One of the most successful initial public offerings (IPOs) over the last few years came from Appen Ltd (ASX: APX).
Appen is a leading provider of language technology data and services. It has team of over one million crowd-sourced experts around the globe providing or improving the data that is used for the development of machine learning and artificial intelligence products.
When did Appen hit the ASX boards?
Appen has been listed on the Australian share market for just over five and a half years.
It listed in January 2015 after raising $15 million at 50 cents per share. This gave Appen a market capitalisation of $47.3 million.
Management explained that the funds raised would help it “take advantage of, and grow with, the recent acceleration of devices and technology that interact with humans on human terms and advances in mobile communications and social media that are driving unified communication in any language and across languages.”
It certainly achieved on this and has been growing at an extraordinary rate since 2015.
For example, last month it released its half year results and revealed a 35% increase in underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) to $62.5 million. That’s more than its entire market capitalisation upon listing.
Looking ahead, the company expects a strong second half. It reaffirmed its guidance for underlying EBITDA in the range of $125 million to $130 million in FY 2020. This will be a 23.8% to 28.7% increase year on year.
The good news is that more of the same is expected in the coming years.
The company’s chairman, Chris Vonwiller, commented: “We are especially pleased with this result amidst the pandemic and the implementation of our growth initiatives. The strength of our business model, market exposure, competitive position and our consistent execution give us the confidence to push forward with our investments to solidify future growth.”
What if you had invested in the Appen IPO?
If you had invested $10,000 into Appen’s shares at its IPO, you would have picked up 20,000 shares at 50 cents each.
At the time of writing, the company’s shares are changing hands for $31.83.
This means your 20,000 shares would now have a market value of $636,600. Not bad for a $10,000 investment!
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Appen Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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