Straker Translations : Quarterly Activites Update & Appendix 4C

29 April 2022

ASX and MEDIA RELEASE

Straker FY22 revenue grows 79% to $55.9m, topping guidance

Momentum continues to build towards $100m aspirational annual revenue target, with growth in Q4 FY22 underpinned by strong sales to global enterprise customers and the first contribution from the Belgium-based translation provider IDEST, acquired in Q4.

Adjusted EBITDA positive for the second consecutive quarter as Straker consolidates its transition to profitable growth. The outlook remains strong supported by latent opportunities in recent acquisitions, including IDEST, our growing service reputation among global enterprises and the company's ongoing determination to be a leader in the consolidation of the global translations market.

FINANCIAL HIGHLIGHTS1

• • Unaudited FY22 revenue of $55.9m up 79% on FY2021 result of $31.3m (up 82% in constant currency) and ahead of guidance of 'more than $50m' for FY22.

• • Q4 FY22 revenue of $17.4m up 94% vs Q4 FY21 and 15% on Q3FY22, lifted by acquisitions and continued organic growth. IDEST, acquired in Q4, contributes $2.2m.

• • Adjusted EBITDA of $0.471m, positive for the second consecutive quarter.

• • Operating cash is positive with an inflow of $919k lifted by increasing revenue, good cash collections, moderated by the expansion of global sales & marketing capability and operational support to the IBM contract.

• • Strong balance sheet with no debt and cash of $15.1m.

• • Strong enterprise pipeline driven by customers looking for technology-led solutions for localisation.

• • Straker has a profitable and growth focused business model and will give guidance for FY23 on release of the full year results.

OPERATING HIGHLIGHTS:

• • IDEST performing well and in-line with expectations. Integration programme reinforces the latent potential to come from cross selling Straker's global language translation capabilities.

1 All figures are in NZ$ unless stated.

Straker Translations (STG)	Registered Address	www.strakertranslations.com
NZ Company no. 1008867	Level 2, 49 Parkway Drive	[e-mail]
ARBN: 628 707 399	Rosedale, Auckland 0632
1

• • IBM volumes continue to grow in-line with expectations, system integration mostly completed and new partnership opportunities developing.

• • Teams have been able to travel again to engage customers at industry conferences and directly face to face.

• • Sustainability report completed to further enhance our credentials as we strive for B Corp certification.

Q4 FY22 revenues resilient, topping off a strong year

Straker Translations (ASX:STG) has closed out a strong financial year in the quarter ending 31 March 2022 supported by strong revenue from our landmark global translation agreement with IBM and a $2.2m contribution from IDEST.

The result lifts unaudited revenue for the year to 31 March 2022 to $55.9m, a figure well ahead of the guidance given in May 2021 for annual revenue 'above' $50m.

The FY22 result reflects the first full year contribution from Lingotek acquired in February 2021 and IDEST. It was also boosted by strong organic growth led by our success in leveraging our global translation capabilities and our technological leadership with global multi-nationals.

Margins remain a strong focus

Margins eased slightly in Q4 to 52% reflecting the dilution caused by lower margin IDEST revenue. As highlighted in the third quarter we see considerable potential to drive margin improvements in the coming quarters as we integrate IDEST on to the RAY platform and continue to transition IBM translation jobs from third parties to our systems.

Straker continues to focus on driving margin improvements, recognising that incremental improvements can deliver a significant uplift in EBITDA given the company's scale. Q4 adjusted EBITDA was $471k, the second consecutive quarter of positive EBITDA due to increasing economies of scale, including the set-up of a lower cost resource centre in the Philippines.

Research and development

We have continued to advance our vision of delivering a technology stack to meet the differing needs of our customers.

Our RAY translation platform meets the needs of those that want minimal involvement in the translation process, while the Lingotek subscription platform is directly targeted at those customers who wish to manage the translation process internally.

Our research and development team have advanced connections between Lingotek's suite of connectors and the RAY platform. Workflow between IBM and the RAY platform has also been enhanced as the new application programming interface that links IBM's systems with ours is further deployed across IBM's operations and we are seeing significant improvements in productivity as a result.

Straker Translations (STG)	Registered Address	www.strakertranslations.com
NZ Company no. 1008867	Level 2, 49 Parkway Drive	[e-mail]
ARBN: 628 707 399	Rosedale, Auckland 0632
2

The best measure of this is operating revenue per project manager (the group's operating revenue divided by the number of project managers, the people who shepherd translations through the

RAY translation platform).

