The Straker Translations Ltd (ASX: STG) share price is up more than 12% after reporting its FY21 result.
Straker Translations is based in New Zealand. It has established itself as an AI language services agency with strong AI and data driven technology. Its cloud-based platform manages the end-to-end translation process, using AI and machine-learning to create a first draft translation and then matches the customer’s content with one or more of the 13,000 crowd-sourced human freelance translators for refinement.
FY21 report
In the year to 31 March 2021, it reported revenue grew 13% to $31.3 million. There was a contribution from acquisitions, with COVID-19 causing some disruptions to sales.
The Lingotek acquisition contributed $1.9 million in the two months since completion, while the IBM strategic alliance goes live. This is driving an increase in translation and product development activity.
Straker Translations’ adjusted EBITDA (EBITDA explained) loss improved by 66% to $0.2 million from a loss of $0.6 million in the prior year. Lingotek subscription revenue drove a margin recovery in the fourth quarter.
However, the net loss after tax worsened from $2.5 million to $6 million. Revenue gains were offset by adverse foreign exchange movements and higher interest costs.
The company noted that its operating cashflow was positive in the second half of its financial year.
Management comments
Straker’s CEO and co-founder Grant Straker said: “Our strategic priorities are clear. We are focussed on driving consolidation in the translation sector, building repeating revenues – particularly among the large global enterprises that benefit from Straker’s global reach and our AI-powered RAY translation platform – and continuing to consolidate our technological leadership.
“What has been so satisfying for the Board and Management is that we have again successfully executed on those priorities. Moreover, we have done so while delivering financial and operational results that unambiguously validate the approach we are taking in global language service markets.”
Straker outlook and the share price
In FY22 it expects revenue to reach over $50 million at an improved gross margin. That would represent an increase of more than 60% compared to the $31.3 million reported today.
Straker is an interesting business and it could be one to learn more about and keep an eye on. There are other ASX growth shares that could also be longer-term opportunities.