Appen Annual Report 2023

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FY2023 Annual Report · Appen

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2023
Annual Report

Contents

Overview

About Appen

2023 at a glance

Chair message

CEO message

Value drivers

How we create value

12 Technology, processes, systems

15 Global crowd

18 Customer and brand

22 Our people

27 Financial

32 Social and environment

Governance

Identifying and managing risk

Our approach to governance

Board of Directors

Executive team

Directors’ report

62 Remuneration report

Financial report

135 Directors’ declaration

136

Independent auditor’s report

140 Additional information

143 Materiality assessment

144

Prioritised United Nations
Sustainable Development Goals

145 Non-financial data metrics

148 Corporate directory

Appen Limited
ABN 60 138 878 298

All amounts in this report are
in United States (US) dollars
unless otherwise stated.

About this report

This Annual Report combines our financial and non-financial
performance, linking environmental, social and governance
matters to our strategy and business performance.

In preparing our Annual Report, we have used the International
Integrated Reporting Council (IIRC) Framework, the Sustainability
Accounting Standards Board (SASB) and the Task Force
on Climate-related Financial Disclosures (TCFD) to guide
our disclosures on how Appen creates value for shareholders
and which topics are most material to our business.

Underlying results are alternative measures to those
recommended under International Financial Reporting Standards
(IFRS) and are used by management to assess the underlying
performance of the business. Underlying results have been
derived from statutory measures contained in the financial
statements but have not been subject to audit. A reconciliation
between statutory and underlying results is detailed on page 31
of this report.

Sustainable Development goals

We support the United Nations’ Sustainable Development Goals
(SDGs), and by doing our part to contribute to the success of the
SDGs we believe we can help contribute to a more sustainable
future. On page 144 we have identified five SDGs as priority SDGs
where we believe we can best contribute.

Reporting currency

Appen reports its financial results in United Stated (US) dollars.

Forward-looking statements

This report contains forward-looking statements.
These statements involve subjective judgement and analysis
and are subject to significant uncertainties, risks, and
contingencies, many of which are outside the control of Appen.
In particular, they speak only as of the date of this report, they
are based on particular events, conditions or circumstances
stated in the materials, they assume the success of Appen’s
business strategies, and they are subject to significant regulatory,
business, competitive, currency and economic uncertainties
and risks. Except as required by applicable regulations or
by law, Appen does not undertake to publicly update or review
any forward-looking statements, whether as a result of new
information or future events. Past performance cannot
be relied on as a guide to future performance.

Material issues

A matter is considered material if senior management and the
board believe it could significantly impact the value created and
delivered in the short, medium, and long term. We identify and
capture material issues through stakeholder engagement and
our annual risk and materiality assessment. The outcome of these
processes and our material issues are described on page 143.

Operating and Financial Review

The sections of this report from pages 10 to 51 titled the
Chair message, CEO message, How we create value, Identifying
and managing risk and Our approach to governance, comprise
our Operating and financial review (OFR), and form part
of the Directors’ report.

Real world AI

transforming the lives of

our customers and crowd

Appen 2023 Annual Report

12 Technology, processes, systems

15 Global crowd

18 Customer and brand

22 Our people

27 Financial

32 Social and environment

of this report.

Contents

Overview

About Appen

2023 at a glance

Chair message

CEO message

Value drivers

How we create value

Governance

Identifying and managing risk

Our approach to governance

Board of Directors

Executive team

Directors’ report

62 Remuneration report

Financial report

135 Directors’ declaration

136

Independent auditor’s report

140 Additional information

143 Materiality assessment

144

Prioritised United Nations

Sustainable Development Goals

145 Non-financial data metrics

148 Corporate directory

Appen Limited

ABN 60 138 878 298

All amounts in this report are

in United States (US) dollars

unless otherwise stated.

About this report

This Annual Report combines our financial and non-financial

performance, linking environmental, social and governance

matters to our strategy and business performance.

In preparing our Annual Report, we have used the International

Integrated Reporting Council (IIRC) Framework, the Sustainability

Accounting Standards Board (SASB) and the Task Force

on Climate-related Financial Disclosures (TCFD) to guide

our disclosures on how Appen creates value for shareholders

and which topics are most material to our business.

Underlying results are alternative measures to those

recommended under International Financial Reporting Standards

(IFRS) and are used by management to assess the underlying

performance of the business. Underlying results have been

derived from statutory measures contained in the financial

statements but have not been subject to audit. A reconciliation

between statutory and underlying results is detailed on page 31

Sustainable Development goals

We support the United Nations’ Sustainable Development Goals

(SDGs), and by doing our part to contribute to the success of the

SDGs we believe we can help contribute to a more sustainable

future. On page 144 we have identified five SDGs as priority SDGs

where we believe we can best contribute.

Reporting currency

Appen reports its financial results in United Stated (US) dollars.

Forward-looking statements

This report contains forward-looking statements.

These statements involve subjective judgement and analysis

and are subject to significant uncertainties, risks, and

contingencies, many of which are outside the control of Appen.

In particular, they speak only as of the date of this report, they

are based on particular events, conditions or circumstances

stated in the materials, they assume the success of Appen’s

business strategies, and they are subject to significant regulatory,

business, competitive, currency and economic uncertainties

and risks. Except as required by applicable regulations or

by law, Appen does not undertake to publicly update or review

any forward-looking statements, whether as a result of new

information or future events. Past performance cannot

be relied on as a guide to future performance.

Material issues

A matter is considered material if senior management and the

board believe it could significantly impact the value created and

delivered in the short, medium, and long term. We identify and

capture material issues through stakeholder engagement and

our annual risk and materiality assessment. The outcome of these

processes and our material issues are described on page 143.

Operating and Financial Review

The sections of this report from pages 10 to 51 titled the

Chair message, CEO message, How we create value, Identifying

and managing risk and Our approach to governance, comprise

our Operating and financial review (OFR), and form part

of the Directors’ report.

Real world AI
transforming the lives of
our customers and crowd

Appen 2023 Annual Report

1
1

About

Appen

Appen is a global market leader in data with expertise in deep
learning and generative AI. With almost three decades of experience
in data sourcing, data annotation, and model evaluation by humans,
we enable organisations to launch the world’s most innovative
artificial intelligence systems.

Our expertise includes a global crowd of more than one million skilled contractors who speak more than
500 languages 1, in over 200 countries 2, as well as our advanced AI data platform. Our products and
services give leaders in technology, automotive, financial services, retail, healthcare, and governments
the confidence to launch world-class AI products.

In 2023 Appen re-positioned itself to take advantage of its full growth potential and to capture all available
opportunities in the generative AI space. We launched a new set of generative AI or LLM products that
provide a comprehensive data platform for customers to generate meaningful value when they build
and integrate generative AI models in their organisations. Our vision is to expand our addressable market,
which will help to diversify our customer base, deliver margin improvement, increase revenue visibility
and deliver strong return on investment.

Deep-learning AI

Generative AI

Data collection

Data annotation

Relevance

Fine tuning

Assurance

Point of interest

Annotation

Search relevance

Human feedback

A/B testing

Speech

Categorisation

Content moderation

Instruction datasets

Benchmarking

Custom collections

Synthetic data

Ad evaluation

Model evaluation

Certification

AI feedback

Monitoring

Appen Data Annotation Platform

Appen Crowd marketplace

1 Self-reported.
2 Self-reported, includes territories.

Our purpose

This year, we defined our new purpose and values to support our

transformation and create an environment where everyone can

thrive, feel valued, and grow to their full potential. We are excited

by the opportunities that lie ahead and our purpose talks to our role

in unlocking the power of AI for Good to build a better world. Our new

values unite us – they guide our decision making and how we behave.

We unlock the power of ‘AI for good’ to build a better world

Our purpose:

Perspective:

We are a learn-it-all culture and embrace that comfort

and growth do not coexist

Our values

Customer obsessed

We believe our customer relationships are the ultimate

differentiator and the foundation of our success.

Action oriented

We take decisive action, fast pace and make informed

decisions quickly to drive progress and achieve results.

Courage to innovate

We have the courage to innovate and foster breakthrough thinking

and make it our engine for growth, success, and progress.

Winning together

We foster teamwork and collaboration, celebrate each other’s

success, and work together towards common goals.

Appen 2023 Annual Report

About

Appen

Appen is a global market leader in data with expertise in deep

learning and generative AI. With almost three decades of experience

in data sourcing, data annotation, and model evaluation by humans,

we enable organisations to launch the world’s most innovative

artificial intelligence systems.

Our expertise includes a global crowd of more than one million skilled contractors who speak more than

500 languages 1, in over 200 countries 2, as well as our advanced AI data platform. Our products and

services give leaders in technology, automotive, financial services, retail, healthcare, and governments

the confidence to launch world-class AI products.

In 2023 Appen re-positioned itself to take advantage of its full growth potential and to capture all available

opportunities in the generative AI space. We launched a new set of generative AI or LLM products that

provide a comprehensive data platform for customers to generate meaningful value when they build

and integrate generative AI models in their organisations. Our vision is to expand our addressable market,

which will help to diversify our customer base, deliver margin improvement, increase revenue visibility

and deliver strong return on investment.

Deep-learning AI

Generative AI

Data collection

Data annotation

Relevance

Fine tuning

Assurance

Point of interest

Annotation

Search relevance

Human feedback

A/B testing

Speech

Categorisation

Content moderation

Instruction datasets

Benchmarking

Custom collections

Synthetic data

Ad evaluation

Model evaluation

Certification

AI feedback

Monitoring

Appen Data Annotation Platform

Appen Crowd marketplace

1 Self-reported.

2 Self-reported, includes territories.

Our purpose

This year, we defined our new purpose and values to support our
transformation and create an environment where everyone can
thrive, feel valued, and grow to their full potential. We are excited
by the opportunities that lie ahead and our purpose talks to our role
in unlocking the power of AI for Good to build a better world. Our new
values unite us – they guide our decision making and how we behave.

Our purpose:
We unlock the power of ‘AI for good’ to build a better world

Perspective:
We are a learn-it-all culture and embrace that comfort
and growth do not coexist

Our values

Customer obsessed

We believe our customer relationships are the ultimate
differentiator and the foundation of our success.

Action oriented

We take decisive action, fast pace and make informed
decisions quickly to drive progress and achieve results.

Courage to innovate

We have the courage to innovate and foster breakthrough thinking
and make it our engine for growth, success, and progress.

Winning together

We foster teamwork and collaboration, celebrate each other’s
success, and work together towards common goals.

Appen 2023 Annual Report

2023
at a glance

Financial

Revenue (US$M)

$273.0M

29.7% from $388.1m in FY22

Underlying EBITDA

$(24.5)M

compared to $11.0 million in FY22

Underlying EBITDA excluding FX

$(20.4)M

compared to $13.6m in FY22

Statutory NPAT

$(118.1)M

compared to $(239.1)m in FY22

Customers

Customer NPS

from 22 in FY22

171

New Market customers

LLM model builders
as customers

New projects for
Global Services

Our people

Our crowd

75%

Employee engagement

from 78%

Crowd NPS

from 31

Global

Ethical and

Modern

Slavery policy

50%

Female representation

amongst our board

22%

Female representation

amongst our senior leadership

Nil

secure ISO 27001

certified facilities

reported material

data breaches

95%

Completion rate of mandatory

compliance training

Ethical

Improving

the crowd experience

with technology upgrades

through our Crowd

code of ethics

Technology

$34.6M

99.9%

product investment

system uptime

Social & Environment

Signatory to the

UN Global

Compact

Net

zero

by 2030

‘AI for

Good’

Committee

established

impact sourcing

partnerships

with NGOs

Appen 2023 Annual Report

2023

at a glance

Financial

Revenue (US$M)

$273.0M

29.7% from $388.1m in FY22

Underlying EBITDA

$(24.5)M

compared to $11.0 million in FY22

Underlying EBITDA excluding FX

$(20.4)M

compared to $13.6m in FY22

Statutory NPAT

$(118.1)M

compared to $(239.1)m in FY22

Customers

Customer NPS

from 22 in FY22

171

New Market customers

LLM model builders

as customers

New projects for

Global Services

Our people

Our crowd

75%

Employee engagement

from 78%

Crowd NPS
from 31

Global

Ethical and
Modern
Slavery policy

50%

Female representation
amongst our board

22%

Female representation
amongst our senior leadership

95%

Completion rate of mandatory
compliance training

Ethical
AI

through our Crowd
code of ethics

Improving

the crowd experience
with technology upgrades

Technology

$34.6M

99.9%

product investment

system uptime

Nil

secure ISO 27001
certified facilities

reported material
data breaches

Social & Environment

Signatory to the

UN Global
Compact

Net
zero

by 2030

‘AI for
Good’

Committee
established

impact sourcing
partnerships
with NGOs

Appen 2023 Annual Report

Chair message

Resetting
Resetting
our business
our business

2023 has been a disappointing year for shareholders
and a challenging time for Appen. While the rise
of generative AI has created significant excitement,
difficult macro conditions and a slowdown in tech
spending persisted. This year our immediate focus
has been to reset the business by refreshing our
leadership, removing costs and positioning Appen
to participate in the generative AI services market.

FY23 impacted by external conditions

For the 2023 financial year, Appen announced a Statutory
Loss of $118.1 million reflecting a non-cash impairment
of $69.2 million. The impairment relates to Appen’s investment
in its Global Services business. Importantly, the non-cash post
tax impairment does not affect Appen’s liquidity.

At the end of the year, Appen had $32.1 million (equivalent
to A$48.6 million) 1 in cash.

Once again, the board made the decision not to declare
an interim or final dividend in 2023 due to Appen’s financial
performance and to ensure an appropriate allocation
of capital.

Total operating revenue declined 29.7% to $273.0 million
and Appen recorded an underlying EBITDA (before foreign
exchange) loss of ($20.4) million, compared to $13.6 million
in the prior year. Appen’s results reflect a challenging external
environment as customers continued to optimise their
tech spend and evaluate their AI strategies.

Pleasingly, China recorded annual revenue growth of 2.7%
compared to the prior year as it achieved a quarterly revenue
record of $11.1 million in Q4FY23. The Quadrant business,
which has been fully integrated into New Markets, also
recorded a strong revenue uplift, albeit from a small base.

There have also been some early benefits from Appen’s
generative AI offerings; however, these have been
insufficient to offset the revenue and earnings declines
in our global and non-global business.

The board remained focused on maintaining adequate
balance sheet flexibility. In support of our strategy
reset, Appen raised A$60 million of equity in June 2023
and a further A$30 million of equity in December 2023.

Resetting Appen

Critical to Appen’s ongoing success is to ensure we operate
efficiently and sustainably.

At the beginning of 2023, we began a transformation
process to reset Appen to better capture the growth in
generative AI and improve performance of our core business.
This included a new strategy to deliver long term growth
and revenue diversification along with a $60 million cost
reduction program.

Some of the key areas identified for improvement
included a leadership and strategy refresh, operational
improvements to project delivery and crowd management
and strengthening of Appen’s sales and marketing functions.

During the year, Appen also launched a new set of large
language models (LLMs) for fine tuning and assurance
to enable enterprise customers to capture value from
generative AI models. Increasing Appen’s market channels
was also a key focus and the partnership with NVIDIA

1 Assumes FY23 average exchange rate AUD|USD 0.66.

6
6

has produced tangible benefits with the signing of our first

Operating sustainably

million-dollar Fortune 500 company deal.

We remain committed to sizing our cost base in line with

our revenue opportunity. In response to Google’s decision

to terminate its global services contract by 19 March 2024,

we will further reduce our cost base by $13.5 million.

Change in leadership

On 5 February 2024, we appointed Ryan Kolln as our new

CEO and Managing Director. Ryan has made extraordinary

Our commitment to our stakeholders including our crowd,

our customers and people remain as strong as ever.

We recognise the value of our one million plus crowd and

the value our crowd provides to our customers. Despite

the challenges faced by our business, we invested in

systems and processes to improve the crowd and customer

experience. Customer NPS has lifted significantly, however

crowd NPS declined primarily due to lower project availability.

contributions to Appen during his time with the company.

The high ethical treatment of our crowd remains a key priority.

He has an intimate understanding of Appen’s history,

We stand by our commitment to the crowd as defined in our

a strong technical understanding of the AI market, and

Crowd Code of Conduct, and our Global Ethical Sourcing

a proven strategy background. The unique combination

and Modern Slavery Policy.

of his skills and experience makes Ryan the ideal leader

to guide Appen through its next phase and navigate the

evolving generative AI market.

To deliver on our commitment to responsible AI and ensure

that AI performs correctly, it requires diverse datasets that

reflect the real world. This year, our teams conducted further

On behalf of the Board, I want to acknowledge Armughan

research programs to understand representation across the

Ahmad’s tenure as CEO. He held this position during a period

Crowd and address any gaps. We also focused on our social

of great change at Appen and oversaw a new strategic direction

impact – establishing five partnerships with global non-profits

and re-sizing of the business. We wish him well for the future.

to foster diversity and offer work opportunities within our

Board governance

There have been no changes to the Board in 2023.

The appointments of Lynn Mickleburgh and Mini Peiris

to the Appen Board on 29 July 2022 and 4 November 2022

respectively and their endorsement by shareholders at our

AGM in May 2023 completes our process of Board renewal.

Executive remuneration

Commencing in FY22, Appen’s short-term incentive (STI)

scorecard for key management personnel represents

a combination of financial and non-financial metrics.

Appen will always regard its financial performance as

paramount and assigns these metrics an STI weighting of 70%.

Non-financial metrics reflect Appen’s focus on its customers,

crowd and people and are assigned an STI weighting of 30%.

The board understands that shareholders are disappointed

with Appen’s business and financial performance. Reflecting

Closing

on the shareholder experience and 2023 financial outcomes

there is no STI payable for the company’s financial

performance as revenue and earnings performance targets

were not met.

This year, customer NPS was 140% of target and employee

engagement was 91.9% of target (which was above the 90%

payout threshold). In recognition of these results a partial

STI will be paid to key management personnel to reward

performance for these two metrics only. The STI equates

to 10.6% of the maximum payable.

There was no STI payable to the former CEO.

I would encourage shareholders to read the remuneration

report, commencing on page 62.

Crowd to underrepresented individuals, including refugees.

Promoting a diverse and inclusive culture across all

aspects of Appen’s business has been a long-held priority.

In 2023 Appen achieved 55% female representation among

its employees. We also maintained female representation

of 50% among non-executive directors, however female

representation among the senior leadership team

declined from 30% to 22%. We acknowledge the extent

of organisational change within Appen has adversely

impacted female representation at senior levels.

Appen remains committed to supporting international

initiatives to transition to net zero emissions. We have

completed our initial Net Zero Roadmap and have

committed to net zero by 2030. We are also working

towards assurance for our emissions data and remain

committed to the Science Based Target initiative.

Our people have worked hard to instil a greater level

of operational rigour and reset Appen’s business

in an incredibly challenging environment. I thank them

for their perseverance and ongoing commitment

in supporting our crowd and customers.

While Appen’s business returned to cash EBITDA

profitability in December 2023 there is still much work to do.

I am confident that under the stewardship of our new CEO,

Ryan Kolln, together with the commitment of our people

that Appen is on the right path.

Our constant focus remains on improving the company’s

performance and delivering better returns for shareholders.

We thank shareholders for their ongoing support.

RICHARD FREUDENSTEIN

Non-executive Chair

Appen 2023 Annual Report

Chair message

Resetting

our business

2023 has been a disappointing year for shareholders

and a challenging time for Appen. While the rise

of generative AI has created significant excitement,

difficult macro conditions and a slowdown in tech

spending persisted. This year our immediate focus

has been to reset the business by refreshing our

leadership, removing costs and positioning Appen

to participate in the generative AI services market.

FY23 impacted by external conditions

At the end of the year, Appen had $32.1 million (equivalent

to A$48.6 million) 1 in cash.

For the 2023 financial year, Appen announced a Statutory

Loss of $118.1 million reflecting a non-cash impairment

of $69.2 million. The impairment relates to Appen’s investment

in its Global Services business. Importantly, the non-cash post

tax impairment does not affect Appen’s liquidity.

Once again, the board made the decision not to declare

an interim or final dividend in 2023 due to Appen’s financial

performance and to ensure an appropriate allocation

of capital.

Total operating revenue declined 29.7% to $273.0 million

and Appen recorded an underlying EBITDA (before foreign

Resetting Appen

exchange) loss of ($20.4) million, compared to $13.6 million

Critical to Appen’s ongoing success is to ensure we operate

in the prior year. Appen’s results reflect a challenging external

efficiently and sustainably.

environment as customers continued to optimise their

tech spend and evaluate their AI strategies.

At the beginning of 2023, we began a transformation

process to reset Appen to better capture the growth in

Pleasingly, China recorded annual revenue growth of 2.7%

generative AI and improve performance of our core business.

compared to the prior year as it achieved a quarterly revenue

This included a new strategy to deliver long term growth

record of $11.1 million in Q4FY23. The Quadrant business,

and revenue diversification along with a $60 million cost

which has been fully integrated into New Markets, also

reduction program.

recorded a strong revenue uplift, albeit from a small base.

There have also been some early benefits from Appen’s

included a leadership and strategy refresh, operational

generative AI offerings; however, these have been

improvements to project delivery and crowd management

insufficient to offset the revenue and earnings declines

and strengthening of Appen’s sales and marketing functions.

Some of the key areas identified for improvement

in our global and non-global business.

The board remained focused on maintaining adequate

balance sheet flexibility. In support of our strategy

reset, Appen raised A$60 million of equity in June 2023

and a further A$30 million of equity in December 2023.

During the year, Appen also launched a new set of large

language models (LLMs) for fine tuning and assurance

to enable enterprise customers to capture value from

generative AI models. Increasing Appen’s market channels

was also a key focus and the partnership with NVIDIA

1 Assumes FY23 average exchange rate AUD|USD 0.66.

has produced tangible benefits with the signing of our first
million-dollar Fortune 500 company deal.

We remain committed to sizing our cost base in line with
our revenue opportunity. In response to Google’s decision
to terminate its global services contract by 19 March 2024,
we will further reduce our cost base by $13.5 million.

Change in leadership

On 5 February 2024, we appointed Ryan Kolln as our new
CEO and Managing Director. Ryan has made extraordinary
contributions to Appen during his time with the company.
He has an intimate understanding of Appen’s history,
a strong technical understanding of the AI market, and
a proven strategy background. The unique combination
of his skills and experience makes Ryan the ideal leader
to guide Appen through its next phase and navigate the
evolving generative AI market.

On behalf of the Board, I want to acknowledge Armughan
Ahmad’s tenure as CEO. He held this position during a period
of great change at Appen and oversaw a new strategic direction
and re-sizing of the business. We wish him well for the future.

Board governance

There have been no changes to the Board in 2023.
The appointments of Lynn Mickleburgh and Mini Peiris
to the Appen Board on 29 July 2022 and 4 November 2022
respectively and their endorsement by shareholders at our
AGM in May 2023 completes our process of Board renewal.

Executive remuneration

Commencing in FY22, Appen’s short-term incentive (STI)
scorecard for key management personnel represents
a combination of financial and non-financial metrics.
Appen will always regard its financial performance as
paramount and assigns these metrics an STI weighting of 70%.
Non-financial metrics reflect Appen’s focus on its customers,
crowd and people and are assigned an STI weighting of 30%.

The board understands that shareholders are disappointed
with Appen’s business and financial performance. Reflecting
on the shareholder experience and 2023 financial outcomes
there is no STI payable for the company’s financial
performance as revenue and earnings performance targets
were not met.

This year, customer NPS was 140% of target and employee
engagement was 91.9% of target (which was above the 90%
payout threshold). In recognition of these results a partial
STI will be paid to key management personnel to reward
performance for these two metrics only. The STI equates
to 10.6% of the maximum payable.

There was no STI payable to the former CEO.

I would encourage shareholders to read the remuneration
report, commencing on page 62.

Operating sustainably

Our commitment to our stakeholders including our crowd,
our customers and people remain as strong as ever.

We recognise the value of our one million plus crowd and
the value our crowd provides to our customers. Despite
the challenges faced by our business, we invested in
systems and processes to improve the crowd and customer
experience. Customer NPS has lifted significantly, however
crowd NPS declined primarily due to lower project availability.

The high ethical treatment of our crowd remains a key priority.
We stand by our commitment to the crowd as defined in our
Crowd Code of Conduct, and our Global Ethical Sourcing
and Modern Slavery Policy.

To deliver on our commitment to responsible AI and ensure
that AI performs correctly, it requires diverse datasets that
reflect the real world. This year, our teams conducted further
research programs to understand representation across the
Crowd and address any gaps. We also focused on our social
impact – establishing five partnerships with global non-profits
to foster diversity and offer work opportunities within our
Crowd to underrepresented individuals, including refugees.

Promoting a diverse and inclusive culture across all
aspects of Appen’s business has been a long-held priority.
In 2023 Appen achieved 55% female representation among
its employees. We also maintained female representation
of 50% among non-executive directors, however female
representation among the senior leadership team
declined from 30% to 22%. We acknowledge the extent
of organisational change within Appen has adversely
impacted female representation at senior levels.

Appen remains committed to supporting international
initiatives to transition to net zero emissions. We have
completed our initial Net Zero Roadmap and have
committed to net zero by 2030. We are also working
towards assurance for our emissions data and remain
committed to the Science Based Target initiative.

Closing

Our people have worked hard to instil a greater level
of operational rigour and reset Appen’s business
in an incredibly challenging environment. I thank them
for their perseverance and ongoing commitment
in supporting our crowd and customers.

While Appen’s business returned to cash EBITDA
profitability in December 2023 there is still much work to do.
I am confident that under the stewardship of our new CEO,
Ryan Kolln, together with the commitment of our people
that Appen is on the right path.

Our constant focus remains on improving the company’s
performance and delivering better returns for shareholders.
We thank shareholders for their ongoing support.

RICHARD FREUDENSTEIN
Non-executive Chair

Appen 2023 Annual Report

CEO message

Pivoting to
Generative AI

I am honoured to have been appointed CEO of Appen.

I also acknowledge that it’s been a disappointing year for

shareholders. Despite a challenging operating environment,

we have made significant progress to reset the business.

As CEO my priority is to continue evolving Appen, return our

core business to profitability, and positioning the company

to capture the full potential of generative AI.

FY23 operating performance
Our full year results are disappointing. FY23 revenue declined
circa 30% to $273.0 million and we recorded an underlying
EBITDA loss (excluding foreign exchange) of ($20.4) million,
compared to $13.6 million in FY22.

In 2023, despite our presence in a rapidly expanding market,
we encountered significant challenges affecting our revenue.
This was driven by three primary market factors. Firstly,
a large customer materially reduced their spend on human
annotation work which had an outsized impact on Appen.
Secondly, the introduction of mainstream generative AI
in late 2022 resulted in many customers evaluating their
AI strategies and slowed down investment in ramping
existing AI models. Thirdly, many of Appen’s customers
were impacted by the broader technology slowdown which
resulted in cost reduction measures.

While we can’t control market conditions, we can control
our operations and have focused on ensuring we have
a sustainable business model. In 2023 we completed
a $60 million cost out program that enabled the business
to exit the year profitability on a cash EBITDA basis. The cost
out program focused on some of the direct costs related
to revenue, streamlining our existing operations, delayering
the organisation, and optimising growth investments.

2023 was a breakout year for AI thanks to the mainstream
introduction of generative AI. Open AI’s ChatGPT was
launched in late 2022 and showcased the potential of this
new technology.

Despite the external challenges and their impact on
our revenue, we saw a large volume of new opportunities
in generative AI from existing and new customers, particularly
in the second half of 2023. We are currently working with
22 large language model builders globally that are building
generative AI foundation models. We also saw significant
interest from Fortune 1000 companies that are looking
to deploy generative AI in their operations. We anticipate
that generative AI will materially expand our total addressable
market, and we are well positioned to support companies
involved in developing foundational models as well as those
customising them.

Appen’s Data Annotation Platform (ADAP) and crowd
management platforms remain critical to how we deliver
high quality data for our customers, including supporting
generative AI. We have stepped up our product velocity
and released new generative AI focused products including
several features to support the new requirements
of generative AI customers. In 2023 Appen’s investment in
product development was $34.6 million, or 12.7% of revenue.

We also opened a new technology hub in Hyderabad India

On 22 January 2024, we reported that one of our largest

to support Appen’s global engineering function.

Building a world class go-to market function by driving a more

consultative selling approach and standardising our sales

and go-to market efforts is a key initiative. The sales team is

now fully established. Our go-to-market function has been

matched with our partnership ecosystem, as we collaborate

with companies like NVIDIA to help expand our reach to more

customers globally.

AI for Good focus underpins everything we do. Our customers

value our commitment to promote responsible and ethical

AI. We continue to support important initiatives, including

the active recruitment of impact sourced contributors from

Africa, where we provide work opportunities to refugees and

other disadvantaged people.

Appen’s future in a dynamic market

2023 has been the year of AI. It is an exciting time

for AI as the demand and expectations around

generative AI continue to grow. From our perspective,

it is also a transition period as companies continue to

customers, Google, will terminate its global contract.

We have carefully assessed our strategic options for the

business and will implement a further cost out program

of $13.5 million annualised. The loss of the Google contract

is disappointing and was very unexpected.

As we look forward, I am highly optimistic about the future

of Appen. Our focus remains on creating high quality data

for the world’s leading AI. Appen has evolved in the past

and will continue to evolve as the market shifts.

Management change

As part of resetting Appen, we have transitioned to a leaner

company and are focused on ensuring our executive team

has deep operational expertise.

During the year, several changes were made to the executive

team and we consolidated some functions.

Justin Miles has been appointed as Chief Financial Officer

(CFO) effective 27 February 2024. Since August 2023, he has

been acting as our interim CFO and was previously Deputy

CFO. Justin is a seasoned finance leader who has been with

evaluate their AI strategies considering not only generative AI,

but also the challenging external environment.

Appen since 2016.

While we see a great opportunity for Appen in the generative

AI space, the benefits from generative AI are yet to show

meaningful results. Most Enterprise customers were piloting

large language models in FY23, as there are few customers

using it in large scale production.

There is however, one constant. That is, humans play a critical

role due to the subjective nature of generative AI outcomes.

Technology used to develop generative AI relies on vast

amounts of data to train base models. These models can

be prone to error and human interaction is vital to align model

outcomes with human values and reduce hallucinations,

bias and toxicity.

Mike Davie was appointed as our new Chief Product Officer

in August 2023 and has now also taken on the role of Chief

Technology Officer in addition to his existing responsibilities.

Andrew Ettinger is our new Chief Revenue Officer. He leads

Appen’s sales and marketing functions.

Details of the team can be found on pages 54 to 57

of this report.

It would be remiss of me not to acknowledge and thank the

people who have left Appen due to our restructuring program.

I extend my heartfelt thanks and best wishes to them.

Strategy and prospects

Our strategy remains focused on the three large customer

segments of the AI data market. Firstly, customers that are

developing deep learning models. This is our traditional

customer base and we are focused on optimising how we

Closing

In closing, I would like to thank the Board, management

and Appen employees for their support. I am truly excited

to be leading Appen and could not be prouder of the positive

impact we create by promoting responsible and ethical AI.

deliver high quality data with more AI automation embedded

While the external environment will continue to present

in the process. We are making good progress in automation,

challenges, I am confident we can return Appen to profitability

with several customers now benefiting from automated

and make further inroads into the generative AI space.

I sincerely thank shareholders for their ongoing support.

We will continue working hard to ensure a better future.

data creation as a core element of our offering.

Secondly, we will support generative AI foundation model

builders with their data needs. As mentioned, as at the

end of FY23 we are working with the vast majority of large

language model builders globally and expect to see growth

in this customer segment continue.

Finally, we will support enterprises that are customising

RYAN KOLLN

large language models for their internal use cases. Our focus

CEO and Managing Director

is to provide a software suite that enables internal data science

teams to connect with internal experts for model training

data and feedback. This solution uses Appen’s existing data

annotation platform known as ADAP.

8
8

Appen 2023 Annual Report

CEO message

Pivoting to

Generative AI

I am honoured to have been appointed CEO of Appen.

I also acknowledge that it’s been a disappointing year for

shareholders. Despite a challenging operating environment,

we have made significant progress to reset the business.

As CEO my priority is to continue evolving Appen, return our

core business to profitability, and positioning the company

to capture the full potential of generative AI.

FY23 operating performance

Our full year results are disappointing. FY23 revenue declined

circa 30% to $273.0 million and we recorded an underlying

EBITDA loss (excluding foreign exchange) of ($20.4) million,

compared to $13.6 million in FY22.

In 2023, despite our presence in a rapidly expanding market,

we encountered significant challenges affecting our revenue.

This was driven by three primary market factors. Firstly,

a large customer materially reduced their spend on human

annotation work which had an outsized impact on Appen.

