Local artificial intelligence and machine learning ASX darling Appen has pounced on San Francisco rival Figure Eight Technologies in a surprise acquisition will result in a capital raising of around $300 million (US$285 million) to snap up the crowd data crunching play.
The move is a strong indication specialists in the AI and ML sector are starting to consolidate to scale-up for a challenge to traditional big software and analytics houses.
Notices issued to the ASX on Monday by Appen said the company will offer shares in the capital raising for $21.50, an 11.8 percent discount on their last trading price.
With earn-outs included, the value of the acquisition will be worth around just under $430 million making it one of the larger tech transactions on the local board this year.
Now in a voluntary trading halt, Chatswood-based Appen company has quietly been snapping up specialist companies over the past few years, building the comparatively low-profile company’s market cap to around $2.6 billion.
Appen’s main game is essentially data grooming and annotation from multiple sources including speech, text and video across multiple languages. At a time when AI and ML plays need voracious amounts of data to make them effective, Appen’s smarts make that data ingestible for use.
A speciality is natural language processing, the make-or-break capability that defines whether bots or other digital customer assistance technologies are actually any use.
While the company is notoriously cagey about publicly revealing its customers, it cites its client base as big tech, e-commerce, search, social media and web marketing firms.
Figure Eight is far less shy, listing Microsoft, Google, VMware, Facebook, Mozilla, Twitter and American Express as customers in its corporate brag book.
Technology channel partners listed include AWS, Google Cloud, Microsoft Azure and IBM Watson, a reach that is clearly appealing to growth-hungry Appen.
The selling point of Figure Eight’s capability is what it calls ‘human-in-the-loop’ machine learning that allows it to pump ML data to the likes of chatbots, search and autonomous vehicles.
Appen cites productivity gains stemming from the use of Figure Eight’s platform as a key opportunity along with Figure Eight being able to tap into Appen’s human ‘crowd’ of around one million people that it uses to polish or ‘annotate’ the data it processes.
The deal would allow Appen to potentially automate a lot of that manual process, giving it considerable uplift in capacity and cost control if all goes to plan.