APPEN LIMITED — Interim / Quarterly Report 2015

Aug 27, 2015

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Appen Limited FY2015 First Half Results Presentation

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Appen helps the worlds leading vehicle makers develop hands-free, voice-activated systems for safer driving

Appen helps major ecommerce vendors improve search accuracy to make shopping easier, improve conversion rates and grow businesses

Appen helps leading search and social media companies deliver relevant content and news to their users

Appen’s work underpins speech recognition technologies for government and commercial applications such as Skype’s translator that connects friends and businesses around the globe

Appen works with gaming console providers for voice activated commands that enhance the player’s experience

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Company Confidential 2
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FY2015 1H Highlights

1H#Revenue#Performance#

• Revenue up 33% on 1H FY2014

• • EBITDA up 44% on 1H FY2014 • NPAT up 28% on 1H FY2014 • Addressing customer concentration • Entered social media and ecommerce markets

• • On track to exceed full year prospectus

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40,000""
35,000"" +33%"
30,000""
25,000""
20,000""
Total"Revenue"
15,000""
10,000""
5,000""
0""
1H"FY2014" 1H"FY2015"
1H#Earnings#Performance#
6,000""
5,000""
+44%"
4,000""
EBITDA"
3,000"" +28%"
Net"Profit"a;er"Tax"
2,000""
1,000""
0""
1H"FY2014" 1H"FY2015"
3
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Company Confidential

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Company Overview

• Appen founded in 1996. Butler Hill group founded in 1993. Merged in 2011

• Provide high quality language data and services to major technology companies and government agencies worldwide

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• Customers include 9 of the top 10 global technology companies

• 140 languages and dialects

• 180 staff globally

• Over 240,000 crowd-sourced on-demand contractors

• Offices in Australia, US and Philippines

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Company Confidential 4
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	FY2015 1H	FY2014 1H	% change	%change constant currency
LanguageResources*	13,064	11,923	10%
ContentRelevance	22,741	14,978	52%
TotalRevenue	35,804	26,902	33%	15%
GrossProft	15,738	12,466	26%
Expenses	11,579	9614	20%
EBITDA	4,843	3,370	44%	9%
EBITDAMargin	14%	13%	1%
NPAT	2,678	2,088	28%	7%
ResultsexcludingoneTofcostsassociatedwithIPO
EBITDA	5,057	3,370	50%	15%
NPAT	2,828	2,088	35%	15%

FY2015 1H Results

• Revenue up 33% on 1H FY2014, mostly due to 52% increase in Content Relevance from new customers and the falling AUD

• NPAT up 28% on 1H FY2014 as revenue growth outpaced expenses supported by lower AUD rates

• Average AUD to USD rate of 0.78 1H FY2015 vs. 0.91 1H FY2014

• Currency corrected revenue growth of 15%, EBITDA of 15% and NPAT of 15% after oneoff adjustments

*"Formerly"Speech"and"Data"CollecZon."‘Language"Resource’""is"aligned" with"the"Language"Technology"market"and"broadens"Appen’s"scope."

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Company Confidential 5
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	FY20151H	FY20141H	%change
LanguageResources*
Revenue	13,064	11,924	10%
GrossMargin	8,147	7407
OperaZngProft	4,958	4,293	15%
ProftMargin	38%	36%
ContentRelevance
Revenue	22,740	14,978	52%
GrossMargin	7,590	5,059
OperaZngProft	3,313	1,526	117%
ProftMargin	15%	10%

FY2015 1H Divisional Results

• Language Resources* revenue up 10% due to ongoing demand from existing customers and the falling AUD

• Language Resources profit up 15% on revenue growth

• Content Relevance revenue up 52% due to new customer acquisition and the falling AUD

• Content Relevance profit up 117% due to revenue growth and economies of scale

*"Formerly"Speech"and"Data"CollecZon."‘Language"Resource’""is"aligned" with"the"Language"Technology"market"and"broadens"Appen’s"scope."

