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STRAKER LIMITED AGM Information 2024
65867_rns_2024-08-26_175b5313-00ff-49e1-947e-9572ee0eb54e.pdf
AGM Information
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ASX RELEASE
2024 Annual Meeting Chair and CEO Addresses and Presentation
Auckland, 27 August 2024 – Straker Ltd (ASX: STG, 'Straker' or 'the Company') attaches the Chair and CEO addresses and presentation for Straker's 2024 Annual Meeting.
Authorisation
This announcement has been authorised for release by the Company Secretary of Straker Limited.
Corporate: Investors:
Grant Straker, CEO & Co-Founder Ben Henri E: [email protected] E: [email protected] P: +64 21 512 484 P: +61 473 246 040
David Ingram, CFO E: [email protected] P: +64 21 591 984
About Straker
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.straker.ai
ARBN: 628 707 399 Rosedale, Auckland 0632
Straker (STG) Registered Address www.straker.ai NZ Company no. 1008867 Level 2, 49 Parkway Drive [email protected]
STRAKER LIMITED – 2024 ANNUAL MEETING
Tuesday 27 August 2024
Address by the Chair, Linda Jenkinson
My name is Linda Jenkinson, and I am Straker's Non-Executive Chair. This is my inaugural Annual General Meeting of Straker's shareholders. I intend on giving a brief review of the key highlights of FY24 before handing over to Grant Straker, our Managing Director, and David Ingram, our CFO, for more detailed commentary.
But first, however, I would like to highlight a critical trend shaping our industry. Our industry continues to be in a state of transition, shifting rapidly from traditional processes to AI based solutions. This is by no means a phenomenon unique to the translation and localisation sectors. Industries from health care to the legal profession, to financial services are evolving their work flows and processes to reap highly anticipated benefits of generative AI.
For Straker, this is no surprise. Whilst generative AI began to dominate conversations in late 2022, AI has been at the heart of Straker's ethos and product offering since the Company's entry into the industry in 2010. Our technology leadership, well highlighted by our strategic translation partnership with IBM, had its genesis almost 15 years ago in our Founders' understanding that a gap in the market existed for technology-based translation services that could utilise both machines and humans to produce highly accurate, faster, and more cost-effective translations. Iterating improvements to this original insight has underpinned our product offering ever since.
Our commitment to innovation has recently yielded several unique product releases, such as AI Verify, which have received much interest from customers. We don't intend to rest though, and will continue to invest strongly in R&D. The vast majority of our budget in this area is dedicated to AI initiatives in FY25 and shareholders can expect to see further product releases.
Ours is a highly fragmented industry and we continue to believe that a vast number of our 'cottage industry' scale competitors, will not have the resources, balance sheet or expertise to take compete in an AI world. We are already seeing signs of these competitors exiting the industry. This bodes well for Straker.
With that said I would like to turn to a review the key highlights of FY24.
Financial and Operational Performance
Straker's financial results for FY24 demonstrate the combined benefits of outstanding cost control and an evolving product offering in an environment of constrained market conditions.
As the year progressed, we tempered our expectations for Revenue, due to customers more tightly controlling their own expenditure than originally forecast and delivered $50m in Sales for the full year. A key highlight in these challenging conditions was the contribution from our new Managed Services business, which reported significant growth from a standing start in the second Quarter and ended the year as one of our most important topline contributors.
Whilst Revenue declined year on year the Company achieved an outstanding level of profitability. The trend of improving Gross Margins over recent reporting periods continued throughout FY24
and we have generated a dramatic improvement in Gross Margins of 950 basis points over the last 2 years. This has been due to technology gains, the integration of acquired business as well as the rapid growth in the Managed Services business. A record Gross Margin allowed us to report a Gross Profit of approximately $32m.
I'm very pleased to highlight that we achieved a record Adjusted EBITDA of $4.5 million, which is three times last year's result. This remarkable improvement is a direct result of our enhanced Gross Margin and our relentless focus over the past several years on boosting the efficiency of our operations. We are now capable of delivering improved services to our customers with fewer resources.
The increased scalability of Straker is particularly evident in our Production segment, where the core of our work is performed. Through continuous innovation, we have reduced the resources allocated to translation by 29% over the past 18 months, while simultaneously maintaining the quality and reliability our customers expect of us.
