Straker Shares Skyrocket 75% on IBM Deal

Translation Agency Straker Shares Skyrocket 75% on IBM Deal

Shares in Sydney-listed Straker Translations (ASX: STG) soared 75% on November 11, 2020, adding approximately USD 25m to the company’s market capitalization. Driving the rally, a major deal win with Big Blue announced that same day.

The two-year deal with IBM (extendable by two more years) will see the New Zealand-based language service provider (LSP) supporting IBM Cloud Services as well as the so-called “IBM Adaptive Translations Services” and “IBM Global Media Localisation.”

Straker said it was unable to quantify the size of the deal but expects to ramp up headcount by 30% to service the IBM account. Given Straker’s size, that would put the value of the deal in the mid-single-digit millions.

The LSP also said the deal expands its “current relationship with IBM, from one language (Spanish) to 55 languages, including a number of key popular languages” as well as providing “translation capabilities in the Media segment,” which Straker described as a key growth market.

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Since its October 2018 Australia listing, Straker has struggled to show a meaningful profit with earnings hovering around the break-even mark. The IBM deal should push the company into solid profitability, while also considerably lifting the top line.

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CEO Grant Straker highlighted this as a major deal win with the large tech company. Straker’s financial year ends March 31, 2021 and the LSP said it expects the IBM deal to impact Q4 FY21 results, just as it has done in the past.