At the start of the year the average revenue per project manager, was $49k per month. But over the last year this has increased steadily and in the March quarter it stood at $67K per manager

Cash flows and funding

Operating cash inflow for the quarter was $919k, up from the $34k in Q3 FY22. We recorded a total cash outflow during the quarter of $2.2m from $0.77m in Q3 due to the acquisition of IDEST for $1.9m in net cash and an earn-out payment of $0.3m regarding the Lingotek acquisition.

Cash reserves at the end of the quarter stood at $15.1m from $17.5m at the end of the third quarter.

Summary and outlook

CEO and Co-founder Grant Straker said: "We have turned in a strong fourth quarter that has topped off a vintage year for the company. Revenue growth of nearly 80% in a single year represents a significant achievement and demonstrates the transformation Straker has undergone.

"We see momentum continuing in the business. Our latest acquisition, IDEST, demonstrates the potential. The company has performed well since acquisition leveraging the strong relationships it enjoys with iconic institutions such as the United Nations and the European Commission, but until now has relied on providing French translation services.

"These relationships coupled with Straker's capability in translating numerous language pairs, and our track record delivering these services to blue-chip multinationals such as IBM, is a compelling customer proposition. It is also further validation of our strategy to be a leader in the consolidation of the translation sector.

"We see similar potential across our operations around the world from our presence in New Zealand through to Lingotek in the US. Meanwhile, the strength of our technology and the depth of talent within our business gives us the flexibility to deliver translation services in a way that is aligned with the needs of our customers.

"Straker is well positioned to continue its organic growth path as it continues to drive towards its aspirational goal of $100m in revenue. The transformation we have achieved in the last year is a

clear demonstration that this goal is well within our sights."

Related party transactions

An amount of $118k was paid to Directors in fees during Q4 FY2022, with a further $8k paid to a director in relation to consulting services provided.

Straker Translations (STG)	Registered Address	www.strakertranslations.com
NZ Company no. 1008867	Level 2, 49 Parkway Drive	[e-mail]
ARBN: 628 707 399	Rosedale, Auckland 0632
3

Authorisation

This announcement has been authorised for release by the Board of Straker Translations Limited.

Corporate:	Investors:
Grant Straker, CEO & Co-Founder	Ben Henri
E:[e-mail]	E:[e-mail]
P: [phone]	P: [phone]
David Ingram, CFO
E:[e-mail]
P: [phone]
About Straker Translations

Based in New Zealand Straker provides next generation language services supported by a state-of-the-art technology stack and robust AI layer to clients around the world. By combining the latest available technologies with linguistic expertise, Straker's solutions are scalable, cost-effective, and accurate. Through technical innovation and data analytics, Straker is a proven partner in future-proofing global communications.

For more information visit:www.strakertranslations.com

Straker Translations (STG)	Registered Address	www.strakertranslations.com
NZ Company no. 1008867	Level 2, 49 Parkway Drive	[e-mail]
ARBN: 628 707 399	Rosedale, Auckland 0632
4

Rule 4.7B

Appendix 4C

Quarterly cash flow report for entities subject to Listing Rule 4.7B

Name of entity

For personal use only

Straker Translations Limited

ABN

628 707 399

Consolidated statement of cash flows

1. Cash flows from operating activities

• 1.1 Receipts from customers

• 1.2 Payments for

  • (a) research and development

  • (b) product manufacturing and operating costs

  • (c) advertising and marketing

  • (d) leased assets

  • (e) staff costs

  • (f) administration and corporate costs

• 1.3 Dividends received (see note 3)

• 1.4 Interest received

• 1.5 Interest and other costs of finance paid

• 1.6 Income taxes paid

• 1.7 Government grants and tax incentives

• 1.8 Other (provide details if material)

  Acquisition/integration payments

• 1.9 Net cash from / (used in) operating activities

ASX Listing Rules Appendix 4C (17/07/20)

See chapter 19 of the ASX Listing Rules for defined terms.

Quarter ended ("current quarter")

Q4 31 March 2022

Current quarter

$NZD'000

Year to date (12 months) $NZD'000

17,578

50,403

(1,514) (5,876)

(7,393) (23,416)

(42) (911)

- (5)

(6,173) (18,508)

(1,537) (4,052)

- - - -- - - -

-

-

919

(2,365)

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