Human Translation Down, Machine Translation Up in Rozetta Half-Year Earnings

On October 15, 2020, Japan-based machine translation (MT) and language service provider (LSP) Rozetta Corp released financial results for the six month period from March 1, 2020 to August 31, 2020, the company’s first half of its 2021 fiscal year (H1).

The publicly-listed company generated revenues of JPY 1,997m (USD 19.0m) for H1, a 3.2% increase from the same period the previous year. Profit was JPY 222m (USD 2.1m).

Rozetta’s biggest division is Machine Translation (MT), which contributed around USD 13.5m or 71% to the company’s topline. MT revenues grew around 46% from the same period the previous year, while profit grew 42% to USD 1.8m.

The other two divisions that Rozetta operates — Human Translation (HT), and Crowdsourcing — are much smaller, and saw a decline in revenues from the previous year. Revenues in both divisions fell by around 40%, while Crowdsourcing reported a slight loss.

In the results, Rozetta discussed the impact of the Covid-19 pandemic on the business, saying that, although the MT division held firm, orders from new customers were below expectations in the months from June to August (Q2) as a result of “the slowdown of corporate activities due to the Covid pandemic.”

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Rozetta has since observed an “increase in the number of business negotiations due to the resumption of exhibitions.” In addition, the company is expecting to see a moderate recovery in orders from late 2020, as they hope to onboard additional customers through their newly released products, T-3MT and RozettaMetamsource.

Outside of the MT business, the traditional language services (HT) division saw an uptick from late August but a full recovery will likely take time, Rozetta said. Moreover, interpreting, most of which is onsite, has been “greatly affected” by travel restrictions into Japan and it is uncertain when a recovery will occur.

Overall, they said, it is impossible to predict when the impacts of Covid-19 will subside, in particular “the downturn in purchasing activities of client companies, which are deeply related to the overseas economies.” Rozetta is therefore forecasting full-year results of around USD 37m in revenues and USD 4.3m in profits.

Change in Focus

Rozetta also noted that there would be a shift in management focus from the MT business to “Global Ubiquitous,” which they defined as “the integration of cutting-edge technologies such as AI, AR (Augmented Reality), VR (Virtual Reality), 5G/6G/G7 (High-speed, Multiple Connections), 4K/8K/12K (Super-Resolution), video distribution solutions, robotics, and HA (Human Augmentation).” These technologies are designed “to enable people around the world to interact, work, and enjoy their lives “with anyone anytime, anywhere without linguistic barriers,” Rozetta said.

Fun fact: although Rozetta plans to divert its focus from machine translation, Rozetta’s own MT was integral to the preparation of the results themselves.

The English-language version of Rozetta’s results was “prepared using our machine translation” with “no manual modification,” they pointed out in a disclaimer at the top of the document.

Of course, the company was careful to insert the usual caveats: that the document is for reference purposes only, and that the original Japanese version prevails in the events of any differences. An interesting use case for MT nonetheless.

Rozetta’s market capitalization currently stands at around USD 260m, or around 7x revenues. Use Slator’s live charts of listed LSPs to track Rozetta’s share price and performance in real time.