Auckland-based artificial intelligence (AI) language services solutions provider Straker Translations has revealed the investment it has made as part of its partnership with IBM has hit its bottom line for the six months ending 30 September.
The company, which is publicly traded on the Australian Securities Exchange (ASX), told shareholders on 25 November that its adjusted half-yearly earnings before interest, tax, depreciation and amortisation (EBITDA), came to a loss of $1 million, down from a narrow $40,000 profit for the corresponding period the year prior. This represents a fall of 2712.5 per cent.
“The EBITDA loss is due to the upfront investment we have made in the business to meet the needs of the rapidly scaling IBM business and the costs of scaling up our sales and marketing efforts to focus on further organic growth opportunities,” the company said in a statement.
Straker Translations revealed earlier this year it had chosen IBM Cloud to scale up translation services for 55 languages and target larger customers worldwide.
Straker had also been appointed as a strategic translation service provider to support IBM cloud services, IBM adaptive translations services and IBM global media localisation.
In May 2020, Straker provided subtitling for IBM’s premier annual Think conference, which required the creation of subtitles for 6,000 minutes of video, equivalent to 920,000 words, within ten days.
The two-year public cloud contract expanded Straker’s relationship with IBM while adding more capacity to grow, the provider said at the time.
Straker’s overarching strategy is to deploy its own AI-powered translation technology to automate translation services for documents and websites as well as media content translation, subtitling and voice over production.
According to its latest half-yearly financials, the company’s net loss after income tax from ordinary activities during the period was $5.46 million. For the corresponding period last year, the company’s net loss after tax came to $1.96 million.
However, revenues were very much on the rise, with the company reporting a 58 per cent year-on-year increase to $23.33 million.
The revenue rise was driven by the contribution of recent acquisitions, most notably the US-based translation provider Lingotek, and the benefits accruing from the strategic IBM translation alliance, which was struck in the second half of the prior financial year.
Indeed, despite the financial shadow left from its investment in its partnership with IBM, Straker told shareholders that the quantum of work delivered under the IBM strategic translations contract was ahead of expectations, and was now running at more than 10 million words a month across 90 languages, up from 1 million words in January.
Meanwhile, the company’s gross profit rose to $13.1 million from $7.6 million, representing 56 per cent of revenue, up from 51 per cent in the previous corresponding period.
“I am immensely proud of our achievements in the last half year,” Straker CEO and co-founder Grant Straker said. “The transformational deals we struck in the second half of the prior financial year – the acquisition of the US-based Lingotek and the strategic translation contract win with IBM – set us up for continued strong growth.”
Together, the agreements have driven a strong increase in group revenue, helped improve margins materially and have positioned the company well to drive towards its target of $100 million in revenue.
“Indeed, compared to 1HFY21 we have added additional annualised revenues of $17 million driving us towards our full-year revenue guidance of $50 million,” Straker said. “Since the start of the year translation volumes through our platform have surged.
“IBM content is now running at more than 10 million words a month up from 1 million in January and is ahead of expectations. We are also delivering translations in 90 different languages up from just two in January and the 55 envisaged when we set this contract in motion.
“We have also delivered on our service commitments to IBM, with more than 80 per cent of IBM’s translation requests now being delivered directly to our systems,” he added.