May 28, 2019

New Zealand Herald: Straker Translations shares jump after it beats prospectus forecasts


28 May 2019

Kiwi company Straker Translations ASX-listed shares jumped 11 per cent to A$1.50 in early trading after it posted a full-year revenue and adjusted earnings figures that nudged ahead of its prospectus forecast.

Revenue, fuelled by a series of acquisitions, was up 44 per cent to $24.6 million or 4.7 per cent ahead of guidance for the year to March 31.

The company made a $4.5m net loss, versus a $1.6m loss in the prior year.

Its loss before acquisition and IPO costs was $790,000, a sixty per cent improvement.

Gross profit was also a nose ahead of guidance as it jumped from $9.3m to $13.4m

The company finished the year with $17.7m cash (from the year-ago $22m) and no debt.

No guidance was given for 2020.

Co-founder and chief executive Grant Straker told the Herald his company would continue to pursue an acquisition strategy in the year ahead.. The timing of deals was hard to guarantee, however, making it tricky to give guidance.

Straker says the global translation market is now worth US$47b and will grow to $66b by 2022. Its founder says its blend of AI and human translators with relevant experience in specialised areas like the legal industry.

After an up-and-down ride, Straker's stock almost back where it started (it listed at A$1.51 in October last year).

But its CEO is sticking by its decision to list across the Tasman.

"Aussie investors have been very good to us. Most institutional investors that came in at the IPO have grown their shareholding since then," he told the Herald.

Last month he offered the blunt assessment, "Right now I can't imagine any growth orientated global company picking the NZX over the ASX."

Growth through acquisition

A string of acquisitions in the US, UK and Europe - funded first by private investment from the David Kirk-headed Bailador then IPO money - has seen Straker's staff numbers grow from 30 in 2015 to 140 today.

The UK and Europe (52 per cent) and North America (34 per cent) have become Straker's biggest markets.

Although its acquisitions have been the biggest contributor, Straker also enjoyed 12.6 per cent organic growth last year.

Grant Straker in the Straker office in Gisborne - where his company relocated some of its operations after asking Auckland staff if they wanted a more affordable location. Photo / Michael Craig.

So far, everything is going to plan.

"It's good to deliver on what we promised the market," Straker says.

Straker Translations stock jump today gives the company a valuation around $80m.

Bailador is the largest shareholder with a 20 per cent stake. Straker family members (former paratrooper Grant co-founded the company with his wife Merryn) hold 19 per cent.