11 months ago
May 3, 2018
The Slator 2018 Language Service Provider Index
As the global language industry continues to evolve rapidly driven by technology and an influx of investment, Slator is launching the Slator Language Service Provider Index (Slator LSPI) to focus our coverage of providers to the large enterprise language market.
Slator LSPI participants were selected referencing their revenues and market activities for 2016 and 2017, and they represent a meaningful composite of leading vendors.
This Is Not Just A List
The LSPI will be a useful resource to language industry stakeholders such as service vendors, buyers, consultant, technologists, and investors when used in conjunction with Slator’s online news service and research, such as our recent M&A and NMT reports. The Slator LSPI also provides an expandable building-block approach, similar to the MSCI in financial markets, as we deepen coverage geographically and within industry segments.
The Slator Language Service Provider Index contains 33 LSPs whose 2017 revenues exceed USD 30m plus two companies on a Watch List we are monitoring for inclusion in 2019. LSP revenues have been independently verified by Slator, led by Research Analyst Esther Bond, with company representatives or publicly accessible sources such as annual reports filed with regulators or stock exchanges.
Our approach to data collection is detailed in the Index section below. The combined revenue of the 33 Slator LSPI companies grew 16% in 2017 to USD 4.7bn. This is an attractive headline rate but growth across the index is mixed and the Slator LSPI is not a market-sizing exercise.
- TransPerfect is a sales machine. Its 12% organic revenue growth is an impressive USD 65.8m in absolute terms – more than double the USD 30m revenue required to make the Slator LSPI. In October 2017, TransPerfect CEO Phil Shawe presented at SlatorCon New York on how they built this sales machine and keep it well oiled.
- Media localization is booming with the growth of Over-the-Top (OTT) media services over the past three years. This is fueling growth for players such as BTI Studios (interview with CEO Björn Lifvergren at SlatorCon Zurich), ZOO Digital, IYUNO, VSI, SDI Media, and others.
- Video interpreting is growing in the United States, aided by regulatory drivers such as the Language Access framework. This has propelled players such as LanguageLine, Cyracom, and Stratus Video to double digit revenue growth.
- M&A was the major growth driver for many LSPs that saw double digit revenue increases, which implies that core organic revenue growth was relatively flat for many LSPs with a few notable exceptions such as TransPerfect.
For more commentary on performance data and organizational changes for each LSPI company, see the News Digest section below.
The Slator LSPI is not meant to be inclusive of all possible companies given the size, complexity and fragmentation of the global language industry. Some companies are part of conglomerates, where verifying the specific language service revenue can be difficult, while a few others have declined to participate.
The Other Companies section contains a round-up of relevant performance and organizational changes for 11 companies known to have significant language service revenues, but whose performance Slator has not been able to independently verify.
Contact Slator co-founder Andrew Smart if you would like to submit your company for inclusion in the 2019 Slator LSPI; or if you would like to discuss consultancy services including a strategy review, senior management workshop, technology assessment or custom industry research.
2019 Watch list
- Unless otherwise noted, the figures reflect revenues obtained for the company’s fiscal year, and therefore do not always represent the calendar year;
- Figures are presented in US dollar millions (USDm) for the purposes of the index;
- Where relevant, exchange rates are based on historical data and taken to be 31 Dec 2017 for 2017 figues and 31 Dec 2016 for 2016 figures;
- Unless otherwise noted, the percentage growth is calculated based on the actual currency as reported to / acquired by Slator.
