Straker’s M&A strategy pays off with record half-year revenue result
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Special Report: The revenue result followed through to positive EBITDA as momentum builds for the year ahead.
Translation technology company Straker (ASX:STG) is executing on its vision to build a global SaaS platform, following the release of a strong half-year result this morning.
Top line revenues rose nine per cent to a record high of $14.6m for the six months ended September 30.
In addition, annualised recurring revenues – an indicator of growth for the year ahead — rose by a robust 32 per cent to $28.1m, with repeat enterprise customers generating 59 per cent of sales.
Commenting on the results, Straker said revenue growth was driven by the contributions from two strategic acquisitions — NZTC International and On-Global.
NZTC is New Zealand’s longest established translation company, while On-Global is a Spain-based translation business that forms a core part of Straker’s European expansion strategy.
Gross margins rose to $7.6m, a slight fall as a percentage of total revenue as part of the integration process for Straker’s new acquisitions.
However, the company also demonstrated early synergies across its product suite while streamlining its cost structure – a combination which saw top line revenues flow through to positive EBITDA of $40,000.
Looking forward to 2021, CEO Grant Straker said the company is now positioned to capitalise on a number of tailwinds in the wake of the COVID-19 pandemic.
“COVID-19 is accelerating the transition of the translation industry to an outsourced and automated model, and we are benefitting from this trend,” Straker said.
As evidence of that shift, he cited the company’s recent deal with global computing giant IBM – an announcement which saw Straker shares surge by more than 50 per cent.
In addition, the company flagged plans to get back on the M&A trail, with a number of strategic acquisition opportunities in the pipeline as the global economy emerges from the pandemic.
In fact, the IBM deal itself emerged out of Straker’s 2018 acquisition of the Spain-based MSS – a translation platform that was only providing Spanish language services at the time.
“Soon after MSS was integrated with Straker and implemented the RAY translation platform, it became clear that we could offer IBM more,” Straker said.
“We are seeing particularly strong engagement with global enterprise customers who value our global reach as much as they value the speed, accuracy and service that our platform delivers,” he said.
Pointing to the increased demand for translation technology, Straker said across the company’s global platform it had seen an 81 per cent increase in the amount of data it processes, compared to the same time last year.
Throughout the year, Straker has also focused on building its tech advantage by further developing its market-leading RAY platform, with improved capabilities around user interface and subtitling across multiple languages.
The company said its global footprint leaves it well placed to benefit from increased demand in the year ahead.
“We continue to expect revenue from the recently announced IBM agreement to positively impact the Q4FY21 financial results and expect it to yield a significant contribution in FY22,” Straker said.
“We are looking ahead with confidence and look forward to providing an update at the end of the third quarter, if not before.”
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.