Straker Ltd · ASX:STG
Straker — Straker Translations — FY2019 Earnings Presentation
38 slides from Straker's earnings presentation, May 28, 2019
Slide 1: FY19 Results Presentation
Contact For personal use only FY19 Results Presentation Straker Translations (ASX.STG) 28 May 2019 1
Slide 2: World leading A.I. data driven language translation platform
For personal use only Straker is a world leading A.I. data driven language translation platform powering the global growth of businesses !2
Slide 3: Our advantage through proprietary RAY platform
OUR ADVANTAGE THROUGH PROPRIETARY RAY PLATFORM For personal use only 3
Slide 4: Delivering what we promised
Delivering what we promised For personal use only Key operational achievements Key technology achievements Acquired three strategic bolt-on businesses Built new platform connectors including Magento where we now have the industry leading plugin Completed IPO, raising $20m (gross proceeds) for RAY tr
Slide 5: Exceeded Prospectus FY19 forecasts
Exceeded Prospectus FY19 forecasts For personal use only 44% $25.8m YoY revenue Proforma growth revenues ($0.48m) 12.6% Organic revenue Proforma growth adjusted EBITDA 83% $17.7m 52.4m Repeat Revenue Cash at bank Words Translated !5
Slide 6: Successfully acquiring and integrating strategic acquisitions
Successfully acquiring and integrating strategic acquisitions For personal use only MSS EULE $6.4m Enterprise customer access Enterprise customer with larger footprint in access with larger Spanish market with easy footprint into Europes integration given location to largest market. $4.8m Straker te
Slide 7: FY19 delivered a strong financial performance
For personal use only FY19 delivered a strong financial performance !7
Slide 8: Continued to deliver strong growth
CONTINUED TO DELIVER STRONG GROWTH 44% YOY Revenue For personal use only Growth (NZ $m) 54% 26 Repeat Revenue 44% 24.6 Actual 44% Growth 23 23.5 Prospectus 38% 21 55% 14% 18 Gross Margins Operating 17.0 Up 0.4% on a Cashflow 15 constant currency basis improves by FY-18 FY-19 14% YoY YoY revenue growt
Slide 9: Exceeded Prospectus Forecast
Exceeded Prospectus Forecast Pro-forma Pro-forma Prospectus PF ^ PF ^ FY18 FY19 FY Mar-19 v FY18 v Prospectus For personal use only Revenue 23.42 25.81 24.89 10.2% 3.7% Revenue growth of 10.2%, driven organically from enterprise customers in EMEA and APAC Gross Margin 12.71 14.08 13.96 10.8% 0.8% Gr
Slide 10: Operating Cashflow
Operating Cashflow Pro-forma Pro-forma Prospectus PF ^ PF ^ FY18 FY19 FY Mar-19 v FY18 v Prospectus Adjusted EBITDA (1.52) (0.48) (0.53) 68.8% 9.9% Improves 30% YoY Non-cash items in EBITDA 0.05 - - For personal use only Non-operating expenses (0.24) - (0.06) Changes in working capital 0.27 (0.53) (0
Slide 11: Well placed to continue growth trajectory
For personal use only Well placed to continue growth trajectory !11
Slide 12: Technology investment in our platform
TECHNOLOGY INVESTMENT IN OUR PLATFORM We have made significant investments in our technology and R&D For personal use only We have more than 20 highly efficient Setup an office in Gisborne to give talented technology staff. Currently looking to grow staff with families a lifestyle choice location tech team
Slide 13: The industry that we operate in
THE INDUSTRY THAT WE OPERATE IN 70 For personal use only 66B Industry Size USD$ 56B 52.5 Forecast to reach 66 Billion by 2022 47B 43B 2018 - 2022 CAGR 7%* 40B 35 37B 35B 33B The translation industry facilitates trillions of dollars 17.5 of global trade annually 0B 0 2013 2014 2015 2016 2017 2018 202
