Can this ASX stock become a potential multibagger?
Appen surged more than 11% by afternoon trade on Tuesday which has taken year-to-date gains to over 130%, as investors reacted positively to a strong December 2025 quarterly update that highlighted accelerated generative AI demand which is likely to grow even more in 2026.
Appen Limited (ASX: APX)
announced its December 2025 quarter results on 29 January 2026 which showed continued progress in its turnaround strategy as demand for generative AI data services accelerated and this triggered a strong rally in the share price.
Revenue growth was driven by generative AI projects which contributed 44.1% of Q4 revenue as the company supported large language model training and evaluation work for global technology clients.
The company reported Q4 FY25 revenue of US$73.4 million and underlying EBITDA of US$13.3 million which was its strongest quarterly EBITDA result since 2021.
Appen China was a key highlight as it delivered US$32.0 million in Q4 revenue which was up 81% year-on-year supported by strong demand from Chinese technology companies and rapid expansion in LLM related projects.
For FY25, group revenue increased by 4.5% to US$230.8 million while underlying EBITDA before FX rose by more than 250% to US$12.2 million which highlights improved margins and tighter cost discipline.
The company generated a net operating cash inflow of US$14.7 million in Q4 FY25 compared with a cash outflow in the prior quarter which took full year operating cash flow to US$23 million.
Gross margins expanded to 45.6% in Q4 FY25 from 40.3% in the prior corresponding period which was driven by a higher mix of generative AI projects and higher contribution from high margin prebuilt datasets.
Appen ended the quarter with a strong cash balance of US$59.8 million which provides balance sheet flexibility as it continues to invest in platform automation and higher value AI data capabilities.
Operational efficiency remained a focus as the remaining portion of around US$10 million in annualised cost savings was executed during Q4 through technology innovation and automation initiatives.
The current market capitalisation stands at almost $500 million and positions the company to capture global growth as AI adoption increases.
(Source: Company Announcements)
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