Straker Translations shares soar on stellar FY22 results

Straker Translations shares have rocketed after reporting an almost 80% increase in revenue and beating guidance.

Straker Translations (ASX:STG) saw revenue increase 78.5% for FY22 to $55.9 million, well ahead of guidance of $50 million for the period.

The global leader in AI-based translation services also reported positive EBITDA, up 194% from 2021, as the company focuses on continued profitable growth.

Straker has seen steady success since its IPO in 2018, led by Bailador with significant shareholdings held by Australian Ethical and Clime Asset Management.

The NZ-based business offers a unique solution for its users by amalgamating Ai, machine-learning and a crowd-sourced pool of freelance translators to provide faster and more accurate translations.

Dubbed the “RAY Translation Platform”, it is used by more than 10,000 clients, including IBM, in more than 20 countries for translation services.

Profit trajectory

Despite dilution caused two major acquisitions – IDEST Communication and Lingotek – Straker reported a gross profit rise to $30.4 million from $16.7 million, with gross margins for the year 54%, up on the prior year’s 53%.

The business also saw its EBITDA turn positive in the second half of the year delivering EBITDA of $1.2m, delivering a full year result of $0.2 million. The Company has also guided to continued profitability in the coming financial year.

“The transition of EBITDA is a pleasing result, but it also shows our determination and commitment to delivering profitable growth for the business and shareholders.”, says Founder and CEO, Grant Straker.

M&A strategy

Beneath the strong results lies a foundation of savvy acquisitions that have helped the Kiwi tech company optimise its services and land lucrative partnerships that have cemented Straker as a major player in machine learning translations.

The FY22 fourth quarter Straker acquisition of Belgium-based IDEST Communication for €4.25 million strengthened its position in Europe and put it in the box seat for key relationships with multilateral governance organisations such as the United Nations and the European Union.

Meanwhile, the US-based Lingotek, acquired in the fourth quarter of FY21 for US$6.47 million, grew Straker’s revenue by 11% from the previous year. On top of revenue growth the Lingotek acquisition added strategic translation connector technology to the “RAY Translation Platform” markedly improving the company’s service offering.

“We see immediate potential to drive margin improvements as we continue to integrate our acquisitions and transition these businesses to the Ai-Powered RAY translation platform, Grant Straker states.

“However, we are also determined to drive incremental productivity improvements, recognising that such changes can deliver a significant uplift in earnings given our scale.”

IBM Boost

Inked in 2020, Straker’s multi-year strategic translation alliance with computing giant IBM has begun to supercharge the company’s global enterprise success.

The alliance which saw IBM replace multiple vendors with Straker’s technology-based approach has exceeded both Straker’s and IBM’s user volume forecasts.

Sitting at just under 2.2 million words per month at the commencement of the alliance, volume has steadily increased to more than 11 million words per month with peaks reaching up to 19 million.

“The IBM alliance has been pivotal to the recent success of Straker Translations,” Grant Straker says. “ The rise in volume we’ve seen from the partnership has been accompanied by a surge in multiple revenue streams to Straker. The partnership validates our ability to scale quickly to meet the demands of a global customer.”

This article was developed in collaboration with Straker Translations Group, 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.