Secondly, the introduction of mainstream generative AI

in late 2022 resulted in many customers evaluating their

AI strategies and slowed down investment in ramping

existing AI models. Thirdly, many of Appen’s customers

were impacted by the broader technology slowdown which

resulted in cost reduction measures.

While we can’t control market conditions, we can control

our operations and have focused on ensuring we have

a sustainable business model. In 2023 we completed

a $60 million cost out program that enabled the business

to exit the year profitability on a cash EBITDA basis. The cost

out program focused on some of the direct costs related

to revenue, streamlining our existing operations, delayering

the organisation, and optimising growth investments.

2023 was a breakout year for AI thanks to the mainstream

introduction of generative AI. Open AI’s ChatGPT was

launched in late 2022 and showcased the potential of this

new technology.

Despite the external challenges and their impact on

our revenue, we saw a large volume of new opportunities

in generative AI from existing and new customers, particularly

in the second half of 2023. We are currently working with

22 large language model builders globally that are building

generative AI foundation models. We also saw significant

interest from Fortune 1000 companies that are looking

to deploy generative AI in their operations. We anticipate

that generative AI will materially expand our total addressable

market, and we are well positioned to support companies

involved in developing foundational models as well as those

customising them.

Appen’s Data Annotation Platform (ADAP) and crowd

management platforms remain critical to how we deliver

high quality data for our customers, including supporting

generative AI. We have stepped up our product velocity

and released new generative AI focused products including

several features to support the new requirements

of generative AI customers. In 2023 Appen’s investment in

product development was $34.6 million, or 12.7% of revenue.

We also opened a new technology hub in Hyderabad India
to support Appen’s global engineering function.

Building a world class go-to market function by driving a more
consultative selling approach and standardising our sales
and go-to market efforts is a key initiative. The sales team is
now fully established. Our go-to-market function has been
matched with our partnership ecosystem, as we collaborate
with companies like NVIDIA to help expand our reach to more
customers globally.

AI for Good focus underpins everything we do. Our customers
value our commitment to promote responsible and ethical
AI. We continue to support important initiatives, including
the active recruitment of impact sourced contributors from
Africa, where we provide work opportunities to refugees and
other disadvantaged people.

Appen’s future in a dynamic market
2023 has been the year of AI. It is an exciting time
for AI as the demand and expectations around
generative AI continue to grow. From our perspective,
it is also a transition period as companies continue to
evaluate their AI strategies considering not only generative AI,
but also the challenging external environment.

While we see a great opportunity for Appen in the generative
AI space, the benefits from generative AI are yet to show
meaningful results. Most Enterprise customers were piloting
large language models in FY23, as there are few customers
using it in large scale production.

There is however, one constant. That is, humans play a critical
role due to the subjective nature of generative AI outcomes.
Technology used to develop generative AI relies on vast
amounts of data to train base models. These models can
be prone to error and human interaction is vital to align model
outcomes with human values and reduce hallucinations,
bias and toxicity.

Strategy and prospects

Our strategy remains focused on the three large customer
segments of the AI data market. Firstly, customers that are
developing deep learning models. This is our traditional
customer base and we are focused on optimising how we
deliver high quality data with more AI automation embedded
in the process. We are making good progress in automation,
with several customers now benefiting from automated
data creation as a core element of our offering.

Secondly, we will support generative AI foundation model
builders with their data needs. As mentioned, as at the
end of FY23 we are working with the vast majority of large
language model builders globally and expect to see growth
in this customer segment continue.

Finally, we will support enterprises that are customising
large language models for their internal use cases. Our focus
is to provide a software suite that enables internal data science
teams to connect with internal experts for model training
data and feedback. This solution uses Appen’s existing data
annotation platform known as ADAP.

On 22 January 2024, we reported that one of our largest
customers, Google, will terminate its global contract.
We have carefully assessed our strategic options for the
business and will implement a further cost out program
of $13.5 million annualised. The loss of the Google contract
is disappointing and was very unexpected.

As we look forward, I am highly optimistic about the future
of Appen. Our focus remains on creating high quality data
for the world’s leading AI. Appen has evolved in the past
and will continue to evolve as the market shifts.

Management change
As part of resetting Appen, we have transitioned to a leaner
company and are focused on ensuring our executive team
has deep operational expertise.

During the year, several changes were made to the executive
team and we consolidated some functions.

Justin Miles has been appointed as Chief Financial Officer
(CFO) effective 27 February 2024. Since August 2023, he has
been acting as our interim CFO and was previously Deputy
CFO. Justin is a seasoned finance leader who has been with
Appen since 2016.

Mike Davie was appointed as our new Chief Product Officer
in August 2023 and has now also taken on the role of Chief
Technology Officer in addition to his existing responsibilities.

Andrew Ettinger is our new Chief Revenue Officer. He leads
Appen’s sales and marketing functions.

Details of the team can be found on pages 54 to 57
of this report.

It would be remiss of me not to acknowledge and thank the
people who have left Appen due to our restructuring program.
I extend my heartfelt thanks and best wishes to them.

Closing

In closing, I would like to thank the Board, management
and Appen employees for their support. I am truly excited
to be leading Appen and could not be prouder of the positive
impact we create by promoting responsible and ethical AI.

While the external environment will continue to present
challenges, I am confident we can return Appen to profitability
and make further inroads into the generative AI space.
I sincerely thank shareholders for their ongoing support.
We will continue working hard to ensure a better future.

RYAN KOLLN
CEO and Managing Director

Appen 2023 Annual Report

How we create value

Value Driver
Value Driver

Principle risks
Principle risks

How we deliver value
How we deliver value

Creating and measuring value

Investment in technology,
Investment in technology,
innovation and transformation
innovation and transformation

Compliance with security,
Compliance with security,
privacy and other data regulations
privacy and other data regulations

Through our technology and innovative solutions,
Through our technology and innovative solutions,
we look to streamline and automate processes
we look to streamline and automate processes
so we can deliver AI training data at scale
so we can deliver AI training data at scale

Our engineer, privacy, and cyber security teams
Our engineer, privacy, and cyber security teams
work to ensure that data availability targets are met,
work to ensure that data availability targets are met,
and data is protected and secure
and data is protected and secure

Crowd conditions
Crowd conditions

Crowd supply meets
Crowd supply meets
customer demand
customer demand

Changing customer strategy
Changing customer strategy
and needs
and needs

Ability to execute on operational
Ability to execute on operational
requirements
requirements

Talent strategy and employee
Talent strategy and employee
value proposition
value proposition

Managing a culture of growth
Managing a culture of growth
through change
through change

Strategic direction of the business
Strategic direction of the business

Financial sustainability
Financial sustainability

We are committed to treating our crowd fairly
We are committed to treating our crowd fairly
in accordance with our Crowd Code of Ethics
in accordance with our Crowd Code of Ethics

Whistleblower and Speak Up Policy is available
Whistleblower and Speak Up Policy is available
to support crowd grievances
to support crowd grievances

Our Impact Sourcing strategy provides jobs to people
Our Impact Sourcing strategy provides jobs to people
who have limited prospects for secure employment
who have limited prospects for secure employment

We do great work for our customers and deliver
We do great work for our customers and deliver
a superior customer experience
a superior customer experience

Our LLM capabilities provide customers with
Our LLM capabilities provide customers with
resources to fine-tune and assure their AI models,
resources to fine-tune and assure their AI models,
helping to improve their customer experiences
helping to improve their customer experiences

Constantly monitoring relevant market and customer
Constantly monitoring relevant market and customer
trends to meet the evolving needs of customers
trends to meet the evolving needs of customers

By focusing on making Appen a great place to work
By focusing on making Appen a great place to work
and creating a culture where our people can thrive,
and creating a culture where our people can thrive,
grow and feel valued
grow and feel valued

Investing in our people and HR systems to build
Investing in our people and HR systems to build
a workforce for the future and optimise the
a workforce for the future and optimise the
employee experience
employee experience

Embedding diversity principles across our business
Embedding diversity principles across our business
via our Diversity and Inclusion policy
via our Diversity and Inclusion policy

We aim to grow the business and to deliver
We aim to grow the business and to deliver
increased revenue and earnings to support returns
increased revenue and earnings to support returns
for shareholders
for shareholders

Capture the potential of generative AI
Capture the potential of generative AI

Technology,
Technology,
processes
processes
systems
systems

Global crowd
Global crowd

Customer
Customer
and brand
and brand

Our people
Our people

Financial
Financial

Compliance with legal, statutory
Compliance with legal, statutory
and ethical obligations
and ethical obligations

We are taking steps to reduce the impact
We are taking steps to reduce the impact
of our operations on the environment
of our operations on the environment

Social and
Social and
environment
environment

Environmental, social and
Environmental, social and
governance (ESG) risks and
governance (ESG) risks and
performance
performance

Our platform removes traditional barriers to work
Our platform removes traditional barriers to work
and increases global participation and representation
and increases global participation and representation
in the development of emerging technologies
in the development of emerging technologies

We are committed to achieving fair AI and creating
We are committed to achieving fair AI and creating
responsible AI standards
responsible AI standards

1 Due to budget constraints, the net zero emissions target for business operations has been revised from 2025 to 2030.
1 Due to budget constraints, the net zero emissions target for business operations has been revised from 2025 to 2030.

To deliver on our purpose and unlock the power of ‘AI for good’ to build a better world we draw our technology, scale and

flexibility of our Crowd and deep expertise. We offer our customers highly flexible offerings – from fully tailored solutions

to pre-labelled datasets and LLM solutions. We have a strong track record of AI deployment across many data types and

a proven ability to meet production needs that achieve high benchmarks for data quality. The outcomes delivered for each

value driver determines our ability to create value for our stakeholders – including Our Crowd, Our customers, Our people,

shareholders, and the community more broadly. Even though we conduct our work with an innovative mindset and embrace

new ways of doing things, our decisions are always supported by a disciplined approach to governance and risk management.

We support the United Nations’ Sustainable Development Goals (SDGs). By doing our part to contribute to the success

of these goals we believe we can help contribute to a more sustainable future and create value for our stakeholders.

We have identified the following six core priority SDGs where we believe we can best contribute.

SDGs

Pages 12-14

Invested $34.6 million in technology and systems, including enhancements to ADAP

to support LLM products and better support the crowd and customers

Development of a China intelligent LLM development platform

No material privacy breaches

Met or exceeded 99.9% uptime across all our platforms

Maintained certification for ISO 27001 and SOC 2

Gained ISO 14001/ISO 45001 for four sites

We provided flexible, work-from-home opportunities to our global crowd of one million+ contractors

We helped make AI ethical and fair through our Crowd Code of Ethics

In response to crowd NPS we delivered initiatives to improve the crowd experience

Partnered with Mercy Corps, Na’amal, Generation and Konexio to bring digital work

Pages 15-17

to underprivileged communities

Piloted demographic surveys to understand representation across the Crowd and identify gaps

Improved customer satisfaction with a significant uplift in our Net Promoter Score

Enhanced the customer experience through the launch of LLM fine tuning and assurance products

We demonstrated leadership in promoting responsible and ethical AI through our AI

for Good strategy which also helps to enhance our brand

Pages 18-21

We have a target of 30% female representation of women in senior management positions

and on the board. We exceeded this target at board level

Continue to respond to employee feedback to drive future engagement scores higher

Established and implemented Appen’s new culture code

Pages 22-26

Completed equity raisings in June 2023 and December 2023 to support Appen’s strategy refresh

Determined not to pay a dividend due to Appen’s financial performance

Continued disclosure of scopes 1,2 and 3 and commenced work on assuring of the data

Continued implementation of our Net Zero Roadmap and working towards net zero across

operations by 2030 1

Compact commitments

Commenced development of reporting on progress against United Nations Global

Pages 27-31

Pages 32-38

Appen 2023 Annual Report

How we create value

To deliver on our purpose and unlock the power of ‘AI for good’ to build a better world we draw our technology, scale and
flexibility of our Crowd and deep expertise. We offer our customers highly flexible offerings – from fully tailored solutions
to pre-labelled datasets and LLM solutions. We have a strong track record of AI deployment across many data types and
a proven ability to meet production needs that achieve high benchmarks for data quality. The outcomes delivered for each
value driver determines our ability to create value for our stakeholders – including Our Crowd, Our customers, Our people,
shareholders, and the community more broadly. Even though we conduct our work with an innovative mindset and embrace
new ways of doing things, our decisions are always supported by a disciplined approach to governance and risk management.
We support the United Nations’ Sustainable Development Goals (SDGs). By doing our part to contribute to the success
of these goals we believe we can help contribute to a more sustainable future and create value for our stakeholders.
We have identified the following six core priority SDGs where we believe we can best contribute.

Value Driver

Principle risks

How we deliver value

Creating and measuring value
Creating and measuring value

Invested $34.6 million in technology and systems, including enhancements to ADAP
Invested $34.6 million in technology and systems, including enhancements to ADAP
to support LLM products and better support the crowd and customers
to support LLM products and better support the crowd and customers

Development of a China intelligent LLM development platform
Development of a China intelligent LLM development platform

No material privacy breaches
No material privacy breaches

Met or exceeded 99.9% uptime across all our platforms
Met or exceeded 99.9% uptime across all our platforms

Maintained certification for ISO 27001 and SOC 2
Maintained certification for ISO 27001 and SOC 2

Gained ISO 14001/ISO 45001 for four sites
Gained ISO 14001/ISO 45001 for four sites

We provided flexible, work-from-home opportunities to our global crowd of one million+ contractors
We provided flexible, work-from-home opportunities to our global crowd of one million+ contractors

We helped make AI ethical and fair through our Crowd Code of Ethics
We helped make AI ethical and fair through our Crowd Code of Ethics

In response to crowd NPS we delivered initiatives to improve the crowd experience
In response to crowd NPS we delivered initiatives to improve the crowd experience

Partnered with Mercy Corps, Na’amal, Generation and Konexio to bring digital work
Partnered with Mercy Corps, Na’amal, Generation and Konexio to bring digital work
to underprivileged communities
to underprivileged communities

Piloted demographic surveys to understand representation across the Crowd and identify gaps
Piloted demographic surveys to understand representation across the Crowd and identify gaps

SDGs
SDGs

Pages 12-14
Pages 12-14

Pages 15-17
Pages 15-17

Changing customer strategy

We do great work for our customers and deliver

Improved customer satisfaction with a significant uplift in our Net Promoter Score
Improved customer satisfaction with a significant uplift in our Net Promoter Score

Enhanced the customer experience through the launch of LLM fine tuning and assurance products
Enhanced the customer experience through the launch of LLM fine tuning and assurance products

We demonstrated leadership in promoting responsible and ethical AI through our AI
We demonstrated leadership in promoting responsible and ethical AI through our AI
for Good strategy which also helps to enhance our brand
for Good strategy which also helps to enhance our brand

Pages 18-21
Pages 18-21

We have a target of 30% female representation of women in senior management positions
We have a target of 30% female representation of women in senior management positions
and on the board. We exceeded this target at board level
and on the board. We exceeded this target at board level

Continue to respond to employee feedback to drive future engagement scores higher
Continue to respond to employee feedback to drive future engagement scores higher

Established and implemented Appen’s new culture code
Established and implemented Appen’s new culture code

Pages 22-26
Pages 22-26

Strategic direction of the business

We aim to grow the business and to deliver

Completed equity raisings in June 2023 and December 2023 to support Appen’s strategy refresh
Completed equity raisings in June 2023 and December 2023 to support Appen’s strategy refresh

Financial sustainability

Determined not to pay a dividend due to Appen’s financial performance
Determined not to pay a dividend due to Appen’s financial performance

Continued disclosure of scopes 1,2 and 3 and commenced work on assuring of the data
Continued disclosure of scopes 1,2 and 3 and commenced work on assuring of the data

Continued implementation of our Net Zero Roadmap and working towards net zero across
Continued implementation of our Net Zero Roadmap and working towards net zero across
operations by 2030 1
operations by 2030 1

Commenced development of reporting on progress against United Nations Global
Commenced development of reporting on progress against United Nations Global
Compact commitments
Compact commitments

Pages 27-31
Pages 27-31

Pages 32-38
Pages 32-38

Appen 2023 Annual Report

Technology,

processes

systems

Global crowd

Customer

and brand

Investment in technology,

Through our technology and innovative solutions,

innovation and transformation

we look to streamline and automate processes

Compliance with security,

so we can deliver AI training data at scale

privacy and other data regulations

Our engineer, privacy, and cyber security teams

work to ensure that data availability targets are met,

and data is protected and secure

Crowd conditions

Crowd supply meets

customer demand

We are committed to treating our crowd fairly

in accordance with our Crowd Code of Ethics

Whistleblower and Speak Up Policy is available

to support crowd grievances

Our Impact Sourcing strategy provides jobs to people

who have limited prospects for secure employment

Ability to execute on operational

Our LLM capabilities provide customers with

a superior customer experience

and needs

requirements

resources to fine-tune and assure their AI models,

helping to improve their customer experiences

Constantly monitoring relevant market and customer

trends to meet the evolving needs of customers

Talent strategy and employee

By focusing on making Appen a great place to work

value proposition

and creating a culture where our people can thrive,

Our people

Managing a culture of growth

through change

grow and feel valued

Investing in our people and HR systems to build

a workforce for the future and optimise the

employee experience

Embedding diversity principles across our business

via our Diversity and Inclusion policy

increased revenue and earnings to support returns

for shareholders

Capture the potential of generative AI

Financial

Compliance with legal, statutory

We are taking steps to reduce the impact

and ethical obligations

of our operations on the environment

Social and

environment

Environmental, social and

governance (ESG) risks and

performance

Our platform removes traditional barriers to work

and increases global participation and representation

in the development of emerging technologies

We are committed to achieving fair AI and creating

responsible AI standards

1 Due to budget constraints, the net zero emissions target for business operations has been revised from 2025 to 2030.

Value drivers

Technology

processes,
systems

Appen’s technology processes and systems deliver AI training data
at scale. We leverage advanced tools and methodologies to source,
prepare, and evaluate data, ensuring the highest quality datasets for
our clients. With the ability to support large language model (LLM)
capabilities we are at the forefront of Generative AI, providing our
customers with the resources they need to fine-tune their AI models
and achieve optimal performance.

$34.6M

in product development

Nil

reported material
data breaches

Priority SDG

Our comprehensive range of technology products and data services
encompasses both deep learning and generative AI. This includes Appen
Connect 2.0 and our Appen Data Annotation Platform (ADAP), a solution
that allows internal teams and external customers to design and manage
human annotation projects. Through the acquisition of Quadrant, we have
integrated the data collection services of Geolancer and Hydra into our
product suite. We also offer specialised services through our China

platform tailored for the Chinese market.

Global Services, Global Product, Enterprise, Government

China

Appen
Connect 2.0

Sources crowd

Matches to projects
and annotation tasks

Handles crowd payments

Leverage crowd support
capabilities

Appen
Data Annotation
Platform (ADAP)

Collect and annotate
training data

Draw on powerful LLM
capabilities (fine tuning
and assurance)

Data Collection

China Platform

Provides crowd
management and
annotation for China
markets

Harness intelligent
LLM platform

Geolancer – Provides
in-field data
collection including
point of interest data

Hydra – Allows mobile
location DaaS data
collection

QCMP – Manage user
consent and data
privacy compliance

Product development

In FY23, investment in product development (excluding

amortisation) decreased 16.0% to $34.6 million and

represented 12.7% of revenue (2022: $41.2 million

or 10.6% of revenue).

This year we delivered several initiatives to improve

the crowd and customer experience. As the industry

evolves and projects become more complex, customers

require a crowd with a more advanced skill set. In turn,

we developed and upgraded the Appen Connect platform

to enable a simpler, more effective creation and management

of projects while providing functionality to rapidly source

and match the right crowd contributors to the right project.

By the end of FY23, all contributor and project records

were migrated to Appen Connect 2.0. In addition,

all project teams were using the upgraded platform

for project creation and project management of their crowd.

The upgraded Appen Connect 2.0 platform is expected

to be fully functional by Q3 in 2024.

We have seen some early benefits associated with the

upgraded platform with reduced dependency on human

input to manage project recruitment. Appen’s recruitment

function has become more automated, with the team

reduced from 70 to seven employees.

Within the Appen Connect 2.0 platform, we have

upgraded the following functionality:

modernised and expanded our reporting

and analytics capabilities to collect contributor,

productivity, and quality data for individual projects.

built a new fraud screening functionality which includes

more sophisticated identity measures including ID

validation, facial recognition, and proof of address.

began piloting a new payment service to be used

for all contributors, providing rapid payment

functionality and increased flexibility of payment

methods, while supporting a global crowd. Expected

use of this new payment service is Q1 of 2024.

built a more comprehensive profile record for

individual contributors to record NPS score, support

issues, parsed resume data, contributor skills such

as language, domain expertise and educational records.

This helps increase the knowledge Appen has on any

individual contributor, enabling better crowd sourcing

and recruitment outcomes.

updated our communication platform to better

support the demands of our project teams and

improve support of the crowd.

To create a better user experience and seamless point

of contact between Appen and our contributors, we merged

Appen Mobile into Appen Connect 2.0. Our Crowd can

access Appen Connect 2.0 on the web, on their phone

or via an app.

Within ADAP we released enhancements and new features

to support our LLM data products which enable Enterprises

to fine tune, evaluate and monitor their LLM models.

These products include AI chat feedback functionality,

benchmarking solutions and text tools.

The AI Chat Feedback solution allows domain experts to have

live conversations with Chatbots and review, rate and rewrite

responses in real time. While the benchmarking solution

addresses the challenge of model selection by enabling

the efficient comparison of multiple models. Further detail

of these offerings can be found in the Customer and Brand

section on page 18.

We also added writing assistance tools in ADAP which include

reinforcement learning with human feedback functionality

and response writing such as rich text editors, gibberish

detection and advanced duplicate detection.

Within ADAP, quality flow features were upgraded to provide

customers with enhanced assurance methodology and highly

flexible data annotation workflow capabilities. Other areas

of investment included improving contributor productivity,

increasing quality of data and reducing fraud.

Separately, Appen China developed its own intelligent

LLM development platform which offers a comprehensive

one-stop solution for AI clients in the industry. It integrates

mainstream open-source large language models and covers

a wide range of capabilities, including data set management,

data annotation, computational resource scheduling, model

evaluation, model fine-tuning, and model deployment.

By leveraging the platform, Appen China provides end-to-end

solutions for customised data and model development,

enabling enterprises to easily adopt large language models

and create high quality generative AI applications for

transformative user experiences.

Appen 2023 Annual Report

Value drivers

Technology

processes,

systems

Appen’s technology processes and systems deliver AI training data

at scale. We leverage advanced tools and methodologies to source,

prepare, and evaluate data, ensuring the highest quality datasets for

our clients. With the ability to support large language model (LLM)

capabilities we are at the forefront of Generative AI, providing our

customers with the resources they need to fine-tune their AI models

and achieve optimal performance.

$34.6M

in product development

Nil

reported material

data breaches

Priority SDG

Our comprehensive range of technology products and data services

encompasses both deep learning and generative AI. This includes Appen

Connect 2.0 and our Appen Data Annotation Platform (ADAP), a solution

that allows internal teams and external customers to design and manage

human annotation projects. Through the acquisition of Quadrant, we have

integrated the data collection services of Geolancer and Hydra into our

product suite. We also offer specialised services through our China

platform tailored for the Chinese market.

Global Services, Global Product, Enterprise, Government

China

Appen

Data Collection

China Platform

Appen

Connect 2.0

Sources crowd

Matches to projects

and annotation tasks

Handles crowd payments

Leverage crowd support

capabilities

Data Annotation

Platform (ADAP)

Collect and annotate

training data

Draw on powerful LLM

capabilities (fine tuning

and assurance)

Provides crowd

management and

annotation for China

markets

Harness intelligent

LLM platform

Geolancer – Provides

in-field data

collection including

point of interest data

Hydra – Allows mobile

location DaaS data

collection

QCMP – Manage user

consent and data

privacy compliance

Product development

In FY23, investment in product development (excluding
amortisation) decreased 16.0% to $34.6 million and
represented 12.7% of revenue (2022: $41.2 million
or 10.6% of revenue).

This year we delivered several initiatives to improve
the crowd and customer experience. As the industry
evolves and projects become more complex, customers
require a crowd with a more advanced skill set. In turn,
we developed and upgraded the Appen Connect platform
to enable a simpler, more effective creation and management
of projects while providing functionality to rapidly source
and match the right crowd contributors to the right project.

By the end of FY23, all contributor and project records
were migrated to Appen Connect 2.0. In addition,
all project teams were using the upgraded platform
for project creation and project management of their crowd.
The upgraded Appen Connect 2.0 platform is expected
to be fully functional by Q3 in 2024.

We have seen some early benefits associated with the
upgraded platform with reduced dependency on human
input to manage project recruitment. Appen’s recruitment
function has become more automated, with the team
reduced from 70 to seven employees.

Within the Appen Connect 2.0 platform, we have
upgraded the following functionality:

modernised and expanded our reporting
and analytics capabilities to collect contributor,
productivity, and quality data for individual projects.

built a new fraud screening functionality which includes
more sophisticated identity measures including ID
validation, facial recognition, and proof of address.

began piloting a new payment service to be used
for all contributors, providing rapid payment
functionality and increased flexibility of payment
methods, while supporting a global crowd. Expected
use of this new payment service is Q1 of 2024.

built a more comprehensive profile record for
individual contributors to record NPS score, support
issues, parsed resume data, contributor skills such
as language, domain expertise and educational records.
This helps increase the knowledge Appen has on any
individual contributor, enabling better crowd sourcing
and recruitment outcomes.

updated our communication platform to better
support the demands of our project teams and
improve support of the crowd.

To create a better user experience and seamless point
of contact between Appen and our contributors, we merged
Appen Mobile into Appen Connect 2.0. Our Crowd can
access Appen Connect 2.0 on the web, on their phone
or via an app.

Within ADAP we released enhancements and new features
to support our LLM data products which enable Enterprises
to fine tune, evaluate and monitor their LLM models.
These products include AI chat feedback functionality,
benchmarking solutions and text tools.

The AI Chat Feedback solution allows domain experts to have
live conversations with Chatbots and review, rate and rewrite
responses in real time. While the benchmarking solution
addresses the challenge of model selection by enabling
the efficient comparison of multiple models. Further detail
of these offerings can be found in the Customer and Brand
section on page 18.

We also added writing assistance tools in ADAP which include
reinforcement learning with human feedback functionality
and response writing such as rich text editors, gibberish
detection and advanced duplicate detection.

Within ADAP, quality flow features were upgraded to provide
customers with enhanced assurance methodology and highly
flexible data annotation workflow capabilities. Other areas
of investment included improving contributor productivity,
increasing quality of data and reducing fraud.

Separately, Appen China developed its own intelligent
LLM development platform which offers a comprehensive
one-stop solution for AI clients in the industry. It integrates
mainstream open-source large language models and covers
a wide range of capabilities, including data set management,
data annotation, computational resource scheduling, model
evaluation, model fine-tuning, and model deployment.
By leveraging the platform, Appen China provides end-to-end
solutions for customised data and model development,
enabling enterprises to easily adopt large language models
and create high quality generative AI applications for
transformative user experiences.

Appen 2023 Annual Report

Technology, processes, systems

Value drivers

Managing and protecting data

Cyber security

At Appen, we manage and protect massive amounts
of data, in line with security, privacy, and other data
regulations. We are also mindful of the increasing risk
posed by cyber security attacks and continue to adopt
industry best practices to guard against this risk.

System and data security

Managing data security is an essential and a core
competency of our business. Our approach
is comprehensive and involves people, processes,
and technology. As a minimum we adhere to industry
recognised standards, such as the International
Organisation for Standardisation (ISO) and National
Institute of Standards and Technology (NIST) and
implement global best practices.

Mandatory security awareness and privacy training
is provided to all employees. We also conduct regular
synthetic phishing tests to promote employee awareness
of the threats and their responsibilities in managing data
security. These tests also provide an indication as to the
effectiveness of our training programs.

We provide customers with a range of secure technology
solutions. Our SaaS customers can maintain their data
in their environment and do not need to physically move
it to our environment. For maximum data security, our
software can be deployed in the customers’ air-gapped
environment or private cloud.

Customers with even higher data security requirements
are able to use one of our eight ISO 27001 certified secure
facilities in the Philippines, the UK and China.

Data privacy

Our engineering, security and privacy teams work closely
together to ensure that data privacy is integrated into our
systems. We also work to comply with specific data privacy
requirements in the markets in which we operate, including
the California Consumer Privacy Act, the Philippines and
Australian Privacy Acts, and the EU/UK General Data
Protection Regulation. Mandatory data privacy training
is provided to all employees on an annual basis.

In 2023, China achieved BSI certification
ISO 14001/ISO 45001 for four sites.

There were no reported material breaches in 2023 1.

Platform availability, reliability and resilience

Platform availability, reliability and resilience is a key focus
of our engineering teams. The team works to strict system
availability targets and ensures that our systems can
safely scale in response to changes in demand. In FY23,
we continued to meet or exceed 99.9% 2 uptime across
all our platforms.

Our cyber security risk management framework
is based on internationally recognised NIST standards
and is structured to identify, detect, protect against,
respond and recover to cyber security threats.

Security penetration testing is conducted annually
by a third-party specialist, we have ISO 27001: 2013 certified
facilities and our ADAP platform is SOC 2 Type-2 attested.
Additionally, our UK and China facilities are ISO 9001
certified, and our UK facility is Cyber Essential Plus
certified in line with UK requirements. Appen also achieved
Payment Card Industry (PCI) compliance for its ADAP
platform as per industry requirements.

Our IT Security policies and standards are adhering
to ISO 27001 controls and the incident response procedure
is aligned with the NIST CSF (Cyber Security Framework).
We conduct several incident response tabletop
exercises annually.

In 2022, a cybersecurity maturity assessment was
conducted by an independent third party (PwC) utilising
the NIST framework. The assessment showed that Appen’s
maturity level had improved. The results of this review
continue to form the program of works to further mature
Appen’s cybersecurity capability.

In 2023, we enhanced the security posture of Appen
by implementing Attack surface management, Security
validation and Zero Fox takedown from Mandiant.
Five of the ten project recommendations were completed
in FY23, and the remainder will be finished by the end
of FY24 in time for re-evaluation.

Appen has cyber security insurance in place.

Data encryption is in place when data is at rest and in transit
for critical systems as per SAL (Secure Algorithm List).
We have centralised access controls via SSO (Single Sign
On) and MFA (Multi Factor Authentication) for additional
layers of protection. Security logs from our critical systems
are captured and monitored in a SIEM (Security Information
and Event Management) tool.

We also have top tier network, perimeter, and end point
security tools protecting the assets and monitoring
inbound and outbound network traffic. Privilege access
and vendor security reviews are conducted as per
our standards.

FY24 focus

Appen is committed to innovation and excellence. We remain
focused on revamping the crowd experience to foster a more
engaging environment, advancing our annotation platform
to support classified or sensitive projects, and automating
processes through AI-based productivity enhancements.
Advancing our cybersecurity maturity through dedicated
programs, as well as data classification and loss prevention
projects also remain key priorities.

1 Based on report from Privacy and Counsel team.
2 Based on report from third-party website monitoring company, StatusCake.

1 Self-reported, includes territories.

2 Self-reported.

Appen 2023 Annual Report

Global

crowd

Our skilled and diverse crowd of more than 1 million contributors

is key to our purpose of unlocking the power of AI to build a better

world. Spanning more than 200 countries 1, speaking 500+ 2

languages, and comprising a multitude of specialised areas

of expertise we’ve assembled a crowd that’s unmatched.

Ethical AI

through our

Crowd code

of ethics

Crowd NPS

4 points from 31 FY22

Priority SDG

Purpose of our crowd

Our crowd is our most valued asset,

providing clients certainty that AI

solutions will work, are aligned with

their values, and with human values.

Our platform enables our

contributors to work with our

clients in deploying AI that is both

responsible and ethical. Our clients

deeply value the broad diversity

of skills and capabilities our crowd

has to offer.

Appen’s flexible work from home

model attracts the most trusted,

qualified, and capable contributors

from around the world.

Our crowd appreciate the

opportunity to participate in the

dynamic and growing AI market,

developing technology skills and

on projects that fit with their

personal goals and lifestyle.

At Appen, we believe that AI has

the power to solve some of the

world’s biggest challenges when it

is developed and deployed ethically,

responsibly, and aligned with

human values. We also believe that

humans play a crucial role in the

safe and effective deployment of AI.

We have built a diverse crowd

which spans many cultures,

ethnicities, age groups, life stages

and occupations. Our crowd offers

clients access to a rich diversity

needed to train and align AI models

with human values.

Human involvement is not a stage

in AI development – it’s the core.