Slide 14: Our growth strategy
OUR GROWTH STRATEGY Five Point Growth Strategy For personal use only Winning new Increased Transactional Integration into enterprise penetration with Acquisitions Revenue content platforms customers existing customers Straker raised funds at its October 2018 IPO to continue its inorganic growth stra
Slide 15: Organic growth
ORGANIC GROWTH For personal use only Winning new Transactional Integration into Increased penetration enterprise customers revenue content platforms with existing customers • Secure large volume • Provides cash flow • Directly market to • Winning new divisions enterprise customers benefits platforms’
Slide 16: Acquisition opportunity
ACQUISITION OPPORTUNITY For personal use only Fragmented Industry Increase EBITDA % Templated Acquisition Structure Language services market revenue – over 18,500 language service providers • Improve the target’s gross • Compounding gains on margins each acquisition Top 100 service providers = 15% i
Slide 17: Acquisition strategy
ACQUISITION STRATEGY The focus of our acquisition strategy is on Asia Pacific (specifically Japan and Australasia), USA, Spain, DACH region, For personal use only Benelux and the UK. In all these regions (outside of Benelux) we have well functioning business units making integration easier and faster
Slide 18: Key priorities for FY20
KEY PRIORITIES FOR FY20 For personal use only Work on using our data-driven approach to win new enterprise customers especially around the need for translation data within A.I. engines Rationalise our global infrastructure as we grow and leverage economies of scale Focus on simplifying content on-ra
Slide 19: Appendix
For personal use only Appendix !19
Slide 20: Pro forma revenue by region
PRO FORMA REVENUE BY REGION Revenue mix in EMEA and APAC increase slightly in FY19 For personal use only FY-18 Composition FY-19 Composition 13% 14% 36% 34% 51% 52% APAC EMEA NAM APAC EMEA NAM Includes recent acquisition COM Translations 20
Slide 21: FY-19 pro-forma revenue grows by 10.2%
FY-19 PRO-FORMA REVENUE GROWS BY 10.2% Pro-forma revenues including COM increase to $27.4 (NZ$m) Growth driven organically largely by repeat base (83% of mix) (NZ$m) For personal use only FY-19 Pro-forma Revenue Growth FY-19 Pro-forma New v Repeat Growth 26 30 25.8 10.2% 24.5 25 14.2% 4.4 3.9 23 23.
Slide 22: Pro-forma performance improves
Year on Year Pro-forma Pro-forma FY18 FY19 PF ^ v FY18 PF ^ v Prospectus Performance Improves Adjusted EBITDA (1.52) (0.48) 68.8% 9.9% For personal use only Non-operating (0.29) (0.05) EBITDA (1.82) (0.53) 70.9% 9.9% EBITDA Margin % -7.8% -2.0% 5.7% 0.3% D&A (0.37) (0.47) After adding back non-opera
Slide 23: Statutory Financials
Statutory Financials Stat Stat Stat ^ FY18 FY19 v FY18 Revenue 17.03 24.59 44.4% Revenue growth of 44% on prior Gross Margin 9.29 13.43 44.5% year, driven by both acquisitions and For personal use only Gross Margin % 55% 55% 0.0% organic activity Operating Costs (10.72) (13.67) 27.5% Other Income /
Slide 24: Statutory Financials Cont..
Stat Stat Stat ^ Statutory Financials Cont.. Adjusted EBITDA FY18 (1.43) FY19 (0.16) v FY18 88.8% Non-cash items in EBITDA 0.05 For personal use only Non-operating expenses (0.24) (0.17) Operating cashflow improves 14% Changes in working capital 0.37 (0.73) on prior year Operating cash flow (1.24) (1.
