AI dataset companies strike $300M deal as market booms
Appen, an Australian company that provides specialized datasets for training artificial intelligence and machine learning systems, has acquired San Francisco-based Figure Eight following the announcement of full-year results that lifted Appen’s valuation on the Australian Securities Exchange.
Datasets sold by Appen are used for a range of AI applications, including voice recognition, relevance data, and computer vision, and include nearly 200 different languages. The Sydney Morning Herald reports that Appen’s revenue for 2018 increased by 120 percent to AU$364 million (US$257 million), for an after-tax profit increase of 148 percent to $49 million ($35 million), buoyed by increasing demand in the AI industry. Both results significantly beat analyst expectations, and the company’s shares rose 20 percent on the news to $22.90. The company is also expecting its underlying earnings to increase by roughly 20 percent from $71.3 million in 2018 to the $85 to $90 million range.
Appen also raised $285 million ($200 million) in fundraising from institutional investors, according to the Australian Financial Review.
With all of that new money, Appen will spend US$175 million (AU$248 million) upfront and up to $125 million ($177 million) based on 2019 performance for “human-in-the-loop” machine learning platform provider Figure Eight.
Figure Eight transforms unlabeled data of various kinds into high-quality AI training data with highly automated tools, which the company says increase the speed of high-quality training dataset creation by up to 50 times over manual labeling. The company will continue to operate independently through 2019, before being integrated into Appen’s team of more than 500 staff in Australia, the US, the UK, and the Philippines.
Appen acquired Leapforce in 2017 for AU$105 million (US$74 million), and upgraded its earnings three times last year, as existing projects began producing sharply higher revenues.
Analyst Garry Sherriff of RBC Capital Markets says that Appen is positioned to fill demand for the “voice-ification of the internet,” according to the Morning Herald.
“Not a tech company per se, [Appen] is the global leader in providing raw ‘curated’ data major global tech companies need to train their AI systems. AI performance improves with larger volumes of high-quality data. Customers demand delivery at speed and competitive pricing,” Sherriff comments. “We believe the demand for annotated and curated data for machine learning and AI purposes is in its infancy. The AI market is booming.”