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Most investors would be soaking up the core operational details of Appen Ltd (ASX: APX) today. However, an unexpected mention of ‘crypto’ during the data annotation company’s earnings call might have caught some off guard.
In afternoon trade, shares in the beleaguered S&P/ASX 300 Index (ASX: XKO) constituent are fetching $4.19 apiece, up 0.48%. Although, the market was looking upon Appen even more fondly in early trading, reaching an intraday high of $4.57.
So, has Appen’s management taken a leaf out of Elon Musk’s playbook — investing in crypto? Or is there another explanation for why Appen and crypto were mentioned in the same sentence?
Is Appen an ASX-listed crypto investor?
During Appen’s earnings call today, one analyst asked a very interesting question. Instead of it being about profits, revenue growth, or even guidance… it probed for an explanation as to why Appen was talking about crypto in its financial statements.
Posing the question was Bell Potter senior analyst Chris Savage, who asked:
In the notes, there was a loss on revaluation of inventory and you called out cryptocurrency. Have you actually invested in crypto, or are you getting paid in crypto, what’s the story there?
Savage was referring to a line item in Appen’s financials labelled ‘losses on inventory’. The expense made for accounting purposes amounted to $275,000. Considering there hasn’t really been much mention of Appen being involved with crypto before, the appearance is puzzling.
Yet, Appen chief financial officer Kevin Levine quickly explained, saying:
First, it’s a very small part of the business and it came alongside the Quadrant acquisition. So, actually one of the key strengths that Quadrant has in terms of how they manage their crowd is they actually pay their crowd in crypto.
From there, Levine went on to explain the benefits of operating with crypto, stating:
There are two benefits of that: the first is near real-time settlement. The second one is micropayments — because a lot of the tasks that geolancers perform are very small, [involving] very small amounts; and so it can handle kind of micropayments without necessarily imposing fees, etc. on to the recipients.
Finally, the CFO of ASX-listed Appen revealed that the crypto asset it mainly holds for this activity is Ethereum (CRYPTO: ETH). According to the company’s filing, the stablecoin USD Coin (CRYPTO: USDC) is also in its arsenal.
In conclusion, Appen in a way is an ASX-listed investor of Ethereum. However, by the comments made during the earnings call, it doesn’t seem to be for the sake of an alternative investment.
Both Appen and crypto hold a commonality, though. Both are down massively compared to a year ago. Undoubtedly, shareholders and crypto holders alike will be hoping for better days to come.