Slide 25: Financial Position
Stat Stat Financial Position Cash & cash equililants FY18 7.8 FY19 17.7 Trade receivables and accruals 2.0 3.9 For personal use only DSOs increase to 67 days Other current assets 1.2 1.4 Total Current Assets 11.0 22.9 Closed with $17.7m in bank and in strong Intangibles 5.1 10.3 position to fund gro
Slide 26: Statutory to pro-forma reconciliation
STATUTORY TO PRO-FORMA RECONCILIATION Actual Actual Prospectus For personal use only FY18 FY19 FY19 Statutory revenue 17.03 24.59 23.48 Less: impact of Com. acquisition not in prospectus - (0.19) - Net impact of MSS acquisition 3.25 0.49 0.49 Net impact of Eule acquisition 3.15 0.92 0.92 Po-forma re
Slide 27: Straker's investment proposition
STRAKER’S INVESTMENT PROPOSITION • Huge US$47 billion addressable market opportunity For personal use only Huge Global TAM • Industry is growing at over 7% pa • Artificial Intelligence driven platform using more than 500 billion data points Unique Technology • Proprietary “RAY Ai Translation Platform
Slide 28: The Problem
The Problem The speed of content change is also increasing and traditional For personal use only Global content is expanding translation providers cannot at an exponential rate and deliver to customer timeframes traditional translation processes cannot deliver at scale for customers Content is movin
Slide 29: Where we do it
For personal use only WHERE WE DO IT UK/Europe North America 76 Staff 52% Revenue Asia 14 Staff 6 Staff 34% Revenue 3% Revenue Australasia 38 Staff 11% Revenue Straker Group Revenue by region post COM acquisition 29
Slide 30: How we do it
HOW WE DO IT We have a built a unique technology platform (RAY Ai) to leverage the advances in A.I and For personal use only big data to give us a strong competitive advantage in the US$47 billion translation industry. A.I Data driven Automation of translation Crowd of more Global sales and the cont
Slide 31: Revolutionary data-driven platform
REVOLUTIONARY DATA-DRIVEN PLATFORM For personal use only Data-driven Data-driven Data-driven Data-driven Data-driven Speed Quality Production value security Using big data to Rather than process Using data to Being able to offer Using data to train machine driven quality streamline the alternative pr
Slide 32: What success has proven
WHAT SUCCESS HAS PROVEN For personal use only In 2011 we were the first company to develop a data driven approach to translation. We have redefined how the translation process works and aligned it to the business requirements of today Unique Variable cost solutions that 83% of revenue Industry High so
Slide 33: What we do
WHAT WE DO For personal use only Straker helps leading Straker helps major technology companies finance institutions streamline and scale the deliver quarterly market ability to communicate reports in multiple across regions languages Straker works with major e-commerce providers to Straker enables g
Slide 34: Company history
COMPANY HISTORY Acquired For personal use only *$NZD FY19 Forecast Pro-forma Revenue COM $24.9m* IPO Acquired Acquired MSS Elanex Bailador Acquired Investment EULE Acquired $11.8m Eurotext Barcelona Technology Company production $8m centre Full Time Multi-lingual Google driven Employees Content Mana
Slide 35: Board of Directors
Board of Directors For personal use only Phil Norman Grant Straker Tim Williams Katrina Johnson Steve Donovan Paul Wilson Independent Non-Executive Chairman Founder and Managing Director Independent Non-Executive Director Independent Non-Executive Director Non-Executive Director Non-Executive Direct
Slide 36: Executive Team
Executive Team For personal use only Grant Straker Founder and Managing Director David Sowerby Haydn Marks Indy Nagpal Merryn Straker Kim Andrews Chief Revenue Officer Chief Financial Officer Chief Technology Officer Chief Operating Officer Chief People Officer As per above ▶David was appointed Chief Revenue
Slide 37: Disclosure Statement
DISCLOSURE STATEMENT This presentation is given on behalf of Straker Translations Limited ASX:STG (Company number NZ: 1008867 / AU: ARBN 628 707 399) Information in this presentation: For personal use only • Is for general information purposes only, and is not an offer or invitation for purchase, or
Slide 38: Investor call / Contact
Investor call Contact An investor call regarding the Company’s FY19 results will be held today at 10:30am Australia Eastern Time (12:30pm New Zealand Standard Time). For personal use only For those wishing to dial into the call, please dial your respective local number below and provide the conferen