Human alignment helps to minimise

hallucinations, bias and toxicity and

should be incorporated at every

stage. Keeping humans in the loop

throughout AI development and

deployment ensures AI is steered

towards a future where technology

augments human potential.

Our crowd Net Promoter

Score (NPS) declined 4 points

from 31 to 27 during the year.

the lack of project availability,

duration of projects, amount of

pay, support and communication.

With development of Appen

Connect 2.0 we hope to address

some of these concerns.

Importance of people in AI

Responders raised concerns about

AI knowledge while earning money

Crowd engagement

Technology, processes, systems

Value drivers

Global

crowd

Our skilled and diverse crowd of more than 1 million contributors
is key to our purpose of unlocking the power of AI to build a better
world. Spanning more than 200 countries 1, speaking 500+ 2
languages, and comprising a multitude of specialised areas
of expertise we’ve assembled a crowd that’s unmatched.

Ethical AI

through our
Crowd code
of ethics

Crowd NPS

4 points from 31 FY22

Priority SDG

1 Based on report from Privacy and Counsel team.

2 Based on report from third-party website monitoring company, StatusCake.

1 Self-reported, includes territories.
2 Self-reported.

Purpose of our crowd

Our crowd is our most valued asset,
providing clients certainty that AI
solutions will work, are aligned with
their values, and with human values.

Our platform enables our
contributors to work with our
clients in deploying AI that is both
responsible and ethical. Our clients
deeply value the broad diversity
of skills and capabilities our crowd
has to offer.

Appen’s flexible work from home
model attracts the most trusted,
qualified, and capable contributors
from around the world.

Our crowd appreciate the
opportunity to participate in the
dynamic and growing AI market,
developing technology skills and
AI knowledge while earning money
on projects that fit with their
personal goals and lifestyle.

Importance of people in AI

At Appen, we believe that AI has
the power to solve some of the
world’s biggest challenges when it
is developed and deployed ethically,
responsibly, and aligned with

human values. We also believe that
humans play a crucial role in the
safe and effective deployment of AI.

We have built a diverse crowd
which spans many cultures,
ethnicities, age groups, life stages
and occupations. Our crowd offers
clients access to a rich diversity
needed to train and align AI models
with human values.

Human involvement is not a stage
in AI development – it’s the core.
Human alignment helps to minimise
hallucinations, bias and toxicity and
should be incorporated at every
stage. Keeping humans in the loop
throughout AI development and
deployment ensures AI is steered
towards a future where technology
augments human potential.

Crowd engagement

Our crowd Net Promoter
Score (NPS) declined 4 points
from 31 to 27 during the year.
Responders raised concerns about
the lack of project availability,
duration of projects, amount of
pay, support and communication.
With development of Appen
Connect 2.0 we hope to address
some of these concerns.

Appen 2023 Annual Report

Managing and protecting data

Cyber security

At Appen, we manage and protect massive amounts

Our cyber security risk management framework

of data, in line with security, privacy, and other data

is based on internationally recognised NIST standards

regulations. We are also mindful of the increasing risk

and is structured to identify, detect, protect against,

posed by cyber security attacks and continue to adopt

respond and recover to cyber security threats.

industry best practices to guard against this risk.

System and data security

Managing data security is an essential and a core

competency of our business. Our approach

is comprehensive and involves people, processes,

and technology. As a minimum we adhere to industry

recognised standards, such as the International

Organisation for Standardisation (ISO) and National

Institute of Standards and Technology (NIST) and

implement global best practices.

Mandatory security awareness and privacy training

is provided to all employees. We also conduct regular

synthetic phishing tests to promote employee awareness

of the threats and their responsibilities in managing data

security. These tests also provide an indication as to the

effectiveness of our training programs.

We provide customers with a range of secure technology

solutions. Our SaaS customers can maintain their data

in their environment and do not need to physically move

it to our environment. For maximum data security, our

software can be deployed in the customers’ air-gapped

environment or private cloud.

Customers with even higher data security requirements

are able to use one of our eight ISO 27001 certified secure

facilities in the Philippines, the UK and China.

Data privacy

Our engineering, security and privacy teams work closely

together to ensure that data privacy is integrated into our

systems. We also work to comply with specific data privacy

requirements in the markets in which we operate, including

the California Consumer Privacy Act, the Philippines and

Australian Privacy Acts, and the EU/UK General Data

Protection Regulation. Mandatory data privacy training

is provided to all employees on an annual basis.

In 2023, China achieved BSI certification

ISO 14001/ISO 45001 for four sites.

There were no reported material breaches in 2023 1.

Platform availability, reliability and resilience

Platform availability, reliability and resilience is a key focus

of our engineering teams. The team works to strict system

availability targets and ensures that our systems can

safely scale in response to changes in demand. In FY23,

we continued to meet or exceed 99.9% 2 uptime across

all our platforms.

Security penetration testing is conducted annually

by a third-party specialist, we have ISO 27001: 2013 certified

facilities and our ADAP platform is SOC 2 Type-2 attested.

Additionally, our UK and China facilities are ISO 9001

certified, and our UK facility is Cyber Essential Plus

certified in line with UK requirements. Appen also achieved

Payment Card Industry (PCI) compliance for its ADAP

platform as per industry requirements.

Our IT Security policies and standards are adhering

to ISO 27001 controls and the incident response procedure

is aligned with the NIST CSF (Cyber Security Framework).

We conduct several incident response tabletop

exercises annually.

In 2022, a cybersecurity maturity assessment was

conducted by an independent third party (PwC) utilising

the NIST framework. The assessment showed that Appen’s

maturity level had improved. The results of this review

continue to form the program of works to further mature

Appen’s cybersecurity capability.

In 2023, we enhanced the security posture of Appen

by implementing Attack surface management, Security

validation and Zero Fox takedown from Mandiant.

Five of the ten project recommendations were completed

in FY23, and the remainder will be finished by the end

of FY24 in time for re-evaluation.

Appen has cyber security insurance in place.

Data encryption is in place when data is at rest and in transit

for critical systems as per SAL (Secure Algorithm List).

We have centralised access controls via SSO (Single Sign

On) and MFA (Multi Factor Authentication) for additional

layers of protection. Security logs from our critical systems

are captured and monitored in a SIEM (Security Information

and Event Management) tool.

We also have top tier network, perimeter, and end point

security tools protecting the assets and monitoring

inbound and outbound network traffic. Privilege access

and vendor security reviews are conducted as per

our standards.

FY24 focus

Appen is committed to innovation and excellence. We remain

focused on revamping the crowd experience to foster a more

engaging environment, advancing our annotation platform

to support classified or sensitive projects, and automating

processes through AI-based productivity enhancements.

Advancing our cybersecurity maturity through dedicated

programs, as well as data classification and loss prevention

projects also remain key priorities.

Global crowd

Crowd NPS 1

2023
2022
2021
2020

Our strategy to get the right crowd

We deploy a variety of strategies and technology to ensure
our Crowd includes the diversity of skills, experience
and backgrounds required for our clients’ projects.
Requirements for more specific, specialised, and verified
skills such as finance, coding, law, health, and creative
writing are increasing as more clients work to develop and
enhance generative AI and large language models (LLMs).

In 2023, we fundamentally overhauled most of our crowd
facing systems. These enhancements deliver a better
user experience, by providing a more efficient qualification
process, without compromising our trust and safety
standards for our customers.

We also expanded and upgraded our reporting and
analytics capabilities to include richer contributor profiles
– with hundreds of searchable profile skills and attributes
now available. This helps to increase the knowledge

that Appen has on an individual contributor. These
enhancements also include quality data for individual
projects which provide valuable insights for our customers.

Upgrades were also made to our communication platform
to better support the crowd and we began piloting a new
payment service with improved functionality and flexibility.

More details on Appen’s technology initiatives to support
its crowd can be found in the Technology process
and systems section on page 12.

Crowd care

The fair and ethical treatment of our contractors, and
our ongoing commitment to their wellbeing is a priority.
As a company, we uphold responsible and sustainable
labour and supply chain practices. We recognise this
is the right thing to do and our customers also expect
that their business partners uphold such standards.

Our Crowd Code of Ethics is central to how we care for
our contractors. It includes our goal of fair pay and having
our hourly rates exceed the minimum wage in markets
where our managed services are used by customers.
We continue to monitor hourly rates of pay of our crowd
to ensure that any pay gaps are identified and resolved.

Measures the likelihood of crowd contractors to recommend Appen to a friend or colleague, according to a scale of 1–10 where 10 means
extremely likely (0–6 Detractor, 7–8 Passive, 9–10 Promoter). NPS is calculated by subtracting the % of total detractors from the % of total
promoters. Scores can range from – 100 to +100.

Our Global Ethical Sourcing and Modern Slavery

Policy outlines what we expect of our suppliers.

Our policy is published on our website at

Global Ethical Sourcing and Modern Slavery Policy.

We also support our contractors under our

Whistleblower and Speak Up Policy. This policy

is also published on our website at Whistleblower

Speak Up Policy.

Crowd diversity and inclusion

One of the six pillars of our Crowd Code of Ethics

is inclusion and we are dedicated to offering

opportunities to individuals of all abilities

and backgrounds.

Our Impact Sourcing Partnerships between our

customers and community partners continue to grow,

bringing in people who would not otherwise have

opportunities for meaningful employment.

More information about our impact sourcing

partnerships can be found in the Social and

environment section on page 32.

Our Crowd

Code of Ethics

Fair pay – Our goal is to pay our crowd

above minimum wage in every market

around the world where we operate.

Inclusion – A diverse and inclusive

culture is vital to our mission of helping

build better AI. We offer opportunities for

individuals of all abilities and backgrounds.

Crowd voice – Our crowd has a valued

voice at Appen and their feedback helps

us to continuously improve.

Privacy and confidentiality –

Any information collected about the crowd

is requested solely for the purposes of the

project. We take precautions to protect

that information and do not release private

data on individuals to third parties without

lawful basis.

Communication – We believe

in helpful, transparent and responsive

lines of communication with our crowd.

Wellbeing – We promote wellness,

community and connections through

online forums and best practices.

Our Crowd Code of Ethics

Statement is available at:

Our diverse global Crowd of 1M

Contributors is Unmatched

(appen.com)

FY24 focus

Our crowd is key to our ability to meet the needs of our clients. Attracting and retaining qualified people to work

with clients to deploy AI that is effective and safe is critical to our operations and essential for the development

of responsible AI. We remain focused on further enhancing the crowd experience to improve engagement.

Appen 2023 Annual Report

Global crowd

Crowd NPS 1

2023

2022

2021

2020

Our strategy to get the right crowd

We deploy a variety of strategies and technology to ensure

our Crowd includes the diversity of skills, experience

and backgrounds required for our clients’ projects.

Requirements for more specific, specialised, and verified

skills such as finance, coding, law, health, and creative

writing are increasing as more clients work to develop and

enhance generative AI and large language models (LLMs).

In 2023, we fundamentally overhauled most of our crowd

facing systems. These enhancements deliver a better

user experience, by providing a more efficient qualification

process, without compromising our trust and safety

standards for our customers.

We also expanded and upgraded our reporting and

analytics capabilities to include richer contributor profiles

– with hundreds of searchable profile skills and attributes

now available. This helps to increase the knowledge

that Appen has on an individual contributor. These

enhancements also include quality data for individual

projects which provide valuable insights for our customers.

Upgrades were also made to our communication platform

to better support the crowd and we began piloting a new

payment service with improved functionality and flexibility.

More details on Appen’s technology initiatives to support

its crowd can be found in the Technology process

and systems section on page 12.

Crowd care

The fair and ethical treatment of our contractors, and

our ongoing commitment to their wellbeing is a priority.

As a company, we uphold responsible and sustainable

labour and supply chain practices. We recognise this

is the right thing to do and our customers also expect

that their business partners uphold such standards.

Our Crowd Code of Ethics is central to how we care for

our contractors. It includes our goal of fair pay and having

our hourly rates exceed the minimum wage in markets

where our managed services are used by customers.

We continue to monitor hourly rates of pay of our crowd

to ensure that any pay gaps are identified and resolved.

Measures the likelihood of crowd contractors to recommend Appen to a friend or colleague, according to a scale of 1–10 where 10 means

extremely likely (0–6 Detractor, 7–8 Passive, 9–10 Promoter). NPS is calculated by subtracting the % of total detractors from the % of total

promoters. Scores can range from – 100 to +100.

Our Global Ethical Sourcing and Modern Slavery
Policy outlines what we expect of our suppliers.
Our policy is published on our website at
Global Ethical Sourcing and Modern Slavery Policy.

We also support our contractors under our
Whistleblower and Speak Up Policy. This policy
is also published on our website at Whistleblower
Speak Up Policy.

Crowd diversity and inclusion

One of the six pillars of our Crowd Code of Ethics
is inclusion and we are dedicated to offering
opportunities to individuals of all abilities
and backgrounds.

Our Impact Sourcing Partnerships between our
customers and community partners continue to grow,
bringing in people who would not otherwise have
opportunities for meaningful employment.

More information about our impact sourcing
partnerships can be found in the Social and
environment section on page 32.

Our Crowd
Code of Ethics

Fair pay – Our goal is to pay our crowd
above minimum wage in every market
around the world where we operate.

Inclusion – A diverse and inclusive
culture is vital to our mission of helping
build better AI. We offer opportunities for
individuals of all abilities and backgrounds.

Crowd voice – Our crowd has a valued
voice at Appen and their feedback helps
us to continuously improve.

Privacy and confidentiality –
Any information collected about the crowd
is requested solely for the purposes of the
project. We take precautions to protect
that information and do not release private
data on individuals to third parties without
lawful basis.

Communication – We believe
in helpful, transparent and responsive
lines of communication with our crowd.

Wellbeing – We promote wellness,
community and connections through
online forums and best practices.

Our Crowd Code of Ethics
Statement is available at:
Our diverse global Crowd of 1M
Contributors is Unmatched
(appen.com)

FY24 focus

Our crowd is key to our ability to meet the needs of our clients. Attracting and retaining qualified people to work
with clients to deploy AI that is effective and safe is critical to our operations and essential for the development
of responsible AI. We remain focused on further enhancing the crowd experience to improve engagement.

Appen 2023 Annual Report

Value drivers

Customer
and brand

At Appen, our focus is to deliver great outcomes and experiences for
our customers. As a global market leader and trusted partner, we provide
high-quality, human centric data to promote responsible and ethical AI.

Delivering value for customers

Since 1996, we have powered innovative AI applications for global
brands including Microsoft, Amazon, Pinterest, Salesforce, Oracle,
Adobe and BestBuy. Appen has cultivated trusted partnerships
and earned a reputation based on our ability to provide unbiased,
high quality, and globally representative data. As the demand for
AI continues to grow, we remain committed to our core belief that
humans are at the heart of its success.

Our focus is on creating stronger, smarter, and more efficient AI
systems for our clients and to help shape a future where human
intellect and machine learning seamlessly collaborate.

We believe that the success of our clients lies in their ability
to leverage data effectively. Our high-quality human-annotated
datasets are essential in training and validating AI algorithms,
ultimately leading to more accurate and reliable results.

AI can be a powerful tool for positive change in the world. The work
we do for our customers is impactful and we are committed to using
our expertise and resources to support initiatives that use AI for
social good. From partnering with organisations focused on
environmental conservation to supporting projects that promote
diversity and inclusion, we are dedicated to making a difference
through AI. Our customers value our unwavering focus to promote
responsible and ethical AI.

Customer NPS

13 points from 22

in FY22

171

new customers

LLM model builders
as customers

Priority SDG

Net promoter score

Our key customer satisfaction measurement tool

is Net Promoter Score (NPS). We seek feedback from

our customers on a bi-annual basis and monitor NPS

across our Global, Enterprise and China clients.

This year customer NPS was 35, up 13 points from

22 in FY22. This score was above target and reflected

a high level of customer satisfaction with Appen’s service

offerings and project delivery. Customers saw the benefit

of organisational change at Appen, with the company’s

internal resources and process better aligned and able

to pivot to deliver higher quality project outcomes.

In addition to the scoring process, we also receive

qualitative feedback from our surveys. This feedback

provides valuable insights and helps us to identify

opportunities to further refine our product offerings and

delivery services. We undertook several initiatives within

our quality and engineering teams to ensure enterprise AI

models delivered accurate and timely data for customers.

Increasing channels to market

Establishing meaningful ecosystem partnerships

to increase our channels to market has been a key

focus. These relationships provide important access

to enterprise customers and will enable our sales

organisation to reach more customers.

NVIDIA: Our collaboration with NVIDIA, announced

3 May 2023, is a solution that combines Appen’s AI data

expertise with the NVIDIA AI Enterprise platform. The

NVIDIA AI Enterprise platform provides a comprehensive

suite of AI and data analytics software, while Appen

complements this with data sourcing, annotation and

labelling, and Reinforcement Learning with Human

Feedback services. The collaboration between Appen

and NVIDIA empowers our enterprise clients to elevate

customer interactions through AI-enabled experiences.

In 1H23, we signed our first million-dollar deal to service

a global Fortune 500 company together with NVIDIA.

REKA: The Appen + Reka AI partnership, announced

4 May 2023 aims to accelerate the LLM journey for

enterprises, providing them with the tools and expertise

to overcome these challenges. Together, we deliver

customised multi-modal LLM applications that improve

productivity, improve customer experiences, and ensure

data security and privacy.

Amazon Web Services (AWS): In November 2023,

Appen selected AWS as its primary cloud for its

AI solutions and innovation. Through a multi-year

agreement, Appen and AWS have expanded their

relationship as Appen develops new enterprise

solutions for AI data sourcing, annotation and model

evaluation. By leveraging AWS’s cloud infrastructure,

including machine learning and AI capabilities, Appen’s

AI data platform ensures the delivery of high-quality

training data for market-leading generative AI products.

This expanded partnership enables Appen to integrate

cutting-edge services from AWS, further enhancing its AI

data platform as a vital interface between humans and AI.

Appen 2023 Annual Report

Value drivers

Customer

and brand

At Appen, our focus is to deliver great outcomes and experiences for

our customers. As a global market leader and trusted partner, we provide

high-quality, human centric data to promote responsible and ethical AI.

Delivering value for customers

Since 1996, we have powered innovative AI applications for global

brands including Microsoft, Amazon, Pinterest, Salesforce, Oracle,

Adobe and BestBuy. Appen has cultivated trusted partnerships

and earned a reputation based on our ability to provide unbiased,

high quality, and globally representative data. As the demand for

AI continues to grow, we remain committed to our core belief that

humans are at the heart of its success.

Our focus is on creating stronger, smarter, and more efficient AI

systems for our clients and to help shape a future where human

intellect and machine learning seamlessly collaborate.

We believe that the success of our clients lies in their ability

to leverage data effectively. Our high-quality human-annotated

datasets are essential in training and validating AI algorithms,

ultimately leading to more accurate and reliable results.

AI can be a powerful tool for positive change in the world. The work

we do for our customers is impactful and we are committed to using

our expertise and resources to support initiatives that use AI for

social good. From partnering with organisations focused on

environmental conservation to supporting projects that promote

diversity and inclusion, we are dedicated to making a difference

through AI. Our customers value our unwavering focus to promote

responsible and ethical AI.

Customer NPS

13 points from 22

in FY22

171

new customers

LLM model builders

as customers

Priority SDG

Net promoter score

Our key customer satisfaction measurement tool
is Net Promoter Score (NPS). We seek feedback from
our customers on a bi-annual basis and monitor NPS
across our Global, Enterprise and China clients.

This year customer NPS was 35, up 13 points from
22 in FY22. This score was above target and reflected
a high level of customer satisfaction with Appen’s service
offerings and project delivery. Customers saw the benefit
of organisational change at Appen, with the company’s
internal resources and process better aligned and able
to pivot to deliver higher quality project outcomes.

In addition to the scoring process, we also receive
qualitative feedback from our surveys. This feedback
provides valuable insights and helps us to identify
opportunities to further refine our product offerings and
delivery services. We undertook several initiatives within
our quality and engineering teams to ensure enterprise AI
models delivered accurate and timely data for customers.

Increasing channels to market

Establishing meaningful ecosystem partnerships
to increase our channels to market has been a key
focus. These relationships provide important access
to enterprise customers and will enable our sales
organisation to reach more customers.

NVIDIA: Our collaboration with NVIDIA, announced
3 May 2023, is a solution that combines Appen’s AI data
expertise with the NVIDIA AI Enterprise platform. The
NVIDIA AI Enterprise platform provides a comprehensive
suite of AI and data analytics software, while Appen
complements this with data sourcing, annotation and
labelling, and Reinforcement Learning with Human
Feedback services. The collaboration between Appen
and NVIDIA empowers our enterprise clients to elevate
customer interactions through AI-enabled experiences.
In 1H23, we signed our first million-dollar deal to service
a global Fortune 500 company together with NVIDIA.

REKA: The Appen + Reka AI partnership, announced
4 May 2023 aims to accelerate the LLM journey for
enterprises, providing them with the tools and expertise
to overcome these challenges. Together, we deliver
customised multi-modal LLM applications that improve
productivity, improve customer experiences, and ensure
data security and privacy.

Amazon Web Services (AWS): In November 2023,
Appen selected AWS as its primary cloud for its
AI solutions and innovation. Through a multi-year
agreement, Appen and AWS have expanded their
relationship as Appen develops new enterprise
solutions for AI data sourcing, annotation and model
evaluation. By leveraging AWS’s cloud infrastructure,
including machine learning and AI capabilities, Appen’s
AI data platform ensures the delivery of high-quality
training data for market-leading generative AI products.
This expanded partnership enables Appen to integrate
cutting-edge services from AWS, further enhancing its AI
data platform as a vital interface between humans and AI.

Appen 2023 Annual Report

Customer and brand

Large Language Models

Growing and diversifying our customer base

Taking the industry to new heights

At Appen, we understand the importance of trust and
accountability in AI. Our Large Language Models (LLMs)
released during 2023 serve as an essential trust layer,
ensuring that AI tools are truly helpful and not harmful
to the public. This year Appen launched various LLM tools
for fine tuning and assurance, including AI chat feedback
and benchmarking solutions. Collectively, these help
enterprises to build more complex and high-performing
LLMs that provide helpful, harmless, and honest
responses while reducing bias and toxicity.

Appen is truly a global business and supports companies
that are at the forefront of AI. Our customers include
global technology companies, software business
that incorporate AI models into their core products,
generative AI model builders and enterprise companies
that are adopting AI in their products and operations.

In FY23, our top five customers accounted for 74.8%
of revenue, down from 81.9% in FY22 . Revenue from
New Markets (excluding Global Product) accounted
for 26.3% of revenue, up from 18.1% in FY22.

This year, Appen delivered multiple projects related
to generative AI model development and evaluation,
for leading model builders, large tech and enterprise
customers. These projects included curating
prompt-response datasets for fine tuning, preference
annotation and ranking to train LLMs with human
feedback, evaluation and benchmarking of generative
AI model outputs, and human testing with live
model interactions. More complex projects required
domain-specific expertise, multilingual expansion and
multimodal datasets.

Generative AI revenue significantly increased in 2H23,
up 410% compared to 1H23. Most projects are delivered
using Appen’s Data Annotation Platform (ADAP);
however, we are seeing new platform-only projects
emerge with LLM startups. Appen is currently working
with 22 LLM model builders globally.

Generative AI

AI Chat Feedback:

Allows domain experts to assess multi-turn
live conversations, enabling them to review,
rate, and rewrite each response. This ensures
that LLMs are tested in complex conversations
that extend over multiple turns or dialogues,
mirroring real-world applications.

Benchmarking:

Addresses the challenge of model selection
by enabling customers to evaluate the
performance of various models across common
or fully custom dimensions. By leveraging
a curated crowd of our AI training specialists,
we evaluate performance along demographic
dimensions such as gender, ethnicity, and
language. A configurable dashboard enables
efficient comparison of multiple models,
providing invaluable insights for informed
decision-making.

Beyond contributing to the technical growth of the

AI industry, Appen plays a significant role in ensuring

responsible AI practices. Our dedication to ethical

considerations is apparent in every aspect of our work,

from strict adherence to privacy and security protocols

to regular reviews and updates of our policies.

By instilling these ethical standards throughout the AI

lifecycle, we help create a framework within the industry

that prioritises responsible AI use. This commitment

ensures that the AI technologies we enable are not only

advanced but also respect user privacy and promote

fairness. We remain dedicated to shaping a future

towards positive and ethical progress of AI.

In addition to supporting customers directly, we provide

industry information and resources that monitor trends

Case Study: Enhancing

internet safety through

search relevance

Appen data ensures online safety

for children through search relevance

The Project: A popular video platform for

children identified a need to improve search

results and implement content filtering

to ensure only appropriate content is readily

available on the platform. A dedicated quality

team was established to oversee the publication

of content and a thorough quality check was

conducted to flag and filter out inappropriate

material before it is shared with children.

and developments in AI. In FY23, Appen released its State

The Challenge: With a massive volume

of AI Automotive Report. The report offers specific insights

of content being published on the platform,

into how the transportation and automotive industries

the company needed to scale quickly.

are leveraging artificial intelligence to improve driver and

Specialised tasks were used to address child

passenger experience, safety and comfort.

Appen partnered with The Harris Poll to deliver the

research which identified that AI has tremendous

potential to make the automotive experience safer

and more innovative. The findings also noted optimism

about the future of autonomous vehicles. Almost 80%

safety thresholds and protection in search

results. This allows users of all ages to enjoy

relevant search results while being shielded

from inappropriate content. The company also

needed to validate that age-appropriate content

filtering was working accurately.

of respondents indicated that they currently feel safe with

The Solution: Appen’s ability to quickly

autonomous vehicles on the road. Those surveyed also

implement and scale projects made us the

indicated their confidence in a number of AI applications.

preferred data provider. We assembled

Appen’s research also uncovered the importance of

human oversight to ensure an accurate and safe rollout

of AI across the transportation space. In fact, 97%

of respondents noted that human-in-the-loop evaluation

is important for accurate model performance, which

allows for more collaboration and oversight to improve

the effectiveness of AI and machine learning models.

The report can be accessed on the web: The State of AI

and Machine Learning for Automotive 2023 (appen.com).

a dedicated quality team to provide precise

rating guidance with detailed instructions for the

crowd to clarify the defined age groups, content

types, and definitions of inappropriate material.

The Result: The project is an ongoing effort

to consistently deliver appropriate and filtered

content to each defined age group. The team

diligently reviews tens of thousands of video

tasks each month, swiftly identifying videos

that may initially appear safe for children but

contain inappropriate voiceover content.

Such videos are promptly flagged for offensive

content, effectively deterring the viewing of

inappropriate material by children, and creating

a safer platform experience for users of all ages.

FY24 focus

In a dynamic and fast-paced AI market new opportunities are endless. Appen will continue to leverage its position

as a global leader in data to deliver great outcomes for its customers and build new relationships. In FY24, we will

continue to build on our expertise in LLM tools and evolve our offerings, including advancements to our annotation

platform and automate processes through AI-based productivity initiatives.

Appen 2023 Annual Report

Customer and brand

At Appen, we understand the importance of trust and

accountability in AI. Our Large Language Models (LLMs)

released during 2023 serve as an essential trust layer,

ensuring that AI tools are truly helpful and not harmful

to the public. This year Appen launched various LLM tools

for fine tuning and assurance, including AI chat feedback

and benchmarking solutions. Collectively, these help

LLMs that provide helpful, harmless, and honest

responses while reducing bias and toxicity.

enterprises to build more complex and high-performing

In FY23, our top five customers accounted for 74.8%

Appen is truly a global business and supports companies

that are at the forefront of AI. Our customers include

global technology companies, software business

that incorporate AI models into their core products,

generative AI model builders and enterprise companies

that are adopting AI in their products and operations.

of revenue, down from 81.9% in FY22 . Revenue from

New Markets (excluding Global Product) accounted

for 26.3% of revenue, up from 18.1% in FY22.

This year, Appen delivered multiple projects related

to generative AI model development and evaluation,

for leading model builders, large tech and enterprise

customers. These projects included curating

prompt-response datasets for fine tuning, preference

annotation and ranking to train LLMs with human

feedback, evaluation and benchmarking of generative

AI model outputs, and human testing with live

model interactions. More complex projects required

domain-specific expertise, multilingual expansion and

multimodal datasets.

Generative AI revenue significantly increased in 2H23,

up 410% compared to 1H23. Most projects are delivered

using Appen’s Data Annotation Platform (ADAP);

however, we are seeing new platform-only projects

emerge with LLM startups. Appen is currently working

with 22 LLM model builders globally.

Generative AI

AI Chat Feedback:

Allows domain experts to assess multi-turn

live conversations, enabling them to review,

rate, and rewrite each response. This ensures

that LLMs are tested in complex conversations

that extend over multiple turns or dialogues,

mirroring real-world applications.

Benchmarking:

Addresses the challenge of model selection

by enabling customers to evaluate the

performance of various models across common

or fully custom dimensions. By leveraging

a curated crowd of our AI training specialists,

we evaluate performance along demographic

dimensions such as gender, ethnicity, and

language. A configurable dashboard enables

efficient comparison of multiple models,

providing invaluable insights for informed

decision-making.

Large Language Models

Growing and diversifying our customer base

Taking the industry to new heights

Beyond contributing to the technical growth of the
AI industry, Appen plays a significant role in ensuring
responsible AI practices. Our dedication to ethical
considerations is apparent in every aspect of our work,
from strict adherence to privacy and security protocols
to regular reviews and updates of our policies.

By instilling these ethical standards throughout the AI
lifecycle, we help create a framework within the industry
that prioritises responsible AI use. This commitment
ensures that the AI technologies we enable are not only
advanced but also respect user privacy and promote
fairness. We remain dedicated to shaping a future
towards positive and ethical progress of AI.

In addition to supporting customers directly, we provide
industry information and resources that monitor trends
and developments in AI. In FY23, Appen released its State
of AI Automotive Report. The report offers specific insights
into how the transportation and automotive industries
are leveraging artificial intelligence to improve driver and
passenger experience, safety and comfort.

Appen partnered with The Harris Poll to deliver the
research which identified that AI has tremendous
potential to make the automotive experience safer
and more innovative. The findings also noted optimism
about the future of autonomous vehicles. Almost 80%
of respondents indicated that they currently feel safe with
autonomous vehicles on the road. Those surveyed also
indicated their confidence in a number of AI applications.

Appen’s research also uncovered the importance of
human oversight to ensure an accurate and safe rollout
of AI across the transportation space. In fact, 97%
of respondents noted that human-in-the-loop evaluation
is important for accurate model performance, which
allows for more collaboration and oversight to improve
the effectiveness of AI and machine learning models.

The report can be accessed on the web: The State of AI
and Machine Learning for Automotive 2023 (appen.com).

Case Study: Enhancing
internet safety through
search relevance

Appen data ensures online safety
for children through search relevance

The Project: A popular video platform for
children identified a need to improve search
results and implement content filtering
to ensure only appropriate content is readily
available on the platform. A dedicated quality
team was established to oversee the publication
of content and a thorough quality check was
conducted to flag and filter out inappropriate
material before it is shared with children.

The Challenge: With a massive volume
of content being published on the platform,
the company needed to scale quickly.
Specialised tasks were used to address child
safety thresholds and protection in search
results. This allows users of all ages to enjoy
relevant search results while being shielded
from inappropriate content. The company also
needed to validate that age-appropriate content
filtering was working accurately.

The Solution: Appen’s ability to quickly
implement and scale projects made us the
preferred data provider. We assembled
a dedicated quality team to provide precise
rating guidance with detailed instructions for the
crowd to clarify the defined age groups, content
types, and definitions of inappropriate material.

The Result: The project is an ongoing effort
to consistently deliver appropriate and filtered
content to each defined age group. The team
diligently reviews tens of thousands of video
tasks each month, swiftly identifying videos
that may initially appear safe for children but
contain inappropriate voiceover content.
Such videos are promptly flagged for offensive
content, effectively deterring the viewing of
inappropriate material by children, and creating
a safer platform experience for users of all ages.

Appen 2023 Annual Report

FY24 focus

In a dynamic and fast-paced AI market new opportunities are endless. Appen will continue to leverage its position
as a global leader in data to deliver great outcomes for its customers and build new relationships. In FY24, we will
continue to build on our expertise in LLM tools and evolve our offerings, including advancements to our annotation
platform and automate processes through AI-based productivity initiatives.

Value drivers

Our
people

Every day, our people strive to unlock the power of AI for Good
to build a better world. Our aim is to support their ability to do
so, by providing a safe and inclusive work culture to allow them
to perform at their best.