Our business is exceptionally well-positioned to capitalise on a return to more normalised customer activity, without the need to reverse the cost savings we have diligently implemented. Our efforts to achieve sustainable cost reductions have been key to setting the stage for a profitable future, and this focus on expense management is unchanged.
In the field of product development, growing demand for AI-powered content verification has opened significant opportunities for Straker. This generative AI based offering we call 'AI Verify,' was successfully launched before the year's end. AI Verify is an advanced AI Agent, using multiple large and small language models, combined with human verification to significantly reduce the time and cost of translation and verification.
Our growing suite of AI-driven applications, including AI Cloud and AI Verify are a key to increasing Straker's Software-as-a-Service (SaaS) revenue. This is one of our primary objectives for FY25 and beyond. Shifting more of our revenue from 'Repeat' to 'Recurring' sources enhances the predictability of our revenue and is supportive of strong margins. Businesses with such qualities are generally accorded superior valuation by investors and we hope to benefit from this preference.
A larger portion of our annual R&D budget is now allocated to further innovations that support this shift in revenue mix. Straker remains steadfast in its commitment to innovation, investing about $8 million each year in developing new solutions for our customers. We view this expenditure not as a cost, but as a strategic investment in our future, ensuring that Straker stays at the forefront of generative AI-driven applications for localisation and other emerging customer needs.
Healthy Financial Position
A standout feature of FY24 was our ongoing generation of cash. We produced over $2 million in Free Cash Flow during FY24, which has not only reinforced Straker's already robust balance sheet but also provided the Board with substantial flexibility to navigate share market conditions.
Thus, we were in the enviable position of being able to take advantage of a weak market for ASX emerging companies generally, and what the Board considered to be the market's mispricing of
Straker shares in particular, to launch and complete a share buyback of 5.2% of Straker's Issued Capital.
Notwithstanding the buyback the Company ended the year with cash of $12.2m and, of course, no debt.
Outlook
Turning now to our outlook, which is always of keen interest to shareholders and prospective investors. As we transition to new AI growth opportunities, our core focus is on delivering stable Gross Margin with reducing opex, and to be both cash flow and EBITDA positive for the fiscal year 2025.
Board changes
As shareholders will know, Heith Mackay-Cruise retired as Straker's Chair, and as a director, shortly after the end of the Financial Year. I take this opportunity to acknowledge Heith's stewardship of the business over his tenure. We wish him well in his future endeavours.
Acknowledgements
On behalf of the Board, I would like to thank our CEO and Managing Director, Grant Straker, and the whole Executive team for the work that they have put in over what proved to be a challenging, yet busy and productive year.
Our product innovation and ongoing outstanding service delivery would not be possible without the talent of, and commitment from, staff members in Straker offices around the world. The Board thanks every team member for their continued efforts and passion for delivering world-leading localisation and verification solutions for our customers.
We would also like to thank you, our shareholders, for your continuing support. I look forward to updating you again with my thoughts on the Company as the year progresses.
I will now hand over to Grant to go through the year in review in more detail.
STRAKER AGM 2024
Thank you for waiting, the presentation will begin shortly
Linda Jenkinson
Chair
VIRTUAL MEETING AND VOTING
https://meetings.linkgroup.com/STG2024
Directors
Grant Straker Amanda Cribb Steve Donovan Steve Bayliss James Johnstone Chief Executive Officer and Managing Director
Independent Non-Executive Director
Non-Executive Director
Independent Non-Executive Director
Non-Executive Director
Agenda
1. Welcome
2. Chair's address
- CEO & Managing Director's address
4. Q&A
-
- Formal business
-
- Meeting close
Chair's address
CEO and Managing Directors address
Our mission is to harness the power of human insight and artificial intelligence to drive unparalleled productivity.