- Figures are self-declared or from publicly accessible sources such as annual reports filed with regulators or the stock market
Slator 2018 LSPI News Digest
|1||TransPerfect||What a year 2017 was for TransPerfect: Epic struggle for control, wave of senior departures late in the year, but still growing 12% organically and acquiring the bragging rights of becoming the largest LSP by revenues. The company is due to be sold to current co-CEO Phil Shawe, with the sales completion deadline set for June 2018. Upon completion, TransPerfect is expected to re-start its M&A activities in earnest.|
|2||Lionbridge||2017 saw Lionbridge enter a transition phase, post-sale to Private Equity Group H.I.G. Capital. Complete with a new CEO leadership and major restructuring, the company posted 7.3% revenue growth in 2017, and 16% in Q4 2017. 2018 looks set to be a transformative year, with Lionbridge announcing over 100 layoffs while shooting for acquisition-led revenue growth and partnering in technology with new NMT providers like Amazon.|
|3||LanguageLine Solutions||Having been sold to French call center operator Teleperformance in 2016, LanguageLine solutions is now part of Teleperformance’s “Specialized Services”. The company’s revenues grew by 8.7% in 2017, but their Q1 2018 has slowed, reportedly impacted by a weak dollar and an operational glitch. LanguageLine is a major player on the North America interpretation scene.|
|4||SDL||SDL continues its transformation. The company posted a slight decline in revenue for 2017 compared with 2016, and cut around 100 positions. Publicly-listed SDL also expects to do away with another 160 jobs in 2018. SDL is driving to increase the utilization of internal linguists. Analysts have made note of the disappointing financial performance for 2017 but have highlighted the progress made on the operational side – many rate the stock as BUY or POSITIVE.|
|5||RWS||RWS’s position on the index understates its current size. That’s because our figures do not yet include revenues from Moravia, which RWS acquired in a transformative acquisition in in October 2017. (RWS’s latest fiscal year ended September 2017 and therefore did not take into account any revenues attributed to Moravia). In the half-year period from October 2017 to March 2018 vs the previous year, RWS’s reported revenues jumped by 82% to USD 194m. Investors were not impressed with RWS’s half-year performance and shares have lost around 20% since the results were posted. Still, consolidating Moravia for the full year 2018 will mean RWS is on track to generate around USD 400m in revenues, pushing the company further up the index.|
|6||SDI Media||Media localizer SDI Media is a Netflix preferred vendor and its growth in revenue is representative of the worldwide boom in cross-cultural content consumption, also being enjoyed by others in the space. In November 2017, the company acquired marketing agency PPC, whose clients include Walt Disney Pictures, Marvel Studios, BBC, 20th Century Fox, Sky, Netflix, NBC and Sony Pictures.|
|7||Welocalize||Private-equity owned Welocalize spent several years expanding its service offering, acquiring companies such as GLS and Nova (lifesciences) and Traffic Optimiser (digital marketing, now Adapt Worldwide). Of late, the company appears to be focusing more on consolidating and integrating prior acquisitions rather than seeking out new ones.|
|8||Keyword Studios||In 2017, Keyword Studios made 11 acquisitions, adding 15 locations to its 2016 total of 27, and delivered a strong 56.3% growth vs 2016. Acquisitions are expected to continue throughout 2018 and to remain rooted in the gaming sector. Among its seven business lines, localization is the biggest revenue driver, followed by Functional Testing and Art Creation.|
|9||Amplexor International||2017 saw Amplexor acquire Sajan for USD 28.5m, gaining a foothold in the United States. The Luxembourg-based LSP, formerly known as Euroscript, was originally almost entirely reliant on business from EU institutions, a segment whose portion now accounts for about 12-15% of the business. Amplexor has aggressively diversified since and is looking for potential acquisitions further afield.|
|10||STAR Group||The Swiss-based STAR Group is a very private company. No acquisitions, few public appearances of online marketing efforts. Based in a former monastery at the northernmost tip of Switzerland, STAR Group’s performance was a steady affair with a slight increase in revenues of 1.3% from 2016.|