1,037
FTEs

from 1,475 in FY22

75%

Employee
engagement

from 78% in FY22

Priority SDG

Global and diverse work force

As of 31 December 2023, we had 795 full time equivalent employees (FTE),
and approximately 222 fixed term, nine casual employees and 11 interns.
Full time employees total 992 and part time employees total 45. As part
of our transformation and in response to challenging external operating
conditions we flattened our organisational structure and consolidated
functions. This resulted in a 29.7% reduction in our workforce.

1,037
employees

Permanent
Fixed term
Casual
Interns

Full time
Part time

795
222
9
11

992
45

2023 employee distribution

Appen’s people are based in North America, Asia Pacific, UK, Europe,
Australia and India. In 2023, we added two new offices in Canada and India.

1,037
employees

Asia Pacific

North America

Australia/NZ

UK/Europe

725

185

Commitment to

diversity and inclusion

At Appen, we aim to build a more diverse and

inclusive workforce to improve our performance

and better reflect the communities in which

we operate. We understand the value of a global

workforce and embrace the unique perspectives,

experiences, and backgrounds of our people.

Our diversity policy guides our inclusive work

practices and is focused on increasing gender

and ethnic diversity among employees, in senior

management and on the board.

The Board has set a target of 30% female

representation at all senior leadership levels.

Female representation at the executive team

and senior vice president (SVP) level declined

due to voluntary and involuntary departures

of senior female employees.

As of 31 December, women represented:

Overall workforce

Board director

Executive team/SVP

Vice President

Senior Director

Director

Manager

% female 2

2023

2022

Occupational profile

Our people have deep industry expertise, particularly

in the areas of project delivery, crowd management

and engineering. We have developed specialised

industry capabilities which we embed into our

products and processes. We also rely on deep domain

expertise in the areas of linguistics, knowledge

graphs, computational aptitude, machine learning

and computer science. AI is fast paced and dynamic,

and the with rise of generative AI we recognise

that ongoing upskilling and reskilling is required

to meet and exceed stakeholder expectations.

1,037

employees

Product and engineering

Delivery

Corporate

Crowd

Executive

Revenue and marketing

546

171

111

132

Employee engagement

We recognise that an engaged and high-performing

workforce is essential for the success of our business.

To ensure we are responding to the needs of our

people, we conduct quarterly engagement surveys.

We continue to receive strong employee participation

rates that allow us to leverage insights from our

employee surveys to drive further improvements.

In FY23, we recorded an employee engagement

score of 75% down from 78% on the previous year.

In part, the decline in our employee engagement

score reflects the challenging external environment

and the realignment of our workforce to create

a leaner and more efficient organisational structure.

We will continue to respond to our employee’s

feedback and drive our engagement scores higher

in the following year.

Employee engagement 1

2023

2022

2021

2020

2019

75%

78%

76%

82%

76%

Measures the likelihood of full-time permanent employees

(including those in PEOS) referring a friend or colleague

to Appen based on their employee experience. The scale

is a 5-point Likert resulting in 1–2 Detractor, 3 Passive

and 4–5 Promoter. NPS is calculated by subtracting

the % of total detractors from the % of total promoters.

Survey results are provided by Workday Peakon.

2 Based on HR report for all permanent employees

generated by Workday.

Appen 2023 Annual Report

Value drivers

Our

people

Every day, our people strive to unlock the power of AI for Good

to build a better world. Our aim is to support their ability to do

so, by providing a safe and inclusive work culture to allow them

to perform at their best.

1,037

FTEs

from 1,475 in FY22

75%

Employee

engagement

from 78% in FY22

Priority SDG

Global and diverse work force

As of 31 December 2023, we had 795 full time equivalent employees (FTE),

and approximately 222 fixed term, nine casual employees and 11 interns.

Full time employees total 992 and part time employees total 45. As part

of our transformation and in response to challenging external operating

conditions we flattened our organisational structure and consolidated

functions. This resulted in a 29.7% reduction in our workforce.

1,037

employees

Permanent

Fixed term

Casual

Interns

Full time

Part time

2023 employee distribution

Appen’s people are based in North America, Asia Pacific, UK, Europe,

Australia and India. In 2023, we added two new offices in Canada and India.

1,037

employees

Asia Pacific

North America

Australia/NZ

UK/Europe

795

222

992

725

185

Commitment to
diversity and inclusion

At Appen, we aim to build a more diverse and
inclusive workforce to improve our performance
and better reflect the communities in which
we operate. We understand the value of a global
workforce and embrace the unique perspectives,
experiences, and backgrounds of our people.
Our diversity policy guides our inclusive work
practices and is focused on increasing gender
and ethnic diversity among employees, in senior
management and on the board.

The Board has set a target of 30% female
representation at all senior leadership levels.
Female representation at the executive team
and senior vice president (SVP) level declined
due to voluntary and involuntary departures
of senior female employees.

As of 31 December, women represented:

Overall workforce

Board director

Executive team/SVP

Vice President

Senior Director

Director

Manager

% female 2

2023

2022

Occupational profile

Our people have deep industry expertise, particularly
in the areas of project delivery, crowd management
and engineering. We have developed specialised
industry capabilities which we embed into our
products and processes. We also rely on deep domain
expertise in the areas of linguistics, knowledge
graphs, computational aptitude, machine learning
and computer science. AI is fast paced and dynamic,
and the with rise of generative AI we recognise
that ongoing upskilling and reskilling is required
to meet and exceed stakeholder expectations.

Delivery

Product and engineering

1,037
employees

Corporate

Crowd

Revenue and marketing

Executive

546

171

111

132

Employee engagement

We recognise that an engaged and high-performing
workforce is essential for the success of our business.
To ensure we are responding to the needs of our
people, we conduct quarterly engagement surveys.
We continue to receive strong employee participation
rates that allow us to leverage insights from our
employee surveys to drive further improvements.

In FY23, we recorded an employee engagement
score of 75% down from 78% on the previous year.
In part, the decline in our employee engagement
score reflects the challenging external environment
and the realignment of our workforce to create
a leaner and more efficient organisational structure.
We will continue to respond to our employee’s
feedback and drive our engagement scores higher
in the following year.

Employee engagement 1

2023

2022

2021

2020

2019

75%

78%

76%

82%

76%

Measures the likelihood of full-time permanent employees
(including those in PEOS) referring a friend or colleague
to Appen based on their employee experience. The scale
is a 5-point Likert resulting in 1–2 Detractor, 3 Passive
and 4–5 Promoter. NPS is calculated by subtracting
the % of total detractors from the % of total promoters.
Survey results are provided by Workday Peakon.
2 Based on HR report for all permanent employees

generated by Workday.

Appen 2023 Annual Report

Our people

Building our new culture

Training and development

This year, we adopted a new Culture Code to support our
transformation. Through our new Purpose and Perspective,
we are seeking to create an environment where everyone
can thrive, feel valued, and grow their potential. Our people
are further united by our four values that guide how
we pursue individual, team and organisational objectives.
Our values also inform how we work with those within
and outside Appen.

Leaders are responsible for modelling our Culture Code
and fostering it within their teams, and each employee
is expected to conduct themselves in alignment with
Appen’s Culture Code.

Appen’s Culture Code:

Purpose

We unlock the power of AI for Good to build a better world.

Perspective

We are a learn-it-all culture and embrace that comfort
and growth do not coexist.

Values

Four values unite us:

Customer obsessed: We believe our customer
relationships are the ultimate differentiator and
the foundation of our success.

Action oriented: We take decisive action,
fast pace and make informed decisions quickly
in order to drive progress and achieve results.

Courage to innovate: We have the courage
to and foster breakthrough thinking and make
it our engine for growth, success, and progress.

Winning together: We foster teamwork and
collaboration, celebrate each other’s success,
and work together towards common goals.

A collaborative goal-setting methodology was introduced
in Appen in 2023 with OKRs – Objectives and Key Results.
This framework helps drive our teams and employees
to set challenging and ambitious goals with measurable
results. All employees and managers were provided training
throughout the year on how to cultivate impactful OKRs
and drive meaningful conversations.

During 2023, Appen’s strategic focus progressed towards
Large Language Models (LLMs), and due to the fast-changing
landscape of today, it was important that Appen equipped
its own people with the fundamentals of AI and LLMs.
All employees were upskilled, and a specific focus on
client-facing roles in sales, marketing, solutions, linguists,
and service delivery, as well as an advanced path for more
technical roles.

At the beginning of 2023, Appen rolled out a new leadership
program that included paths for leaders at different levels
from self-leadership to leading the organisation, as well
as a Leadership Collaborative community and quarterly
leadership labs where leaders can share best practices
and collaborate on specific topics.

In FY23, our people averaged one hour of training per
month through Appen University, with a total training time
of 35,156 hours 1.

Working ethically

Our people are required to complete mandatory annual
training in critical areas such as data privacy, security
awareness and sexual harassment. Our Code of Conduct
training which sets out employees’ obligations to act
honestly and ethically is also mandatory for all employees
and contractors. In FY23, we achieved a 95% completion
rate for our Code of Conduct training 2.

Data from Appen University.

1
2 Data from Appen University, excluding China employees.

Giving back

Giving back to our global community is at the core of our

business. In alignment with Appen’s AI for Good strategy,

Appen launched its Volunteering program, giving our

employees one day per year to volunteer for non-profit

organisations in their communities. Appen believes this

will not only benefit the communities in which we operate,

but also enrich the lives of our employees by allowing

them to make a difference.

Some examples of giving back included the Sydney

office coming together to create 50 care packages

in partnership with The Good Box, who support people

experiencing homelessness across Australia.

In the Philippines, our Cavite team partnered with the

Department of Education’s Brigada Eskwela, also known

as School Maintenance Week, and prepped the schools

for the upcoming academic year. The team helped

transform ordinary classrooms into lively spaces that

fuel creativity through donations of cleaning materials,

refreshing the classroom by painting walls and furniture

and cleaning the surroundings.

In addition, Appen’s Employee Service committee

facilitated the following events to raise money, awareness

and show our support:

Appen’s Biggest Morning Tea – held in both Australia

and the Philippines, where Appen raised $2,500

towards making a difference for those impacted

by cancer.

Pride Month – Appen beamed Pride across the globe

during Pride Month with our Philippines team marching

in the Cavite Pride Parade; Exeter hosted ‘Dress Like

The Rainbow’ day (helping to raise awareness of the

state of LGBTQI rights across Europe); Sydney held

a rainbow food-filled Pride lunch bursting with colour,

and Bellevue threw a Pride Party raising funds for

a local LGBTQI youth non-profit organisation.

Cavite Fire Appeal – in 2023, many families were

displaced by fires in Cavite, Philippines. Appen

raised $3,500 to support those in need.

Organised a 10,000 steps per day challenge across

the month of September to help raise money for the

Cerebral Palsy Alliance (CPA), an organisation that

supports people living with Cerebral Palsy. A total

of $5,200 was raised with more than 10 million steps

made by employees globally.

Appen 2023 Annual Report

Our people

Building our new culture

Training and development

This year, we adopted a new Culture Code to support our

A collaborative goal-setting methodology was introduced

transformation. Through our new Purpose and Perspective,

in Appen in 2023 with OKRs – Objectives and Key Results.

we are seeking to create an environment where everyone

This framework helps drive our teams and employees

can thrive, feel valued, and grow their potential. Our people

to set challenging and ambitious goals with measurable

are further united by our four values that guide how

results. All employees and managers were provided training

we pursue individual, team and organisational objectives.

throughout the year on how to cultivate impactful OKRs

Our values also inform how we work with those within

and drive meaningful conversations.

and outside Appen.

Leaders are responsible for modelling our Culture Code

Large Language Models (LLMs), and due to the fast-changing

and fostering it within their teams, and each employee

landscape of today, it was important that Appen equipped

is expected to conduct themselves in alignment with

its own people with the fundamentals of AI and LLMs.

During 2023, Appen’s strategic focus progressed towards

Appen’s Culture Code.

Appen’s Culture Code:

Purpose

We unlock the power of AI for Good to build a better world.

Perspective

We are a learn-it-all culture and embrace that comfort

and growth do not coexist.

Values

Four values unite us:

Customer obsessed: We believe our customer

relationships are the ultimate differentiator and

the foundation of our success.

Action oriented: We take decisive action,

fast pace and make informed decisions quickly

in order to drive progress and achieve results.

Courage to innovate: We have the courage

to and foster breakthrough thinking and make

it our engine for growth, success, and progress.

Winning together: We foster teamwork and

collaboration, celebrate each other’s success,

and work together towards common goals.

All employees were upskilled, and a specific focus on

client-facing roles in sales, marketing, solutions, linguists,

and service delivery, as well as an advanced path for more

technical roles.

At the beginning of 2023, Appen rolled out a new leadership

program that included paths for leaders at different levels

from self-leadership to leading the organisation, as well

as a Leadership Collaborative community and quarterly

leadership labs where leaders can share best practices

and collaborate on specific topics.

In FY23, our people averaged one hour of training per

month through Appen University, with a total training time

of 35,156 hours 1.

Working ethically

Our people are required to complete mandatory annual

training in critical areas such as data privacy, security

awareness and sexual harassment. Our Code of Conduct

training which sets out employees’ obligations to act

honestly and ethically is also mandatory for all employees

and contractors. In FY23, we achieved a 95% completion

rate for our Code of Conduct training 2.

Data from Appen University.

2 Data from Appen University, excluding China employees.

Giving back

Giving back to our global community is at the core of our
business. In alignment with Appen’s AI for Good strategy,
Appen launched its Volunteering program, giving our
employees one day per year to volunteer for non-profit
organisations in their communities. Appen believes this
will not only benefit the communities in which we operate,
but also enrich the lives of our employees by allowing
them to make a difference.

Some examples of giving back included the Sydney
office coming together to create 50 care packages
in partnership with The Good Box, who support people
experiencing homelessness across Australia.

In the Philippines, our Cavite team partnered with the
Department of Education’s Brigada Eskwela, also known
as School Maintenance Week, and prepped the schools
for the upcoming academic year. The team helped
transform ordinary classrooms into lively spaces that
fuel creativity through donations of cleaning materials,
refreshing the classroom by painting walls and furniture
and cleaning the surroundings.

In addition, Appen’s Employee Service committee
facilitated the following events to raise money, awareness
and show our support:

Appen’s Biggest Morning Tea – held in both Australia
and the Philippines, where Appen raised $2,500
towards making a difference for those impacted
by cancer.

Pride Month – Appen beamed Pride across the globe
during Pride Month with our Philippines team marching
in the Cavite Pride Parade; Exeter hosted ‘Dress Like
The Rainbow’ day (helping to raise awareness of the
state of LGBTQI rights across Europe); Sydney held
a rainbow food-filled Pride lunch bursting with colour,
and Bellevue threw a Pride Party raising funds for
a local LGBTQI youth non-profit organisation.

Cavite Fire Appeal – in 2023, many families were
displaced by fires in Cavite, Philippines. Appen
raised $3,500 to support those in need.

Organised a 10,000 steps per day challenge across
the month of September to help raise money for the
Cerebral Palsy Alliance (CPA), an organisation that
supports people living with Cerebral Palsy. A total
of $5,200 was raised with more than 10 million steps
made by employees globally.

Appen 2023 Annual Report

Our people

Value drivers

New presence in India

Our Future Ways of Working

Appen completed the resizing and relocation of its
engineering function to Hyderabad, India. This new location
will be home to approximately 100 employees who will help
with the development of cutting-edge software solutions
that will shape the future of AI and Machine Learning.

Launch of our internship program

Appen launched its first internship program in 2023
to harness curiosity, energy, and an irresistible zest
for learning. The interns have actively participated,
tackled substantial challenges, and ignited real business
transformation across product, engineering, sales,
marketing, customer success, IT and HR functions.

Appen partnered with the Coalition of Innovation Leaders
Against Racism (CILAR) and attended the CILAR MyStartr
event in Toronto in March 2023 where we sourced
more than 100 applicants for our eight intern openings
in the US and Canada – all from ethnically diverse
backgrounds with senior level managers for exposure
and coaching during the Summer of 2023. Nearly half
remained during the fall to extend their internships.

For nearly three years, Appen employees have
faced many challenges including working through
the pandemic and responding to the ongoing tech
slowdown as our customers cut costs. During this
time, we transitioned to different working models
and as a company, we embraced resilience and
adjusted to the ever-changing environment and
needs of our customers.

The next evolution of our Future Ways of Working
strategy focuses on flexibility and no-one size fits
all approach. This year, we learnt a lot about what
we need to do in order to thrive at Appen, and a hybrid
model gives us the best of both worlds. This model
fosters flexibility, enhancing employee satisfaction and
drives productivity. Appen has continued to promote
in person social and cultural connections through
the Neighbourhood Connections Program – allowing
employees that live in the same city or community
to build connections with colleagues.

FY24 focus

We recognise that a diverse, engaged and high performing workforce is key to our success.
To that end, we remain focused on investing in our people and culture. We plan to further
embed our new Culture Code throughout the company and develop and empower our leaders.
Across Appen we will continue to champion diversity to help build a more inclusive workplace.

Appen 2023 Annual Report

Financial

Appen’s financial results reflect challenging external operating and

macroeconomic conditions that have led to a broader technology market

slowdown as customers reduced their spend and evaluated their AI

strategies. In response, we remained focused on areas within our control

and adopted a greater level of operational rigour. This enabled Appen

to achieve its cash EBITDA profitability objective in December 2023.

US$M (unless stated otherwise)

Group revenue and other income

Operating revenue

Gross Margin 1 %

Underlying EBITDA 2

Underlying EBITDA 2 before FX

Underlying NPAT 3

Statutory NPAT 4

Dividend cents per share

FY23

274.2

273.0

36.3%

(24.5)

(20.4)

(52.8)

(118.1)

Nil

FY22

388.5

388.1

37.6%

11.0

13.6

(22.8)

(239.1)

Nil

Change

-29.4%

-29.7%

-130bps

nm%

Financial performance summary

The external operating environment and the response of our

customers’ is reflected in Appen’s financial performance as follows:

• Group revenue and other income decreased 29.4%

• China finished the year strongly with Q4 revenue

to $274.2 million, primarily reflecting a lower contribution

of $11.1 million representing a quarterly record.

from Global Services which recorded a 36.1% reduction

in revenue.

• Product development investment (excluding

amortisation) decreased 16.0% to $34.6 million

• Global Services revenue down 36.1% to $191.5 million.

and represented 12.7% of revenue.

• New Market revenue down 7.8% to $81.5 million,

• Underlying EBITDA (before the impact of foreign

impacted by lower Global Product revenue. Excluding

exchange losses) decreased from $13.6 million

Global Product, New Markets revenue grew 2.2%

to ($20.4) million due to lower revenue, lower gross

to $71.8 million.

margin, proportionally higher cost base versus FY22.

Priority

SDG

1 Gross margin refers to revenue less crowd expenses.

2 Underlying EBITDA excludes impairment loss, earn-out adjustment, restructure costs, transaction costs,

inventory losses, and acquisition-related and one-time share-based payment expense.

3 Underlying NPAT excludes after tax impact of impairment loss, earn-out adjustment, restructure costs,

transaction costs, inventory losses, acquisition-related and one-time share-based payment expense,

amortisation of acquisition related intangibles, and deemed interest on earn-out liability.

4 Includes non-cash impairment of $69.2 million (FY22: non-cash impairment of $204.3 million).

Our people

Value drivers

New presence in India

Our Future Ways of Working

Appen completed the resizing and relocation of its

For nearly three years, Appen employees have

engineering function to Hyderabad, India. This new location

faced many challenges including working through

will be home to approximately 100 employees who will help

the pandemic and responding to the ongoing tech

with the development of cutting-edge software solutions

slowdown as our customers cut costs. During this

that will shape the future of AI and Machine Learning.

time, we transitioned to different working models

Launch of our internship program

Appen launched its first internship program in 2023

to harness curiosity, energy, and an irresistible zest

for learning. The interns have actively participated,

tackled substantial challenges, and ignited real business

transformation across product, engineering, sales,

marketing, customer success, IT and HR functions.

Appen partnered with the Coalition of Innovation Leaders

Against Racism (CILAR) and attended the CILAR MyStartr

event in Toronto in March 2023 where we sourced

more than 100 applicants for our eight intern openings

in the US and Canada – all from ethnically diverse

backgrounds with senior level managers for exposure

and coaching during the Summer of 2023. Nearly half

remained during the fall to extend their internships.

and as a company, we embraced resilience and

adjusted to the ever-changing environment and

needs of our customers.

The next evolution of our Future Ways of Working

strategy focuses on flexibility and no-one size fits

all approach. This year, we learnt a lot about what

we need to do in order to thrive at Appen, and a hybrid

model gives us the best of both worlds. This model

fosters flexibility, enhancing employee satisfaction and

drives productivity. Appen has continued to promote

in person social and cultural connections through

the Neighbourhood Connections Program – allowing

employees that live in the same city or community

to build connections with colleagues.

FY24 focus

We recognise that a diverse, engaged and high performing workforce is key to our success.

To that end, we remain focused on investing in our people and culture. We plan to further

embed our new Culture Code throughout the company and develop and empower our leaders.

Across Appen we will continue to champion diversity to help build a more inclusive workplace.

Financial

Appen’s financial results reflect challenging external operating and
macroeconomic conditions that have led to a broader technology market
slowdown as customers reduced their spend and evaluated their AI
strategies. In response, we remained focused on areas within our control
and adopted a greater level of operational rigour. This enabled Appen
to achieve its cash EBITDA profitability objective in December 2023.

US$M (unless stated otherwise)

Group revenue and other income

Operating revenue

Gross Margin 1 %

Underlying EBITDA 2

Underlying EBITDA 2 before FX

Underlying NPAT 3

Statutory NPAT 4

Dividend cents per share

FY23

274.2

273.0

36.3%

(24.5)

(20.4)

(52.8)

(118.1)

Nil

FY22

388.5

388.1

37.6%

11.0

13.6

(22.8)

(239.1)

Nil

Change

-29.4%

-29.7%

-130bps

nm%

Financial performance summary

The external operating environment and the response of our
customers’ is reflected in Appen’s financial performance as follows:

• Group revenue and other income decreased 29.4%

to $274.2 million, primarily reflecting a lower contribution
from Global Services which recorded a 36.1% reduction
in revenue.

• Global Services revenue down 36.1% to $191.5 million.

• China finished the year strongly with Q4 revenue
of $11.1 million representing a quarterly record.

• Product development investment (excluding
amortisation) decreased 16.0% to $34.6 million
and represented 12.7% of revenue.

• New Market revenue down 7.8% to $81.5 million,

impacted by lower Global Product revenue. Excluding
Global Product, New Markets revenue grew 2.2%
to $71.8 million.

• Underlying EBITDA (before the impact of foreign
exchange losses) decreased from $13.6 million
to ($20.4) million due to lower revenue, lower gross
margin, proportionally higher cost base versus FY22.

Priority
SDG

1 Gross margin refers to revenue less crowd expenses.
2 Underlying EBITDA excludes impairment loss, earn-out adjustment, restructure costs, transaction costs,

inventory losses, and acquisition-related and one-time share-based payment expense.

3 Underlying NPAT excludes after tax impact of impairment loss, earn-out adjustment, restructure costs,
transaction costs, inventory losses, acquisition-related and one-time share-based payment expense,
amortisation of acquisition related intangibles, and deemed interest on earn-out liability.

4 Includes non-cash impairment of $69.2 million (FY22: non-cash impairment of $204.3 million).

Appen 2023 Annual Report

Financial

• Underlying EBITDA (including the impact of foreign

Operating revenue and customer diversification

exchange gains and losses) decreased from $11.0 million
to ($24.5) million.

• Underlying net loss after tax increased to $52.8 million
from underlying net loss of $22.8 million in FY22, due
to the factors mentioned above, offset by an income
tax benefit of $6.8 million primarily relating to the
reduction of deferred tax liabilities.

• Non-cash impairment of $69.2 million reflecting the

impairment of Goodwill and certain non-current assets
associated with the Global Services cash generating unit.
FY22 included non-cash impairment of $204.3 million
reflecting the impairment of Goodwill and certain
intangibles associated with the New Markets (excl. China)
cash generating unit.

• Statutory net loss after tax and after impairment
of $118.1 million, compared to statutory net loss after
tax of $239.1 million in FY22.

• No dividend was paid due to Appen’s financial

performance and to ensure appropriate allocation
of capital.

• Cash balance of $32.1 million at 31 December 2023

and no debt.

Market conditions

In 2023 global economic growth slowed given the impact
of monetary policy tightening and cost of living pressures.
While activity remained resilient in key markets like the
United States, economic and geopolitical conditions
resulted in an ongoing slowdown in Tech spending as
customers continued to reduce costs and evaluate their
AI strategies. These conditions proved more challenging
than expected. While there were green shoots in generative
AI product offerings, these projects remain small, and they
have not offset revenue declines in Appen’s core deep
learning business.

The emergence of large language models (LLMs) such as
ChatGPT launched at the end of 2022 sparked excitement
and significant interest in generative AI. Throughout 2023,
the potential impact of generative AI continued to grow,
and the acceleration of its adoption is now a key propriety
for many companies. Bloomberg Intelligence expect the
generative AI market to grow at a CAGR of 42% and reach
a total spend of approximately $1.3 trillion in 2032. 1

Human feedback across the full cycle of LLM development
is required to minimise hallucinations, bias and toxicity.
In 2023 we saw the emergence of tools that enabled
developers to use LLMs more effectively with humans
for data curation, testing and monitoring human functions.
To secure the last mile development of LLMs, human in the
loop feedback will be critical to ensure ongoing fine-tuning
and generally supporting a new potential of human led
operating systems.

Group operating revenue decreased 29.7% to $273.0 million,
reflecting a lower contribution from the Global division
and New Markets as our customers optimise their spend,
cut costs, and evaluated their AI strategies. Revenue from
New Markets (excluding Global Product) represented 26.3%
of total group revenue, up from 18.1% in FY22.

In FY23, model testing and relevance work represented
75.9% of group revenue, compared to 76.1% in FY22.

On 22 January 2024, Appen advised that it had received
notification from a material customer, Google LLC, that
as part of a strategic review process it will be terminating
its global inbound services contract with Appen, resulting
in the cessation of all projects with Appen by 19 March 2024.

Appen’s FY23 revenue from Google was $82.8 million and
represents 30.3% of total revenue. Group revenue, excluding
Google was $190.2 million, compared to $285.4 million in FY22.

Revenue by operating division

Global Services FY23 revenue decreased 36.1%
to $191.5 million (FY22: $299.8 million) and was impacted
by a reduction in spend from Global customers due to the
ongoing challenging external operating and macroeconomic
conditions. Despite the external environment, Global
Services won 83 new projects (albeit at a lower level when
compared to 156 in FY22), including annotation, content
categorisation and relevance work.

We saw some green shoots as revenue from LLM work
contributed, and all Appen’s Global customers completed
a generative AI project or had a project in the pipeline.

New Markets revenue declined 7.8% to $81.5 million,
impacted by lower Global Product revenue. Second half
revenue from New Markets reduced 1.6% to $42.6 million
from $43.3 million in 2HFY22.

Excluding Global Product, New Markets revenue grew
2.2% to $71.8 million due to growth from China, Quadrant
and Government.

Second half revenue from Enterprise, China, Quadrant
and Government grew 8.8% compared to prior corresponding
period to $39.0 million due to strong contributions from
China and Quadrant. In China, 2H23 revenue grew 23.4%
on the prior corresponding period on the back of new
LLM project launches.

New Markets won a total of 171 new customers
(FY22: 184 new customers). This reflects the good
momentum in Enterprise, China and Quadrant, primarily
for LLM evaluation, autonomous vehicles (AV), in-car cabin
data collection and point-of-interest data collection.

The Enterprise team secured 34 new client wins which
included LLM evaluation and categorisation, search
relevance, taxonomy and annotation work.

Enterprise also secured multiple deals with leading LLM

Amortisation of product development was $19.7 million down

model builder. The average deal size signed was $147,000,

from $20.6 million in 2022. The decrease reflects and reflects

up 5.0% from the average deal size of $140,000 in FY22

a higher lower level of product development investment.

and $61,000 in FY21. In 2H FY23 the average deal size was

$200,000 compared to $106,000 in 1H FY23.

China recorded 2.7% lift in revenue to $34.5 million compared

to FY22. The business finished the year strongly delivering

a record Q4 revenue performance of $11.1 million as business

conditions returned to more normalised levels as the

protracted COVID19 impacts evident in 1H23 subsided.

Underlying financial performance

Underlying earnings before interest, tax, depreciation, and

amortisation (EBITDA) was ($24.5 million) (2022: $11.0 million).

Before the impact of foreign exchange gains or losses,

underlying EBITDA was ($20.4 million) (2022: $13.6 million).

The reduction in Appen’s underlying EBITDA is due

to reduced revenue and gross margin, and a proportionally

Collectively China, Japan and Korea secured 82 new

higher cost base versus FY22.

clients, which included eight clients with 20 LLM projects,

projects with large tech and leading automobile companies,

and a project with a large multinational conglomerate.

Cost of sales, which is predominantly comprised of payments

to our crowd workers was up as a percentage of revenue

at 63.7% compared to 62.4% for FY22. This is primarily

China remained focused on growth and maintaining its

due to the customer and project mix.

position as a leading AI data company. In the first half

of FY23 China released two new platforms, 1) an LLM

Data Training platform, and 2) SaaS Annotation platform.

The China business continues to support 10 of the leading

auto companies, the top 10 internet companies and the

top four mobile companies.

The Quadrant business, which now fully integrated into

the New Markets business, recorded strong revenue growth,

albeit from a small base. This primarily reflects an increase

in data location. Quadrant also secured 55 new clients wins.

Operating expenses 1 for FY23 decreased 11.3% or $14.8 million

compared to FY22. The decrease predominately reflects the

benefit of the cost reduction program completed over the

course of FY23.

The Global Services segment reported EBITDA

of $17.5 million down 67.9% from $54.5 million in FY22,

mainly due to reduction in spend from Global customers

due to the ongoing challenging external operating and

macroeconomic conditions, and a proportionally higher

cost base coming out of FY22. Global Services EBITDA

Government recorded good revenue growth, albeit from

margin of 9.1% primarily impacted by lower revenue on core

a small base. This primarily reflects the delivery of large

high margin projects, and a proportionally higher cost base

contract won in FY22.

coming out of FY22.

Further detail can be found in the Customer and Brand value

The New Markets segment reported EBITDA

driver on page 18.

Product development

Technology continues to play a critical role in Appen’s

business and underpins our ability to deliver large scale

data requirements for our customers. Investment in product

development in FY23 (excluding amortisation) decreased

16.0% to $34.6 million and represented 12.7% of revenue

(2022: $41.2 million or 10.6% of revenue).

While the quantum of our product development spend was

lower in FY23, we remain committed to the development

of industry-leading products and tools. This year,

we delivered several initiatives to improve the crowd and

customer experiences, and the development of LLM and

annotation platforms in China. Within ADAP we released

enhancements and new features to support our LLM data

products which enable Enterprises to fine tune, evaluate

and monitor their LLM models. These products include AI

chat feedback functionality, benchmarking solutions and

text tools. For more information on these initiatives see the

Technology processes and systems value driver on page 12.

of ($32.7 million) compared to EBITDA of ($36.5 million)

in FY22. The improvement reflects implementation

of the cost reduction program and higher margin project

mix in Global Product.

Underlying net loss after tax was ($52.8 million) compared

to ($22.8 million) in FY22. Increase predominately due

to the factors noted above with the main contributing

factor being a reduction in spend from Global customers

due to the ongoing challenging external operating and

macroeconomic conditions.

Statutory net loss after tax of ($118.1 million) includes

one-off restructure costs of $8.9 million associated

with implementation of the cost reduction programs

implemented during FY23 and one-off costs associated

with changes to the leadership team to align with the

strategy refresh and turn around focus. Also included

is non-cash impairment of $69.2 million in relation to the

Global Services cash generating unit.

1 Bloomberg Intelligence, IDC (June 2023).

1 Operating expenses exclude crowd labelling services, share-based payments, depreciation and amortisation, transaction

costs, finance costs and restructure costs.

Appen 2023 Annual Report

Financial

• Underlying EBITDA (including the impact of foreign

Operating revenue and customer diversification

of $118.1 million, compared to statutory net loss after

Appen’s FY23 revenue from Google was $82.8 million and

exchange gains and losses) decreased from $11.0 million

to ($24.5) million.

• Underlying net loss after tax increased to $52.8 million

from underlying net loss of $22.8 million in FY22, due

to the factors mentioned above, offset by an income

tax benefit of $6.8 million primarily relating to the

reduction of deferred tax liabilities.

• Non-cash impairment of $69.2 million reflecting the

impairment of Goodwill and certain non-current assets

associated with the Global Services cash generating unit.

FY22 included non-cash impairment of $204.3 million

reflecting the impairment of Goodwill and certain

intangibles associated with the New Markets (excl. China)

cash generating unit.

