APX Financial Forecasts
Our financial projections for APX Limited reflect conservative growth assumptions balanced with the significant opportunities in generative AI and China market expansion, while acknowledging execution risks in the Enterprise & Government segments.
Revenue Projections
Our revenue forecasts assume APX will successfully execute its strategic pivot toward generative AI services, driving accelerated growth from FY2025 onwards. We project revenue growth of 17.2% in FY2025, moderating to 12.5% by FY2028 as the business scales and market penetration increases. The generative AI segment is expected to grow from 22% of revenue in FY2024 to approximately 42% by FY2028, while China operations maintain strong momentum with 30-35% CAGR through the forecast period. Enterprise & Government segments are projected to stabilize and return to modest growth from FY2026, contributing to overall revenue diversification. Global Product/ADAP platform adoption drives higher-margin revenue streams, with this segment expected to reach 18-20% of total revenue by FY2028. Geographic diversification reduces dependence on US markets, with China representing 30-32% of revenue by the forecast period end.
Revenue Growth Trajectory
| Metric | FY2024A | FY2025E | FY2026E | FY2027E | FY2028E | CAGR |
|---|---|---|---|---|---|---|
| Revenue ($m) | 238.0 | 279.0 | 321.5 | 365.2 | 410.9 | 14.6% |
| Growth % | - | 17.2% | 15.2% | 13.6% | 12.5% | - |
Profitability Evolution
Our profitability projections reflect significant margin expansion as APX transitions toward higher-value generative AI services and achieves operational leverage. Gross margins are expected to expand from 40.8% in FY2024 to 46.2% by FY2028, driven by increasing mix of platform-based services and premium AI data offerings. EBITDA margins demonstrate substantial improvement from 3.3% in FY2024 to 18.7% by FY2028, reflecting both revenue mix benefits and disciplined cost management. The inflection point occurs in FY2026 when EBITDA margins reach double digits, supported by scale benefits and operational efficiencies. NPAT margins turn sustainably positive from FY2026 onwards, reaching 12.8% by FY2028 as the business model matures. This margin expansion trajectory assumes successful execution of the generative AI strategy, continued strong performance in China, and gradual recovery in Enterprise & Government segments.
| Margins | FY2024A | FY2025E | FY2026E | FY2027E | FY2028E |
|---|---|---|---|---|---|
| Gross Margin | 40.8% | 42.1% | 43.6% | 44.9% | 46.2% |
| EBITDA Margin | 3.3% | 6.8% | 11.2% | 15.1% | 18.7% |
| NPAT Margin | -6.1% | -0.4% | 5.2% | 9.6% | 12.8% |
Comprehensive Financial Projections
| A$m unless stated | FY2024A | FY2025E | FY2026E | FY2027E | FY2028E |
|---|---|---|---|---|---|
| Revenue | 238.0 | 279.0 | 321.5 | 365.2 | 410.9 |
| Gross Profit | 97.1 | 117.5 | 140.2 | 164.0 | 189.8 |
| EBITDA | 7.9 | 19.0 | 36.0 | 55.1 | 76.8 |
| EBIT | -6.8 | 2.3 | 19.3 | 38.4 | 60.1 |
| NPAT | -14.5 | -1.1 | 16.7 | 35.1 | 52.6 |
| EPS (cents) | -5.6 | -0.4 | 6.5 | 13.6 | 20.4 |
| DPS (cents) | 0.0 | 0.0 | 0.0 | 4.1 | 6.1 |
| Operating Cash Flow | 12.4 | 22.6 | 41.2 | 58.9 | 79.5 |
| Capex | -14.3 | -16.7 | -19.3 | -21.9 | -24.7 |
| Free Cash Flow | -1.9 | 5.9 | 21.9 | 37.0 | 54.8 |
| Net Debt | -8.2 | -14.1 | -36.0 | -73.0 | -127.8 |
| Net Debt/EBITDA | -1.0x | -0.7x | -1.0x | -1.3x | -1.7x |
Key Assumptions
Revenue Assumptions
- Generative AI segment grows from 22% to 42% of revenue by FY2028, driven by continued market adoption and APX's platform capabilities
- China operations maintain 30-35% CAGR through the forecast period, benefiting from local market expansion and regulatory advantages
- Global Product/ADAP platform adoption accelerates, reaching 18-20% of total revenue by FY2028 with higher margins
Cost Assumptions
- Gross margins expand 130bps annually through FY2028, driven by service mix shift and operational efficiency improvements
- Operating expenses scale at 85% of revenue growth rate, reflecting disciplined cost management and operational leverage
- Depreciation and amortization increases with technology investments, maintaining capex at 6% of revenue annually
Balance Sheet Assumptions
- Working capital requirements improve from 9.0% to 6.5% of incremental revenue, reflecting process optimization and customer mix benefits
- Net cash position strengthens progressively from FY2026 onwards, supporting potential dividend initiation and strategic investments
Scenario Analysis
Our scenario analysis examines three distinct outcomes based on varying assumptions around generative AI market adoption, competitive positioning, and execution capabilities. The base case assumes steady progress in strategic initiatives with measured success in key growth areas, while bull and bear cases reflect material upside and downside risks to our core assumptions.
| Scenario | Revenue CAGR | Terminal EBITDA Margin | FY2028 EPS | Implied Value |
|---|---|---|---|---|
| Bull Case | 20.0% | 22.0% | 28.5c | $1.17 |
| Base Case | 14.6% | 18.7% | 20.4c | $0.88 |
| Bear Case | 10.0% | 10.0% | 12.1c | $0.62 |