|11||CyraCom International||After several exceptional growth years, CyraCom showed a comparatively modest increase of 8.7% up from 2016. The company featured on the Inc. 5000 list two years running, growing by 125% in 2015 and by 17% in 2016. Along with the likes of LanguageLine, CyraCom is one of the giants of the remote interpreting space.|
|12||BTI Studios||BTI posted impressive year-on-year growth of 57.4% in 2017, capitalising on the upward swing in the media localization industry. The company has made a conscious move to prioritise dubbing above subtitling in recent years: in 2010, 96% of BTI’s revenues were from subtitling in 2010 and only 3% from dubbing, whereas today, dubbing accounts for 60% and subtitling less than 40%. The shift to OTT clients will also continue to be a big growth factor for BTI in coming years. *Percentage growth was calculated on USD-converted revenues since the 2017 and 2016 figures were obtained in two different currencies (EUR and SEK respectively).|
|13||Semantix||Private-equity owned Semantix has been on an acquisition drive across the Nordics recently, buying up Textminded in 2017 and Amesto translation earlier in 2018. (2017 figures do not include Amesto revenue, which is estimated at around USD 18m annually). The company also appointed a new CEO in October 2017. Although they continue to dominate the Nordics, Semantix now has a footprint in other parts of Europe, as well as Chile and China (through the Textminded deal). Semantix will have to diversify away from its core government interpretation business if it is to succeed in the long-run.|
|14||Honyaku Center||In 2017, Honyaku Center, Japan’s largest LSP, acquired Media Research Inc and a purchased a 13% stake in Mirai Translate. *Although the company’s fiscal year ends in March, the revenues above are for the 2016 and 2017 calendar years. Although financial performance was flat across the business for 2017, impacted by declining sales in the conventions segment, translation verticals registered growth above 5%. Honyaku Center has also recently appointed a new president.|
|15||Donnelley Language Solutions||Donnelley Financial Solutions (DFIN), the new parent company of Donnelley Language Solutions, was formed in the spin-off from RR Donnelley & Sons, which completed in October 2017. Having acquired MultiCopora in 2014, any future acquisitions are likely to focus on technology, services, and highly regulated markets. The company is also prioritising transcreation, website localization, video dubbing and subtitling, and machine translation post-editing as growth areas.|
|16||Pactera Technology International||Pactera is the IT outsourcing unit of Chinese conglomerate HNA Group that was due to be sold in 2017. However, pre-IPO fundraising work was stopped back in November 2017. HNA itself acquired Pactera from Blackstone only one year earlier. The Globalization Services unit currently accounts for about 9% of Pactera’s revenues and traditionally services large enterprise IT accounts, going up against the likes of Lionbridge and Moravia (now part of RWS).|
|17||Ubiqus||The France-headquartered LSP has a long history of dealmaking, having acquired 20 companies in the past 15 years. In 2017, the company acquired two boutique Spanish LSPs: Celer Soluciones (lifesciences) and Traducciones Poliglota (generalist). In a next move, Ubiqus plans to streamline and integrate their own in-house TMS.|
|18||thebigword||Thebigword rebounded strongly in 2017, posting an impressive 40% growth, and outperforming the company’s own prediction of 35%. This growth is largely credited to the UK-based company having secured a large Ministry of Justice contract in August 2016 (worth GBP 120m), and they and also achieved organic growth of about 5% in 2017. CEO Larry Gould is expecting FY2018 growth to reach 20% (thebigword’s fiscal year runs until May).|
|19||United Language Group||Created in 2016 from spin-off of Merrill Translation Services and the subsequent acquisition of KJ International, the newly formed ULG swiftly acquired Language Select (2016), MT vendor Lucy Software (2017), and VIA (2018). Along the way, the company has been sued by founder and former CEO Jeff Brink (since quietly settled), but continues to execute its original buy-and-build strategy.|
