Ann: Successful Completion of A$285 Million Placement, page-59

All sweet, no dramas.

You can start thinking of the common things in life around you today. Talk to your phone via Siri, or a Google Home, or an Amazon Alexa, or Samsung Bixby.

Think about how the computer understands your tone and slang.

Then think about how it understands a high pitched voice and a low pitched voice, rolled R’s, pronunciation, speed of speech.

Then think about how many millions or billions of data points the machine needs to be taught, just to comprehend one sentence.

Then there’s Asian languages that don’t follow a specific format, for example certain actions have different words for them depending on the gender. You’d need hundreds or thousands of native speakers who will work to translate words, passages and paragraphs. Sure, it’s easy, but it is labour intensive. I guess Appen has the crowdsource management aspect of it down pat, which is why it isn’t easy to replicate. With Figure 8, they are trying to reduce the costs from the crowdsourcing aspect, which is very positive for us shareholders. More $$ falling into the bottom line.

At 5.7x Revenue, have they overpaid for this company? I think not. It may be unfathomable to many Aussie investors that people are willing to pay that much for a company making losses. Understand though that this happens on a weekly basis in Silicon Valley. To buy new tech, you need to spend up. Otherwise the vendors would rather not sell, or they may be bought up by other deep pocketed potential competitors.

Eat or be eaten, that’s how it works in the tech sector. Appen have had runs on the board with acquisitions which is why most investors are OK with this purchase. They have proven that they are good at bedding down acquisitions and extracting the most out of it in no time at all.