On June 14, 2016, London-based language service provider (LSP) translate plus filed its KPMG audited annual report for the year ended August 31, 2015 with the UK government.
Total revenues came in at GBP 6.625m* (USD 8.799m), up 2.5 percent from the previous financial year’s GBP 6.464m. The company’s gross profit was GBP 3.578m, up 6.3 percent from last year’s GBP 3.359m. Gross margins stood at 54%, up 3.7 percentage points from the prior period.
Translate plus is a private company and jointly owned by founders Robert Timms and Per Severinsen. The two started the company in 2008 after leaving British LSP thebigword, where Timms was Strategic Accounts Director and Severinsen VP of European Sales.
In an industry where gross margins and profitability figures are often treated as state secrets, translate plus has opted for transparency. The company would not have to file a full P&L statement. Below a certain revenue threshold, the UK allows companies to submit abbreviated (balance-sheet only) accounts.
So why put it all out there? Slator reached out to co-founder and director Robert Timms, who said he considers the transparency beneficial for the company in the long run. He said it gets them attention via rankings such as the Deloitte Fast 50 in 2015 or the Sunday Times SME Export Track 100.
Open reporting apparently also helps the credit rating, and, according to Timms, might make it easier for them to find external investors, should they choose to go that route in the future.
The accounts break results down in revenues, cost-of-sales, gross profit, administration costs, and operating profit (essentially EBITDA). Timms explained that cost-of-sales is almost exclusively spending on translation and other direct linguistics services, as is the case with most other LSPs. Below gross profit, administration costs is the catch-all line for PM, admin, IT, sales, management, and other costs.
Asked about the slight decrease in EBITDA in the 2015 period, Timms said that most of the decrease was caused by investments in new office space and by the hiring of additional staff, most of which were senior hires.
The investments are paying off. For the current financial year, which ends in August 31, 2016, Timms projected a strong increase in revenue to GBP 8.5m and an EBITDA margin of over 10%.
It seems the company has managed to sustainably scale past the USD 5-8m threshold where many LSPs either sell or get stuck. Asked about what’s driving growth, Timms pointed out the company is starting to win larger accounts where they would not have been considered two to three years ago.
Timms would not disclose client names but according to the company website, some of translate plus’s clients include Amazon, Google, and, according to Fast Track 100, Nestlé, and Morgan Stanley.
Executing these larger, more demanding contracts requires operations staff, who, despite the British pound’s recent Brexit-induced fall, are likely to be too expensive in central London. The recent opening of a European support office in Sofia, Bulgaria, will help keep the costs for operational expansion in check.
On the revenue side, Timms has high hopes for Jackpot Translation, a spinoff division, focused on game translation and app localization. Timms said Jackpot’s management, sales and marketing are run independently with admin, finance and accounting provided by translate plus as a shared service. He plans to launch additional, specialized brands over the coming years.
For translation productivity, translate plus currently uses SDL Trados, Across, and MemoQ, Timms said. The company has developed its own translation management system (TMS) called iPlus. Timms stressed that he considers a proprietary TMS part of the core value proposition of a language service provider. “Differentiating yourself purely through project management and translation quality is difficult”, he said.
Asked for his take on Brexit’s effect on the language services sector, Timms said he regrets the decision but points out the weakening of the pound might actually be a good thing for export oriented LSPs. More than 65% of translate plus’ business comes from outside UK.
As for translate plus staff, he does not see a problem with hiring employees from the EU, since even in a post-Brexit world, bringing in skilled workers should still be possible.
Note: *last 3 digits rounded
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