What’s Happening With Straker Translations IPO

  • Oct 22, 2018 AEDT
  • Team Kalkine
What’s Happening With Straker Translations IPO

Based in New Zealand, Straker Translations Limited (ASX: STG) is involved in the operations of operating a cloud-enabled translation services platform. The company issued its prospectus on 26 September 2018 and the company’s shares started trading on ASX from 22 October 2018. Under its prospectus, STG raised around $21.2 million by the issue of 12,185,430 ordinary shares. The Offer price was $1.51 per share and on the first day of the trading, the share price of the company increased by $0.20 (13.3 %) and traded at $1.710 as on 22 October 2018. As per the prospectus of the company, from the total funds received under the Offer, 13.3 percent of the funds will be used for Payment of cash proceeds to Selling Shareholders, 63.6 percent of the funds will be used for investment in sales & marketing, investment in product development, general corporate purposes and customer acquisition, including potential additional acquisitions, 3.1 percent of the funds will be used for the payment of costs of the Offer and 1.8 percent of the funds will be used as a working capital. The company generates revenue from its customers for translation services and the services are mainly charged on a rate per word basis with the rate varying depending upon the language pair (a greater rate is charged for a less common language pair) and the nature of the project. 

In FY 2018, the company provided services for around 8,400 customers globally with the largest customer accounting for 10.6 percent of total pro forma revenues and the top 20 customers accounting for 54.3 percent of total pro forma revenues. The revenues of the company are geographically diverse as 88% of Straker’s pro forma FY 2018 revenues are sourced from outside Australia and New Zealand.

In the last two years, the company has undertaken four acquisitions and the company has a strategy to continue acquisition activity in the future. The company is having various organic and inorganic growth strategies in place to take advantage of the scalable business model it has established, and it has a track record of organic growth and acquisitions. The Company has an acquisition strategy based on the financial benefits of migrating acquired customer bases onto its own technology platform which has been demonstrated in the first two acquisitions of the company. For Straker, the acquisitions are a significant growth opportunity as the nature of the language services industry is highly fragmented. The company intends to actively pursue potential acquisition opportunities in the market in the future.

In FY 2018, the company experienced a revenue growth of around 44 percent to $17.03 million as compared to the revenue of FY 2017. The net loss of the company decreased from $2.68 million in FY 2017 to $1.52 million in FY 2018. By the end of FY 2018, the company was having current assets worth of $11.03 million. The net cash used in the operating activities of the company was $1.28 million in FY 2018.

STG shares traded at $1.710 with the intraday trading volume of 600,217 shares as on 22 October 2018 (AEST 4:00 PM).

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