Straker Translations Investor Brie fi ng Half year results to 30 September 2018
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: Includes Non-IFRS measures as we believe they provide useful • Is for general information purposes only, and is not an o ff er or invitation for information for readers to assist in understanding Straker’s purchase, or recommendation of securities in Straker Translations Limited fi nancial performance. Non-IFRS fi nancial measures do not have a (Straker) standardised meaning and should not be viewed in isolation or considered as substitutes for the measures reported in accordance • Should be read in conjunction with, and is subject to, Straker’s latest and prior with NZ IFRS. These measures have not been independently interim and annual reports, including Straker’s interim report for the period audited or reviewed. ended 30 September 2018, and Straker’s market releases on the ASX Pro forma information has been extracted form the company’s • Includes forward-looking statements about Straker and the environment in prospectus. In presenting the pro forma historical income which Straker operates, which are subject to uncertainties and contingencies statement information, certain adjustments to the audited outside of Straker’s control - Straker’s actual results or performance may di ff er statutory income statements have been made. These include the materially from these statements impact the acquisition of MSS and Eule and incremental costs of operating as a publicly listed company • Includes statements relating to past performance, which should not be regarded as a reliable indicator of future performance All information in this presentation is current at 30 September 2018, unless otherwise stated. • May contain information from third parties believed to be reliable; however, no representations or warranties are made as to the accuracy or completeness of All currency amounts are in NZ dollars, unless otherwise stated. such information, and � 2
Business Financial Agenda Outlook Q&A update update Grant Straker Haydn Marks CEO CFO � 3
Business Update Grant Straker CEO � 4
YoY Revenue Growth Adjusted EBITDA +39% $110k Outstanding performance NPBT ($243k) across all KPIs Pro forma Revenues Gross Margins 55.3% $13.4m $12m Reported Revenue Operating Expenses Repeat Revenue Growth 54% of revenue 42% � 5
1 Key Business PROFITABILITY Points from the We are seeing clear bene fi ts from the operating leverage produced by our technology as we continue to deliver on our pro fi tability forecasts. H1 Result 2 IPO Major achievement of The IPO was a signi fi cant work stream for the team and the company is now listing on the ASX on in a position to focus solely on pursuing its growth strategy from a position of strength. the 22nd October 2018 3 REPEAT REVENUE Organic and repeat revenue is growing in line with expectations. Our global infrastructure is enabling us to grow our international customer contracts and secure new business opportunities in lucrative markets like Europe. � 6
Success at growing existing customer accounts at an enterprise Organic Growth level New opportunities with large global tech companies for automation of the translation process We have a laser focus on new business generation Customers requirements becoming more complex, aligning with our technology solutions US Government contracts in unique vertical driving revenue in North America Settled global sales team and structures � 7
MSS Spain Eule Germany Straker European O ffi ces ACQUISITIONS During H1 2019 we completed two acquisitions and both have performed in line with 21 Sta ff 22 Sta ff expectations, and generated new Barcelona Kiel and Cologne organic growth NZ$3.25m Revenue* NZ$3.14m Revenue* opportunities. Discussion underway to Has opened new grow largest customer opportunity with one of revenue through our the largest customers technology o ff ering Integration underway and Integration underway with a o ffi ce consolidation with team from NZ in Europe Straker o ffi ce in Barcelona � 8 completed *Pro-forma March 2018 revenues
Total revenue breakdown by geography (Reported) Europe (largest global translation market) now our largest market as we penetrate deeper in region 17% 19% 36% H1 Sep-17 H1 Sep-18 52% 29% 47% North America EMEA APAC North America EMEA APAC � 9
Investment into our RAY platform During H119 we made signi fi cant investments into our RAY translation platform 1 Translation A.I driven 8 quote engine upgraded File analysis servers have been set up in a high-availability to 2 handle increased load and complexity Adobe AEM Connector Released and Magento 7 3 Enterprise connector released. A new system to allow translators to Updates to the timing making it easier for perform various checks on jobs quality us to o ff er alternative pricing frameworks to customers to save review and validation time. 4 6 DACH Payment Method is now live. 5 The aim of this was increase job stream conversion rate in line with other markets. 1.7m new human translation memory � 10 items added to database A new release of tools to translate Microsoft O ffi ce Documents and review them in our platform.
