Straker achieves record profitability and cash flow in FY24

Straker reports free cash flow of $2.3m, a $3.2m improvement from the prior corresponding period
Record gross margin of 63.8%, well ahead of guidance
Company reports third consecutive year of positive Adj EBITDA

Special Report: Pioneering AI-powered translation company Straker (ASX:STG) has delivered a strong set of results for the year ending March 31, 2024. Despite challenging market conditions, the company reported record profitability and positive free cash flow, affirming its strategic focus on leveraging AI technologies.

The company reported record revenue of $50 million for the period, with cash receipts slightly higher at $52.2 million. Gross margin (GM) of 63.8% exceeded guidance and was up a whopping 680 basis points over the past two years. Adjusted EBITDA surged to $4.5 million, a threefold increase from $1.4 million in the previous corresponding period.

Free cash flow (FCF) also saw a substantial uplift, improving by $3.2 million to reach $2.3 million. The company maintains a robust balance sheet with no debt and cash reserves of $12.2 million, even after a $2 million share buyback.

Strategic Developments

FY24 marked a transformative year for the company which rebranded from “Straker Translations” to “Straker Ltd” to reflect its expanding technological capabilities beyond translation services. The newly established Managed Services (MS) division, launched early in the fiscal year, demonstrated exceptional growth, significantly contributing to the company’s GM expansion. This division, primarily serving leading enterprise customer IBM, has quickly become a key revenue stream.

Straker’s technology seamlessly integrates human expertise with machine capabilities. The company’s leading AI-driven tool, Verify, discerns content suitable for direct use from machine translation and content requiring human review providing substantial cost savings for clients.

Company Co-founder and CEO Grant Straker said Verify presents a substantial Annual Recurring Revenue (ARR) opportunity.

“We’ve had very positive early feedback from on Verify from key clients. By providing verification and compliance checks for AI-driven content, the product ensures the highest standards of accuracy and reliability,” he said.

“This not only streamlines the translation process but also significantly reduces costs for our clients. Our innovative approach positions us at the forefront of the industry, transforming the way businesses handle multilingual content and driving considerable growth in our Annual Recurring Revenue.”

Outlook for FY25

Looking ahead, Straker expects its gross margin to exceed FY24 levels, sustained EBITDA profitability, and continued free cash flow generation with the AI Cloud product suite anticipated to contribute to the company’s ARR base.

“We believe the work we have done in the last two years has positioned us exceptionally well for a return to more favourable market conditions,” said Grant Straker.

“Our investment in AI innovations, particularly the AI Cloud and AI Verify offerings, is expected to significantly enhance our revenue quality and drive SaaS growth.”

This article was developed in collaboration with Straker, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.