Straker shares feel the IBM effect with 50pc rally

Translation software company Straker Translations (ASX:STG) has strengthened ties with computing giant IBM.

Straker announced this morning that it’s been appointed as a Strategic Translation Service Provider for IBM, in a two year deal (with an option for two more).

Shares in the company jumped by as much as 50 per cent to $1.36 — their highest level since January.

The IBM effect

Straker’s core technology is an AI-based software platform used to translate written documents into other languages.

The company’s initial agreement with IBM was based around translation services for one language — Spanish.

However, the new deal will see that number expanded to 55, including major languages such as French, Chinese, Portuguese and Japanese.

The integration will see the expanded deployment of Straker’s proprietary RAY platform, a cloud-based, AI translation service that’s been developed over the last eight years.

IBM will run the technology across a number of its verticals, including the Adaptive Translations Services department and its global media division, which Straker said is a “key growth driver of the business”.

Straker didn’t flag a specific revenue figure from the deal, on the basis that “such financial effect can only be determined over time based on usage volume”.

However, historically it said revenues from its partnership with IBM’s Translation Services division have been material.

In addition, the company expects to increase headcount by around 30 staff to accommodate its expanded language offering.

Commenting on the announcement, Straker CEO Grant Straker said the expanded partnership with a multinational computing company will be crucial for the company as the broader race around AI technology heats up.

“Our industry, like almost every other, is being fundamentally changed by the accelerating use of AI across all facets of localisation,” he said.

“The agreement requires extensive integration with IBM and the opportunity to build a deep partnership with the world’s leading AI company is hugely exciting.”

The company highlighted the March quarter of 2021 as the key time period when it expects income to flow from the deal.