Our Business What we do and how we commercialise our innovation MAX German, French and English Freelance Translator St. Johann, Germany � 11
Language services market size, global, 2015 to 2020 The Market 60 We operate in the US CAGR 7.3% 58 $50bn and growing 54 50 global translation 45 industry 43 40 38 30 15 0 2015E 2016E 2017E 2018F 2019F 2020F � 12 Source: 1. Frost & Sullivan, ‘Market Report on the Language Services Market’ (29 August 2018), commissioned by Straker
13,000 Hybrid Content 90+ File formats supported We overlay crowd- source 554 Billion Translation Model sourced language data points Automated content ingestion translators Over many years we have developed a hybrid translation platform that 1st Crowd Human big Machine utilises advances in machine machine source data driven Translation translation combined with translation human quality Engine draft refinement review the variable cost base of professional human translators Final translated content � 13 Straker proprietary RAY platform is used for the process
We utilise our proprietary We leverage advances in 1 2 and unique platform to machine learning to Commercialising track and pay translators produce industry-high our innovation by the hour, rather than gross margins by the word 3 Our technology helps to increase translator speed, How we have grown quickly so we gain operating and commercialised our $27 $26 $30 $28 leverage over time innovation through hybrid translations 1,023 775 680 469 Avg hourly rate $ Avg Translator CY15 CY16 CY17 CY18 YTD words per Hour 0 English - French � 14 English - French Translator Speed
122 Full Time Employees in 10 O ffi ces UK Ireland Germany USA Spain Japan Hong Kong Thailand Australia New Zealand � 15 Sales Sales and Production
Financial Results Haydn Marks CFO
P ro-forma revenues of $13.4m and on track to deliver prospectus forecast Financial Pro-forma adjusted EBITDA loss of ($132k) KPIs and Revenue growth of 39% YoY Highlights H1-19 Reported YoY repeat revenue growth of 42%, driven by both strong organic growth and acquisition revenues Reported gross margin strong at 55.3% and up on the previous period’s margin of 54% Reported adjusted EBITDA pro fi t of $110k, signi fi cantly up on the previous period’s loss of ($786k) DSOs expand to 75 days versus 60 days the previous year due to increased business activity with enterprise customers Operating cash fl ows up 10% YoY to ($0.96m) � 17
Statutory Results
Revenue growth (Reported) Revenue Growth New v Repeat Revenue 12 14 12 39% 2.3 9 10.5 8.6 9.9 31% 71% 1.8 NZDm NZDm 42% 7 6 6.9 5 3.5 3 0 0 0 0 0 H1 Sep-17 H1 Sep-18 H1 Sep-16 H1 Sep-17 H1 Sep-18 Repeat New Reported repeat revenue growth of 42% � 19
NZDm H1-19 H1-18 YoY Non-IFRS Operating Income H1-19 Translation Revenue 12.00 8.61 39% (Reported) CoS (5.37) (3.96) Gross Margin 6.63 4.65 42% Revenue Growth of 39% YoY, to $12m Gross Margin % 55.3% 54% 130 bps Gross margin of 55.3% expands by 130 bps Operating expenses up 20% YoY Operating Costs (6.52) (5.44) 20% and make up 54% of revenue v 63% prior year, demonstrating Other Income / Costs 0.00 - - real leverage from our technology Adjusted EBITDA 0.11 (0.79) 813% Adjusted EBITDA pro fi t of $110k, up 813% Margin % 1% (9%) 1,000 bps on the previous period’s loss of ($786k) � 20 Very strong growth across the board
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