• Statutory net loss after tax and after impairment

tax of $239.1 million in FY22.

• No dividend was paid due to Appen’s financial

performance and to ensure appropriate allocation

of capital.

and no debt.

Market conditions

In 2023 global economic growth slowed given the impact

of monetary policy tightening and cost of living pressures.

While activity remained resilient in key markets like the

United States, economic and geopolitical conditions

resulted in an ongoing slowdown in Tech spending as

customers continued to reduce costs and evaluate their

AI strategies. These conditions proved more challenging

than expected. While there were green shoots in generative

Group operating revenue decreased 29.7% to $273.0 million,

reflecting a lower contribution from the Global division

and New Markets as our customers optimise their spend,

cut costs, and evaluated their AI strategies. Revenue from

New Markets (excluding Global Product) represented 26.3%

of total group revenue, up from 18.1% in FY22.

In FY23, model testing and relevance work represented

75.9% of group revenue, compared to 76.1% in FY22.

On 22 January 2024, Appen advised that it had received

notification from a material customer, Google LLC, that

as part of a strategic review process it will be terminating

its global inbound services contract with Appen, resulting

in the cessation of all projects with Appen by 19 March 2024.

represents 30.3% of total revenue. Group revenue, excluding

Google was $190.2 million, compared to $285.4 million in FY22.

Revenue by operating division

to $191.5 million (FY22: $299.8 million) and was impacted

by a reduction in spend from Global customers due to the

ongoing challenging external operating and macroeconomic

conditions. Despite the external environment, Global

Services won 83 new projects (albeit at a lower level when

compared to 156 in FY22), including annotation, content

categorisation and relevance work.

We saw some green shoots as revenue from LLM work

contributed, and all Appen’s Global customers completed

a generative AI project or had a project in the pipeline.

• Cash balance of $32.1 million at 31 December 2023

Global Services FY23 revenue decreased 36.1%

AI product offerings, these projects remain small, and they

New Markets revenue declined 7.8% to $81.5 million,

have not offset revenue declines in Appen’s core deep

impacted by lower Global Product revenue. Second half

learning business.

revenue from New Markets reduced 1.6% to $42.6 million

from $43.3 million in 2HFY22.

The emergence of large language models (LLMs) such as

ChatGPT launched at the end of 2022 sparked excitement

Excluding Global Product, New Markets revenue grew

and significant interest in generative AI. Throughout 2023,

2.2% to $71.8 million due to growth from China, Quadrant

the potential impact of generative AI continued to grow,

and Government.

and the acceleration of its adoption is now a key propriety

for many companies. Bloomberg Intelligence expect the

generative AI market to grow at a CAGR of 42% and reach

a total spend of approximately $1.3 trillion in 2032. 1

Second half revenue from Enterprise, China, Quadrant

and Government grew 8.8% compared to prior corresponding

period to $39.0 million due to strong contributions from

China and Quadrant. In China, 2H23 revenue grew 23.4%

Human feedback across the full cycle of LLM development

on the prior corresponding period on the back of new

is required to minimise hallucinations, bias and toxicity.

LLM project launches.

In 2023 we saw the emergence of tools that enabled

developers to use LLMs more effectively with humans

for data curation, testing and monitoring human functions.

To secure the last mile development of LLMs, human in the

loop feedback will be critical to ensure ongoing fine-tuning

and generally supporting a new potential of human led

operating systems.

New Markets won a total of 171 new customers

(FY22: 184 new customers). This reflects the good

momentum in Enterprise, China and Quadrant, primarily

for LLM evaluation, autonomous vehicles (AV), in-car cabin

data collection and point-of-interest data collection.

The Enterprise team secured 34 new client wins which

included LLM evaluation and categorisation, search

relevance, taxonomy and annotation work.

Enterprise also secured multiple deals with leading LLM
model builder. The average deal size signed was $147,000,
up 5.0% from the average deal size of $140,000 in FY22
and $61,000 in FY21. In 2H FY23 the average deal size was
$200,000 compared to $106,000 in 1H FY23.

China recorded 2.7% lift in revenue to $34.5 million compared
to FY22. The business finished the year strongly delivering
a record Q4 revenue performance of $11.1 million as business
conditions returned to more normalised levels as the
protracted COVID19 impacts evident in 1H23 subsided.

Collectively China, Japan and Korea secured 82 new
clients, which included eight clients with 20 LLM projects,
projects with large tech and leading automobile companies,
and a project with a large multinational conglomerate.

China remained focused on growth and maintaining its
position as a leading AI data company. In the first half
of FY23 China released two new platforms, 1) an LLM
Data Training platform, and 2) SaaS Annotation platform.
The China business continues to support 10 of the leading
auto companies, the top 10 internet companies and the
top four mobile companies.

The Quadrant business, which now fully integrated into
the New Markets business, recorded strong revenue growth,
albeit from a small base. This primarily reflects an increase
in data location. Quadrant also secured 55 new clients wins.

Government recorded good revenue growth, albeit from
a small base. This primarily reflects the delivery of large
contract won in FY22.

Further detail can be found in the Customer and Brand value
driver on page 18.

Product development

Technology continues to play a critical role in Appen’s
business and underpins our ability to deliver large scale
data requirements for our customers. Investment in product
development in FY23 (excluding amortisation) decreased
16.0% to $34.6 million and represented 12.7% of revenue
(2022: $41.2 million or 10.6% of revenue).

While the quantum of our product development spend was
lower in FY23, we remain committed to the development
of industry-leading products and tools. This year,
we delivered several initiatives to improve the crowd and
customer experiences, and the development of LLM and
annotation platforms in China. Within ADAP we released
enhancements and new features to support our LLM data
products which enable Enterprises to fine tune, evaluate
and monitor their LLM models. These products include AI
chat feedback functionality, benchmarking solutions and
text tools. For more information on these initiatives see the
Technology processes and systems value driver on page 12.

Amortisation of product development was $19.7 million down
from $20.6 million in 2022. The decrease reflects and reflects
a higher lower level of product development investment.

Underlying financial performance

Underlying earnings before interest, tax, depreciation, and
amortisation (EBITDA) was ($24.5 million) (2022: $11.0 million).
Before the impact of foreign exchange gains or losses,
underlying EBITDA was ($20.4 million) (2022: $13.6 million).
The reduction in Appen’s underlying EBITDA is due
to reduced revenue and gross margin, and a proportionally
higher cost base versus FY22.

Cost of sales, which is predominantly comprised of payments
to our crowd workers was up as a percentage of revenue
at 63.7% compared to 62.4% for FY22. This is primarily
due to the customer and project mix.

Operating expenses 1 for FY23 decreased 11.3% or $14.8 million
compared to FY22. The decrease predominately reflects the
benefit of the cost reduction program completed over the
course of FY23.

The Global Services segment reported EBITDA
of $17.5 million down 67.9% from $54.5 million in FY22,
mainly due to reduction in spend from Global customers
due to the ongoing challenging external operating and
macroeconomic conditions, and a proportionally higher
cost base coming out of FY22. Global Services EBITDA
margin of 9.1% primarily impacted by lower revenue on core
high margin projects, and a proportionally higher cost base
coming out of FY22.

The New Markets segment reported EBITDA
of ($32.7 million) compared to EBITDA of ($36.5 million)
in FY22. The improvement reflects implementation
of the cost reduction program and higher margin project
mix in Global Product.

Underlying net loss after tax was ($52.8 million) compared
to ($22.8 million) in FY22. Increase predominately due
to the factors noted above with the main contributing
factor being a reduction in spend from Global customers
due to the ongoing challenging external operating and
macroeconomic conditions.

Statutory net loss after tax of ($118.1 million) includes
one-off restructure costs of $8.9 million associated
with implementation of the cost reduction programs
implemented during FY23 and one-off costs associated
with changes to the leadership team to align with the
strategy refresh and turn around focus. Also included
is non-cash impairment of $69.2 million in relation to the
Global Services cash generating unit.

1 Bloomberg Intelligence, IDC (June 2023).

1 Operating expenses exclude crowd labelling services, share-based payments, depreciation and amortisation, transaction

costs, finance costs and restructure costs.

Appen 2023 Annual Report

Financial

Cost reduction program

Non-cash asset impairment charge

The following table summarises the Group’s financial results for the current and prior year and provides a reconciliation

In line with Appen’s focus on operational rigour, the Group
announced delivered a $60 million1 cost savings program,
with the first full year impact expected to be achieved
in FY24. The initiatives completed over the course
of FY23 enabled Appen to achieve its cash EBITDA
profitability objective in December 2023.

Growth strategy and FY24 priorities

Appen plays a key role in powering both deep learning
applications and generative AI. This year, Appen
re-positioned itself to take advantage of its full growth
potential and to capture available opportunities
in the generative AI space.

Appen’s strategy remains focused on delivering high
quality data for leading AI. Quality data is important for
deep learning model performance and is even more
important for generative AI.

Appen has a comparative advantage over its competitors
by using its +28 years of experience in crowd-based data
collection, annotation and model evaluation and adapt this
expertise to generative AI. Appen’s AI data services for deep
learning and generative AI is illustrated on page 2 in the
About Appen section.

Appen is focused on the following five strategic pillars
to support its customers and deliver profitable growth.

1. Building a next generation crowd and project

management platform that improve how we deliver
projects, create a better experience for our crowd,
and reduce our related product and engineering costs.

2. Utilise more AI in our projects to scale the creation

of datasets for our customers.

3. Configure our highly-flexible ADAP platform to support

companies that are customising off-the-shelf generative
AI models for their internal use cases.

4. Modernise our sales and marketing with a stronger focus
on existing customer account management technical
thought leadership.

5. Tightly manage our costs to adjust costs more

proactively to revenue.

Following a review of the value of the Group’s cash
generating units (CGU) and of the carrying value of its assets
in accordance with the relevant accounting standards,
a non-cash, pre-tax impairment charge of $69.2 million was
booked for the year ended 31 December 2023. The carrying
value of non-goodwill intangibles attributable to the Global
Services CGU was reduced by $16.1 million and the carrying
value of Goodwill was reduced by $53.1 million.

The impairment charge is non-cash related and
is a non-operating item. Accordingly, underlying EBITDA
and underlying NPAT is not impacted.

Note 12 of the financial report (pages 107 to 110)
provides further information in relation to the impact
of the impairment charge on the Group’s intangible assets.

Balance sheet

Net assets at 31 December 2023 were $92.8 million
(31 December 2022: $148.0 million). Decrease in net assets
primarily due to trading performance during the year and
non-cash impairment charge noted above.

Trade and other receivables combined with contract assets
were $29.3 million lower at 31 December 2023 compared
to 31 December 2022 due to lower revenue volumes.

Current liabilities were $17.4 million lower at 31 December 2023
compared to 31 December 2022. Decrease is due to lower
trade and other payables ($12.5 million) because of lower
cost of sales and operating expenses. In addition, contract
liabilities are down $7.6 million primarily due to lower
revenue volumes.

Cash balance increased by $8.7 million to $32.1 million
at 31 December 2023 from $23.4 million at 31 December 2022.
This includes net proceeds of $57.4 million from issuance
of shares during the period, partially offset by lower trading
performance and one-off costs associated with cost
reduction programs.

In June Appen completed a fully underwritten ~A$60 million
equity raising and in December 2023, completed a further
fully underwritten ~A$30 million equity raising to support the
company’s refresh. Net proceeds of $57.4 million through the
issue of 86,707,619 shares.

between our statutory and underlying results.

Global Services revenue

New Markets revenue

Other income

Total sales revenue and other income from principal activities

Underlying net loss after tax (NPAT) 1

(Less)/add underlying adjustments (net of tax)

Amortisation of acquisition-related identifiable Intangible assets

Impairment loss

Earn-out adjustment

Restructure costs

Transaction costs

Deemed interest on earn-out liability 2

Losses on inventory

Acquisition-related and one-time share-based payments

Statutory NPAT

Less: tax benefit

Add: net interest expense

Add: deemed interest on earn-out liability 2

EBIT 3

Add: depreciation and amortisation

Statutory EBITDA 4

Add/(less): underlying adjustments

Impairment loss

Earn-out adjustment

Restructure costs

Transaction costs

Inventory losses

Underlying EBITDA 1

Statutory diluted earnings per share (cents)

Underlying diluted earnings per share (cents)

% Statutory EBITDA/revenue

% Underlying EBITDA/revenue

Acquisition-related and one-time share-based payments

Year ended

31 December

Change

(36.1%)

(7.8%)

(29.4%)

(52,810)

(22,739)

nm%

2023

$000

191,533

81,479

1,153

274,165

(61,663)

(6,158)

11,196

(6,515)

(380)

(248)

–

(1,501)

(118,079)

(6,870)

805

354

(123,790)

35,147

69,182

(15,994)

8,967

542

1,501

–

(24,445)

(83.10)

(37.17)

(32.3%)

(8.9%)

2022

$000

299,755

88.378

360

388,493

(204,326)

(9,573)

–

(488)

(1,096)

(540)

(257)

(49)

–

772

813

204,326

–

678

1,556

309

11,017

(193.78)

(18.43)

(50.4%)

2.8%

(239,068)

nm%

(237,483)

41,582

nm%

(88,643)

(195,901)

nm%

1 $60.0 million annualised cash opex savings (comparing December FY23 versus Q1 FY23). Cash opex refers to opex included in underlying
EBITDA calculation, adding platform development capitalised from the profit and loss, less non-cash share-based payments expense.
FY23 annualised cash opex included STI at 15.6% achievement (that represents partial achievement for non-financial metrics).

1 Underlying results are a non-IFRS measure used by management to assess the performance of the business and have been calculated from

statutory measures. Non-IFRS measures have not been subject to audit. Underlying EBITDA excludes impairment loss, restructure costs,

transaction costs, earn-out adjustment, inventory losses and acquisition-related and one-time share-based payments expense.

2 Liability with respect to the Quadrant acquisition which settled in January 2024 via the issue of ordinary shares.

3 EBIT is defined as earnings before interest and tax.

4 EBITDA is EBIT before depreciation and amortisation.

Appen 2023 Annual Report

Financial

Cost reduction program

Non-cash asset impairment charge

In line with Appen’s focus on operational rigour, the Group

Following a review of the value of the Group’s cash

announced delivered a $60 million1 cost savings program,

generating units (CGU) and of the carrying value of its assets

with the first full year impact expected to be achieved

in accordance with the relevant accounting standards,

in FY24. The initiatives completed over the course

a non-cash, pre-tax impairment charge of $69.2 million was

of FY23 enabled Appen to achieve its cash EBITDA

booked for the year ended 31 December 2023. The carrying

profitability objective in December 2023.

value of non-goodwill intangibles attributable to the Global

Services CGU was reduced by $16.1 million and the carrying

Growth strategy and FY24 priorities

value of Goodwill was reduced by $53.1 million.

Appen plays a key role in powering both deep learning

applications and generative AI. This year, Appen

re-positioned itself to take advantage of its full growth

potential and to capture available opportunities

in the generative AI space.

Appen’s strategy remains focused on delivering high

quality data for leading AI. Quality data is important for

deep learning model performance and is even more

important for generative AI.

The impairment charge is non-cash related and

is a non-operating item. Accordingly, underlying EBITDA

and underlying NPAT is not impacted.

Note 12 of the financial report (pages 107 to 110)

provides further information in relation to the impact

of the impairment charge on the Group’s intangible assets.

Balance sheet

Net assets at 31 December 2023 were $92.8 million

Appen has a comparative advantage over its competitors

(31 December 2022: $148.0 million). Decrease in net assets

by using its +28 years of experience in crowd-based data

primarily due to trading performance during the year and

collection, annotation and model evaluation and adapt this

non-cash impairment charge noted above.

expertise to generative AI. Appen’s AI data services for deep

learning and generative AI is illustrated on page 2 in the

About Appen section.

Appen is focused on the following five strategic pillars

to support its customers and deliver profitable growth.

1. Building a next generation crowd and project

management platform that improve how we deliver

projects, create a better experience for our crowd,

and reduce our related product and engineering costs.

2. Utilise more AI in our projects to scale the creation

of datasets for our customers.

3. Configure our highly-flexible ADAP platform to support

companies that are customising off-the-shelf generative

AI models for their internal use cases.

on existing customer account management technical

thought leadership.

5. Tightly manage our costs to adjust costs more

proactively to revenue.

Trade and other receivables combined with contract assets

were $29.3 million lower at 31 December 2023 compared

to 31 December 2022 due to lower revenue volumes.

Current liabilities were $17.4 million lower at 31 December 2023

compared to 31 December 2022. Decrease is due to lower

trade and other payables ($12.5 million) because of lower

cost of sales and operating expenses. In addition, contract

liabilities are down $7.6 million primarily due to lower

revenue volumes.

Cash balance increased by $8.7 million to $32.1 million

at 31 December 2023 from $23.4 million at 31 December 2022.

This includes net proceeds of $57.4 million from issuance

of shares during the period, partially offset by lower trading

performance and one-off costs associated with cost

In June Appen completed a fully underwritten ~A$60 million

equity raising and in December 2023, completed a further

fully underwritten ~A$30 million equity raising to support the

company’s refresh. Net proceeds of $57.4 million through the

issue of 86,707,619 shares.

The following table summarises the Group’s financial results for the current and prior year and provides a reconciliation
between our statutory and underlying results.

Global Services revenue
New Markets revenue
Other income
Total sales revenue and other income from principal activities

Underlying net loss after tax (NPAT) 1
(Less)/add underlying adjustments (net of tax)
Impairment loss
Amortisation of acquisition-related identifiable Intangible assets
Earn-out adjustment
Restructure costs
Transaction costs
Deemed interest on earn-out liability 2
Losses on inventory
Acquisition-related and one-time share-based payments
Statutory NPAT
Less: tax benefit
Add: net interest expense
Add: deemed interest on earn-out liability 2

EBIT 3
Add: depreciation and amortisation

Statutory EBITDA 4
Add/(less): underlying adjustments
Impairment loss
Earn-out adjustment
Restructure costs
Transaction costs
Acquisition-related and one-time share-based payments
Inventory losses

Year ended
31 December
2023
$000

Year ended
31 December
2022
$000

191,533
81,479
1,153
274,165

299,755
88.378
360
388,493

Change

(36.1%)
(7.8%)

(29.4%)

(52,810)

(22,739)

nm%

(61,663)
(6,158)
11,196
(6,515)
(380)
(248)
–
(1,501)
(118,079)
(6,870)
805
354

(123,790)
35,147

(204,326)
(9,573)
–
(488)
(1,096)
(540)
(257)
(49)
(239,068)
–
772
813

(237,483)
41,582

nm%

(88,643)

(195,901)

nm%

69,182
(15,994)
8,967
542
1,501
–

204,326
–
678
1,556
49
309

4. Modernise our sales and marketing with a stronger focus

reduction programs.

Underlying EBITDA 1

(24,445)

11,017

nm%

Statutory diluted earnings per share (cents)
Underlying diluted earnings per share (cents)
% Statutory EBITDA/revenue
% Underlying EBITDA/revenue

(83.10)
(37.17)
(32.3%)
(8.9%)

(193.78)
(18.43)
(50.4%)
2.8%

1 $60.0 million annualised cash opex savings (comparing December FY23 versus Q1 FY23). Cash opex refers to opex included in underlying

EBITDA calculation, adding platform development capitalised from the profit and loss, less non-cash share-based payments expense.

FY23 annualised cash opex included STI at 15.6% achievement (that represents partial achievement for non-financial metrics).

1 Underlying results are a non-IFRS measure used by management to assess the performance of the business and have been calculated from
statutory measures. Non-IFRS measures have not been subject to audit. Underlying EBITDA excludes impairment loss, restructure costs,
transaction costs, earn-out adjustment, inventory losses and acquisition-related and one-time share-based payments expense.

2 Liability with respect to the Quadrant acquisition which settled in January 2024 via the issue of ordinary shares.
3 EBIT is defined as earnings before interest and tax.
4 EBITDA is EBIT before depreciation and amortisation.

Appen 2023 Annual Report

Value drivers

Social and
environment

The acceleration of generative AI marks an important milestone.
Its adoption can make a positive impact to many aspects of our
lives and deliver far reaching societal benefits. As the use
of AI technology grows, we strive to be at the forefront of the
development of responsible AI.

AI for Good

In Appen, we believe AI can be a powerful tool for positive change
in the world which aligns with our commitment to good business
practices. Hence, we have drafted our ‘AI for Good’ strategy with
the purpose of:

putting ethics and responsibility at the heart of our products,

governance and operations – Be Good

invest our time, products & profit to support communities

where we live and work – Do Good

engage & influence our Customers & the AI industry
to demand ethical and responsible AI – Lead Good

The ‘AI for Good’ Committee was established in the current year
to oversee the delivery and progress of the AI for Good strategy.
The committee, chaired by our CEO and Managing Director, will
provide guidance and advice to ensure that we are achieving the
desired outcomes from the strategy.

Signatory

to the UN Global
Compact

impact sourcing
partnerships with
global NGOs

Priority SDG

Governance

Our social and environmental frameworks are underpinned

by our commitment to a high standard of corporate

governance. The Board of Directors is responsible for:

in 2024.

Human rights

Our stance on human rights is

Below is a snapshot of our current progress against the

principles ahead of our formal reporting requirements

overseeing the management of climate change related

Labour

We continue to report on gender

considering the environmental impacts of our activities

setting social and environmental standards

monitoring compliance with our social and sustainability

policies and practices

risks and opportunities

approving climate change related disclosures.

monitoring progress against goals and targets

set for climate related issues

The Audit and Risk Management Committee

is responsible for:

considering environmental and climate change

risk as part of the quarterly risk reporting process

reviewing relevant reporting from management

to ensure management is effectively managing the risks

making recommendations to the Board

Good business practice

Good business practice involves prioritising ethical

conduct towards customers, employees, and stakeholders.

Our Code of Conduct outlines the minimum standards

for our business, our people and stakeholder interactions.

Our Anti-Corruption and Anti-Bribery Policy reinforces

our zero-tolerance approach to bribery and corruption,

including specifically prohibiting the use of corporate

funds for political advocacy and political donations 1.

Mandatory code of conduct training, completed by 95% 2

of eligible employees as of December 31, 2023, ensures

that our people are aware of their obligations. To enhance

compliance and foster accountability, short-term incentive

awards for senior management are linked to divisional

training completion rates during the year.

To demonstrate our commitment, in 2022 we became

a signatory to the United Nations Global Compact (UNGC).

We continue to support the ten principles of UNGC

on human rights, labour, environment, and anti-corruption

and are adopting them to our business strategies

and operations.

underpinned by our Global Ethical

Sourcing and Modern Slavery Policy.

We anticipate that we will commence

risk-based reviews of our suppliers

in line with this policy in 2024.

diversity metrics and have set a target

for 30% female representation across

senior management.

implementation of the net zero

roadmap with the target of net zero

by 2030. Consolidation of offices and

LED lightings installations has helped

reduce electricity consumption and

greenhouse gas emissions.

and included as part of mandatory

compliance training for everyone.

We will continue to monitor and

report on the compliance training

with employees encouraged to report

on potential corruption practices via

our whistleblower hotline.

Environment

We have commenced the

Anti-Corruption

Anti-corruption policy in place

Modern Slavery and respect for Human Rights

We consider any form of modern slavery and human

rights abuse as unacceptable and acknowledge

our role in eradicating it. Our commitment is outlined

in our Global Ethical Sourcing and Modern Slavery Policy,

which sets expectations for us and our suppliers.

The policy opposes forced labour and supports fair

employment, working conditions, freedom of association,

non-discrimination, and whistleblower protections.

We’ve integrated supplier requirements from the policy into

procurement practices, collaborating with suppliers and

customers to mitigate modern slavery and human rights

risks in our supply chain. Any breaches of our commitments

undergo thorough investigation through grievance

or whistleblower processes, with findings reported

to the board. In 2023, there was one modern slavery

breach reported to authorities.

1 Based on financial data from Workday.

2 Data from Appen University. Calculation consistent with FY22 which excludes China and Quadrant.

Appen 2023 Annual Report

Value drivers

Social and

environment

The acceleration of generative AI marks an important milestone.

Its adoption can make a positive impact to many aspects of our

lives and deliver far reaching societal benefits. As the use

of AI technology grows, we strive to be at the forefront of the

development of responsible AI.

AI for Good

the purpose of:

In Appen, we believe AI can be a powerful tool for positive change

in the world which aligns with our commitment to good business

practices. Hence, we have drafted our ‘AI for Good’ strategy with

putting ethics and responsibility at the heart of our products,

governance and operations – Be Good

invest our time, products & profit to support communities

where we live and work – Do Good

engage & influence our Customers & the AI industry

to demand ethical and responsible AI – Lead Good

The ‘AI for Good’ Committee was established in the current year

to oversee the delivery and progress of the AI for Good strategy.

The committee, chaired by our CEO and Managing Director, will

provide guidance and advice to ensure that we are achieving the

desired outcomes from the strategy.

Signatory

to the UN Global

Compact

impact sourcing

partnerships with

global NGOs

Priority SDG

Governance

Our social and environmental frameworks are underpinned
by our commitment to a high standard of corporate
governance. The Board of Directors is responsible for:

considering the environmental impacts of our activities

setting social and environmental standards

monitoring compliance with our social and sustainability
policies and practices

overseeing the management of climate change related
risks and opportunities

Labour

approving climate change related disclosures.

monitoring progress against goals and targets
set for climate related issues

The Audit and Risk Management Committee
is responsible for:

Environment

considering environmental and climate change
risk as part of the quarterly risk reporting process

reviewing relevant reporting from management
to ensure management is effectively managing the risks

making recommendations to the Board

Anti-Corruption

Below is a snapshot of our current progress against the
principles ahead of our formal reporting requirements
in 2024.

Human rights

Our stance on human rights is
underpinned by our Global Ethical
Sourcing and Modern Slavery Policy.

We anticipate that we will commence
risk-based reviews of our suppliers
in line with this policy in 2024.

We continue to report on gender
diversity metrics and have set a target
for 30% female representation across
senior management.

We have commenced the
implementation of the net zero
roadmap with the target of net zero
by 2030. Consolidation of offices and
LED lightings installations has helped
reduce electricity consumption and
greenhouse gas emissions.

Anti-corruption policy in place
and included as part of mandatory
compliance training for everyone.
We will continue to monitor and
report on the compliance training
with employees encouraged to report
on potential corruption practices via
our whistleblower hotline.

Good business practice

Good business practice involves prioritising ethical
conduct towards customers, employees, and stakeholders.
Our Code of Conduct outlines the minimum standards
for our business, our people and stakeholder interactions.
Our Anti-Corruption and Anti-Bribery Policy reinforces
our zero-tolerance approach to bribery and corruption,
including specifically prohibiting the use of corporate
funds for political advocacy and political donations 1.

Mandatory code of conduct training, completed by 95% 2
of eligible employees as of December 31, 2023, ensures
that our people are aware of their obligations. To enhance
compliance and foster accountability, short-term incentive
awards for senior management are linked to divisional
training completion rates during the year.

To demonstrate our commitment, in 2022 we became
a signatory to the United Nations Global Compact (UNGC).
We continue to support the ten principles of UNGC
on human rights, labour, environment, and anti-corruption
and are adopting them to our business strategies
and operations.

Modern Slavery and respect for Human Rights

We consider any form of modern slavery and human
rights abuse as unacceptable and acknowledge
our role in eradicating it. Our commitment is outlined
in our Global Ethical Sourcing and Modern Slavery Policy,
which sets expectations for us and our suppliers.
The policy opposes forced labour and supports fair
employment, working conditions, freedom of association,
non-discrimination, and whistleblower protections.

We’ve integrated supplier requirements from the policy into
procurement practices, collaborating with suppliers and
customers to mitigate modern slavery and human rights
risks in our supply chain. Any breaches of our commitments
undergo thorough investigation through grievance
or whistleblower processes, with findings reported
to the board. In 2023, there was one modern slavery
breach reported to authorities.

Appen 2023 Annual Report

1 Based on financial data from Workday.
2 Data from Appen University. Calculation consistent with FY22 which excludes China and Quadrant.

Social and environment

Case Study

Appen is proud to partner with Na’amal,
a non-profit who works to change the narrative,
and create pathways to employment for refugees
and underrepresented groups. In Ethiopia and
Kenya, to complement Na’amal’s tech and soft
skills training, Appen ran informational and
onboarding webinars and provided dedicated
support to the students so they could start
earning an income on our platform. Appen
staff also put their hand up to mentor refugees,
and we provided funding for internet access
and ex-Appen laptops so the students on the
program could launch their online careers.

Seid Omer (second from left in first image),
a refugee living in Ethiopia, shared his take
on the experience: “I felt an overwhelming
happiness at having the chance to work
and provide for myself without depending
on anyone. Furthermore, I experienced a sense
of accomplishment for successfully completing
the qualification process, passing the exam,
and coming onboard Appen. Being presented
with an opportunity like this in a refugee-like
environment is truly life-changing, as it instills
hope and a sense of security…. Overall, this
income empowers me to have greater autonomy,
opportunities, and a brighter outlook on life.”

Social Impact

As part of our ongoing commitment to make a positive
social impact, we collaborate with entities to create
employment opportunities for individuals facing
barriers to work. We are particularly focused on helping
individuals from vulnerable or marginalised backgrounds
such as refugees and the long-term unemployed.
In FY23, we focused on partnerships with refugee
communities and organisations.

In 2023, we launched impact sourcing partnerships
with global NGOs such as Re:Coded, Na’amal, Konexio
and Generation, and continued our partnership with
MercyCorps. Our program now spans seven countries
and provides dedicated support to onboard more than
200 refugees and people who have been long-term
unemployed to access work on our platform. To further
support these individuals and help them launch their
online careers, we worked with our partners to provide
internet access, laptops and training in a variety
of technical and soft skills. We also continue to take
a leading role in the IAOP Center for Social Impact,
helping to develop principles around impact sourcing
and collaborating with organisations seeking to engage
in impact sourcing.

Appen employees give back by undertaking pro-bono
work and hold various fundraising events organised
by our Employee Services Committee (ESC) to support
a variety of not-for-profit organisations throughout
the year including the Appen’s Biggest Morning Tea,
Steptember and the Cavite fire appeal where we raised
a total of over $17,000 for charities such as Cancer
Council, Cerebral Palsy Alliance and the International
Red Cross.

Importance of diversity to achieving fair AI

To achieve equitable outcomes for users of AI products,
developers must address bias throughout the AI
lifecycle. This involves mitigating bias in data sourcing,
preparation, evaluation, and quality management.
Our global crowd, with diverse backgrounds, aids
customers in promoting fairness and minimising bias.
We emphasise diversity not only in the data but also
in the individuals involved in the data lifecycle and
product development.

As part of our ongoing commitment to diverse
representation, we piloted demographic surveys for one
of our largest projects to identify and start to address
gaps in representation. We plan to broaden this project
in 2024 with a view to implementing initiatives to create
an even more diverse crowd.

Environmental footprint

Strategy

Our environmental and climate change commitments

Our Net Zero Carbon Roadmap provides pathways towards

are outlined in our revised Environment Position

achieving net zero emissions across Appen’s business

Statement (EPS) which include actions to engage

operations and supply chain by 2030. Originally targeted for

with our external stakeholders (i.e., suppliers, clients,

2025, the net zero emissions target for business operations

contractors) to reduce our environmental footprint,

has been revised to 2030 due to budget constraints.

reducing water consumption within offices

scenario modelling and estimated budget for offsets

provide transparency and disclosure of our progress

and having the governance structure in place to oversee

the management of environmental risk and compliance.

We have a relatively small environmental footprint

within our own operations and have committed

to further reducing the impact of our operations,

including our offices, facilities, travel and data centre

usage by:

reducing electricity consumption and increase

use of renewable energy

optimising our data centre requirements and

working with a cloud supplier that has committed

to using 100% renewable energy

reducing waste generation and water use and

increasing recycling and donating or reprocessing

used technology equipment

minimising travel by using digital conferencing

and collaboration tools

working with our partners and suppliers

on sustainable procurement solutions

creating and implementing new Energy and

Waste Management Guidelines to implement

good energy and waste management practices.

Climate change

We acknowledge the risks associated with

climate change and are committed to playing

our part in supporting the transition

to net zero emissions by signing up to the

Science Based Target initiative (SBTi)

to limit global warming by 1.5°C. We have

created a net zero emissions roadmap

to provide pathways towards achieving our

net zero emissions target. The roadmap

and its proposed funding (excluding offsets)

has been approved by management and will

be adopted across the business.

The key strategic actions include:

sustainable office design

better energy management

energy efficiency

sustainably sourced energy (renewable energy)

engagement with suppliers to pursue net zero emissions

carbon offsets

Given that offsets are a key part of the roadmap, we have

drafted our offset strategy which include:

current and forecasted greenhouse gas emissions

for Appen

value chain and criteria for carbon offsets

This will ensure that the carbon offsets we procure will align

to our company’s values and provide the social and economic

benefits that goes beyond carbon reductions.

