Straker Posts Double Digit Top Line Growth in Q2 2020, Set to Buy Two LSPs in Europe

Australia-listed language service provider Straker (STG.AX) provided a business update for the second quarter of its financial year 2020 (Q2 2020). The company reported the somewhat unusual metric of cash inflows (as opposed to the more common revenue metric) in the announcement. 

The update said that cash inflows came in at NZD 7.3m (USD 4.6m) in the second quarter of financial year 2020 (Q2 2020); an increase of 15% from the same period the year prior. For reference, Straker generated around USD 16m in revenues in its 2019 financial year ended March 31, 2019.

Straker said in the October 2019 update that it is making progress on its aim of ramping up sales to enterprise customers, pointing out that it had become one of a number of preferred vendors for a major global enterprise. The company has traditionally been known for servicing ad-hoc clients with projects of a smaller, transactional nature.

Another development that Straker highlighted for the quarter was its newly agreed partnership with AppTek, an AI support services company that deals with automatic speech recognition (ASR) and NMT. Straker inked a partnership with AppTek on October 18, 2019, which will allow them to integrate AppTek’s technology into Straker’s AI-enabled translation platform, RAY. 

The AppTek partnership is a strategic play that will contribute towards Straker’s bid to expand its media localization capabilities, the business update said. The company plans to focus on automating elements of the speech-to-text, transcription and text-to-screen services it offers to media localization customers. 

CEO Grant Straker at SlatorCon San Francisco 2019

Having acquired COM Translations, a Spanish LSP specialized in audio-visual services, in early 2019, Straker integrated and rebranded the business unit to Straker Media in Q1 2020. According to Straker, media localization is “the fastest growing segment of the global translation industry,” which explains their rationale in wanting to “become a major global force” in the attractive media localization niche.

Straker also snapped up Spain-based LSP On Global Language Marketing in the first quarter of FY 2020, and the company has now said that it is in “advanced discussions with two [acquisition] opportunities based in Europe.” With residual cash reserves of NZD 14.0m (USD 8.9m), much of it raised in its October 2018 IPO, Straker has dry powder for future M&A. 

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What the company does not yet have is a profitable business. But Straker confirmed in the business update that it only narrowly missed breakeven point in Q2 2020, if the results are adjusted for one-off restructuring and integration costs.

Investors seemed pleased with the results, with Straker’s shares ticking up 3% on the news. The company’s market cap stood at AUD 95.2m (USD 65.3m) as of press time.