“Longer term, we’re banking on what we believe is a very strong trend around AI and a very strong need for AI training data,” Brayan said.

Analysts, including Citi’s Siraj Ahmed, flagged potential negative surprises last month, citing digital advertising weakness and Facebook, Appen’s largest customer, transitioning to a new AI engine.

Wilsons Equity Research analyst Ross Barrows said the downgrade was worse than its below-market forecasts.

“Today’s downgrade again reiterates Appen’s ‘Achilles’ heel’ – high levels of project-based work from a small number of concentrated clients, noting that it was a tailwind in its early years,” he said.

“Today’s result and the second-half outlook suggests visibility remains challenging, and with no full-year guidance provided today, direction for the stock will be difficult between now and the full-year result in August.”

RBC Capital’s Garry Sherriff was also downbeat about the clouds around its immediate outlook.

“The de-rating of Appen is likely to continue in our view given multiple material downgrades and questions on revenue visibility and strategy.”

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