Progress

We have commenced the implementation of our net zero

strategy this year and achieved the following:

Conducted feasibility studies for onsite solar across

Signed ‘green’ electricity contracts for our corporate

1. Renewable energy

office sites

office in Australia

2. Energy efficiency

Commenced installation of LED lightings in our

Philippines’ offices

3. Sustainable office design

Created design specification document for offices

Ensured new offices in United States and Canada

are energy efficient

Closure of underutilised offices

4. Carbon offsets

Procured carbon offsets to offset our business

travel emissions

Appen 2023 Annual Report

Social and environment

Case Study

Appen is proud to partner with Na’amal,

a non-profit who works to change the narrative,

and create pathways to employment for refugees

and underrepresented groups. In Ethiopia and

Kenya, to complement Na’amal’s tech and soft

skills training, Appen ran informational and

onboarding webinars and provided dedicated

support to the students so they could start

earning an income on our platform. Appen

and we provided funding for internet access

and ex-Appen laptops so the students on the

program could launch their online careers.

Seid Omer (second from left in first image),

a refugee living in Ethiopia, shared his take

on the experience: “I felt an overwhelming

happiness at having the chance to work

and provide for myself without depending

on anyone. Furthermore, I experienced a sense

of accomplishment for successfully completing

the qualification process, passing the exam,

and coming onboard Appen. Being presented

with an opportunity like this in a refugee-like

environment is truly life-changing, as it instills

hope and a sense of security…. Overall, this

staff also put their hand up to mentor refugees,

200 refugees and people who have been long-term

income empowers me to have greater autonomy,

a total of over $17,000 for charities such as Cancer

opportunities, and a brighter outlook on life.”

Council, Cerebral Palsy Alliance and the International

Red Cross.

Social Impact

As part of our ongoing commitment to make a positive

social impact, we collaborate with entities to create

employment opportunities for individuals facing

barriers to work. We are particularly focused on helping

individuals from vulnerable or marginalised backgrounds

such as refugees and the long-term unemployed.

In FY23, we focused on partnerships with refugee

communities and organisations.

In 2023, we launched impact sourcing partnerships

with global NGOs such as Re:Coded, Na’amal, Konexio

and Generation, and continued our partnership with

MercyCorps. Our program now spans seven countries

and provides dedicated support to onboard more than

unemployed to access work on our platform. To further

support these individuals and help them launch their

online careers, we worked with our partners to provide

internet access, laptops and training in a variety

of technical and soft skills. We also continue to take

a leading role in the IAOP Center for Social Impact,

helping to develop principles around impact sourcing

and collaborating with organisations seeking to engage

in impact sourcing.

Appen employees give back by undertaking pro-bono

work and hold various fundraising events organised

by our Employee Services Committee (ESC) to support

a variety of not-for-profit organisations throughout

the year including the Appen’s Biggest Morning Tea,

Steptember and the Cavite fire appeal where we raised

Importance of diversity to achieving fair AI

To achieve equitable outcomes for users of AI products,

developers must address bias throughout the AI

lifecycle. This involves mitigating bias in data sourcing,

preparation, evaluation, and quality management.

Our global crowd, with diverse backgrounds, aids

customers in promoting fairness and minimising bias.

We emphasise diversity not only in the data but also

in the individuals involved in the data lifecycle and

product development.

As part of our ongoing commitment to diverse

representation, we piloted demographic surveys for one

of our largest projects to identify and start to address

gaps in representation. We plan to broaden this project

in 2024 with a view to implementing initiatives to create

an even more diverse crowd.

Environmental footprint

Strategy

Our environmental and climate change commitments
are outlined in our revised Environment Position
Statement (EPS) which include actions to engage
with our external stakeholders (i.e., suppliers, clients,
contractors) to reduce our environmental footprint,
provide transparency and disclosure of our progress
and having the governance structure in place to oversee
the management of environmental risk and compliance.

We have a relatively small environmental footprint
within our own operations and have committed
to further reducing the impact of our operations,
including our offices, facilities, travel and data centre
usage by:

reducing electricity consumption and increase
use of renewable energy

optimising our data centre requirements and
working with a cloud supplier that has committed
to using 100% renewable energy

Our Net Zero Carbon Roadmap provides pathways towards
achieving net zero emissions across Appen’s business
operations and supply chain by 2030. Originally targeted for
2025, the net zero emissions target for business operations
has been revised to 2030 due to budget constraints.

The key strategic actions include:

sustainable office design

better energy management

energy efficiency

sustainably sourced energy (renewable energy)

engagement with suppliers to pursue net zero emissions

carbon offsets

Given that offsets are a key part of the roadmap, we have
drafted our offset strategy which include:

current and forecasted greenhouse gas emissions
for Appen

reducing water consumption within offices

scenario modelling and estimated budget for offsets

reducing waste generation and water use and
increasing recycling and donating or reprocessing
used technology equipment

minimising travel by using digital conferencing
and collaboration tools

working with our partners and suppliers
on sustainable procurement solutions

creating and implementing new Energy and
Waste Management Guidelines to implement
good energy and waste management practices.

Climate change

We acknowledge the risks associated with
climate change and are committed to playing
our part in supporting the transition
to net zero emissions by signing up to the
Science Based Target initiative (SBTi)
to limit global warming by 1.5°C. We have
created a net zero emissions roadmap
to provide pathways towards achieving our
net zero emissions target. The roadmap
and its proposed funding (excluding offsets)
has been approved by management and will
be adopted across the business.

value chain and criteria for carbon offsets

This will ensure that the carbon offsets we procure will align
to our company’s values and provide the social and economic
benefits that goes beyond carbon reductions.

Progress

We have commenced the implementation of our net zero
strategy this year and achieved the following:

1. Renewable energy

Conducted feasibility studies for onsite solar across
office sites

Signed ‘green’ electricity contracts for our corporate
office in Australia

2. Energy efficiency

Commenced installation of LED lightings in our
Philippines’ offices

3. Sustainable office design

Created design specification document for offices

Ensured new offices in United States and Canada
are energy efficient

Closure of underutilised offices

4. Carbon offsets

Procured carbon offsets to offset our business
travel emissions

Appen 2023 Annual Report

Social and environment

Risk management

Metrics and targets

Analysis of risks and opportunities

We assess the potential size and scope of climate
risk through our risk management framework
along with the recommendation of the Task Force
on Climate-related Financial Disclosures (TCFD).
Climate risk is incorporated into our Risk Appetite
Statement which sets out our key risk types, the
thresholds for each, and how we monitor and mitigate
these risks. Management, the Audit and Risk Management
Committee and the Board of Directors all have
responsibilities with respect to overseeing, assessing
and managing climate change risk (see Governance above).
Please refer to the section ‘Analysis of risks and analysis’
for the identification of risks and opportunities associated
with the physical impacts of climate change on business
activities and operations.

As part of the TCFD framework, we have conducted
a scenario analysis of our offices around the world
to identify potential physical risks that will impact
on those sites. Please refer to section ‘TCFD-based
Scenario Analysis’ for further details and outcomes.

Further details of our GHG
inventory, including category
breakdown for scope 3 with
emissions by geography and
energy consumptions can be
found in the Appendix
on page 147.

The GHG emissions inventory (carbon footprint) for 2023
has been completed based on the principles of GHG Protocol
with emissions breakdown in scope 1, 2 and 3 shown in the
following table. The inventory below indicates that 13%
of our overall emissions comes from Appen’s business
operations with the bulk of our emissions coming from
our supply chain (i.e., crowd, suppliers, etc.).

Source

Scope 1 – Natural gas

Scope 2 – Electricity
– Location-Based

Scope 2 – Electricity
– Market-Based

Scope 3

Total Scope
1, 2 & 3 Emissions

2023
tCO2e

309

1,637

2022
tCO2e

263

1,475

1,631

1,466

12,496

15,654

14,442

17,392

The reporting boundary for scope 1 and 2 includes all offices
globally occupied by Appen employees. Office spaces
leased exclusively for the delivery of specific projects
on a short-term basis and offices that were operational
for less than six months in the reporting period have been
excluded from this boundary.

Further details of our GHG inventory, including category
breakdown for scope 3 and emissions by geography can
be found in Appendix page 147 of the annual report.

Outlook

In FY24, we will continue to implement key strategies within the net zero carbon roadmap, engaging with
our crowd and suppliers on emissions reduction and implement our offset strategy with the aim of achieving
Climate Active certification by end of 2025.

We have revised our EPS and will be developing environmental policies for water and waste along with key
initiatives to reduce water consumption and waste generation. We will outline these measures in our 2024
Annual Report.

We are expanding our impact sourcing activities with key objectives of assisting refugee and marginalised
communities and providing a pathway to meaningful employment. We are also expanding our efforts
to manage modern slavery risks through enhanced vendor engagement and assessment.

The AI for Good Committee, established in 2023 and chaired by our CEO and Managing Director, will
ensure that we are continuing to embed AI for Good throughout our governance, products and operations.
We will continue to walk the talk by implementing our social and environmental initiatives in 2024.

Our analysis depicted below indicates that there are significant opportunities and a number of small risks associated with

the physical impacts of climate change. This is due to the dispersed nature of our activities and operations and those of our

key suppliers and customers.

Potential Impact

Response

Transition risks

Policy

and legal

Our customers’ expect

We are addressing these risks

environmentally responsible

by driving more energy-efficient

suppliers as part of their

commitment to net zero

operations and our commitment

to reducing and reporting our carbon

emissions in their supply chains.

footprint. We are also working with our

customers to leverage their initiatives

into our own programs.

Physical risks

Acute

We have offices in locations that

For short-term disruptions, remote

are subject to increased severity

working is a viable option for the

of extreme weather events

majority of our operations with little

due to climate change.

business disruption. We also have

business continuity plans and disaster

recovery plans where adverse weather

events are considered and continue

to review and update these plans as

necessary. Business continuity and

disaster recovery are included and

monitored as a key strategic objective,

which also includes considerations

due to the impact of climate change.

Opportunities

Resource

efficiency

Moving to more resource efficient

We are committed to more

processes may result in reduced

energy-efficient operations including

longer term operating costs

reviewing where additional efficiencies

through efficiency gains but

can be introduced throughout

brings benefits through employee

our operations.

and customer satisfaction.

Energy

source

Using lower-emission sources

We are committed to increasing our

of energy can result in lower costs

utilisation of renewable energy across

as a result of reduced exposure

our operations particularly across

to future fossil fuel price

our physical office locations.

increases, potential changes

to carbon pricing and reputational

benefits with customers and

other stakeholders.

Products

AI will be applied

As the provider of training data for

and

services

in the development of new

AI model development, we anticipate

technologies that reduce reliance

that the demand for our products and

on fossil fuels, cut greenhouse

services will continue to grow as new

gas emissions, improve efficiency

technologies are developed.

and optimise resource allocation.

Appen 2023 Annual Report

Risk management

Metrics and targets

Analysis of risks and opportunities

Our analysis depicted below indicates that there are significant opportunities and a number of small risks associated with
the physical impacts of climate change. This is due to the dispersed nature of our activities and operations and those of our
key suppliers and customers.

Potential Impact

Response

Transition risks

Policy
and legal

Physical risks

Acute

Our customers’ expect
environmentally responsible
suppliers as part of their
commitment to net zero
emissions in their supply chains.

We have offices in locations that
are subject to increased severity
of extreme weather events
due to climate change.

Opportunities

Resource
efficiency

Energy
source

Products
and
services

Moving to more resource efficient
processes may result in reduced
longer term operating costs
through efficiency gains but
brings benefits through employee
and customer satisfaction.

Using lower-emission sources
of energy can result in lower costs
as a result of reduced exposure
to future fossil fuel price
increases, potential changes
to carbon pricing and reputational
benefits with customers and
other stakeholders.

AI will be applied
in the development of new
technologies that reduce reliance
on fossil fuels, cut greenhouse
gas emissions, improve efficiency
and optimise resource allocation.

We are addressing these risks
by driving more energy-efficient
operations and our commitment
to reducing and reporting our carbon
footprint. We are also working with our
customers to leverage their initiatives
into our own programs.

For short-term disruptions, remote
working is a viable option for the
majority of our operations with little
business disruption. We also have
business continuity plans and disaster
recovery plans where adverse weather
events are considered and continue
to review and update these plans as
necessary. Business continuity and
disaster recovery are included and
monitored as a key strategic objective,
which also includes considerations
due to the impact of climate change.

We are committed to more
energy-efficient operations including
reviewing where additional efficiencies
can be introduced throughout
our operations.

We are committed to increasing our
utilisation of renewable energy across
our operations particularly across
our physical office locations.

As the provider of training data for
AI model development, we anticipate
that the demand for our products and
services will continue to grow as new
technologies are developed.

Social and environment

We assess the potential size and scope of climate

The GHG emissions inventory (carbon footprint) for 2023

risk through our risk management framework

has been completed based on the principles of GHG Protocol

along with the recommendation of the Task Force

with emissions breakdown in scope 1, 2 and 3 shown in the

on Climate-related Financial Disclosures (TCFD).

following table. The inventory below indicates that 13%

Climate risk is incorporated into our Risk Appetite

of our overall emissions comes from Appen’s business

Statement which sets out our key risk types, the

operations with the bulk of our emissions coming from

thresholds for each, and how we monitor and mitigate

our supply chain (i.e., crowd, suppliers, etc.).

these risks. Management, the Audit and Risk Management

Committee and the Board of Directors all have

responsibilities with respect to overseeing, assessing

and managing climate change risk (see Governance above).

Please refer to the section ‘Analysis of risks and analysis’

for the identification of risks and opportunities associated

with the physical impacts of climate change on business

activities and operations.

As part of the TCFD framework, we have conducted

a scenario analysis of our offices around the world

to identify potential physical risks that will impact

on those sites. Please refer to section ‘TCFD-based

Scenario Analysis’ for further details and outcomes.

Source

Scope 1 – Natural gas

Scope 2 – Electricity

– Location-Based

Scope 2 – Electricity

– Market-Based

Scope 3

Total Scope

1, 2 & 3 Emissions

2023

tCO2e

309

1,637

2022

tCO2e

263

1,475

1,631

1,466

12,496

15,654

14,442

17,392

The reporting boundary for scope 1 and 2 includes all offices

globally occupied by Appen employees. Office spaces

leased exclusively for the delivery of specific projects

on a short-term basis and offices that were operational

for less than six months in the reporting period have been

excluded from this boundary.

Further details of our GHG inventory, including category

breakdown for scope 3 and emissions by geography can

be found in Appendix page 147 of the annual report.

Further details of our GHG

inventory, including category

breakdown for scope 3 with

emissions by geography and

energy consumptions can be

found in the Appendix

on page 147.

Outlook

In FY24, we will continue to implement key strategies within the net zero carbon roadmap, engaging with

our crowd and suppliers on emissions reduction and implement our offset strategy with the aim of achieving

Climate Active certification by end of 2025.

We have revised our EPS and will be developing environmental policies for water and waste along with key

initiatives to reduce water consumption and waste generation. We will outline these measures in our 2024

Annual Report.

We are expanding our impact sourcing activities with key objectives of assisting refugee and marginalised

communities and providing a pathway to meaningful employment. We are also expanding our efforts

to manage modern slavery risks through enhanced vendor engagement and assessment.

The AI for Good Committee, established in 2023 and chaired by our CEO and Managing Director, will

ensure that we are continuing to embed AI for Good throughout our governance, products and operations.

We will continue to walk the talk by implementing our social and environmental initiatives in 2024.

Appen 2023 Annual Report

Social and environment

Governance

TCFD-based scenario analysis

A desktop scenario analysis has been conducted
to help identify potential physical risks that will impact
on Appen offices globally. The below scenarios have been
conducted based on two carbon emissions scenarios
from Intergovernmental Panel on Climate Change (IPCC)
5th Assessment Report: low emissions (RCP 4.5 or 2⁰C
warming) and high emissions (RCP 8.5 or 4⁰C warming).

For each office the above climate scenarios were analysed
in conjunction with the following identified physical risks:

fires – bushfires and wildfires arising from a hotter and
drier climate

heatwave – prolonged high temperatures

drought – reduced rainfall from a hotter and drier climate

flood – from increased storm activities and intensities
(i.e., storm surges, typhoon etc.)

inundation – lands under water due to rising sea levels
from climate change

For each type of risk the associated business impacts were
determined and a risk rating applied. Some of the identified
business impacts included:

damage to property and potential loss of life

rising cost of business operations

scarcity of resources such as water, etc.

Scenario analysis outcomes

Based on the physical risk analysis, the key risks impacting
most of the offices are heatwave and drought especially
in a high emissions scenario (RCP 8.5).

In response to the analysis, we have identified and begun
initiatives within the office sites for mitigation and adaptation
which include:

energy efficient HVAC and installation of LED lightings

water efficient plumbing and water fixtures

sourcing of on-site or off-site renewable energy
(i.e., solar, wind, hydro).

Identifying

and managing risk

Embedding risk management to balance risk and reward is critical

to our continued ability to operate in the high-growth, dynamic market.

Risk appetite

Emerging risks

To support innovation and operate with agility our risk

We define emerging risks as uncertainties that may not

appetite provides direction to support informed risk-taking.

be fully understood. We monitor them through horizon

Our risk appetite has been defined at a category level

scanning during our annual strategic planning, considering

and supports the day-to-day control activities across

external analyses like the World Economic Forum Global

the business. The risk appetite is reviewed annually

Risk Report. These risks, once better understood,

in conjunction with the annual strategy session and

are integrated into our existing risk reporting alongside

principal risks. More details on these risks can be found

in their corresponding sections below.

approved by the Board.

Risk culture

Our approach to risk management is intertwined with

our strategic planning and objectives. Embedding risk

management across the business from strategy development

down to our day-to-day operations, supported by our

company values, promotes transparency and accountability

in decision making. This culture is supported by our

Code of Conduct and other policies, regular training

and implementation of cost-effective controls.

Key changes in our principal risks

Every year as part our strategic planning process,

we revisit our principal risks to ensure congruence with

our strategic direction and value drivers. This exercise was

conducted concurrently with our materiality assessment

to ensure that material risks from all stakeholders were

appropriately captured, and our assessment was not

materially different to that of our stakeholders. Where

there is a direct correlation with previous reported risks

the movement year on year has been reported.

Further information regarding

emerging risks can be found in

their corresponding principal risks

as identified on the following page.

Appen 2023 Annual Report

Social and environment

Governance

TCFD-based scenario analysis

A desktop scenario analysis has been conducted

For each type of risk the associated business impacts were

to help identify potential physical risks that will impact

determined and a risk rating applied. Some of the identified

on Appen offices globally. The below scenarios have been

business impacts included:

conducted based on two carbon emissions scenarios

from Intergovernmental Panel on Climate Change (IPCC)

5th Assessment Report: low emissions (RCP 4.5 or 2⁰C

warming) and high emissions (RCP 8.5 or 4⁰C warming).

damage to property and potential loss of life

rising cost of business operations

scarcity of resources such as water, etc.

For each office the above climate scenarios were analysed

Scenario analysis outcomes

in conjunction with the following identified physical risks:

Based on the physical risk analysis, the key risks impacting

fires – bushfires and wildfires arising from a hotter and

most of the offices are heatwave and drought especially

drier climate

in a high emissions scenario (RCP 8.5).

heatwave – prolonged high temperatures

drought – reduced rainfall from a hotter and drier climate

In response to the analysis, we have identified and begun

initiatives within the office sites for mitigation and adaptation

flood – from increased storm activities and intensities

which include:

(i.e., storm surges, typhoon etc.)

inundation – lands under water due to rising sea levels

from climate change

energy efficient HVAC and installation of LED lightings

water efficient plumbing and water fixtures

sourcing of on-site or off-site renewable energy

(i.e., solar, wind, hydro).

Identifying
and managing risk

Embedding risk management to balance risk and reward is critical
to our continued ability to operate in the high-growth, dynamic market.

Risk appetite

Emerging risks

We define emerging risks as uncertainties that may not
be fully understood. We monitor them through horizon
scanning during our annual strategic planning, considering
external analyses like the World Economic Forum Global
Risk Report. These risks, once better understood,
are integrated into our existing risk reporting alongside
principal risks. More details on these risks can be found
in their corresponding sections below.

To support innovation and operate with agility our risk
appetite provides direction to support informed risk-taking.
Our risk appetite has been defined at a category level
and supports the day-to-day control activities across
the business. The risk appetite is reviewed annually
in conjunction with the annual strategy session and
approved by the Board.

Risk culture

Our approach to risk management is intertwined with
our strategic planning and objectives. Embedding risk
management across the business from strategy development
down to our day-to-day operations, supported by our
company values, promotes transparency and accountability
in decision making. This culture is supported by our
Code of Conduct and other policies, regular training
and implementation of cost-effective controls.

Key changes in our principal risks

Every year as part our strategic planning process,
we revisit our principal risks to ensure congruence with
our strategic direction and value drivers. This exercise was
conducted concurrently with our materiality assessment
to ensure that material risks from all stakeholders were
appropriately captured, and our assessment was not
materially different to that of our stakeholders. Where
there is a direct correlation with previous reported risks
the movement year on year has been reported.

Further information regarding
emerging risks can be found in
their corresponding principal risks
as identified on the following page.

Appen 2023 Annual Report

Identifying and managing risk

Governance

Risk is an inherent part of doing business and risk management
is a fundamental part of good corporate governance. Our risk
management approach ensures innovation and new possibilities
are underpinned by sound judgement of the potential risks and
identification of risk mitigation strategies.

Monitoring
and partnering

Risk management function

• Defines the risk

management process to
be followed by the business
(including risk appetite).

• Reviews and challenges the
strategic and operational
risks ensuring controls
identified are operating,
and tracks closure of items.

• Facilitates risk process,

collating risk registers and
consolidating the strategic
risk register.

Ultimate responsibility

Board through the Audit & Risk Management Committee

• Provides oversight of risk management and culture which
contributes to the ability to achieve strategic objectives.

• Approve the risk management framework.

• Approve the risk appetite statement and subsequent

addressing of escalated risk appetite triggers.

• Have oversight of strategic and related ESG risks
(including climate related risks and impacts).

Oversight

Executive and Senior Leadership Team

• Responsible for the implementation of the risk

management framework and risk aware culture within
their teams.

• Assess, manage and monitor risk profiles for identified

strategic risks.

•

Identify where risk appetite statement triggers may
be met and further escalation is required.

• Promote a positive and appropriate attitude towards

risk management and ensure employees are aware
of their responsibilities.

• Attest that key risks in their area have been identified

and managed through controls and mitigants
on a bi-annual basis.

Ownership

Operational management

•

Identify, prioritise, assess and monitor risks which
may arise in the business operations.

Implement and comply with all controls, policies
and procedures within their area of responsibility,
including devising and implementing controls
to address identified operational risks.

Key:

Increase

Decrease

Stable

A summary of our principal risks, and how these have changed during the year,

mitigation strategies and related trends are detailed in the following tables.

This reflects the risks identified by the Board for the year ended 31 December 2023. The risk landscape is continually evolving

and we regularly monitor and identify risks on a proactive basis. This means the risk register and associated strategies are not

exhaustive and are reflective of efforts at a set point in time.

Principal risk

Mitigation

Value Driver

Business model

Strategic direction of business

The AI market is very dynamic and client needs

and end-user expectations change rapidly.

Demand for services can rapidly change

depending on technological developments

within market segments, geoeconomic

confrontations (including global conflicts) and

regulatory developments which can all impact

our business model.

Incorporated emerging risk:

geoeconomic confrontations

Change

While this risk has fluctuated throughout

the year, the net position compared to the

prior year remains stable as the revised

to be operationalised.

Customer

and brand

Global crowd

Technology,

processes,

systems

Financial

• We have a strategy team that is dedicated

to monitoring AI and technology markets,

customer trends and regulatory changes.

• We use these insights to inform our

strategy and technology roadmap,

and to evolve our product offerings

and go to market strategy.

• We scan for additional opportunities

to expand into other markets

and/or technology to support our

existing offerings.

• Macroeconomic and geopolitical risks,

including consideration of potential

political uncertainty in certain markets

and geographies, are actively factored

into our strategic planning processes

and investment activity.

to monitor potential policy, legal and

regulatory developments that may

impact our ability to operate in particular

industries, markets and geographical

locations. We have plans and processes

in place to react in an agile manner with

minimal business disruption to any

changes that may occur.

strategy under new leadership begins

• We undertake ongoing horizon scanning

Appen 2023 Annual Report

Identifying and managing risk

Governance

Risk is an inherent part of doing business and risk management

is a fundamental part of good corporate governance. Our risk

management approach ensures innovation and new possibilities

are underpinned by sound judgement of the potential risks and

identification of risk mitigation strategies.

Monitoring

and partnering

Risk management function

• Defines the risk

management process to

be followed by the business

(including risk appetite).

• Reviews and challenges the

strategic and operational

risks ensuring controls

identified are operating,

and tracks closure of items.

• Facilitates risk process,

collating risk registers and

consolidating the strategic

risk register.

Ultimate responsibility

Board through the Audit & Risk Management Committee

• Provides oversight of risk management and culture which

contributes to the ability to achieve strategic objectives.

• Approve the risk management framework.

• Approve the risk appetite statement and subsequent

addressing of escalated risk appetite triggers.

• Have oversight of strategic and related ESG risks

(including climate related risks and impacts).

Oversight

Executive and Senior Leadership Team

• Responsible for the implementation of the risk

management framework and risk aware culture within

• Assess, manage and monitor risk profiles for identified

their teams.

strategic risks.

•

Identify where risk appetite statement triggers may

be met and further escalation is required.

• Promote a positive and appropriate attitude towards

risk management and ensure employees are aware

of their responsibilities.

• Attest that key risks in their area have been identified

and managed through controls and mitigants

on a bi-annual basis.

Ownership

Operational management

•

Identify, prioritise, assess and monitor risks which

may arise in the business operations.

•

Implement and comply with all controls, policies

and procedures within their area of responsibility,

including devising and implementing controls

to address identified operational risks.

Key:

Increase

Decrease

Stable

A summary of our principal risks, and how these have changed during the year,
mitigation strategies and related trends are detailed in the following tables.

This reflects the risks identified by the Board for the year ended 31 December 2023. The risk landscape is continually evolving
and we regularly monitor and identify risks on a proactive basis. This means the risk register and associated strategies are not
exhaustive and are reflective of efforts at a set point in time.

Principal risk

Mitigation

Value Driver

Business model

Strategic direction of business

The AI market is very dynamic and client needs
and end-user expectations change rapidly.
Demand for services can rapidly change
depending on technological developments
within market segments, geoeconomic
confrontations (including global conflicts) and
regulatory developments which can all impact
our business model.

Incorporated emerging risk:
geoeconomic confrontations

Change

While this risk has fluctuated throughout
the year, the net position compared to the
prior year remains stable as the revised
strategy under new leadership begins
to be operationalised.

Customer
and brand

Global crowd

Technology,
processes,
systems

Financial

• We have a strategy team that is dedicated
to monitoring AI and technology markets,
customer trends and regulatory changes.

• We use these insights to inform our
strategy and technology roadmap,
and to evolve our product offerings
and go to market strategy.

• We scan for additional opportunities

to expand into other markets
and/or technology to support our
existing offerings.

• Macroeconomic and geopolitical risks,
including consideration of potential
political uncertainty in certain markets
and geographies, are actively factored
into our strategic planning processes
and investment activity.

• We undertake ongoing horizon scanning
to monitor potential policy, legal and
regulatory developments that may
impact our ability to operate in particular
industries, markets and geographical
locations. We have plans and processes
in place to react in an agile manner with
minimal business disruption to any
changes that may occur.

Appen 2023 Annual Report

Identifying and managing risk

Principal risk

Mitigation

Value Driver

Principal risk

Mitigation

Value Driver

Market demand and competition

In some parts of our business there is
competition from niche and low-cost providers.
Customers may also choose to do some
data annotation tasks in-house and/or use
their scale to seek better terms on pricing.
The profile of the projects that our customers
are undertaking is also changing.

Change

This risk while high, has remained
stable in the year. While the risk from
competition remains prevalent there
have been no significant changes to the
likelihood or impact.

Changing customer
strategy and needs

Currently a few large global technology
companies are the major buyers of AI training
data. The revenue from these clients is
significantly larger than the revenue from other
clients and the volume can fluctuate. Clients
can also rapidly redirect their spend away from
particular projects impacting their ongoing
needs for training data.

Change

This risk has increased in the past year
due to the rapid emergence of the
LLM sector and the impact of further
concentration of revenue to a smaller
group of global customers.

• We monitor new investments in the
data annotation sector closely.

• We have refreshed our sales and

marketing capabilities, including our
go to market strategy.

• We have invested in new sales and

marketing capabilities to deepen and
expand our relationships with existing
and new customers.

• We continue to invest in technology

to increase the quality of our services
and to deploy new capabilities to remain
ahead of the competition.

• We have embraced an agile approach
to the emerging LLM market and have
been able to capitalise on our expertise
in core Relevance activities to these
new offerings.

• We continue to build relationships with
key clients to ensure we can anticipate
strategy changes and react accordingly.

• We monitor relevant market and
customer trends and regulatory
changes to identify potential headwinds
for our clients which may impact our
future revenue.

• We continue our product-led focus
to meet evolving customer needs.

•

Inclusion of customer NPS targets
within executive STI.

Customer
and brand

Technology,
processes,
systems

Financial

Customer
and brand

Technology,
processes,
systems

Key:

Increase

Decrease

Stable

Ability to execute on

operational requirements

The sector we operate in is fast moving, and

we need to be agile to meet these expectations.

Knowledge and skills need to be developed

at the same rate as our clients to continue

to execute our operations successfully to meet

their expectations.

Change

This risk has remained stable in the

current year as we continue to focus our

attention on execution of high-quality

offerings for our customers.

Resilient operational model

The loss of data, a physical site or critical

employees could result in a major impact to our

customers, revenues and reputation.

Change

This risk has remained high but

stable over the year and continues

to be impacted by external factors

such as the on-going prevalence

of cyber-attacks, extreme weather events,

and impact of geopolitical tensions.

• We have a quick response team for our

major clients to ensure we can keep

pace with their changing needs.

• The restructure of our delivery team has

resulted in more streamlined processes

to ensure we able to execute operations

in an effective and consistent manner.

• Refinement of our customer NPS

program which we use to identify

gaps and areas of improvement in our

operational implementation.

• We store data in enterprise grade,

cloud-based servers which are

duplicated to minimise disruption.

• Our engineering team focuses

on resilience to mitigate the risks

of material or sustained disruption.

• We have business continuity plans

for facilities that require a physical

presence on-site and critical systems.

• We have further matured our business

continuity capabilities into our major

client project plans.

• We conduct scenario testing for our

disaster recovery plans.

• Our work-from-home model for

data annotators makes our business

model extremely flexible and resilient.

Technology,

processes,

systems

Customer

and brand

Global crowd

Customer

and brand

Technology,

processes,

systems

Social and

environment

Appen 2023 Annual Report

Identifying and managing risk

Key:

Increase

Decrease

Stable

Principal risk

Mitigation

Value Driver

Principal risk

Mitigation

Value Driver

Market demand and competition

In some parts of our business there is

competition from niche and low-cost providers.

Customers may also choose to do some

data annotation tasks in-house and/or use

their scale to seek better terms on pricing.

The profile of the projects that our customers

are undertaking is also changing.

Change

This risk while high, has remained

stable in the year. While the risk from

competition remains prevalent there

have been no significant changes to the

likelihood or impact.

Changing customer

strategy and needs

Currently a few large global technology

companies are the major buyers of AI training

data. The revenue from these clients is

significantly larger than the revenue from other

clients and the volume can fluctuate. Clients

can also rapidly redirect their spend away from

particular projects impacting their ongoing

needs for training data.

Change

This risk has increased in the past year

due to the rapid emergence of the

LLM sector and the impact of further

concentration of revenue to a smaller

group of global customers.

• We monitor new investments in the

data annotation sector closely.

• We have refreshed our sales and

marketing capabilities, including our

go to market strategy.

• We have invested in new sales and

marketing capabilities to deepen and

expand our relationships with existing

and new customers.

• We continue to invest in technology

to increase the quality of our services

and to deploy new capabilities to remain

ahead of the competition.

• We have embraced an agile approach

to the emerging LLM market and have

been able to capitalise on our expertise

in core Relevance activities to these

new offerings.

• We continue to build relationships with

key clients to ensure we can anticipate

strategy changes and react accordingly.

• We monitor relevant market and

customer trends and regulatory

changes to identify potential headwinds

for our clients which may impact our

future revenue.