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Company Confidential 6
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Customer Concentration

• Substantial new customers in 1H FY2015 have increased revenue and reduced customer concentration risk

• Five largest customers now 75% of revenue vs. 84% in 1HFY2014

• New customers in social media and ecommerce

• Large customers are repeat buyers

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1H#2015#
1H#2014#
2%$
1%$
2%$ 1%$ 2%$
13%$
2%$ 8%$
2%$
2%$
2%$
3%$ 40%$
5%$ 3%$
5%$
8%$
60%$
5%$
8%$
6%$
20%$
Top#ten#customers#by#revenue#
Lightest"shade"is"all"other"customers"
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Company Confidential 7
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	FY20151H	FY2014
CurrentAssets	21,757	18,922
NonTCurrentAssets	11,520	11,217
TotalAssets	33,277	30,139
CurrentLiabiliZes	8,033	9,295
NonTcurrentLiabiliZes	1,744	1,195
TotalLiabiliZes	9,777	10,490
NetAssets	23,500	19,649
TotalEquity	23,500	19,649

Balance Sheet

• Strong balance sheet. No debt.

• Current assets up due to increase in work-inprogress for Language Resources customers and change in the timing of receipts from our new Content Relevance customers.

• Dividend payout of 1.20 cents per share fully franked

• Dividend within Prospectus range: 43% of NPAT

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Company Confidential 8
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	FY20151H	FY20141H
Receipts	27,737	28,482
Paymentsandother	(30,924)	(27,759)
Taxes	(782)	(595)
TotalCashfowfromOperaZons	(3,969)	128
TotalCashfowsTInvestmentAcZviZes	(247)	(2,968)
Cashfows(usedin)/fromfnancing AcZviZes	601	1,035
NetCashfowsfortheperiod	(3,615)	(1,805)
Openingcashbalances	8,649	5,771
FXImpact	162	(340)
Closingcashbalances	5,196	3,626

Cash Flow

• Healthy cash position

• Cash receipts lower due to:

• Early customer receipts of $3.5m paid in late December 2014

• Timing of new customer payments

• 1H FY2015 payments includes IPO costs of $1.5M paid in January

• 1H FY 2014 investment activities includes a $2.8m deferred payment in consideration of the Butler Hill acquisition in 2011

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Company Confidential 9
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Growth Opportunities – Language Resources

• Appen provides data and services to the language technology market

• Language technology sits within the $38.2BN language services market

• Opportunities exist for Appen to break into complex, high-value niches in the language services market

• Further opportunity to benefit from the lower AUD

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Language""
Services"
$38.2BN []
Language""
Technology"
Language""
Resources"
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*"Common"Sense"Advisory,"2015"

Company Confidential

10

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Growth Opportunities – Content Relevance

• Search accuracy attracts users and grows advertising revenue

• Social media content and news relevance retains and adds users

• eCommerce conversion rates improve with effective search

• Appen has added search customers, grown revenue and reduced risk

• Appen works with leading providers to improve service to their users

• Appen has beachhead customers in ecommerce

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Social#Media#Growth#2012#V#2014# Ecommerce#Revenue#by#Region#
Online#AdverPsing#Spend## %"of"online"adults"per"site"
120" 2012" 2013" 2014" "2,000"" Middle"East"&"
80%" "1,800"" Africa"
100"
70%" "1,600"" LaZn"America"
60%" "1,400""
80"
50%" "1,200"" Central"&"
60" "1,000"" Eastern"Europe"
40%"
"800""
40" 30%" Western"Europe"
"600""
20%"
"400""
20" 10%" Asia"Pacific"
"200""
0" 0%" "T""""
2008" 2009" 2010" 2011" 2012" 2013" 2014" Facebook" LinkedIn" Pinterest" Instagram" Twijer" 2011" 2012" 2013" 2014" 2015" 2016" North"America"
$#BN# $#BN#
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Outlook

FY2015#Full#Year#Revenue#Outlook#

• Full year FY2015 guidance:

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"80,000""
"70,000""
"60,000""
"50,000""
"40,000""
"30,000""
"20,000""
"10,000""
"T""""
FY2014" FY15"Prospectus" FY15"Outlook"
FY2015#Full#Year#EBITDA#Outlook#
"12,000""
"10,000""
"8,000""
"6,000""
"4,000""
"2,000""
"T""""
FY2014" FY15"Prospectus" FY15"Outlook"
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• Revenue: $68M to $76M

• EBITDA: $9.6M to $11.2M

• Exceeding prospectus

• Guidance AUD at $0.73

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Company Confidential 12
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Thank you

Mark Brayan, CEO, mbrayan@appen.com Mark Byrne, CFO, mbryrne@appen.com

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