|20||Voice & Script International||With 2017 revenues up 19.5% from 2016, VSI expects to see sustained growth in demand as organizations continue to recognize the value of adapting their content into multiple languages to extend their global reach. As a Netflix Preferred Vendor (NPV), VSI has experienced fluctuations in demand to an extent, but has been able to prepare for demand surges by training new talent ahead of time.|
|21||Worldwide Language Resources||Worldwide Language Resources is one of the major language service providers to the US government, winning a USD 14.9m contract issued by the Department of Defense in 2017. The company was also jointly awarded a large-scale, 10 year army contract in March 2017 along with nine other companies, for a total value of USD 10bn.|
|22||KERN Global Language Services||KERN is a Germany-based LSP with over 50 branches in Europe, North America and Asia. The company posted growth of nearly 10% year on year in 2017. Germany continues to be one of the most highly fragmented language service markets worldwide with hundreds of small LSPs competing for business from the country’s export champions.|
|23||Technicis Group||French PE group Naxicap acquired a majority stake in Technicis Group in early 2016, and Technicis itself has been consistently acquiring in recent years, having bought Swiss company Translation-Probst in July 2016 and Italian LSP Arancho Doc in 2017. Technicis posted a strong 46.7% growth from 2016 to 2017 and has continued its buy-to-build strategy into 2018 with the acquisition of French LSP Textmaster earlier this year. The company is targeting an annual revenue of EUR 60m for 2018 and may move to acquire companies of over EUR 10m going forward.|
|24||Stratus Video||Out of the dozen or so US-based LSPs included in the 2017 Inc. 5000 list, Stratus Video earned itself top spot for its 2016 revenue growth, which was up by more than 2100% from 2015. The virtual remote interpreting (VRI) provider acquired over-the-phone (OPI) provider Optimal Phone Interpreters at the start of 2016. Stratus Video, bought by private equity firm Kinderhook Capital Fund in 2015, also posted huge growth in 2017 (41.6%).|
|25||Morningside Translations||Morningside Translations, a New York-headquartered LSP that focuses on IP, patent, legal, and other regulated industries, was acquired in May 2017 by a group of individuals led by co-CEOs Tom Klein and Roland Lessard. The pair come from outside the language industry and opted for Morningside because of its industry vertical mix and growth track record. True to form, the company posted strong growth of 24.6% for 2017. The company has also recently appointed a LanguageLine’s former CEO and Chairman as Chairman of the Board.|
|26||SeproTec Multilingual Solutions||In 2016, Spain-based SeproTec acquired Lidolang and, in doing so, secured itself a production hub in a tech-savvy location (Poland). They also expanded their US operations the same year. Amid an influx of asylum seekers to Europe, the company was mandated to provide services to the European Union, along with a number of other LSPs. It was also awarded a EUR 5.6m Police contract issued by the Departamento de Interior in Barcelona, Spain. Growth remains strong at 21.8%.|
|27||Certified Languages International||Certified Languages International made the Inc. 5000 list two years running (in 2016 based on 2015 growth and 2017 based on 2016 growth). Growth was 81% and 59% for 2015 and 2016 respectively, and the company has posted yet another strong performance for 2017, with 25.6% year on year growth.|
|28||Akorbi||Akorbi featured on the Inc. 5000 list two years running (in 2016 based on 2015 growth and 2017 based on 2016 growth). Growth was 758% and 450% for 2015 and 2016 respectively, but slowed for the company in 2017, with 6.6% year on year growth. They have been seemingly focusing on senior hires and other growth initiatives of late.|
|29||Telelingua||The Brussels-based LSP with a global footprint posted strong growth for 2017 with an 18.1% year on year increase.|
|30||Livewords||In 2016, Concorde Group acquired cloud translation platform Livewords and was itself then acquired by private equity firm Bencis Capital Partners. The company went on to acquire translation platform FindCircles in the same year and financial translation specialist BB&TW in 2017 before rebranding to Livewords. Year on year growth for 2017 was slightly negative at -2.2%.|
|31||xplanation language services||Belgium-based Xplanation acquired Germany’s Matrix Communication in late 2016, expanding operations to a third European location. The company remains open to acquisition opportunities that would strengthen its presence in Germany, the UK and the US.|
