Due to prudent cost management, there was an improvement in underlying EBITDA before FX despite lower gross margin. I won't talk to Slide 8 as we cover revenue in further detail at later slides.

Over to underlying EBITDA on Slide 9. Group underlying EBITDA before FX improved $0.1 million to a loss of $2.2 million. As just mentioned, there was an improvement despite lower gross margin due to prudent cost management. New Markets EBITDA improved by $4 million to a loss of $4 million. The improvement reflects a positive EBITDA contribution from the China business. The Global Services division reported EBITDA of $2.1 million, down $4.7 million on the prior corresponding period. The decrease reflects lower revenue and gross margin, driven by short-term volatility due to the dynamic nature of the U.S. AI market.

Over to Slide 10. Ryan has already talked about China's strong revenue growth. Revenue grew 67% compared to H1 FY '24. Pleasingly, the China business exited the half with an annualized run rate for June exceeding $100 million. This is a great milestone for the business. China customers include leading LLM model builders along with leading technology and auto customers, and there are revenue opportunities in both China domestically as well as China customers expanding internationally. It is important to note that the China business has a more predictable revenue profile compared to the remainder of the business due to the engagement and delivery model.

Turning to Slide 11. Pleasingly, there has been a positive EBITDA contribution from the China business for the last 5 quarters. China contributed $2.9 million underlying EBITDA to H1 FY '25, a $2.8 million improvement compared to H1 FY '24.

Over to Slide 12. This slide shows quarterly global revenue with Google excluded. As already mentioned, global revenue was impacted by short-term volatility due to the dynamic nature of the U.S. AI market. Despite the short-term volatility, our customer relationships and conviction in the revenue opportunity remains strong. However, it is important to note that timing is uncertain in relation to the resumption of large volume LLM projects.

The uncertainty comes from customer LLM teams planning and going through multiple reorganizations as well as the nature of the work being large volume short-term projects. As well as the strong customer relationships, our quality metrics with our largest customer are at an all-time high. We continue to win new projects, albeit at a low volume of data during the half compared to PCP and a recent win with a $10 million plus annual revenue potential are all signals that support the progress we are making and conviction in the revenue opportunity.

Slide 13 has revenue for the balance of the new market segment being enterprise and government. The decrease in revenue was driven by lower volumes within some existing large enterprise projects, including some projects coming to an end. There is a healthy enterprise pipeline and conviction remains in the revenue opportunity, although timing of revenue conversion remains unclear. U.S. policy uncertainty has meant generating meaningful short-term revenue opportunities within the U.S. Government division is challenging.

Given this challenge for the U.S. Government division, a decision has been made to wind back investment. This will result in approximately $4 million on annualized OpEx savings. The majority will be executed by the end of Q3 FY '25 and the balance by the end of the year. This decision does not have a material impact on existing revenue. It is important to note the $4 million cost savings are in addition to the $10 million cost efficiency gains from the technology strategy that Ryan spoke to at the start of the presentation.

Turning to Slide 14. This is a summary of the profit and loss. And we've already covered most of the line items. However, it is worth noting the expense lines. Employee expenses are down 9% and all other expenses are down 11% compared to H1 FY '24. This is due to the cost-out programs that were executed in H1 '24 as well as continued prudent cost management.

The cash flow summary is on Slide 15. The cash balance at the end of the period was $60.9 million, up $6.1 million from December '24. The Australian dollar equivalent of a cash balance is AUD 92.9 million. Cash flow from operations improved by $2.3 million to $12.9 million. The period was positively impacted by the receipt of a payment from a major customer in the first week of January '25 versus December '24 as scheduled.

Cash flow used in investing activities was $0.8 million higher compared to H1 FY '24 due to a higher investment in product development and new facilities for the China business. The new facilities also impacted financing activities with cash used $0.3 million higher due to lease payments. Cash was used to fund operations and CapEx.

Now before I hand back to Ryan, I would like to call out a potential change to the reporting segments. With the strong growth in China and the wind down of investment in the U.S. government division, we are exploring whether to simplify the reporting segments as we head into the end of the year reporting.

That concludes the financial performance section. Back to you, Ryan.

Thanks, Justin. I'll now provide a strategy and operational update. Moving to Slide 17. We are focused on 3 critical areas for long-term success. First is an expert-led approach to sales and marketing, where our technical teams build deep, trusted relationships with AI researchers and product teams. Our customers are highly technical, and we are retooling our organization to bring our expertise to the forefront of conversations with our customers.

