Why are Appen shares rocketing 32% on Thursday?

Appen Ltd (ASX: APX) shares are on fire on Thursday.

In morning trade, the ASX AI stock is up 32% to $1.43.

Why are Appen shares rocketing today?

Investors have been scrambling to buy the artificial intelligence data services company’s shares following the release of its quarterly update.

For the fourth quarter of FY 2025, Appen reported revenue of $73.4 million. This was a 10% lift on the prior corresponding period and a 33% increase on the third quarter of FY 2025.

This reflects strong performances from both Appen China and Appen Global.

Management revealed that Appen China’s revenue was $32 million during the quarter, which is up 81% on the prior corresponding period. This side of the business was operating with an annualised revenue run-rate exceeding $135 million in December. This reflects demand from generative AI related projects, including supporting international expansion for Chinese technology companies.

Appen Global’s revenue came in at $41.4 million. This is up 90% on the third quarter, but down 16% on the prior corresponding period. This reflects new project wins, including a previously announced $10 million+ generative AI opportunity that has grown faster than expected.

Growing at an even stronger rate was the ASX AI stock’s earnings. Appen revealed that its underlying EBITDA (before foreign exchange) was $13.3 million. This represents a 182% increase on the prior corresponding period and a $12.3 million improvement on the prior quarter.

Management commentary

Commenting on the company’s performance for the quarter, its CEO and managing director, Ryan Kolln, said:

Q4 was a strong finish to the year for both our China and Global businesses. Appen China exited the quarter with an annualised revenue run-rate growing to over $135 million – a pleasing result, providing strong momentum heading into FY26. In addition to the significant revenue growth, our China business also expanded underlying EBITDA profitability on the previous quarter by $1.0 million to $4.3 million, reflecting gross margin expansion and operating leverage as the business continues to scale.

The Appen Global division continues to improve as the business has executed against its turnaround strategy in a highly dynamic market. Q4 delivered a pleasing 56% revenue growth compared to the prior quarter and underlying EBITDA of $10.2 million – a significant improvement on Q3 and pcp. Growth was driven by new project wins, including the previously announced $10 million+ generative AI opportunity that has grown faster than expected and has continued into FY26.

Outlook

No guidance has been given for FY 2026, but management appears positive on its outlook. Kolln added:

With a strong balance sheet and a dedication to delivering quality data at speed we are well positioned for sustained profitable growth. We maintain our focus on revenue growth and ongoing underlying EBITDA profitability

The post Why are Appen shares rocketing 32% on Thursday? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Appen. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.