Ann: Appen to Acquire Figure Eight & Launch Capital Raising, page-62

Thanks for the correction. Yes, US$175 million is only the upfront consideration. An earn-out consideration is payable in March 2020, expected to be US$60-80m. To hit the US$125m, budget outperformance of revenue targets need to be hit which would actually be a good thing (very strong growth).

The acquisition of Figure 8 is not about grabbing a company to improve short-term company profit. It's more a strategic acquisition in regards to IP and improving efficiency on the core business of training datasets which are critical for AI. If Appen get this right and can convert more of their manual annotation into automated processes, the pay-off will be huge in the long term.

Heavily discounted at 11%? I don't agree with that especially considering the massive run-up that APX has had recently.

High tech acquisitions are normally expensive processes due to the high growth nature of the business. You pay for quality. Google and Amazon are customers of Appen. They do not derive their primary revenue from AI. They are big consumers of trained datasets and use Appen datasets to improve their AI. Big tech companies are like the miners and APX is like the company that sells them the equipment and technology to mine the gold. AI requires data sets provided by APX to train the data to improve the accuracy of the algorithms that provide the logic to AI and machine learning. Speed and accuracy of predictive models is what it's all about.

Short term, yes, a lot of the big tech companies like APX and APT look frothy due to their recent nice gains. However, it is up to these companies to keep growing their revenue at a high and sustainable rate. AI is still in its infancy in regard to industry implementation so I see it as having more blue sky and sustainability compared to APT which is riding a credit bubble and with the share price vulnerable to an economic downturn.