|32||IYUNO Media Group||IYUNO’s revenues have skyrocketed by 86.4% from 2016, indicative of the exceptional growth in audiovisual services. In a further boost to its growth potential, Singapore-based IYUNO Media Group received an investment of USD 23.5m from SoftBank Ventures, one of the world’s biggest investors, in April 2018.|
|33||LanguageWire||Denmark-headquartered LanguageWire was acquired by PE firm CataCap in 2017 and finished the year with a respectable 10.1% growth. The company is starting to execute its buy-and-build strategy, having recently acquired Danish software company FrontLab to further build out its proprietary translation management system. LanguageWire remains in dialogue with other software companies as possible acquisition targets.|
|34||ZOO Digital||*ZOO Digital’s fiscal year runs until March and the figures reported in the table above should be interpreted as follows: 2017 reflects the expected revenue for the company fiscal year 2018 (April 2017 to March 2018); and 2016 is the reported revenue for the company fiscal year 2017 (April 2016 to March 2017). ZOO Digital attributed the strong growth (69.7% – projected) to its subtitling and dubbing services and recently announced a strategic partnership with Olive Digital in the UAE as part of its plan to extend its reach to key Middle East countries. The company’s performance makes UK-based media localizer ZOO Digital an undisputed leader in terms of stock performance as it continues to benefit from the boom in media localization.|
|35||Wieners+Wieners||Germany-based Wieners+Wieners acquired Swiss LSP Apostroph in April 2017 (Apostroph did a small transaction in early 2018, buying local rival Transcript). Wieners+Wieners, which has been majority-owned by ECM Equity Capital Management since mid-2016, has a strategy of buy-and-build expansion in the DACH region. The company has continued to operate the Swiss division under “Apostroph”, which was awarded a number of lots in a recent Swiss government tender. Wieners+Wieners’ portfolio is approximately 50% advertising and marketing sector, with other verticals such as legal, finance, luxury goods, and others contributing the remaining half.|
Other Companies with Significant Language Service Revenues
|#||Company Name||News Digest|
|1||Mission Essential Personnel||Mission Essential Personnel started out as an LSP, and has since expanded its focus to serve other government requirements. In 2017, the company was awarded an unconfirmed portion of the DoD DLITE contract (ca. USD 10bn over 10 years), having fulfilled almost 75% of the previous DLITE contract, worth USD 1.2bn. Estimates based on new and continuing contracts awarded to Mission Essential Personnel put the company’s Federal Government-generated revenue at around USD 243m for 2017 and USD 266m for 2016. The US Federal Government awarded upward of USD 500m in new translation and interpreting contracts in 2017, vs USD 497.7 in 2016.|
|2||Global Linguist Solutions||Global Linguist Solutions supplies services to the US Federal Government, working on contracts such as the DoD DLITE contract, worth a total of USD 10bn over 10 years, which it shares with eight other companies. Estimates based on new and continuing contracts awarded to Global Linguist Solutions put the company’s Federal Government-generated revenue at around USD 31m for 2017 and USD 34m for 2016. Global Linguist Solutions also provides a variety of language services, cultural and business consulting to commercial companies.|
|3||DXC ACG WW||Hewlett Packard’s Enterprise Services, which housed its language division, ACG (Applications and Content Globalization), was spun off and merged with CSC in 2017. The new company, called DXC, is an end-to-end IT company, which reported USD 25.4bn in consolidated revenues for 2017. The language component its integrated within Global Business Services (GBS), which posted USD 9.5bn revenue in 2017. GBS focuses on customers within insurance, banking, healthcare and life sciences industries, as well as manufacturing and other diversified industries.|