Second, we're evolving our data offering to address the rapidly changing needs of our clients, supported by our flexible technology infrastructure. Third is the need for technology-enabled efficiencies. We utilize generative AI heavily throughout our operations, including how we validate the quality of our data and provide real-time feedback to our contributors. These priorities ensure that we stay responsive to market trends and deliver consistent value to our clients and shareholders.

Our proprietary platforms, Mercury, ADAP, MatrixGo and CrowdGen are foundational to delivering quality at scale. Each platform has been enhanced in H1 to improve efficiency, quality and contributor experience. Mercury is our workforce and project management platform. We've continued to make improvements and automate many manual steps in how we deliver projects. This has enabled us to significantly enhance the efficiency of our operations.

ADAP is our data annotation platform. It's a highly configurable interface for contributors to produce accurate annotations supported by built-in AI quality checks. MatrixGo is the data annotation platform that we purpose built for the China market. This platform underpins much of our growth in China. Finally, CrowdGen serves as a dynamic interface for our Crowd workers, enabling them to explore earning opportunities, enrich their profiles and get paid seamlessly for their tasks.

Moving to Slide 19, where I'll provide an update on progress against our 2025 strategy. First, we remain highly focused on our core market of human annotated data for AI, including supporting the development of large language models. In H1, we have strengthened our go-to-market team with key hires from competitors. We've also made significant changes to our marketing efforts by developing content that is highly focused on technical thought leadership.

Second, we're driving operational efficiency and automation by utilizing LLMs across our operations. We have been successful in incorporating generative AI into our platforms for high-quality data. This includes both real-time AI quality checks and using AI post-process data for further quality improvements. We've also recently launched an LLM-powered customer service agent that order resolves over 30% of contributed tickets, freeing up internal resources and improving ticket response time.

Third, we're accelerating technology innovation by utilizing LLMs across our software development teams. Our engineering team is now utilizing AI coding tools extensively, increasing the output of the team. We're also running a high-velocity innovation approach enabled by AI software development tools. This allows us to build software prototypes in hours that previously took weeks.

Fourth, we're growing our people, particularly by expanding our technical expertise in our project delivery teams. In the past 3 months, we have made strategic hires from our competitors that have brought significant new capabilities to Appen.

Fifth, following the launch of CrowdGen, we are evolving our data annotation workforce. We now have an LLM interviewer that is in beta testing that will streamline the onboarding process. We're also utilizing the latest LLM models to better match contributors to tasks, which is a major factor for improved data quality.

Finally, we're committed to prudent cost management. We're capturing the benefit of our automation and productivity improvements and ensuring that we can remain lean as we scale. By executing in these 6 areas, we're positioning Appen to deliver superior data quality, ensuring that we meet the evolving needs of our clients and drive profitable growth in the business.

Moving to Slide 20, where I'll share more details on the benefit of our operational efficiency initiatives. Investments in our platforms have been heavily focused on automating operations. This improves the speed and quality of how we produce data while also delivering material operational efficiencies. Due to the platform improvements, we have identified approximately $10 million in incremental annualized cost efficiencies that will be executed over the remainder of FY '25.

It's important to note that the $10 million in cost savings are net of talent upgrades we are making to enhance our team's technical expertise. In addition to the above $10 million, as Justin mentioned, we are winding back investment in the U.S. Government division. This will result in a further annualized OpEx saving of around $4 million.

Now to Slide 22 for our FY '25 outlook and guidance statement. Appen remains confident in its long-term revenue opportunity, including previously provided longer-term targets. As it relates to the balance of FY '25, there is limited visibility related to specific timing for the resumption of large LLM projects. In addition, recent U.S. policy uncertainty has reduced the likelihood of generating meaningful short-term government revenue, resulting in reduced divisional investment. Considering this, Appen reaffirms its current FY '25 guidance of revenue towards the low end of the $235 million to $260 million range and positive full year underlying EBITDA.

That concludes the presentation. Thank you, everyone, for joining. We will now turn to Q&A.

Great. Thanks, Ryan. Thanks, Justin. [Operator Instructions] Just moving to a couple of pre-submitted questions. Market tailwinds. You've identified in the slide deck at a high level some of these tailwinds. Can you just identify what specifically you're monitoring to underpin confidence around full year guidance?

