Straker Translations the leading AI technology-driven translations provider has reported strong growth in revenue for the six months that led up to September 30, 2021.
Revenue increased 57.6% to a record $23.3m from $14.8m at the same time a year ago.
The increase was driven by acquisitions like Lingotek and the benefits accruing from the strategic translation alliance with IBM struck in the second half of the prior financial year.
Gross profit rose to $13.1 million from $7.6 million representing 56% of revenue, up from 51% in PCP. The 500bp increase in margin reflects the scale benefits that come from Straker’s RAY platform and the contribution of high-margin SaaS revenue from Lingotek.
Adjusted EBITDA was ($1 million) down from $0.04 million profit. This is due to the upfront investment made to meet the needs of the rapidly scaling IBM business and the scaling up our sales and marketing efforts to focus on further organic growth opportunities.
The company retains a strong balance sheet following the A$25 million highly successful capital raise in Q1. Cash reserves at Sept 30 were $18.2 million down from the $22.1 million at the end of the first quarter and $7.7 million at the same time a year ago. Straker is debt-free.
Straker Translations’ Chairperson Phil Norman offered additional insights on this aspect.
“Straker will drive growth by gaining a greater share of the localization spend from its broad network of global enterprise relationships and via acquisition is delivering strong results.”
“We have grown our revenue rapidly as we have delivered on our strategy to be the technology-led change-maker in the global localization sector.”
“Our focus for the remainder of FY22 is to continue to drive organic growth.”
“Particularly we want to target large companies that operate across multiple borders, increase our share of the translation spend among our existing customer base and leverage our technological leadership, strong balance sheet and global reach to drive sector consolidation.”
CEO Grant Straker said, “I am immensely proud of our achievements in the last half-year.”
“The transformational deals we struck in the second half of the prior financial year with the acquisition of Lingotek and the translation contract with IBM set us up for strong growth.”
“The agreements have driven a strong increase in group revenue, helped improve margins materially and have positioned us well to drive towards our target of $100 million in revenue.”
“Indeed, compared to 1HFY21 we have added additional annualized revenues of $17 million driving us towards our full-year revenue guidance of $50 million.”
“Translation volumes through our platform have surged. IBM content is now running at more than 10 million words a month up from 1 million in January and is ahead of expectations.”
“We are also delivering translations in 90 different languages up from just two in January and the 55 envisaged when we set this contract in motion.”
“We have also delivered on our service commitments to IBM, with more than 80% of IBM’s translation requests now being delivered directly to our systems.”
“Acquisition of Lingotek is delivering on the promise. It has grown organically, with its revenue for the half-year up nearly 10% vs PCP when it was under different ownership.”
“Lingotek’s translation connector technologies, which will allow translations to be delivered directly into customers’ systems, and its SaaS capabilities offer significant latent value to Straker that we will continue to develop over the coming year.”
“We have made good progress integrating the Lingotek and Straker teams. We are taking the best from both companies, delivering service improvements to all our customers.”
“With our strategy to gain a greater share of our customers’ translation spend and our focus on large enterprise customers, we are putting in place new sales and marketing strategies.”
“They will drive deeper engagement and build enduring relationships with new customers.”
“We are at a scale to generate increasing sales with improving operating leverage having staffed key areas of the business to enable delivery of materially higher level of revenue.”
“We are seeing a growing sales and deeper engagement with new and prospective customers.”
“These efforts have been bolstered by our success with IBM, which has validated the advantages of our technology and reach with a significant customer and a leader in AI.”
“The new enterprise approach means we must accept a longer sales cycle. But the potential value creation, as the IBM contract demonstrated, is significantly larger.”
“Straker is in commercial discussions with a number of clients at various stages of progress and we are hopeful of reporting the successes of these strategies in the coming quarters.”
Research and development
“Our R&D team remain focussed on further integrating with IBM’s systems and linking Lingotek’s powerful suite of translation connectors with the RAY platform.”
“The application programming interface (API) that allows IBM to directly link its systems to the RAY platform was deployed in October, replacing a patchwork of legacy systems.”
“The API has significantly accelerated the speed and efficiency of IBM translations, further contributing to margin improvements and service responsiveness.”
“Our focus is to increase the automation of the workflow from IBM to the RAY platform.”
A key aim is to bring our artificial intelligence capabilities to bear on tasks such as the selection of the best translators to correct initial machine translations.”
“We have deployed the first Lingotek translation connector that will give customers the choice to either link with the Ray translation platform or continue to use Lingotek’s platform.”
“This connector for WordPress is working well and we are now turning our attention to other connectors like those that connect our clients’ CRM and e-commerce platforms.”
“We also continue work on building SaaS functionality into the RAY platform.”
“We aim to offer our clients the benefits from subscription translation services, including high-value features such as advanced connectors and our validation platform.”
“Finally, during the half-year, our information infrastructure received the ISO27001 certification, the gold standard for information security. This accreditation is pivotal to our success in securing the support of the global enterprise customers we are targeting.”
Straker is well-positioned to continue its growth strategy.
“We have market-leading technology, a global footprint and offer our customers opportunities to automate and consolidate their global translation requirements with a single provider delivering significant productivity benefits and cost savings,” Mr. Straker said.
“Success with big companies like IBM provide a high profile validation of these capabilities.”
“IBM’s endorsement will, over time, bring more large enterprise accounts to Straker, especially as our new sales and marketing strategy gains traction, and power our organic growth.”
“The $55bn localization market is highly fragmented with over 20,000 providers, the majority of which rely on outdated and cumbersome manual processing of translations.”
“The sector is ripe for the disruption our RAY platform delivers. With our strong balance sheet, we continue to be a change-maker in the sector based on our valuation criteria.”
“We continue to explore bolt-on acquisitions that will benefit from our technologies, extend our reach into key markets establish relationships with new global enterprise customers and offer opportunities to improve profitability under Straker ownership.”
“We believe we are on track to deliver on our aspirational target of $100 million. Our forecast for FY2022 Revenue exceeds $50m with a Gross Margin exceeding the 53.4% of last year.”