|4||Translate plus||Translate plus reported a 26.6% revenue jump to GBP 8.5 (USD 10.5m) in 2016 vs 2015, and went on to be acquired by cross-media production platform Prodigious (part of the Publicis Groupe) in 2017. Translate plus CEO Robert Timms said that Prodigious revenue for 2017 came in at EUR 235m (USD 282m) and that income from local adaptation, translation or language services accounted for around 80% of this total. Although translate plus is the only fully dedicated language services arm within the Group, these figures suggest that Prodigious’s language-related revenue could be as high as USD 226m.|
|5||Crestec Global Communications||Japan-based Crestec Global Communications has three business lines including Technical Documentation, which houses the Localization division along with the Writing and Data Creation units. The company’s localization activities focus on technical translations for documentation such as user guides, user interface (UI) menus, messages, packaging, and brochures. The company offers MT and MT post-editing services in addition to human translation using productivity tools. Crestec Global Communications does not break out revenues for its divisions.|
|6||Hogarth Worldwide Limited||Hogarth Worldwide Limited (UK) reported revenues of GBP 102.8m (USD 126.8m) for 2016, vs GBP 80.6m (USD 119.1m) for 2015, meaning that the 2016 growth for the UK entity was 27.5%. No comparison with 2017 growth can be made since the 2017 reports had not been filed at time of publication. In addition, these are the UK-only accounts and there are additional undisclosed revenues from overseas entities. London-based Hogarth is a marketing implementation agency that is part of WPP’s Digital business line, and typically competes more with advertising, advertising-production and technology sectors rather than LSPs directly.|
|7||Appen||Australia-based Appen acquired UK transcription provider Mendip Media Group (MMG) in 2016 and Leapforce in 2017. Company revenues for 2017 were USD 130.6m, up by a gigantic 63% from USD 80m in 2016. Appen has a Language Resources Division that provides datasets for training AI engines, and a Content Relevance Division that helps clients train AI driven products. Their operations are therefore quite different from that of a pure-play language service provider, with Language Resources revenues accounting for around 35% of business in the first half of 2016. Appen’s shares have outperformed strongly since the IPO in early 2015, lifting the company’s market capitalization to over 1 billion Australian dollars as of early May 2018.|
|8||Datawords||Paris-based multilingual digital content platform Datawords acquired Luxembourg-based digital marketing firm Vanksen in 2017. Datawords recorded revenue of USD 65m in 2017 and has 500 FTEs (full-time equivalents) worldwide, with the main hubs based in Paris, Luxembourg, Hong Kong, Seoul, Tokyo, New York, Brussels, Milan and Barcelona. Further acquisitions are likely to follow in 2018 and beyond.|
|9||Språkservice||Språkservice posted earnings of USD 61.7m in 2016, and had not yet filed its annual report for 2017 at time of publication. The Sweden-based company has a strong customer footprint across the Nordic region across the public and private sectors. In 2016, Språkservice’s owners founded a consulting and recruitment agency, International Minds, seeking to put the LSP’s database of freelance interpreters to work in IT, sales, marketing, finance and engineering roles that require candidates with experience of other languages or cultures.|
|10||CTS LanguageLink||US-based CTS Language Link has a multi-vertical offering, which includes e-learning, voters’ guides and finance. Part of the company’s core focus is on supplying translation and interpreting services to Limited English Proficient Individuals (LEP), an industry that has been gaining traction because of the ever-expanding linguistic diversity across nations. Requested services commonly involve over-the-phone interpreting (OTP), video-remote interpreting (VRI) and face-to-face interpreting services, and companies use a mix of software and technology to optimise delivery.|
|11||Language Services Associates||In 2017, LSA emerged as one of the bigger creditors of Pearl Linguistics, who filed for bankruptcy leaving GBP 858.6k (USD 1.1m) in money owed to trade creditors. Earlier in 2018, the company released a new Instant Remote Interpretation Service App. The app is designed to improve delivery of language services for individuals of limited English proficiency (LEP). It aims to enhance the overall care and service through fast access to qualified video or voice interpreters via a computer, tablet, or smartphone.|