Insights

Straker Translations share price sinks 7% following mixed update

The language services and technology company has reported strong and profitable revenue growth but hefty cash outflows in Q1 FY23.
The post Straker Translations share price sinks 7% following mixed update appeared first on The Motley Fool Australia. –

The Straker Translations Ltd (ASX: STG) share price is down 6.73% in late afternoon trading.

It appears ASX shares investors are not impressed with the company’s June quarterly activities report released today. It reported “strong and profitable Q1 FY23 revenue growth” but significant cash outflows.

Straker shares opened at $1.03, well down on their previous closing price of $1.115. They slid to a 52-week low of 96 cents before recovering to $1.04 at the time of writing.

By comparison, the S&P/ASX All Ordinaries Index (ASX: XAO) is well into the green today, up 1.09%.

Straker Translations share price dips despite 66% revenue growth

Straker Translations provides language services and technology via subscriptions to its customers. 

Here are the key takeaways from its quarterly report:

Q1 FY23 revenue of NZD$18.8 million, up 66% on Q1 FY22 and 8% on Q4 FY22
Adjusted EBITDA of NZD$1.5 million (third consecutive quarter of growth)
Operating cash outflow of NZD$2.3 million due to an increase in working capital and the timing of customer receipts. Straker expects a return to positive operating cash flow in Q2 FY23
Total cash outflow of NZD$4.3 million, up from NZD$2.2 million in Q4 FY22 following $1.1 million in earn-out payments on IDEST Communications and NZTC and $700,000 in research and development (R&D) capitalisation
Strong balance sheet with no debt
NZD$11.4 million in cash, down from NZD$15.1 million in Q4 2022
Robust sales pipeline driven by customers looking for technology-led global localisation solutions

Straker said its revenue growth was “… underpinned by growing sales to multinational organisations and the contribution from the Belgium-based translation provider IDEST Communications, acquired in Q4 FY22”.

Also contributing to the revenue boost was “strong growth across the APAC and European operations (excluding IDEST) and the continuing success and expansion of Straker’s strategic translations service agreement with IBM”.

What else happened in FY22?

Straker says IDEST “continues to perform well and in line with expectations”. The company sees an opportunity for cross-selling Straker’s global language translation capabilities.

IBM translation volumes are in line with expectations and the system integration is mostly completed “with new partnership opportunities developing”.

Straker said eased COVID-19 travel restrictions were enabling sales staff to once again attend industry conferences and meet face-to-face with customers.

What did management say?

Straker’s CEO Grant Straker said he’s pleased with the company’s progress and confident it can realise its growth opportunities.

Straker commented:

We have a strong balance sheet, are well funded and are on track to deliver on the guidance issued at the end of May 2022 for profitable growth in revenue for the 12 months to the end of March 2023 of 20% and gross margins exceeding the 54% achieved in FY 2022.

This outlook is supported by the latent opportunities in recent acquisitions, including IDEST, a strong sales pipeline among global enterprise customers and governance organisations, the company’s technological leadership, and the strength of its reputation as a change maker in the global translations sector.

We also believe growth will be assisted by the easing of COVID-related travel restrictions …

What’s next?

In its statement, Straker said it wanted to increase its technology lead over its peers:

We are focusing part of our research and development team on a new innovation cycle aimed at
increasing our technology lead over the competition.

Based on some projects with major customers, we have seen how the world of localisation is evolving and how customers are looking for eco-system providers that are integrated into customer processes.

This cycle of innovation should also open up more SaaS revenue opportunities. We expect these efforts to start contributing to revenue in the second half of the year.

Straker Translations share price snapshot

The Straker Translations share price is down 35% in the year to date. The All Ords is down 10%.

Incorporating today’s losses, the micro-cap ASX share is up 1.96% over the past month.

The company has a market capitalisation of $75.59 million.

The post Straker Translations share price sinks 7% following mixed update appeared first on The Motley Fool Australia.

Should you invest $1,000 in Straker Translations right now?

Before you consider Straker Translations, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Straker Translations wasn’t one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

See The 5 Stocks
*Returns as of July 7 2022

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

Rare earths are now in the red for 2022. What does this mean for the Lynas share price?
‘On track’: Fineos share price climbs 6% on strong quarterly
3 ASX 300 retail shares majorly cashing in on Thursday
The Bitcoin price is leaping 10% higher today. What’s going on?
Why is the Bubs share price smashing the All Ordinaries today?

Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Straker Translations. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

  • This field is for validation purposes and should be left unchanged.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Rebate Rewards

Level 2 Rebate

Deposit $2,000 and get $200 Rebate
$ 200 Rebate
  • 3 Simple Steps
  • 1. Register Using The Link Below (Promo-Code: WEBREBATE)
  • 2. Deposit $2,000 and place one trade at any non-Austalian market within 30 calendar days
  • 3. Receive Your $200 Rebate
Popular

Level 1 Rebate

Deposit $1,000 and get $100 Rebate
$ 100 Rebate
  • 3 Simple Steps
  • 1. Register Using The Link Below (Promo-Code: WEBREBATE)
  • 2. Deposit $1,000 and place one trade at any non-Austalian market within 30 calendar days
  • 3. Receive Your $100 Rebate

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex Securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

EASY QUALIFICATION & LOW ENTRY
NEW CLIENT REBATE OFFER
EARN UP TO $200 CASH REBATE
Act Fast - Promotion Ends In
Click Here To Get Started
EASY QUALIFICATION & LOW ENTRY
NEW CLIENT REBATE OFFER
EARN UP TO $200 CASH REBATE
Act Fast - Promotion Ends In
Click Here For More Info