• We continue our product-led focus

to meet evolving customer needs.

•

Inclusion of customer NPS targets

within executive STI.

Customer

and brand

Technology,

processes,

systems

Financial

Customer

and brand

Technology,

processes,

systems

Ability to execute on
operational requirements

The sector we operate in is fast moving, and
we need to be agile to meet these expectations.
Knowledge and skills need to be developed
at the same rate as our clients to continue
to execute our operations successfully to meet
their expectations.

Change

This risk has remained stable in the
current year as we continue to focus our
attention on execution of high-quality
offerings for our customers.

Resilient operational model

The loss of data, a physical site or critical
employees could result in a major impact to our
customers, revenues and reputation.

Change

This risk has remained high but
stable over the year and continues
to be impacted by external factors
such as the on-going prevalence
of cyber-attacks, extreme weather events,
and impact of geopolitical tensions.

• We have a quick response team for our
major clients to ensure we can keep
pace with their changing needs.

• The restructure of our delivery team has
resulted in more streamlined processes
to ensure we able to execute operations
in an effective and consistent manner.

• Refinement of our customer NPS
program which we use to identify
gaps and areas of improvement in our
operational implementation.

• We store data in enterprise grade,
cloud-based servers which are
duplicated to minimise disruption.

• Our engineering team focuses

on resilience to mitigate the risks
of material or sustained disruption.

• We have business continuity plans
for facilities that require a physical
presence on-site and critical systems.

• We have further matured our business
continuity capabilities into our major
client project plans.

• We conduct scenario testing for our

disaster recovery plans.

• Our work-from-home model for

data annotators makes our business
model extremely flexible and resilient.

Technology,
processes,
systems

Customer
and brand

Global crowd

Customer
and brand

Technology,
processes,
systems

Social and
environment

Appen 2023 Annual Report

Identifying and managing risk

Principal risk

Mitigation

Value Driver

Principal risk

Mitigation

Value Driver

People

Talent strategy and
employee value proposition

Our business is reliant on specialised skills.
Our ability to grow is dependent on attracting,
developing and motivating our talent.

Change

Ongoing employment market pressure
remains a key contributor to this risk,
however the internal work over the year
has resulted in a lowering of this risk year
on year.

Managing a culture of growth
through change

Our business’s future resilience is anchored
in a large-scale restructure program, where
employee buy-in is pivotal for success.

Change

This risk has increased over the year due
to the reduction in workforce as a result
of the restructures. The pace of change
required from individuals remains
a source of potential increased risk.

• Our Human Resources department

works closely with the business to
understand the skills and capabilities
required to deliver our business
objectives and to ensure those needs
are met. In 2023, this also included
a revision of the way we manage
employee goals and accountability.

• We have listened to the feedback

provided by our employees as part
of the culture work conducted and
have introduced new ways of working,
additional learning pathways and other
programs to improve our employee
value proposition.

• We continue to benchmark our offerings
across the sector to ensure market
competitiveness and introduced
additional employee benefits programs
to retain and attract talent.

•

Inclusion of employee engagement
targets within executive STI.

• We refreshed our values through the
new Culture Code and linked desired
behaviours and attributes to reward
and recognition.

•

In response to the significant
restructuring, specific measures
included clear communication
strategies, ongoing leadership training,
and regular check-ins to address
concerns and maintain morale among
the remaining workforce.

Appen
employees

Social and
environment

Appen
employees

Technology,
processes,
systems

Key:

Increase

Decrease

Stable

Investment in technology, innovation

• We are investing in our technology

Technology and innovation

and transformation

Technology innovation is key to improving

our capabilities, increasing efficiency

and automation, keeping pace with

customer expectations and staying ahead

of our competition.

Change

This risk has remained stable in the

current year as we continued to invest

in our product and engineering teams.

With an increasingly product-led strategy the

need for solid intellectual property protection

strategies are key to delivering outcomes for

our customers.

Change

This risk has increased over the year

due to the changes in the way our

product and engineering teams are

structured which inherently introduces

more temporary risk.

Technology,

processes,

systems

Customer

and brand

Technology,

processes,

systems

offering to improve both customer

and crowd experiences, to deliver

automation benefits, efficiencies and

new offerings.

• We utilise agile methods in our project

delivery to ensure investment in

engineering projects is appropriately

prioritised and oversight is in place.

(IP) Committee that looks at new

technologies through invention

disclosures, develops appropriate

protection strategies for that

technology and ensures alignment with

product directions (including patenting,

publication etc).

• We have training to ensure employees

are aware of the need to protect

confidential information.

• Access to core technologies is

geographically segmented to improve

IP protection.

• Brands are protected in relevant markets.

Protection of intellectual property

• We have an Intellectual Property

Appen 2023 Annual Report

Identifying and managing risk

Principal risk

Mitigation

Value Driver

Principal risk

Mitigation

Value Driver

Key:

Increase

Decrease

Stable

People

Talent strategy and

employee value proposition

Our business is reliant on specialised skills.

Our ability to grow is dependent on attracting,

developing and motivating our talent.

Change

Ongoing employment market pressure

remains a key contributor to this risk,

however the internal work over the year

has resulted in a lowering of this risk year

on year.

Managing a culture of growth

through change

Our business’s future resilience is anchored

in a large-scale restructure program, where

employee buy-in is pivotal for success.

Change

This risk has increased over the year due

to the reduction in workforce as a result

of the restructures. The pace of change

required from individuals remains

a source of potential increased risk.

• Our Human Resources department

works closely with the business to

understand the skills and capabilities

required to deliver our business

objectives and to ensure those needs

are met. In 2023, this also included

a revision of the way we manage

employee goals and accountability.

• We have listened to the feedback

provided by our employees as part

of the culture work conducted and

have introduced new ways of working,

additional learning pathways and other

programs to improve our employee

value proposition.

• We continue to benchmark our offerings

across the sector to ensure market

competitiveness and introduced

additional employee benefits programs

to retain and attract talent.

•

Inclusion of employee engagement

targets within executive STI.

• We refreshed our values through the

new Culture Code and linked desired

behaviours and attributes to reward

and recognition.

•

In response to the significant

restructuring, specific measures

included clear communication

strategies, ongoing leadership training,

and regular check-ins to address

concerns and maintain morale among

the remaining workforce.

Appen

employees

Social and

environment

Appen

employees

Technology,

processes,

systems

Technology and innovation

Investment in technology, innovation
and transformation

Technology innovation is key to improving
our capabilities, increasing efficiency
and automation, keeping pace with
customer expectations and staying ahead
of our competition.

Change

This risk has remained stable in the
current year as we continued to invest
in our product and engineering teams.

Protection of intellectual property

With an increasingly product-led strategy the
need for solid intellectual property protection
strategies are key to delivering outcomes for
our customers.

Change

This risk has increased over the year
due to the changes in the way our
product and engineering teams are
structured which inherently introduces
more temporary risk.

Technology,
processes,
systems

Customer
and brand

Technology,
processes,
systems

• We are investing in our technology
offering to improve both customer
and crowd experiences, to deliver
automation benefits, efficiencies and
new offerings.

• We utilise agile methods in our project

delivery to ensure investment in
engineering projects is appropriately
prioritised and oversight is in place.

• We have an Intellectual Property
(IP) Committee that looks at new
technologies through invention
disclosures, develops appropriate
protection strategies for that
technology and ensures alignment with
product directions (including patenting,
copyright, trade secret, defensive
publication etc).

• We have training to ensure employees

are aware of the need to protect
confidential information.

• Access to core technologies is

geographically segmented to improve
IP protection.

• Brands are protected in relevant markets.

Appen 2023 Annual Report

Identifying and managing risk

Principal risk

Mitigation

Value Driver

Principal risk

Mitigation

Value Driver

Crowd

Crowd conditions

Independent contractors are critical to our
business. The attraction and retention of skilled
contractors enables our competitive advantage
and customer value proposition.

Change

This risk remained stable in the
current year. While we continue
to see pressure on conditions we are
working hard to meet or exceed our
stakeholders’ expectations.

Crowd supply meets
customer demand

Our business model relies on our ability
to provide customers with access to a broad
range of skills provided by our global crowd.

Change

This risk remains stable. While
our generative AI projects have
seen an increase in the specificity
of skills requested from customers,
the work we are investing in should
put us in a good position to meet
these requirements.

• Our Crowd Code of Ethics establishes

the conditions that we will adhere to,
above the minimum legal requirements.

• We continue to work to improve our
crowd experience to ensure that
we can make the platform a great
place for users.

• Our Impact Sourcing strategy provides
jobs and career development to people
who otherwise have limited prospects
for formal employment.

• We have partnered with external

organisations to evaluate our crowd
conditions and are working towards
further enshrining fair conditions
to contractors across the sector.

•

Inclusion of crowd NPS targets within
executive STI.

• We have begun new research programs
to understand how the work we provide
fits into the life of a contributor.

• Our new contributor experience will
better tailor the platform to the type
of work that they would like to do.

• We continue to introduce and refine
our strategies to combat contractor
integrity to further guarantee that
our clients have access to the best
quality contributors.

• We have partnerships with sourcing
agencies to increase our reach into
difficult markets and to stimulate
applicant interest.

Global crowd

Customer
and brand

Global crowd

Customer
and brand

Data management

Compliance with security, privacy

and other data regulations

We manage a large amount of data as part

of our operations including a significant

amount of personal information which

requires increased security requirements.

Change

This risk remains stable as we

maintain our focus on ensuring

data governance is embedded in

everything we do against a changing

landscape of increased regulation.

Emerging cyber security issues

We manage sensitive customer information,

increasing our exposure and susceptibility

to cyber attacks. Cyber threats could lead

to a loss of data or service interruption

impacting customers and our reputation.

Change

This risk remains stable as we

continue to invest in our cyber

maturity against an ever growing

complexity of cyber threats.

Key:

Increase

Decrease

Stable

Technology,

processes,

systems

Customer

and brand

Technology,

processes,

systems

Customer

and brand

• We continue to integrate security

and privacy requirements into our

systems and offerings by increasing the

collaboration between our engineering

and privacy teams.

• We have a team that is responsible for

understanding emerging information

security risks. They consult with

external advisors.

•

Information security risk assessments

are conducted on a regular basis

and the IT team undergoes training

in risk management.

• We have maintained certification for

ISO 27001 and SOC 2 as well as gaining

ISO 27701 for our China business.

• We have policies, procedures and

training to ensure employees are aware

of their privacy and security obligations.

• We have implemented a cyber security

risk management framework across the

organisation. It includes the deployment

of physical and technological security

measures to identify, protect, detect

and respond to information and cyber

security risks. We have ISO 27001

and SOC 2 certification.

• We conduct audits of our cyber

security practices, including maturity

assessments, scenario planning,

penetration testing and simulation

exercises, for cyber security

incident management.

• The strength of our control

environment is tested on an ongoing

basis by independent security

experts. Their recommendations are

implemented in a prioritised manner.

• We have policies, procedures and

annual training to ensure employees

are aware of the threat and their

responsibilities, and we conduct

regular synthetic phishing tests.

Appen 2023 Annual Report

Identifying and managing risk

Principal risk

Mitigation

Value Driver

Principal risk

Mitigation

Value Driver

Key:

Increase

Decrease

Stable

Crowd

Crowd conditions

Independent contractors are critical to our

business. The attraction and retention of skilled

contractors enables our competitive advantage

and customer value proposition.

Change

This risk remained stable in the

current year. While we continue

to see pressure on conditions we are

working hard to meet or exceed our

stakeholders’ expectations.

Crowd supply meets

customer demand

Our business model relies on our ability

to provide customers with access to a broad

range of skills provided by our global crowd.

Change

This risk remains stable. While

our generative AI projects have

seen an increase in the specificity

of skills requested from customers,

the work we are investing in should

put us in a good position to meet

these requirements.

• Our Crowd Code of Ethics establishes

the conditions that we will adhere to,

above the minimum legal requirements.

• We continue to work to improve our

crowd experience to ensure that

we can make the platform a great

place for users.

• Our Impact Sourcing strategy provides

jobs and career development to people

who otherwise have limited prospects

for formal employment.

• We have partnered with external

organisations to evaluate our crowd

conditions and are working towards

further enshrining fair conditions

to contractors across the sector.

•

Inclusion of crowd NPS targets within

executive STI.

• We have begun new research programs

to understand how the work we provide

fits into the life of a contributor.

• Our new contributor experience will

better tailor the platform to the type

of work that they would like to do.

• We continue to introduce and refine

our strategies to combat contractor

integrity to further guarantee that

our clients have access to the best

quality contributors.

• We have partnerships with sourcing

agencies to increase our reach into

difficult markets and to stimulate

applicant interest.

Global crowd

Customer

and brand

Global crowd

Customer

and brand

Data management

Compliance with security, privacy
and other data regulations

We manage a large amount of data as part
of our operations including a significant
amount of personal information which
requires increased security requirements.

Change

This risk remains stable as we
maintain our focus on ensuring
data governance is embedded in
everything we do against a changing
landscape of increased regulation.

Emerging cyber security issues

We manage sensitive customer information,
increasing our exposure and susceptibility
to cyber attacks. Cyber threats could lead
to a loss of data or service interruption
impacting customers and our reputation.

Change

This risk remains stable as we
continue to invest in our cyber
maturity against an ever growing
complexity of cyber threats.

Technology,
processes,
systems

Customer
and brand

Technology,
processes,
systems

Customer
and brand

• We continue to integrate security
and privacy requirements into our
systems and offerings by increasing the
collaboration between our engineering
and privacy teams.

• We have a team that is responsible for

understanding emerging information
security risks. They consult with
external advisors.

•

Information security risk assessments
are conducted on a regular basis
and the IT team undergoes training
in risk management.

• We have maintained certification for

ISO 27001 and SOC 2 as well as gaining
ISO 27701 for our China business.

• We have policies, procedures and

training to ensure employees are aware
of their privacy and security obligations.

• We have implemented a cyber security
risk management framework across the
organisation. It includes the deployment
of physical and technological security
measures to identify, protect, detect
and respond to information and cyber
security risks. We have ISO 27001
and SOC 2 certification.

• We conduct audits of our cyber

security practices, including maturity
assessments, scenario planning,
penetration testing and simulation
exercises, for cyber security
incident management.

• The strength of our control

environment is tested on an ongoing
basis by independent security
experts. Their recommendations are
implemented in a prioritised manner.

• We have policies, procedures and

annual training to ensure employees
are aware of the threat and their
responsibilities, and we conduct
regular synthetic phishing tests.

Appen 2023 Annual Report

Key:

Increase

Decrease

Stable

Environmental, social and

governance (ESG) risks and

performance

Incorporated emerging risk:

climate change

Change

The risk remains stable as we grow

our ESG program against a changing

regulatory landscape.

Social and

environment

• We are a signatory to the United Nations

Global Compact and have committed

to take action to embed the ten

principles within our business practices.

• We have completed our initial Net Zero

Roadmap and have committed to net

zero emissions across our business

(including supply chain) by 2030.

• We have committed to the Science

Based Target Initiative and

disclosing climate-related issues

in accordance with the Task Force

on Climate-related Financial Disclosures

(TCFD) recommendations.

Identifying and managing risk

Principal risk

Mitigation

Value Driver

Principal risk

Mitigation

Value Driver

Support

Financial sustainability

• We naturally hedge foreign exchange

We operate globally and our business can
be affected by foreign exchange, changes
in debt markets and tax obligations.
As a listed entity we also have an obligation
to protect shareholders’ capital and ensure
sustainable earnings.

Change

Global economic uncertainty and the
ongoing tech slow down has resulted
in an increase in this risk in the year.

Compliance with legal, statutory
and ethical obligations

We have a responsibility to not only operate
in a manner that is congruent with our legal
and statutory obligations. We also have
an obligation to disseminate and embed
responsible AI best practices across our
operations and partnerships.

Incorporated emerging risk:
responsible AI

Change

We continue to invest in building our
responsible practices against a rapidly
changing regulatory environment.

Financial

Appen
employees

Social and
environment

Financial

Appen
employees

risk by paying for associated
services in the same currency
we receive revenue.

• We have a formal hedging policy

to provide protection where we make
payments in Australian dollars with
US funds.

• We continue to monitor the external
landscape and conduct scenario
planning to ensure we can appropriately
respond to changes, such as tax rates,
in a timely manner.

• Capital raises during the year provide

balance sheet flexibility and general
working capital to support return
to profitability, and transaction costs.

• We regularly review our material

obligations to ensure appropriate
controls, governance and oversight
are maintained.

• We understand the local labour

and human rights landscapes in the
jurisdictions we operate in and
ensure we comply with modern
slavery requirements.

• Our compliance framework includes
policies, procedures and a suite
of mandatory compliance training
which helps drive positive attitudes
to compliance across the business.

• We have added relevant subject matter

expertise across the business and are
increasing our training program for all
staff to extend our compliance and
reporting capabilities.

• We have partnered with the World

Economic Forum to create responsible
AI standards to increase the value of,
and trust in AI, for businesses and
the community.

Appen 2023 Annual Report

Principal risk

Mitigation

Value Driver

Principal risk

Mitigation

Value Driver

Key:

Increase

Decrease

Stable

Environmental, social and
governance (ESG) risks and
performance

Incorporated emerging risk:
climate change

Change

The risk remains stable as we grow
our ESG program against a changing
regulatory landscape.

Social and
environment

• We are a signatory to the United Nations
Global Compact and have committed
to take action to embed the ten
principles within our business practices.

• We have completed our initial Net Zero
Roadmap and have committed to net
zero emissions across our business
(including supply chain) by 2030.

• We have committed to the Science

Based Target Initiative and
disclosing climate-related issues
in accordance with the Task Force
on Climate-related Financial Disclosures
(TCFD) recommendations.

Identifying and managing risk

Support

We operate globally and our business can

be affected by foreign exchange, changes

in debt markets and tax obligations.

As a listed entity we also have an obligation

to protect shareholders’ capital and ensure

sustainable earnings.

Change

Global economic uncertainty and the

ongoing tech slow down has resulted

in an increase in this risk in the year.

and ethical obligations

We have a responsibility to not only operate

in a manner that is congruent with our legal

and statutory obligations. We also have

an obligation to disseminate and embed

responsible AI best practices across our

operations and partnerships.

Incorporated emerging risk:

responsible AI

Change

We continue to invest in building our

responsible practices against a rapidly

changing regulatory environment.

Financial sustainability

• We naturally hedge foreign exchange

Compliance with legal, statutory

• We regularly review our material

Financial

Appen

employees

Social and

environment

Financial

Appen

employees

risk by paying for associated

services in the same currency

we receive revenue.

• We have a formal hedging policy

to provide protection where we make

payments in Australian dollars with

US funds.

• We continue to monitor the external

landscape and conduct scenario

planning to ensure we can appropriately

respond to changes, such as tax rates,

in a timely manner.

• Capital raises during the year provide

balance sheet flexibility and general

working capital to support return

to profitability, and transaction costs.

obligations to ensure appropriate

controls, governance and oversight

are maintained.

• We understand the local labour

and human rights landscapes in the

jurisdictions we operate in and

ensure we comply with modern

slavery requirements.

• Our compliance framework includes

policies, procedures and a suite

of mandatory compliance training

which helps drive positive attitudes

to compliance across the business.

• We have added relevant subject matter

expertise across the business and are

increasing our training program for all

staff to extend our compliance and

reporting capabilities.

• We have partnered with the World

Economic Forum to create responsible

AI standards to increase the value of,

and trust in AI, for businesses and

the community.

Appen 2023 Annual Report

Governance

Our approach
to governance

Appen’s governance policies and practices
are consistent with the 4th edition of the
ASX Corporate Governance Council’s
Principles and Recommendations
(ASX Corporate Governance Principles)
throughout the year.

Governance framework
Our governance framework ensures
accountability, both of the Board and
senior management.

To clarify the roles and responsibilities
of directors and management and
to assist the Board in discharging
its responsibilities, the Board operates
under a formal Charter which sets
out the functions reserved to the
Board and provides for the delegation
of functions to Board Committees
and to senior management.

The Board is responsible for
demonstrating leadership, defining
the company’s purpose, establishing
strategic objectives, approving our
values and the Code of Conduct,
and oversight of the management
of the company.

The Board has established two
standing Committees which assist
with the execution of its responsibilities
– the Audit and Risk Management
Committee and the People and
Culture Committee.

2023 areas of
governance focus
Key areas of governance focus and
activities undertaken by the Board,
its Committees and management
during 2023 included:

Strategic and financial performance

• conducted an annual Board and
executive strategy session in
October 2023 to focus Appen’s
response on the impact of the
challenging external operating
environment and ongoing
tech slowdown.

Our people

•

reviewed our organisational
structures within each
business unit and functional
areas with a focus on reducing
organisation layers to improve
operational efficiency.

• adopted a new Culture Code

to support our transformation.

• continued roll out of our Future
Ways of Working, including the
Neighbourhood program to help
employees foster and cultivate
deeper connections.

•

strengthened Appen’s executive
team with the addition of members
with sales expertise.

Global crowd

• ongoing focus on our Crowd

Code of Ethics and building our
reputation as a company of fairness
and integrity in how we partner with
our crowd.

• delivered technology and other

initiatives to ensure the crowd are
better matched to projects and
are qualified, onboarded and paid
more efficiently.

• enhanced technology and

capabilities to address trust and
safety in our Crowd.

• conducted further research
programs to understand
representation across the Crowd
and to identify and fill any gaps
and/or targeted skill sets.

• partnered with Mercy Corps,

Na’amal, Generation and Konexio
to open crowd work opportunities
to refugee communities.

Social and environment

• continued disclosure of greenhouse
gas emissions scopes 1, 2 and 3 and
working towards limited assurance
of the data.

• continued implementation of Net

Zero Roadmap and working towards
net zero across operations by 2030.

•

commenced development of reporting
on progress against our United Nations
Global Compact commitments.

Oversight of Financial and
capital management

• completed a fully underwritten

~A$60 million equity raising in June
2023 and completed a further fully
underwritten ~A$30 million equity
raising in December 2023 to support
the company’s strategy refresh.

• given Appen’s financial

performance and to ensure
prudent allocation of capital,
the board determined not to pay
any dividends.

Ethics and responsible
decision making

• partnered with our key customers
to establish projects to identify
and monitor our impact on social
impact activities.

•

issued our Modern Slavery Statement.

Compliance and risk management

•

internal audit reviewed and
assessed processes across
key operational areas, including
a review of our transformation
projects and processes.

reviewed the risk management
framework, revised the risk
appetite statement and updated
our strategic risks to align with
the strategy as revised in October
2023. Confirmed the identified
risks through our stakeholder
materiality assessment.

• continued focus on cyber security,
ISO27001 compliance across
global sites and SOC2 compliance
on key platforms.

Skill

Description

Skill level

Strategy

Experience in defining strategic objectives, assessing

Board diversity

business plans and driving execution. Ability to

think strategically and identify and critically assess

opportunities and threats and develop effective

strategies in the context of changing market conditions.

Finance

Understanding the financial drivers of the business,

experience in financial accounting and reporting, tax,

corporate finance and internal financial controls.

Risk

Experience in the identification, monitoring and

management of material financial and non-financial risks,

the oversight of compliance frameworks and controls, and

the ability to identify and oversee mitigation strategies for

emerging risk and compliance issues in the organisation.

Industry

experience

Experience and broad understanding of the application

of language technology, machine learning, artificial

intelligence and specifically AI, including market drivers,

risks and trends and encompassing policies, competitors,

end users, regulatory policy and frameworks.

Customer/

Experience developing customer/client strategies and

Client

delivering customer/client outcomes.

Capital markets Expertise in considering and implementing efficient

capital management including alternative capital sources

and distributions, yields and markets.

Corporate

Experience in assessing and completing complex

transactions

business transactions, including mergers, acquisitions,

divestments, capital management, major projects and

business integration.

People and

Board Committee or senior executive equivalent

culture

experience relating to people management and human

management

resources, corporate culture, diversity and inclusion,

and remuneration issues of a global organisation.

Governance

Knowledge and experience in best practice governance

structures, policies and processes.

Technology and

Experience and expertise in identifying, assessing,

innovation

implementing and leveraging digital technologies and

other innovations.

International

Experience in international business, trade and/or

business

experience

investment at a senior executive level and exposure

to global markets and a range of different political,

regulatory, and business environments.

ESG

Expertise in the areas of environment, social and

governance (ESG), and the ability to advise the

Company of required policies, actions and disclosures

on these matters.

High competency and experience

Medium competency and experience

50%

of directors

are female

Male

Female

50.0%

Non-executive

director tenure

4.1 years

average tenure

of NEDs

0–1 year

1–3 years

3–5 years

5+ years

57%

14%

29%

International

business experience

88%

high level

international

experience

High

Medium

87.5%

12.5%

88%

of directors are

independent

Independent

CEO

Data and

security

Understanding the use of data and the risks associated

with data security, cyber and privacy.

Director independence

Appen 2023 Annual Report

Governance

Our approach

to governance

Appen’s governance policies and practices

Our people

are consistent with the 4th edition of the

ASX Corporate Governance Council’s

Principles and Recommendations

(ASX Corporate Governance Principles)

throughout the year.

Governance framework

Our governance framework ensures

accountability, both of the Board and

senior management.

To clarify the roles and responsibilities

of directors and management and

to assist the Board in discharging

its responsibilities, the Board operates

under a formal Charter which sets

out the functions reserved to the

Board and provides for the delegation

of functions to Board Committees

and to senior management.

The Board is responsible for

demonstrating leadership, defining

the company’s purpose, establishing

strategic objectives, approving our

values and the Code of Conduct,

and oversight of the management

of the company.

The Board has established two

standing Committees which assist

– the Audit and Risk Management

Committee and the People and

Culture Committee.

2023 areas of

governance focus

Key areas of governance focus and

activities undertaken by the Board,

its Committees and management

during 2023 included:

Strategic and financial performance

executive strategy session in

October 2023 to focus Appen’s

response on the impact of the

challenging external operating

environment and ongoing

tech slowdown.

•

reviewed our organisational

structures within each

business unit and functional

areas with a focus on reducing

organisation layers to improve

operational efficiency.

• adopted a new Culture Code

to support our transformation.

• continued roll out of our Future

Ways of Working, including the

Neighbourhood program to help

employees foster and cultivate

deeper connections.

•

strengthened Appen’s executive

team with the addition of members

with sales expertise.

Global crowd

• ongoing focus on our Crowd

Code of Ethics and building our

reputation as a company of fairness

and integrity in how we partner with

our crowd.

• delivered technology and other

initiatives to ensure the crowd are

better matched to projects and

are qualified, onboarded and paid

more efficiently.

capabilities to address trust and

safety in our Crowd.

• conducted further research

programs to understand

representation across the Crowd

and to identify and fill any gaps

and/or targeted skill sets.

• partnered with Mercy Corps,

Na’amal, Generation and Konexio

to open crowd work opportunities

to refugee communities.

• continued disclosure of greenhouse

gas emissions scopes 1, 2 and 3 and

working towards limited assurance

of the data.

with the execution of its responsibilities

• enhanced technology and

• conducted an annual Board and

Social and environment

• continued implementation of Net

Zero Roadmap and working towards

net zero across operations by 2030.

•

commenced development of reporting

on progress against our United Nations

Global Compact commitments.

Oversight of Financial and

capital management

• completed a fully underwritten

~A$60 million equity raising in June

2023 and completed a further fully

underwritten ~A$30 million equity

raising in December 2023 to support

the company’s strategy refresh.

• given Appen’s financial

performance and to ensure

prudent allocation of capital,

the board determined not to pay

any dividends.

Ethics and responsible

decision making

• partnered with our key customers

to establish projects to identify

and monitor our impact on social

impact activities.

•

issued our Modern Slavery Statement.

Compliance and risk management

•

internal audit reviewed and

assessed processes across

key operational areas, including

a review of our transformation

projects and processes.

•

reviewed the risk management

framework, revised the risk

appetite statement and updated

our strategic risks to align with

the strategy as revised in October

2023. Confirmed the identified

risks through our stakeholder

materiality assessment.

• continued focus on cyber security,

ISO27001 compliance across

global sites and SOC2 compliance

on key platforms.

Skill

Description

Skill level

Strategy

Finance

Risk

Industry
experience

Experience in defining strategic objectives, assessing
business plans and driving execution. Ability to
think strategically and identify and critically assess
opportunities and threats and develop effective
strategies in the context of changing market conditions.

Understanding the financial drivers of the business,
experience in financial accounting and reporting, tax,
corporate finance and internal financial controls.

Experience in the identification, monitoring and
management of material financial and non-financial risks,
the oversight of compliance frameworks and controls, and
the ability to identify and oversee mitigation strategies for
emerging risk and compliance issues in the organisation.

Experience and broad understanding of the application
of language technology, machine learning, artificial
intelligence and specifically AI, including market drivers,
risks and trends and encompassing policies, competitors,
end users, regulatory policy and frameworks.

Customer/
Client

Experience developing customer/client strategies and
delivering customer/client outcomes.

Capital markets Expertise in considering and implementing efficient

capital management including alternative capital sources
and distributions, yields and markets.

Corporate
transactions

Experience in assessing and completing complex
business transactions, including mergers, acquisitions,
divestments, capital management, major projects and
business integration.

People and
culture
management

Board Committee or senior executive equivalent
experience relating to people management and human
resources, corporate culture, diversity and inclusion,
and remuneration issues of a global organisation.

Governance

Knowledge and experience in best practice governance
structures, policies and processes.

Technology and
innovation

Experience and expertise in identifying, assessing,
implementing and leveraging digital technologies and
other innovations.

Board diversity

50%
of directors
are female

Male
Female

50.0%
50.0%

Non-executive
director tenure

4.1 years
average tenure
of NEDs

0–1 year
1–3 years
3–5 years
5+ years

0%
57%
14%
29%

International
business experience

88%

high level
international
experience

High
Medium

87.5%
12.5%

Data and
security

Understanding the use of data and the risks associated
with data security, cyber and privacy.

Director independence

International
business
experience

Experience in international business, trade and/or
investment at a senior executive level and exposure
to global markets and a range of different political,
regulatory, and business environments.

ESG

Expertise in the areas of environment, social and
governance (ESG), and the ability to advise the
Company of required policies, actions and disclosures
on these matters.

High competency and experience

Medium competency and experience

88%

of directors are
independent

Independent
CEO

7
1

Appen 2023 Annual Report

Governance

Board of
Directors

Richard Freudenstein
BEc, LLB (Hons)
Non-executive Chair

Appointed: Chair on
28 October and joined
as non-executive Director
on 12 August 2021

Board Committee:
Member of the People
and Culture Committee

Richard is a director of Coles Group Limited (ASX:
COL), REA Group Ltd (ASX: REA) and Cricket
Australia. Previously, he was Chair of REA Group
Ltd. He is a former director of Ten Network Holdings
Ltd (ASX: TEN), Foxtel and Astro Malaysia Holdings
Berhad. Richard was also a member of the Advisory
Board of artificial intelligence software company,
Afiniti Ltd (2017–2022). Richard was previously the
Chief Executive Officer (CEO) at Foxtel (2011–2016),
CEO of The Australian newspaper and News
Digital Media at News Ltd (2006–2010) and Chief
Operating Officer (COO) at British Sky Broadcasting
(2000–2006). He is currently Deputy Chancellor and
Fellow of the Senate at the University of Sydney.

Steve Hasker
BCom, MBA, MIA, ACAA
Independent non-executive
Director

Appointed: 7 April 2015

Board Committee:
Chair of the People and
Culture Committee

Steve has extensive experience as a CEO, COO
and Advisor in the US. Steve has been President
and CEO of Thomson Reuters since March 2020.
He was a Senior Advisor to private equity firm TPG
Capital (2019–2020) and CEO of CAA Global, a TPG
Capital portfolio company (2018–2019). At Nielsen
Holdings PLC, he served as Global President and
COO (2015–2017) and President, Global Products
(2009–2014). Steve was a partner with McKinsey
(1998–2009). Before that, he spent five years in
several financial roles in the U.S. and other countries.

Robin Low
BCom, FCA, FAICD
Independent non-executive
Director

Appointed: 30 October 2014

Board Committee:
Chair of the Audit and Risk
Management Committee

Robin is a non-executive director who serves on the
boards IPH Limited (ASX: IPH), Guide Dogs NSW/ACT
and the Sax Institute. Robin is a member of the
University of New South Wales audit committee and
is a Fellow of the Institute of Chartered Accountants
Australia and New Zealand. Robin has extensive
finance, risk and business experience from her
28-year career at PricewaterhouseCoopers where
she was a partner specialising in assurance and
risk. She is a former director at AUB Group Limited
(ASX: AUB), Marley Spoon (ASX: MMM) and is a past
Deputy Chair of the Auditing and Assurance
Standards Board.

