What They Did
Appen was an Australian data annotation company founded in 1996 that supplied training data to the world's largest AI companies. Five clients -- Google, Meta, Microsoft, Apple, and Amazon -- accounted for 80% of its revenue. At its peak in August 2020, Appen's market cap was equivalent to $4.3 billion (AU$42.44/share). The company employed a global network of over a million contractors who labeled images, transcribed audio, and annotated text to train machine learning models.
How LLMs Killed Them
The generative AI boom paradoxically destroyed Appen. Major tech clients began building in-house data annotation capabilities and shifting to synthetic data generation. Google/Alphabet terminated its contract with Appen in early 2024, wiping out $82.8 million in annual revenue (30% of total). The company couldn't pivot fast enough from legacy annotation to the higher-quality data needs of frontier LLMs, while competitors like Scale AI (valued at $13.8B) captured the new market.
Timeline
- August 2020: Stock peaked at AU$42.44 (market cap ~$4.3B).
- 2022: Revenue declined 13% year-over-year.
- 2023: Revenue dropped another 30% to $273 million.
- January 2024: Alphabet notified Appen of contract termination (effective March 19).
- May 2024: Chief Revenue Officer and Chief Marketing Officer departed.
- 2024: Stock had lost 99% of its peak value.
By the Numbers
- Stock down 99% from 2020 peak
- Revenue dropped 30% in 2023 alone
- Lost $82.8 million Google contract (30% of revenue)
- 5 clients accounted for 80% of revenue
- Competitor Scale AI valued at $13.8 billion while Appen collapsed