Founded in 2007 as Crowdflower, Figure Eight services the booming artificial intelligence market.
Clients such as Microsoft, Google, Spotify and Microsoft, eBay and the Home Depot upload images, audio, video and text for Figure Eight’s remote workforce to annotate. That annotated data is then used by the clients to train their machine learning algorithms for use in everything from chatbots to autonomous vehicles.
Mr Brayan said the upfront payment for Figure Eight represented 5.7 times the company’s 2018 revenue of $41.5 million.
Appen expects to pay another $86 million to $114 million in earn-out consideration, which will go to Figure Eight’s 107 employees.
“We think we’ve struck a good deal here, based on all the market makers,” Mr Brayan said.
Other companies had been bought for about six to eight times the last 12 months of revenue, he said.
While Figure Eight lost $22 million last year, Mr Brayan said it was rapidly growing and had a clear pathway to profitability.
Appen shares are in a trading halt and are expected to resume trading on Tuesday. They were last trading at $24.37, up 90 per cent this year.