Straker Translations chief executive Grant Straker says other New Zealand companies need to follow its example and partner with global firms to scale up successfully.
“We're a New Zealand company, we've grown out of New Zealand, we're taking on the world. We've got a fantastic partnership going on with IBM that enables us to scale out from here and to grow,” Grant Straker told BusinessDesk.
The company employs 220 people around the world, including 60 in New Zealand. And it's lifting headcount by 40 to meet the extra demands of an expanded deal with IBM to become the multinational's main translation provider, with IBM Cloud hosting all Straker translation's services and customers for two years.
The cost has not been disclosed with an IBM spokesperson unwilling to provide an estimate because the software as a service – SaaS – model means it ebbs and flows with demand.
Straker Translations hopes having its services hosted in one cloud environment means it can scale up faster to provide its document, website, and media translation products more easily to customers.
The ASX-listed company's current market value is A$100.25 million, with shares closing at A$1.80 yesterday. That's up from A$79.4 million, or A$1.51 per share, in its 2018 initial public offering.
The business-to-business translation services meld AI-based automatic translation with human translators depending on the type of project.
Last month, Straker Translations acquired Lingotek, one of its rivals, for a reported $9.1 million, which could rise to $13.5 million. Straker said the attraction of buying a competitor was in gaining its technology and customer base, and the company is considering further acquisitions, continuing a strategy Straker flagged would soak up about two-thirds of the A$21.2 million it raised when going public.
“Our excellent acquisition strategy is to get some efficiencies out of that business, improve the margins with our tech, and get access to these large customers,” Straker said.
“We can grow the business because that company possibly can’t deliver a global offering to a customer but has a strong relationship and the geography,” he added. The Lingotek deal meant Straker Translations gained high-profile customers such as Nike and Oracle.
He said any future acquired companies’ infrastructure would be moved to IBM Cloud to simplify operations.
Following the November deal to provide translation services to IBM, analysts at brokers Bell Potter and EL&C Baillieu were optimistic Straker Translations could achieve revenue gains of NZ$14 million annually by 2023. The company's total revenue for FY20 was NZ$27.7 million.
Before the deal, IBM could only use Straker Translations' Spanish tools, where now 55 languages are supported thanks to the partnership.
While Straker didn't put a dollar figure on the anticipated increase in sales, it said the IBM deal would lift March quarter revenue and "yield a significant contribution" in the 2022 March year.