In another sign of the language industry’s resilience in the face of the pandemic, New York-headquartered TransPerfect reported third quarter 2020 revenues of USD 213m — an increase of 13% compared to the same period in 2019.
The company said driving quarterly growth was the release of “pent-up demand” and a strong month of September, which was up 20% compared to 2019. As a private company, TransPerfect is not required to release financial results, but has chosen to regularly publish revenue updates.
Topline growth was supported by a number of bolt-on acquisitions TransPerfect closed in Q4 2019, such as Lassostudios, Sublime Subtitling, AGM Factors, Scheune, and Chulengo. TransPerfect President and CEO Phil Shawe told Slator in an interview that of the 13% growth in Q3 2020, M&A contributed five and organic growth, eight percentage points. In terms of regions, Asia performed best, followed by Europe and the Americas.
Asked about his outlook for TransPerfect and the language industry at large, Shawe said that given the global nature of the business and diversified client base, he sees “a positive barometer, not only for our Q4 and 2021, but for the global economy as a whole.”
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Divisional performance was consistent with the broader industry during the pandemic. “Life Sciences was strong, Travel & Hospitality less so, and some areas like on-site interpretation and court reporting were hit extremely hard by Covid-19 but are now rebounding,” Shawe said.
Losing the Crown
In terms of acquisitions, TransPerfect has yet to announce a deal since the outbreak of the pandemic. The company is set to lose its crown to UK-based RWS as the largest language service provider as RWS is on track to acquire rival Super Agency SDL.
TransPerfect’s M&A strategy has historically centered around bolting on additional verticals or technology instead of simply buying scale. Shawe reiterated this and said they “typically don’t engage in M&A to grow our top-line revenue.”
Asked about his take on the RWS-SDL and Acolad-Amplexor mega-acquisitions, Shawe said that “we may see customers that we don’t currently work with not wanting to have all of their eggs in one basket — and be looking to onboard new suppliers. Further, if the merger is seeking to create synergies through headcount reduction, so that the combined entity is more profitable, this may lead to a situation where experienced talent enters the job market.”
While venture capital funding, private equity investment, and M&A activity in the language industry are at record highs, initial public offerings (IPOs) are limited to Australia (of all places).
Asked about the lack of language industry IPOs in the US and Europe, Shawe said “Many industry players are now owned by private equity firms that have the ability to provide growth capital. Because access to capital is one of the main reasons that companies go public, for these companies, going public may not be as necessary.”
60 People in 140k Square Feet
As the northern hemisphere enters the winter season and the pandemic gathers pace once more, TransPerfect continues to operate remotely. CBS reported that at the company’s new headquarters in New York, “before the pandemic struck, 600 people reported to the office every day. Now, on any given day, 60 people at most are present in the 140,000-square-foot space.”
Shawe emphasized that they “believe company culture is critical to our success, [and] we’re looking forward to the day when our teams can safely return to an office environment.” CBS quoted TransPerfect COO Roy Trujillo as saying, “Working in the office is important in developing a company culture. It’s a lot easier to job-hop if you don’t have those types of relationships and experiences with your colleagues in your workplace.”
The challenge of remote work is particularly pronounced in Sales, which has always relied on face-to-face interaction to nurture relationships and close deals. Shawe said that, at TransPerfect, which runs what is perhaps the industry’s largest sales force, sales professionals and clients “have had to adjust to the world of remote working.” Like everyone else, TransPerfect moved its user conference GlobalLink NEXT 2020 online — which boosted attendance by a factor of three, according to Shawe.
New Product Launches
As funding of translation, localization, and interpreting technology startups is at record levels, industry incumbents will need to continue to innovate to compete with emerging rivals and avoid potential tech disruption. In that sense, it has been a busy year for TransPerfect so far.
Among the company’s recent tech launches are StudioNEXT 2.0 (cloud dubbing), Project Director 6 (TMS), GlobalLink Share, GlobalLink OneLinkJS (website localization), GlobalLink Now (Chrome browser extension), as well as updates to DataForce (AI data annotation and labeling platform) and Trial Interactive (clinical trial management platform).
“We have joined [Lionbridge] in their request and gone further — asking Chancellor Bouchard to unseal the entire record for complete transparency” — Phil Shawe, President and CEO, TransPerfect
Finally, there is an update on pending lawsuits: In early October 2020, the company settled a longstanding case around translation productivity tool Wordfast. Now the two remaining cases from the years-long ownership battle that ended in 2017 are the ones involving law firm Skadden Arps and rival US Super Agency Lionbridge. TransPerfect accuses the former of overbilling for their work as the custodian-appointed law firm, and the latter of acquiring trade secrets and confidential information under false pretenses.
In a remarkable alignment of interests, Lionbridge recently filed to unseal certain documents in the Delaware Courts, which, if unsealed, may end up helping TransPerfect in the Skadden case. Shawe told Slator, “We have joined [Lionbridge] in their request and gone further — asking Chancellor Bouchard to unseal the entire record for complete transparency.”