Azzet reports on three ASX stocks with market-moving updates to share today.
Appen tanks on disappointing market update
Shares in Appen (ASX: APX) were down around 15% at the open after the artificial intelligence data services small cap provided a disappointing market update this morning.
Blaming ongoing uncertainty in the U.S. artificial intelligence market, the company guided it to full-year revenue at the lower end of its $235 million to $260 million target range.
Despite recording strong revenue growth in China – which delivered 77% revenue growth over the previous period - the company reported a 6% year-on-year decline in revenue to $51.9 million for the quarter.
Management told the market that strong growth within the China business was offset by the ongoing volatility and dynamic nature of the U.S. AI market, including uncertainty about timing for large LLM projects to resume.
But despite the short-term volatility experienced within the U.S. AI market, management reminded investors that market opportunity remains strong.
The company expects the execution of its near-term strategy to enable the capture of growth throughout the remainder of FY25 and into FY26.
“As the market continues to evolve, the companies best positioned to deliver trusted, scalable data will be those that shape the next generation of AI development. That's where Appen has a unique and powerful role to play,” the company said.
The company reaffirmed plans to tackle negative $0.6 million underlying earnings for the second quarter and negative $2.2 million for the first half by capturing efficiencies through technology innovation and automation which has identified around $10 million in incremental annualised cost efficiencies.
Around 70% of these cost efficiencies are expected to be executed by end of Q3 FY25 and the remainder by end of Q4 FY25.
On an equally positive note, Appen reassured the market that despite limited visibility into the timing of new large language model projects and a weaker outlook for short-term U.S. Government work, it remains confident about its long-term opportunities and expects medium-term revenue targets to remain unchanged.
Other key numbers announced today:
- China business recorded positive earnings of $2.1 million for the quarter and $2.9 million for the half.
- Cash on hand at quarter-end was $60.9 million.
- Annualised revenue run-rate exceeded $100 million in June.
- H1 FY25 revenue (excl. Google) of $102.1 million, up 2%.
The former ASX tech darling’s share price has been on a roller coaster since falling off a cliff from $2.98 to $.99 today.
The stock staged a short-lived 24% rally in May after upgrading FY25 revenue guidance, on the back of emerging growth in China.
The stock has a market cap of $251 million; the share price is up 41% over one year and down 64% year to date.
The stock’s shares appear to be weak with little demand from investors.
Consensus is Hold.
IGO tanks after flagging full write-down at Kwinana
Shares in IGO Ltd (ASX: IGO) were down around 10% in late morning trading after the battery materials company updated the market on the sorry state of its first lithium hydroxide plant at Kwinana, south of Perth, which by all accounts looks to be on life support.
While IGO and its joint venture partners are continuing to discuss the optimum pathway for the refinery that minimises cash outflows, it told investors that impairment of the Kwinana refinery assets of between $70- and $90 million is expected, resulting in train 1 being fully impaired.
This flagged to investors that the value of the Kwinana lithium hydroxide plant may end up being written down to zero.
While issues at Kwinana are no secret, IGO’s CEO Ivan Vella reminded the market that it operated well below nameplate capacity during the quarter at 35% due to equipment failure and did not achieve the guided production tonnes for the year.
“… IGO has low confidence in the ability of this asset to achieve meaningful, sustained improvement. We continue to work with our JV partner to determine the optimal future pathway for the plant.”
Kwinana delivered an earnings loss for the quarter of $28.7 million for the quarter compared to $19.7 million in the third quarter.
June quarter lithium hydroxide production of 2126 tonnes represented 35% of nameplate capacity.
IGO spent an additional $4.5 million on the plant in the three months to June while lithium hydroxide sales fell 25% to 1,739 tonnes.
IGO reported a quarterly underlying earnings of $62.3 million, up from $34 million in the March quarter, driven by stronger nickel and spodumene sales.
The stock of Greenbushes lithium operation and Nova nickel mine, both in WA, clearly carried the company during its Kwinana troubles.
While the company reaffirmed Greenbushes FY26 production and cash cost guidance of 1,500-1,650kt and $310-360/t, respectively, Nova's life of mine production guidance was maintained at 15,000-18,000t of contained nickel.
Nevertheless, investors are justifiably fixated on the [Kwinana] refinery’s struggles, with Train 1 now set to be fully impaired.
IGO has a market cap of $3.4 billion; the share price is down 16% in one year and up around 9% over one month.
The stock appears to be in a medium-term rally confirmed by multiple indicators.
Consensus is Hold.
Micro-X Ltd soars on milestone US agreement
Shares in Micro-X Ltd (ASX: MX1) were up around 34% heading into lunch after the ASX-listed high-tech company announced a supply agreement with an undisclosed top-tier U.S. health group for its Rover Plus mobile radiology system.
It’s understood that the supply agreement is with one of the largest and most respected healthcare groups in the U.S, which treats over 8.5 million patients annually.
As the first agreement for supply of Rover Plus with a major healthcare provider in the U.S., today’s announced supply agreement is being hailed by management as a major commercial milestone for Micro-X.
Commenting on today’s update, Micro-X CEO Kingsley Hall told the market that this new agreement opens the doors for member hospitals to buy the Rover without the need to run an evaluation or tender for new equipment.
"Micro-X [has] worked for nearly a year to demonstrate the value of Rover and to build trust with the Customer, culminating in this supply agreement,” he said.
“We see this as the key step in the execution of our commercial objective of establishing Micro-X as a medical imaging vendor, starting with Rover Plus and growing into [the] future of CT.”
Now that Rover Plus is an approved procurement item, moving forward the company will be supporting the customer to address their needs for new and replacement mobile radiology systems, with Micro-X Rover Plus.
Awarded following a competitive tender and clinical evaluation across four hospitals within the Customer’s U.S. network, today’s announced supply agreement includes:
- Initial agreement term of three years.
- Covers tiered pricing, supply lead times, and standard commercial terms including warranty, product specifications and compliance obligations.
- Approval of the procurement list opens up sales opportunities.
Meanwhile, Micro-X holds $4.0 million in Rover Plus inventory and is preparing its supply chain to support anticipated demand.
Back in June, Adelaide-based Micro-X announced the successful delivery of key development milestones across multiple international projects, securing $2.3 million in milestone payments on schedule and within budget.
The company achieved Milestone 3 under its Development Agreement with ARPA-H for a Full Body CT scanner, triggering a payment of $1.4 million (US$0.9 million).
It also met Milestone 2 under its Strategic Partnership Agreement with Billion Prima for a next-generation baggage and parcel scanner, securing $0.9 million (US$0.6 million).
Micro-X has a market cap of $55 million; the share price is up 10% over one year and up 72% in the last month.
The stock’s shares appear to be in a long-term bearish trend confirmed by a falling 200-day moving average.
However, there are rallies occurring at shorter timeframes.
Consensus does not cover this stock.
This article does not constitute financial or product advice. You should consider independent advice before making financial decisions.