Vanessa Liu

AB Psychology (magna cum

laude with highest honors);

JD (cum laude)

Independent non-executive

Director

Appointed: 27 March 2020

Board Committee:

Member of the Audit and Risk

Management Committee

Vanessa has a deep understanding of emerging

technology trends and enterprise uptake of artificial

intelligence, especially in the US market. She is the

Founder and CEO of SaaS technology company

Sugarwork, and is an non-executive director

of Goodman Group (ASX: GMG). Most recently

she was Vice President of SAP.iO, the early-stage

venture arm of SAP. Prior, Vanessa was the COO

at Trigger Media Group, a digital media incubator.

Before that, she was Associate Partner at McKinsey

where she served clients in media and high-tech

sectors on issues of digital strategy, emerging

market strategy, growth and innovation.

Stuart Davis

LLB

Independent non-executive

Director

Appointed: 30 March 2022

Board Committee:

Member of the Audit and Risk

Management Committee

Stuart is a director of NEXTDC Limited (ASX:

NXT) and Chair of the Remuneration Committee,

a non-executive director of Bank of South Pacific

Limited and PayPal Australia Ltd where he serves

as Chair of the Risk Committee at both companies.

He has more than 30 years’ experience as an

international banker with the HSBC Group where

he was CEO, HSBC India (2009–2012), CEO and

Executive Director for HSBC Bank Australia Limited

(2002–2009) and CEO HSBC Taiwan (1999–2002). He

was a member of the Australian Bankers Association

from 2002–2009 and Deputy Chair from 2006–2009.

Lynn Mickleburgh

BSc (Hons) in Mathematics,

MBA

Director

Independent non-executive

Appointed: 29 July 2022

Board Committee:

Member of the People

and Culture Committee

Lynn has experience as an ASX non-executive

director, a board advisor and transformational

leader of both Fortune 500 companies and

high growth SaaS companies. Lynn is a former

non-executive Director of ASX listed Altium Limited

(ASX:ALU), where she chaired the HR Committee

and served on the Audit and Risk Committee.

Previously, she was Head of Business Optimisation

at Atlassian Inc, VP Finance at Citrix Systems and

held various global and operational roles at Adobe

Systems and Apple Computer.

Mini Peiris

BSc

Director

Independent non-executive

Appointed: 4 November 2022

Board Committee:

Member of the People

and Culture Committee

Mini is a go-to-market advisor for high growth SaaS

companies within the portfolio of Scale Venture

Partners and is Chief Marketing Officer (CMO)

of Doma (NYSE: DOMA), a real estate technology

company. Prior to that, she was the CMO at

Elementum (a Lightspeed company) and Ambra

Health (acquired by Hg’s Intelerad). Mini spent 12+

years at cloud-pioneer company NetSuite (NYSE: N),

from its early stages through to its IPO and beyond.

She helped drive product growth as VP of Product

Management, then went on to lead a global team as

VP Worldwide Marketing that delivered go-to-market

scale from US$100 million to US$750 million.

Appen 2023 Annual Report

Governance

Board of

Directors

Richard Freudenstein

BEc, LLB (Hons)

Non-executive Chair

Appointed: Chair on

28 October and joined

as non-executive Director

on 12 August 2021

Board Committee:

Member of the People

and Culture Committee

Richard is a director of Coles Group Limited (ASX:

COL), REA Group Ltd (ASX: REA) and Cricket

Australia. Previously, he was Chair of REA Group

Ltd. He is a former director of Ten Network Holdings

Ltd (ASX: TEN), Foxtel and Astro Malaysia Holdings

Berhad. Richard was also a member of the Advisory

Board of artificial intelligence software company,

Afiniti Ltd (2017–2022). Richard was previously the

Chief Executive Officer (CEO) at Foxtel (2011–2016),

CEO of The Australian newspaper and News

Digital Media at News Ltd (2006–2010) and Chief

Operating Officer (COO) at British Sky Broadcasting

(2000–2006). He is currently Deputy Chancellor and

Fellow of the Senate at the University of Sydney.

Steve Hasker

BCom, MBA, MIA, ACAA

Independent non-executive

Director

Appointed: 7 April 2015

Board Committee:

Chair of the People and

Culture Committee

Steve has extensive experience as a CEO, COO

and Advisor in the US. Steve has been President

and CEO of Thomson Reuters since March 2020.

He was a Senior Advisor to private equity firm TPG

Capital (2019–2020) and CEO of CAA Global, a TPG

Capital portfolio company (2018–2019). At Nielsen

Holdings PLC, he served as Global President and

COO (2015–2017) and President, Global Products

(2009–2014). Steve was a partner with McKinsey

(1998–2009). Before that, he spent five years in

several financial roles in the U.S. and other countries.

Robin Low

BCom, FCA, FAICD

Robin is a non-executive director who serves on the

boards IPH Limited (ASX: IPH), Guide Dogs NSW/ACT

Independent non-executive

and the Sax Institute. Robin is a member of the

Director

Appointed: 30 October 2014

Board Committee:

Chair of the Audit and Risk

Management Committee

University of New South Wales audit committee and

is a Fellow of the Institute of Chartered Accountants

Australia and New Zealand. Robin has extensive

finance, risk and business experience from her

28-year career at PricewaterhouseCoopers where

she was a partner specialising in assurance and

risk. She is a former director at AUB Group Limited

(ASX: AUB), Marley Spoon (ASX: MMM) and is a past

Deputy Chair of the Auditing and Assurance

Standards Board.

Vanessa Liu
AB Psychology (magna cum
laude with highest honors);
JD (cum laude)
Independent non-executive
Director

Appointed: 27 March 2020

Board Committee:
Member of the Audit and Risk
Management Committee

Vanessa has a deep understanding of emerging
technology trends and enterprise uptake of artificial
intelligence, especially in the US market. She is the
Founder and CEO of SaaS technology company
Sugarwork, and is an non-executive director
of Goodman Group (ASX: GMG). Most recently
she was Vice President of SAP.iO, the early-stage
venture arm of SAP. Prior, Vanessa was the COO
at Trigger Media Group, a digital media incubator.
Before that, she was Associate Partner at McKinsey
where she served clients in media and high-tech
sectors on issues of digital strategy, emerging
market strategy, growth and innovation.

Stuart Davis
LLB
Independent non-executive
Director

Appointed: 30 March 2022

Board Committee:
Member of the Audit and Risk
Management Committee

Stuart is a director of NEXTDC Limited (ASX:
NXT) and Chair of the Remuneration Committee,
a non-executive director of Bank of South Pacific
Limited and PayPal Australia Ltd where he serves
as Chair of the Risk Committee at both companies.
He has more than 30 years’ experience as an
international banker with the HSBC Group where
he was CEO, HSBC India (2009–2012), CEO and
Executive Director for HSBC Bank Australia Limited
(2002–2009) and CEO HSBC Taiwan (1999–2002). He
was a member of the Australian Bankers Association
from 2002–2009 and Deputy Chair from 2006–2009.

Lynn Mickleburgh
BSc (Hons) in Mathematics,
MBA
Independent non-executive
Director

Appointed: 29 July 2022

Board Committee:
Member of the People
and Culture Committee

Lynn has experience as an ASX non-executive
director, a board advisor and transformational
leader of both Fortune 500 companies and
high growth SaaS companies. Lynn is a former
non-executive Director of ASX listed Altium Limited
(ASX:ALU), where she chaired the HR Committee
and served on the Audit and Risk Committee.
Previously, she was Head of Business Optimisation
at Atlassian Inc, VP Finance at Citrix Systems and
held various global and operational roles at Adobe
Systems and Apple Computer.

Mini Peiris
BSc
Independent non-executive
Director

Appointed: 4 November 2022

Board Committee:
Member of the People
and Culture Committee

Mini is a go-to-market advisor for high growth SaaS
companies within the portfolio of Scale Venture
Partners and is Chief Marketing Officer (CMO)
of Doma (NYSE: DOMA), a real estate technology
company. Prior to that, she was the CMO at
Elementum (a Lightspeed company) and Ambra
Health (acquired by Hg’s Intelerad). Mini spent 12+
years at cloud-pioneer company NetSuite (NYSE: N),
from its early stages through to its IPO and beyond.
She helped drive product growth as VP of Product
Management, then went on to lead a global team as
VP Worldwide Marketing that delivered go-to-market
scale from US$100 million to US$750 million.

Appen 2023 Annual Report

Governance

Executive
team

Corporate Services

Ryan Kolln
CEO & Managing Director

Joined: October 2018
MBA, B.Eng (Electrical)

Ryan brings over 20 years of global experience in technology and telecommunications,
along with a deep understanding of Appen’s business and the AI industry.
His professional career began as an engineer, with a focus on mobile network data
engineering in Australia, Asia and North America.

On completion of an MBA from New York University, Ryan joined The Boston
Consulting Group (BCG) in 2011 as a strategy consultant. During his time at BCG
he specialised in technology and telecommunications and gained deep strategy
expertise across a variety of growth and operational topics.

Joining Appen AI in 2018 as VP of Corporate Development, he led strategic
acquisitions like Figure Eight and Quadrant, and supported the establishment
of the China and Federal divisions. His successive promotions culminated in the role
of Chief Operating Officer in August 2023, overseeing global operations and strategy.

Justin Miles
Chief Financial Officer

Joined: March 2016
GradDipCA (Chartered Accounting)
B. Bus (Accounting)

Justin was appointed Chief Financial Officer (CFO) on 27 February 2024. He has been
acting as interim CFO since 1 August 2023 with responsibility for Appen’s finance and
accounting functions. During his tenure at Appen, Justin has held senior finance roles
including Deputy CFO (2023–2024) and VP of Finance (2017–2023). Prior to joining
Appen he worked in senior leadership roles in ASX listed businesses and various roles
within public practice.

Corporate Services (continued)

Andrea Clayton

Chief People Officer

Joined: February 2022

MBA, BA (International Management)

Andrea has more than 20 years of experience in building innovative people programs,

leading people operations teams, and transforming company cultures. Andrea has

served in a variety of global human resource (HR) leadership roles, in listed and

unlisted companies, lived and worked in five countries, and has experience leading

HR in 30+ countries.

Prior to Appen, Andrea served as Chief People Officer at Thrive Pet Healthcare,

one of the largest and fastest growing veterinary companies in the United States.

Through the introduction of industry first programs, flexible policies and achievement

of significant gender diversity at all levels of leadership, Thrive was recognised as the

#1 company in the industry for women by InHerSight. Andrea was also a global HR

leader at General Electric Financial Assurance (now Genworth) for 11 years, including

HR Director for Genworth Australia through its IPO in 2014.

Mike Davie

Chief Product and

Technology Officer

Joined: September 2021

BBA, MSc (Database management)

and business intelligence)

Mike is the Chief Product and Technology Officer. He brings a strong background

of experience in location data and location-based business solutions that are fit for

purpose, easy to use, and simple to organise.

Prior to Appen, Mike was the founder and CEO of Quadrant, growing the business’s

mobile location data services to a portfolio of more than 450 million unique devices

per month, enabling companies to see and understand movement patterns in the

real world. With Quadrant he also developed a proprietary platform, ‘Geolancer’,

which provides authentic, accurate, and up-to-date Point-of-Interest data, manually

verified on the ground.

edge technologies.

Previously, Mike provided leadership and strategy to the Advanced Mobile

Product Strategy team at Samsung where he developed GTM strategies for cutting

Eric de Cavaignac

Joined: November 2021

Chief Transformation Officer and GM crowd MBA (Beta Gamma Sigma, Dean’s List),

BA (Hons)

Eric is responsible for driving programs to scale operations and delivery, and

support revenue growth. He brings more than 25 years of experience in partnering

with investors and management to transform businesses, and to deliver lasting

growth and profit improvement.

Before joining Appen, Eric worked across several industries, including technology,

media, telecommunications, ecommerce, health, financial services and luxury, where

he helped drive digital transformation, international expansion, strategic M&A, and

business restructuring. Eric has worked in New York, London, and Sydney including

10 years as an advisor with McKinsey running a strategy and capital advisory business,

and a number of executive positions reporting to the CEO of multinational companies

executing a turnaround or transformation.

Appen 2023 Annual Report

Governance

Executive

team

Corporate Services

Ryan Kolln

CEO & Managing Director

Joined: October 2018

MBA, B.Eng (Electrical)

Ryan brings over 20 years of global experience in technology and telecommunications,

along with a deep understanding of Appen’s business and the AI industry.

His professional career began as an engineer, with a focus on mobile network data

engineering in Australia, Asia and North America.

On completion of an MBA from New York University, Ryan joined The Boston

Consulting Group (BCG) in 2011 as a strategy consultant. During his time at BCG

he specialised in technology and telecommunications and gained deep strategy

expertise across a variety of growth and operational topics.

Joining Appen AI in 2018 as VP of Corporate Development, he led strategic

acquisitions like Figure Eight and Quadrant, and supported the establishment

of the China and Federal divisions. His successive promotions culminated in the role

of Chief Operating Officer in August 2023, overseeing global operations and strategy.

Justin Miles

Chief Financial Officer

Joined: March 2016

GradDipCA (Chartered Accounting)

B. Bus (Accounting)

Justin was appointed Chief Financial Officer (CFO) on 27 February 2024. He has been

acting as interim CFO since 1 August 2023 with responsibility for Appen’s finance and

accounting functions. During his tenure at Appen, Justin has held senior finance roles

including Deputy CFO (2023–2024) and VP of Finance (2017–2023). Prior to joining

Appen he worked in senior leadership roles in ASX listed businesses and various roles

within public practice.

Corporate Services (continued)

Andrea Clayton
Chief People Officer

Joined: February 2022
MBA, BA (International Management)

Andrea has more than 20 years of experience in building innovative people programs,
leading people operations teams, and transforming company cultures. Andrea has
served in a variety of global human resource (HR) leadership roles, in listed and
unlisted companies, lived and worked in five countries, and has experience leading
HR in 30+ countries.

Prior to Appen, Andrea served as Chief People Officer at Thrive Pet Healthcare,
one of the largest and fastest growing veterinary companies in the United States.
Through the introduction of industry first programs, flexible policies and achievement
of significant gender diversity at all levels of leadership, Thrive was recognised as the
#1 company in the industry for women by InHerSight. Andrea was also a global HR
leader at General Electric Financial Assurance (now Genworth) for 11 years, including
HR Director for Genworth Australia through its IPO in 2014.

Mike Davie
Chief Product and
Technology Officer

Joined: September 2021
BBA, MSc (Database management)
and business intelligence)

Mike is the Chief Product and Technology Officer. He brings a strong background
of experience in location data and location-based business solutions that are fit for
purpose, easy to use, and simple to organise.

Prior to Appen, Mike was the founder and CEO of Quadrant, growing the business’s
mobile location data services to a portfolio of more than 450 million unique devices
per month, enabling companies to see and understand movement patterns in the
real world. With Quadrant he also developed a proprietary platform, ‘Geolancer’,
which provides authentic, accurate, and up-to-date Point-of-Interest data, manually
verified on the ground.

Previously, Mike provided leadership and strategy to the Advanced Mobile
Product Strategy team at Samsung where he developed GTM strategies for cutting
edge technologies.

Eric de Cavaignac
Joined: November 2021
Chief Transformation Officer and GM crowd MBA (Beta Gamma Sigma, Dean’s List),
BA (Hons)

Eric is responsible for driving programs to scale operations and delivery, and
support revenue growth. He brings more than 25 years of experience in partnering
with investors and management to transform businesses, and to deliver lasting
growth and profit improvement.

Before joining Appen, Eric worked across several industries, including technology,
media, telecommunications, ecommerce, health, financial services and luxury, where
he helped drive digital transformation, international expansion, strategic M&A, and
business restructuring. Eric has worked in New York, London, and Sydney including
10 years as an advisor with McKinsey running a strategy and capital advisory business,
and a number of executive positions reporting to the CEO of multinational companies
executing a turnaround or transformation.

Appen 2023 Annual Report

Governance

Corporate Services (continued)

Sales and delivery (continued)

Sales and delivery

Carl Middlehurst
General Counsel and Company Secretary

Joined: February 2019
BSc (Hons) Biochemistry, LLB

Carl Middlehurst is the General Counsel and Company Secretary of Appen Limited.
Prior to joining Appen Carl was the General Counsel and Company Secretary and the
executive responsible for commercialisation and new ventures at NICTA (now Data61)
and was also responsible for the HR function.

Carl was an observer/director for several early-stage companies. He was formerly
at Sun Microsystems in Australia and in Silicon Valley. At Sun, Carl had both legal and
business roles (covering trademarks, APAC and managing an emerging market fund).
Prior to Sun, Carl was at a pharma company and a medical device startup, The Salk
Institute in La Jolla and at Baker & McKenzie (in Sydney and San Diego).

Carl was an Adjunct Professor at Santa Clara University Law School where he taught
Internet and Privacy law. Prior to becoming a lawyer Carl was a research biochemist
and was published in a number of scientific journals.

Andrew Ettinger
Chief Revenue Officer

Joined: May 2023
BSc (Business Marketing)

Andrew oversees Appen’s revenue strategies and driving growth in the field of AI and
has overall responsibility for the company’s Sales & Marketing function. He has more
than 25 years of sales experience in the technology industry.

Andrew’s expertise extends to harnessing the power of data to drive insights and
optimise processes. As the Chief Revenue Officer at Astronomer, he grew the
adoption of their open-source data solution, leading to a remarkable increase
in monthly downloads and revenue. Prior to Astronomer, he served as the VP of Sales
at Pivotal Software. Under his leadership, the company achieved three consecutive
years of significant revenue growth, fuelling digital transformations for Fortune 500
companies in various sectors.

Brian Haskett
SVP Client management and operations

Joined: March 2023
MBA (Information Technology), BSc

Brian oversees client relationships, account strategy, and business operations, ensuring
high client satisfaction and fostering continued growth. With extensive experience
in technology services and consulting, Brian is a seasoned professional adept at guiding
major enterprises toward technological innovation.

Commencing his career as a software engineer, he later moved into global executive
leadership positions at large technology firms, including IBM, CA Technologies,
and Ciber (now HTC). Before assuming the role of SVP, Brian held the position
of Vice President and General Manager at Appen where he collaborated with global
AI technology leaders, contributing to the advancement of machine learning-based
products in areas such as deep learning, generative AI, and large language models.

Roc Tian

SVP and General Manager,

China, Japan and Korea

Joined: August 2019

PhD (Computer Software),

MA (Computer Applications)

Roc comes to Appen with more than 20 years of sales, consulting, and management

experience from Fortune 100 companies. He is responsible for Appen’s business

strategy, sales, marketing, delivery, operations and government relationships in China,

Japan and Korea.

Most recently, Roc was senior partner of IBM GBS where he led the client services,

public sector and enterprise application service lines across the mainland China,

Hong Kong and Taiwan markets with remarkable business performance and

achievements. Before that, Roc was also a core leader responsible for the growth

of IBM’s global delivery centre in China from 4,000 to more than 10,000 people.

Prior to IBM, Roc was a business quality director for HP’s global delivery centre

in China and a key leader responsible for helping HP grow from a start-up to more

than 3,000 people across China. Roc was also the founder and CTO of a technology

start-up that grew to more than 100 people.

Helen Giddings

VP Client delivery

Joined: August 2020

BA (Psychology)

Helen leads the delivery teams across all accounts, excluding Appen’s largest client.

Her focus and passion is the development of deep client relationships, high quality

delivery and driving growth.

Prior to joining Appen, Helen was Director at Pureprofile, an online market research

company. She led delivery teams in multiple countries and successfully supported

new products and growth. Her focus was data quality and developing a high level

of understanding of all areas of the business. Helen previously worked at Sony

Business Europe heading up marketing and e-services with responsibility for all

websites and marketing of broadcast products and services.

Robert Page

VP Client delivery, strategic accounts

Joined: April 2012

BA (Hons)

Robert leads the delivery team for our largest client and is responsible for the overall

account strategy and operations. Robert is an industry expert with more than

a decade of experience in driving Appen teams to delivery excellence. During this

time, he has overseen the delivery of hundreds of successful, diverse projects for

Appen’s customers. He has a deep understanding of the evolving needs of clients and

flawless project execution. He has a track record of scaling opportunities and driving

meaningful cost efficiencies, while navigating the constantly changing landscape

of the technology industry.

Appen 2023 Annual Report

Corporate Services (continued)

Sales and delivery (continued)

Governance

Sales and delivery

Carl Middlehurst

Joined: February 2019

General Counsel and Company Secretary

BSc (Hons) Biochemistry, LLB

Carl Middlehurst is the General Counsel and Company Secretary of Appen Limited.

Prior to joining Appen Carl was the General Counsel and Company Secretary and the

executive responsible for commercialisation and new ventures at NICTA (now Data61)

and was also responsible for the HR function.

Carl was an observer/director for several early-stage companies. He was formerly

at Sun Microsystems in Australia and in Silicon Valley. At Sun, Carl had both legal and

business roles (covering trademarks, APAC and managing an emerging market fund).

Prior to Sun, Carl was at a pharma company and a medical device startup, The Salk

Institute in La Jolla and at Baker & McKenzie (in Sydney and San Diego).

Carl was an Adjunct Professor at Santa Clara University Law School where he taught

Internet and Privacy law. Prior to becoming a lawyer Carl was a research biochemist

and was published in a number of scientific journals.

Andrew Ettinger

Chief Revenue Officer

Joined: May 2023

BSc (Business Marketing)

Andrew oversees Appen’s revenue strategies and driving growth in the field of AI and

has overall responsibility for the company’s Sales & Marketing function. He has more

than 25 years of sales experience in the technology industry.

Andrew’s expertise extends to harnessing the power of data to drive insights and

optimise processes. As the Chief Revenue Officer at Astronomer, he grew the

adoption of their open-source data solution, leading to a remarkable increase

in monthly downloads and revenue. Prior to Astronomer, he served as the VP of Sales

at Pivotal Software. Under his leadership, the company achieved three consecutive

years of significant revenue growth, fuelling digital transformations for Fortune 500

companies in various sectors.

Brian Haskett

Joined: March 2023

SVP Client management and operations

MBA (Information Technology), BSc

Brian oversees client relationships, account strategy, and business operations, ensuring

high client satisfaction and fostering continued growth. With extensive experience

in technology services and consulting, Brian is a seasoned professional adept at guiding

major enterprises toward technological innovation.

Commencing his career as a software engineer, he later moved into global executive

leadership positions at large technology firms, including IBM, CA Technologies,

and Ciber (now HTC). Before assuming the role of SVP, Brian held the position

of Vice President and General Manager at Appen where he collaborated with global

AI technology leaders, contributing to the advancement of machine learning-based

products in areas such as deep learning, generative AI, and large language models.

Roc Tian
SVP and General Manager,
China, Japan and Korea

Joined: August 2019
PhD (Computer Software),
MA (Computer Applications)

Roc comes to Appen with more than 20 years of sales, consulting, and management
experience from Fortune 100 companies. He is responsible for Appen’s business
strategy, sales, marketing, delivery, operations and government relationships in China,
Japan and Korea.

Most recently, Roc was senior partner of IBM GBS where he led the client services,
public sector and enterprise application service lines across the mainland China,
Hong Kong and Taiwan markets with remarkable business performance and
achievements. Before that, Roc was also a core leader responsible for the growth
of IBM’s global delivery centre in China from 4,000 to more than 10,000 people.

Prior to IBM, Roc was a business quality director for HP’s global delivery centre
in China and a key leader responsible for helping HP grow from a start-up to more
than 3,000 people across China. Roc was also the founder and CTO of a technology
start-up that grew to more than 100 people.

Helen Giddings
VP Client delivery

Joined: August 2020
BA (Psychology)

Helen leads the delivery teams across all accounts, excluding Appen’s largest client.
Her focus and passion is the development of deep client relationships, high quality
delivery and driving growth.

Prior to joining Appen, Helen was Director at Pureprofile, an online market research
company. She led delivery teams in multiple countries and successfully supported
new products and growth. Her focus was data quality and developing a high level
of understanding of all areas of the business. Helen previously worked at Sony
Business Europe heading up marketing and e-services with responsibility for all
websites and marketing of broadcast products and services.

Robert Page
VP Client delivery, strategic accounts

Joined: April 2012
BA (Hons)

Robert leads the delivery team for our largest client and is responsible for the overall
account strategy and operations. Robert is an industry expert with more than
a decade of experience in driving Appen teams to delivery excellence. During this
time, he has overseen the delivery of hundreds of successful, diverse projects for
Appen’s customers. He has a deep understanding of the evolving needs of clients and
flawless project execution. He has a track record of scaling opportunities and driving
meaningful cost efficiencies, while navigating the constantly changing landscape
of the technology industry.

Appen 2023 Annual Report

Directors’

report

The Directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter
as the “Group” or “Appen”) consisting of Appen Limited (referred to hereafter as the “Company” or “parent entity”) and the
entities it controlled at the end of, or during, the year ended 31 December 2023.

Directors
The Directors of the Company during the financial year and up to date of this report were as follows:

Richard Freudenstein – Chair
Ryan Kolln – CEO and Managing Director from 5 February 2024
Armughan Ahmad – CEO, President and Managing Director (appointed CEO & President 9 January 2023
and appointed Managing Director 25 January 2023; all appointments ceased 5 February 2024)
Stuart Davis
Stephen Hasker
Vanessa Liu
Robin Low
Lynn Mickleburgh
Sithumini (Mini) Peiris

Changes in Chief Financial Officer
Justin Miles was appointed Deputy Chief Financial Officer on 26 June 2023 and acted as Interim Chief Financial Officer from
1 August 2023.

Kevin Levine was Chief Financial Officer until 1 May 2023. Kevin Levine was replaced by Helen Johnson on 1 May 2023
who resigned for personal reasons effective 31 July 2023. Kevin Levine remained with the business until 1 September 2023
in an advisory capacity.

Principal activities
Appen is a global leader in providing data services for deep learning and generative artificial intelligence (AI) systems. With over
28 years’ of experience in data sourcing, data annotation, and model evaluation by humans, Appen enables many of the world’s
largest technology and Fortune 500 customers globally to launch innovative AI systems.

Our expertise includes a global crowd of more than one million skilled contractors who speak over 500 languages1, in over
200 countries2, as well as our advanced AI data platform. Our products and services give leaders in technology, automotive,
financial services, retail, healthcare, and governments the confidence to launch world-class AI products.

Appen was founded in 1996 and listed on the Australian Securities Exchange on 7 January 2015. The Group has evolved
significantly since then, from a language data service provider to become a leading provider of deep learning and generative
AI data and tools.

expense and excluded from underlying EBITDA for FY24.

Appointment of Chief Executive Officer

Appen has customers and operations globally, and currently has five customer-facing business units as follows:

• Global: responsible for delivery of high-quality deep learning and generative AI data services and products for large global

and Managing Director.

technology customers;

• Enterprise: responsible for leveraging our product suite and AI-driven automation to efficiently grow revenue outside

of Global customers to serve new customers as they invest in AI;

• Government: responsible for serving the emerging AI needs of Government;

• China: responsible for capturing share in the high growth market in China; and

• Quadrant: in September 2021, Appen acquired Quadrant Global Pte Ltd (“Quadrant”), a global leader in mobile location

and Point-of-Interest (POI) data, thus expanding our addressable market, product offering and data annotation capabilities.

1 Self-reported.
2 Self-reported, includes territories.

Appen has the following two operating and reporting segments:

• Global Services: represents the services that Appen provides to our major US technology customers (Global customers)

using the customers’ data annotation platforms and tools. The majority of projects comprise large, at-scale deep learning

(model evaluation) programs, and rely on Appen’s crowd workforce to complete the work, thus reducing the need for

Appen’s Global customers to employ a large and diverse ongoing workforce; and

• New Markets: represents Appen’s high growth markets, product-led and data services growth strategy. It comprises Global

customer revenue through Appen’s data annotation platform and tools (Global Product), and the Enterprise, Government and

China business units. New Markets also includes revenue derived using Quadrant’s geolocation and POI data capabilities. New

Markets customers benefit from our high-quality data collection, annotation and evaluation products, coupled with the provision

of at-scale crowd management with Appen Connect and Appen’s considerable expertise and knowhow built up over the last

28 years. This enables Appen to deliver a full set of AI data services for deep-learning and generative AI for enterprise customers.

Dividends

No dividends have been declared or paid during the year.

Non-cash asset impairment

Following a review of the value of the Group’s cash generating units (CGU) and of the carrying value of its assets in accordance

with the relevant accounting standards, a non-cash, pre-tax impairment charge of $69.2 million was booked for the year ended

31 December 2023.

The carrying value of non-goodwill assets attributable to the Global Services CGU was reduced by $16.1 million and the carrying

value of Goodwill was reduced by $53.1 million. The impairment charge is non-cash related and is a non-operating item.

Matters subsequent to the end of the year

Material customer loss

On 22 January 2024, the Board announced that Appen received notification on Saturday, 20 January 2024 AEDT from a material

customer, Google LLC, that as part of a strategic review process it will be terminating its global inbound services contract

with Appen, resulting in the cessation of all projects with Appen by 19 March 2024. Appen had no prior knowledge of Google’s

decision to terminate the contract.

Revenue recognised for the year ended 31 December 2023 relating to Google LLC was $82.8 million at 26% gross margin.

Gross margin refers to revenue less crowd expenses.

Implementation of cost saving measures

On 12 February 2024, the Board announced that Appen will implement measures to achieve $13.5 million in annualised cost

savings. The cost initiatives represent direct and indirect costs associated with the delivery of Google LLC projects.

Appen expects to complete 80% of the cost initiatives by March 2024 and the remainder by June 2024. The bulk of the costs

are direct costs, however indirect costs have been further scrutinised resulting in the eventual closure of the Toronto and

Bellevue offices in North America.

The first full year benefit of these cost savings is expected to be realised in FY25. The one-off costs associated with implementing

the cost reduction initiatives are expected to be approximately $1.5 million to $2.5 million and will be reported as a non recurring

On 5 February 2024, Appen announced the appointment of Ryan Kolln, formerly the Chief Operating Officer (COO) as CEO

Armughan Ahmad stepped down from his role as CEO, President and Managing Director on 5 February 2024. Mr Ahmad

will receive his statutory entitlements and payment in lieu of notice (12 months – US$600,000).

Mr Ahmad’s LTI grant was forfeited upon his termination. The board exercised its discretion and no STI was awarded

to Mr Ahmad. However, Mr Ahmad’s share-based sign-on bonus will remain on-foot and continue to vest in accordance

with the terms of this contract.

Other than the above, the Directors are not aware of any other matter or circumstance not otherwise dealt with in this report

that has significantly affected or may significantly affect the operations of the Group, the results of those operations or the

state of affairs of the Group in subsequent financial periods.

Likely developments and expected results of operations

The Group continues to pursue its strategy to return to profitability and remains committed to sizing its cost base in line with

the revenue opportunity. Appen’s strategy and FY24 priorities can be found in the financial value driver on page 30.

Appen 2023 Annual Report

Directors’

report

The Directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter

as the “Group” or “Appen”) consisting of Appen Limited (referred to hereafter as the “Company” or “parent entity”) and the

entities it controlled at the end of, or during, the year ended 31 December 2023.

The Directors of the Company during the financial year and up to date of this report were as follows:

Richard Freudenstein – Chair

Ryan Kolln – CEO and Managing Director from 5 February 2024

Armughan Ahmad – CEO, President and Managing Director (appointed CEO & President 9 January 2023

and appointed Managing Director 25 January 2023; all appointments ceased 5 February 2024)

Directors

Stuart Davis

Stephen Hasker

Vanessa Liu

Robin Low

Lynn Mickleburgh

Sithumini (Mini) Peiris

1 August 2023.

in an advisory capacity.

Principal activities

Changes in Chief Financial Officer

Justin Miles was appointed Deputy Chief Financial Officer on 26 June 2023 and acted as Interim Chief Financial Officer from

Kevin Levine was Chief Financial Officer until 1 May 2023. Kevin Levine was replaced by Helen Johnson on 1 May 2023

who resigned for personal reasons effective 31 July 2023. Kevin Levine remained with the business until 1 September 2023

Appen is a global leader in providing data services for deep learning and generative artificial intelligence (AI) systems. With over

28 years’ of experience in data sourcing, data annotation, and model evaluation by humans, Appen enables many of the world’s

largest technology and Fortune 500 customers globally to launch innovative AI systems.

Our expertise includes a global crowd of more than one million skilled contractors who speak over 500 languages1, in over

200 countries2, as well as our advanced AI data platform. Our products and services give leaders in technology, automotive,

financial services, retail, healthcare, and governments the confidence to launch world-class AI products.

Appen was founded in 1996 and listed on the Australian Securities Exchange on 7 January 2015. The Group has evolved

significantly since then, from a language data service provider to become a leading provider of deep learning and generative

AI data and tools.