Full-year forecast revised up for the third quarter in a row, marking the company’s strong business momentum and optimistic outlook ahead
Highlights and achievements for the third quarter of fiscal year 2022
- Revenue increased to 5.1 billion yen with the highest YoY growth rate of 59% over the last four years
- Gross profit reached 69% YoY growth, with a historic high gross margin of 52.9%
- Operating margin turned positive for the second time this year, improving by 6 percentage points YoY, while EBITDA margin improved by 5 percentage points YoY
- Achieved EBITDA margin of 7% with EBITDA profit of 357 million yen
- Revenue from the US and EMEA markets increased over 7 times YoY and represented 13% of total revenues
- Achieved 28% YoY growth in customer numbers with last twelve months net revenue retention of 124.9%, retaining the lowest ever customer churn rate of 0.62%
- Upward revision of full-year forecast from 18.5 billion yen to 19.2 billion yen, with YoY revenue growth rate further accelerated to 51% from 46%
- Operating income revised further, closer to break even, with the expectation of turning operating income positive in the fiscal year 2023
Appier’s third quarter performance summary
Appier Group Inc (TSE: 4180), henceforth referred to as Appier, today announced its financial results for the third quarter of fiscal year 2022. Appier's stellar growth in the third quarter was driven by its successful geographical and vertical expansion, alongside its solid business execution, product synergies and customer acquisition strategy.
Appier reported a historically high growth rate of 59% year-on-year (YoY) and a record-breaking revenue of 5.1 billion yen this quarter, marking its strongest performance in the last four years. Gross profit outpaced revenue growth to 69% YoY growth, with a historically high gross margin of 52.9%. Operating margin also turned positive, representing the second time that Appier has reported a profitable quarter. This was due to a significantly improved gross margin and revenue growth acceleration. Sustaining the momentum from its last few quarters, Appier’s revenue from US and EMEA increased over 7 times YoY and represented 13% of its total revenue, underscoring Appier’s global footprint and success in addressing market demand for AI-powered offerings that support brands’ first-party data strategies.
The focus on AI-predictive and first-party data-centric solutions also contributed to Appier’s bottom line performance, demonstrating its substantial growth. The company’s earnings before interest, taxes, depreciation and amortization (EBITDA) reached a 7% margin with a 5 percentage points YoY improvement, while operating margin improved by 6 percentage points YoY, driven by accelerated revenue growth, gross profit growth and strong operating leverage.
Strong customer traction and demand across Asia Pacific and the US
Strong sales acceleration in Asia Pacific, US and EMEA regions continues to contribute to the company’s market expansion trajectory. Customers in Northeast Asia accounted for the largest share of global revenues at 62%, followed by Greater China (22%) and US and EMEA (13%). Appier’s focus on vertical expansion contributed to more than 50% YoY revenue growth in one of its key regions, Northeast Asia. Furthermore, Appier’s ongoing successful international expansion played an instrumental role in its growth this quarter, as revenues from the US and EMEA rose to 13% from 3% and grew over 7 times YoY, gaining strong momentum before the close of the fiscal year.
New customers were mainly from the entertainment, e-commerce and online services industries, driven by the fast-evolving digital transformation strategies and demands of omnichannel marketing solutions as brands adapt to the new normal post-COVID.
Appier’s recurring revenue currently constitutes over 95% of its total revenue, which drove Appier’s annual recurring revenue (ARR) to 18.2 billion yen with a YoY growth rate of 55%. Appier’s last twelve months (LTM) net revenue retention (NRR) was 124.9%, with its number of customers increasing to 1,302 with a 28% YoY growth. Customer churn rate also maintained at 0.62%, the lowest in Appier history.
Strong foundation to close out another successful financial year
Appier’s guidance has been revised up three times in a row this year, and to reflect its outperformance in the third quarter, it has forecast 19.2 billion yen total revenue for the year, with YoY revenue growth rate further accelerated to 51% from 46%.
Operating loss has been revised to 22 million yen, with significant improvements compared to Appier’s original guidance and getting further closer to breaking even at the end of the financial year, while full-year positive EBITDA profit has been revised to 1.20 billion yen with a 2,735% YoY growth rate. Appier’s focus on continuously improving its business efficiencies is expected to result in better profitability overall, along with the expectation of turning operating income positive in the next fiscal year.
Appier maintains an optimistic outlook for the quarter and next fiscal year, as it sees strong business momentum reflected by its AI-powered solutions turning customers’ marketing investments into measurable returns. The company’s revenue growth in the U.S. and EMEA, along with its expansion to other verticals such as gaming and retail in Asia, also creates more upside sales opportunities, enabling its profitable growth for the next quarter and fiscal year 2023.
Large enterprise customers with more than 10 billion yen annual revenue currently constitute over 90% of Appier revenues, further underlining higher business resilience to overall macroeconomic uncertainties. Moreover, the number of customers adopting more than two solutions has continuously grown higher than the growth of the total customer base, leading to higher retention rates. Appier expects this growing business momentum to continue through the end of the fourth quarter of fiscal year 2022.
“Our performance this quarter has underlined our strong business momentum amidst economic turbulence. Furthermore, our operating incomes and margins turned positive for the second time, putting us in a great position to close off this financial year on a high note. Appier has outperformed again this quarter, and it is with this confidence that we’ve raised our full-year guidance once again, as we embark on accelerating growth in new verticals and geographies, alongside new customer acquisition and existing customer expansion,” said Dr. Chih-Han Yu, CEO and co-founder of Appier. “International expansion will be a continued focus for us as we work towards the launch of the next-gen AI-powered CDP platform following our acquisition of Woopra. With our enhanced product synergies and state-of-the-art AI capabilities, we will continue to deliver value to our customers to help them turn AI into ROI in all kinds of environments.”
Next-gen AI-powered CDP to accelerate business growth
Last month, Appier announced that it had finalized the acquisition of Woopra, a U.S.-based customer journey analytics SaaS company that provides deep data and insights for enterprises to engage with their customers. The integration of AIXON’s predictive AI capabilities into Woopra will create the next-gen, AI-powered Customer Data Platform (CDP), enabling enterprises to achieve the fastest time-to-insight with superior analytics and intuitive data visualization. By adding Woopra to Appier’s suite of AI-powered solutions, businesses can now be empowered with:
- Seamless data unification: One-click integrations to sync customer data and gain a 360° view of each user
- Fast data-to-visualization: Superior user-centric analytics provides fast and comprehensive insights into the user journey and visualizations of the impact of every touchpoint
- Fast data-to-prediction: Precise predictions of end-user behaviors that allow brands to quickly tailor engagement and prediction models through automated Machine Learning model, allowing marketers to know the return before the investment
The total addressable market (TAM) of CDP is growing exponentially and the segment is expected to have a compound annual growth rate (CAGR) of 25-30% by 2025, influenced by the market’s growing and changing expectations for a state-of-the-art CDP. This integration will strengthen Appier’s position in the customer and product analytics market and further its enterprise market penetration and growth in the US and European markets. Woopra’s worldwide customer base will also offer significant opportunities for Appier to expand and solidify its global footprint.
Appier (TSE: 4180) is a software-as-a-service (SaaS) company that uses artificial intelligence to power business decision-making. Founded in 2012 with a vision of democratizing AI, Appier now has 17 offices across APAC, Europe and US, and is listed on the Tokyo Stock Exchange.