Sure. Thanks, Sam. So we engage very closely with our clients, and we're seeing increased conversations around areas where Appen has long strengths, notably large-scale multilingual data related to speech interface systems. This is largely for large language models and generative AI. And the second is broad-scale generative AI evaluations, which, as I mentioned, is very similar to the work that we've been doing for search and ad relevance for a very long time in the business. So we're very confident that the capabilities that we have are very aligned to where we see the market demand heading.

Okay. Great. Thank you. And just on the China business, it delivered over [ $2 million ] of EBITDA during the second quarter of this year, which reflects about a 7% margin. How much incremental investment is required to keep growing that?

We don't think there's any material incremental investment required. We think we're at a really great point now where we've delivered profitable growth, and we expect to continue to deliver profitable growth as we move forward in China.

Sorry, next question from Josh at Barrenjoey.

First one, just on the market and then on some of the financials and cost out. Just firstly, with regard to some of the market trends. I know there's obviously a lot of disruption with the scale and better deals. Has there been any follow-on from that in terms of any of the customers that were using scale and a large capacity that have looked at Appen or evaluating any of Appen services currently?

Yes. Great question, Josh. There's certainly a lot of discussions that we're having with clients following the scale news. It was created a big hole in the market that we are looking to fill actively. So again, as I think we've shared previously, we see this as a real net positive for Appen and our services going forward.

I guess there's some particularly big ones out there that haven't been using your services for a while. Is there any reengagement with any of those larger customers?

Look, we continue to have active conversations. So that's really a big focus for us for the tail end of this year and as we head into next year.

Okay. Great. Next one, just on the cost out, just to clarify on that. So the $10 million is across the year. How should we think about sort of -- and you did mention that was net of some of the new hires. How should we think about, I guess, the net in-year cost benefit and then what that means for the run rate into next year as a result of that and the incremental $4 million?

Yes, I'll take that one. So of that $10 million, around 70% of it will be executed by the end of September. So I think take end of September as the kind of light in the sand for that calculation. And that is just on the net $10 million is about right. We're looking to get people into the business as soon as possible.

In terms of next year, there are a few swing factors as we go into next year. So obviously, the full $10 million will be out, the $4 million OpEx from federal will be out from the U.S. government division. The swing factors are STI is likely to be higher than the half year. There was a few write-backs in H1. So that's going to be higher. The STI can be a swing factor as well. If it's at 100% next year, it may be higher than what's reflected in the numbers this year. And there may be some CPI around existing employee wages as well. So there are 3 swing factors.

Although what is important to note, and I'm not giving into definitive numbers here is that Ryan and I continue to push super hard on getting more cost efficiencies out of this technology strategy. So some of that will be offset by these further gains as we head into the next year. But that's the way I think about it and certainly the way we're planning as we go into next year.

Got it. I might just squeeze in one super quick one. Just on China as well. Obviously, some great progress and profitable progress there, which is great to see. In terms of the customer spread there, has that changed at all to any of the actual some of the LLM or other players that are sort of building out? Or is it primarily still the bulk of it, the large technology players that are obviously building their own LLMs amongst other things?

Yes, there's pretty big overlap between the customers that we've been working with for a long time and the customers that are building LLMs at the moment. We're working with many of the major companies in China that are building out LLMs. A good portion of our work in China is focused on LLMs. And that's helping us out on a few factors. So one is that the gross margin for the work that we do for LLMs in China is typically higher than our traditional work. So that's a real positive factor that's helping us drive the profitability in the division.

Great. And one final one, Justin, just CapEx in terms of how we should be thinking about across this year and next, the sort of capitalized sort of spend in the business?

Yes. So there's a slide in the appendix, Josh. And so we're not looking to spend a whole lot more. So I think we may get some efficiency gains there, but I think using the H1 as kind of a proxy is a good starting point.

I think there are a couple of other questions, but they seem to be answered on the OpEx. Just in terms of the recent project win for over $10 million annualized potential, any more detail you can share there? Is it U.S.-based? What's the expected ramp-up with that time line?

So it is U.S.-based. It's for a large language model builder doing evals. And as I mentioned, that's a tailwind for us. We've done this work for a very long time. I think we'll see the ramp through the remainder of the year and into the kind of first quarter of next year.

Okay. Great. Thank you. I think that's all the time we have for questions today, and that's the only ones we have coming through. Maybe with that, Justin and Ryan, I'll pass it back to you for any closing comments, please.

Thanks, Sam. And thank you, everyone, for your time today for joining the call, and we appreciate the continued support. We look forward to touching and getting in contact with you again in our Q3 results, which will be at the end of September. Okay. Thank you, everyone.

Thank you. Goodbye.