UPDATE 1-Australian AI firm Appen flags up to 84% drop in annual earnings

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Oct 6 (Reuters) - Artificial intelligence firm Appen Ltd said on Thursday its fiscal 2022 earnings could drop as much as 84%, hurt by weaker advertising revenue and a slowdown in spending by some of its major customers.

The company's forecast is indicative of the prolonged cost-cutting measures that global tech giants have had to undertake in the wake of soaring inflation and elevated borrowing costs.

Appen, which runs artificial intelligence training for Facebook, Google and Amazon.com Inc, said it expects underlying EBITDA for the year to be between $13 million and $18 million, down from $78.9 million posted a year earlier.

In its half-yearly report in August, the company missed earnings estimates and said it expected underlying EBITDA for the year to fall from the prior year, citing weaker demand for digital advertising and higher investment costs.

Appen's business model involves outsourcing hundreds of data-checking projects to contractors who manually check and label online content, which clients then feed into their algorithms.

Following the interim results, there has been no improvement in trading conditions in August and September, Appen said.

Appen on Thursday retained a revenue outlook of $375 million to $395 million for the year, compared with $447.3 million last year. (Reporting by Harish Sridharan in Bengaluru; Editing by Shailesh Kuber)