FY2024 at a glance
Delivered Strong Financial Performance
- Achieved $4.5 million in Adj EBITDA
- Generated $50 million in revenue despite challenging macroeconomic conditions
- Reduced operating expenses by $4.5 million, optimizing resource allocation
- Achieved positive free cash flow of $2.3m
- Completed $2m share buy back
Fostered Innovation and Positioned for Future Growth
- Launched AI VERIFY, an industry-leading approach to AI-based translation solutions
- Released Straker AI Cloud with integrated workplace apps
- Released Microsoft Teams and Slack translation management integration
- Demonstrated mainstream AI is a positive development for Straker
Matured Key Alliances and built new ones
● Strengthened strategic partnerships with IBM, Microsoft, Salesforce and Foxit
FY2024 Strategic Achievements - AI Transformation
- High gross margins
- Reduction in OPEX
- Positive EBITDA
- Generate free cash flow
- Maintain strong cash position
Digital Transformation & AI Investment
-
Investment in AI R&D
-
New world leading AI translation process developed
-
New AI SaaS platform
-
Workplace Apps as TMS UX
-
IBM ecosystem
-
Microsoft partnership
-
Slack/Salesforce channel
-
New platform partnerships
Industry remain large and ripe for disruption and consolidation
Industry concentration opportunity
- Top 100 companies concentrate 25% of revenue
- 15-20,000 companies sub US$15 million in revenue
- Current technology evolution will lead to considerable consolidation
- 80% represents around $40 billion of opportunity for the right technology play
- Disruptive AI Verification technology aligns with buyers AI strategy
- Change in channels Platform LLMs and Workplace apps moving who owns the content
- Workplace apps remove need for TMS systems
- Platforms integrating LLMs move content source and get value from our Verification engine
- Significant savings for customers strong reason for change of vendor
- Trust in a local vendor has been the single biggest barrier to organic consolidation in the industry, this moat is now being removed
AI Workflow Orchestrator
Orchestrate enables customers to configure AI workflows that best suit their budgets and expected outcomes by allowing a configuration mix of token and hourly billing for tasks based on quality outcomes.
| Orchestrate Workflows | Untitled Workflow / Draft$75% \vee$ Publish | ||
|---|---|---|---|
| Untitled Workflow Draft$\blacktriangleright$ | $75% \times$ Publish$\Omega$ | ||
| ⋒ | 4 Files are uploaded in Quality Evaluation | eSelect Action$\times$93 | $\overline{\mathbf{\Phi}}$ Files are translated into Spanish (ES)and German (DE)$\cdots$ |
| $\boxdot$93 | Action$\ominus$Select languages for file translation v | $+$ | |
| $\overline{\square^*}$ | $+$ | €Languages | |
| € | $\bullet$ Spanish $\times$ $\bullet$ German $\times$ | $4$ Al translate files$\cdots$ | |
| $4$ Action | |||
| $+$ | $+$ | ||
| $\frac{1}{20}$ If token cost is less than 500 Al tokens$-False$ $( + )$ | |||
| True | |||
| $_{\odot}$ | $_{\odot}$ | $4$ Action9 2 Condition | |
| $\mathbb{P}$ | łAdd action | $\rightleftarrows$ Loop |
Teams & Slack Workplace Apps
| 喞 | $\langle \rangle$ Q Search | $\cdots \bullet$ | |
|---|---|---|---|
| $\mathbf{C}$$\cdots \quad \equiv \quad +$Teams | My channel Post Files F | 0 & D E | |
| $\bigoplus_{\text{Chat}}$Your teamsStraker TranslationGeneralTeamsMy channel $\boxplus$MarketingCalendarTest$\mathcal C$See all channelsCalls$\bigcap_{\rm files}$$\blacktriangledown$Straker$\boxplus$Apps | Sheida Massoudi 1:13 PM$\mathbf{Q}\alpha$150 jobs are currently progressStraker Translate 1:15 PMActualmente hay 150 trabajos en progreso.Actuellement, il y a 150 travaux en cours.Translated into Spanish & French using Straker AlSheida Massoudi 1:13 PM$\mathcal{L}{\mathcal{L}}$@Straker Translate (Staging) Al Translate to JA: How many jobs are done?Straker Translate 1:15 PMwMachine Translate Result:何件の仕事が完了しましたか?Vijayeta Sinel 1:14 PM$\mathcal{F}_{\mathbf{c}}$How many more jobs left?Straker Translate 1:15 PMる あと何件の仕事が残っていますか?$\leftarrow$ Reply□ Start a post | In this channelPeople (2)88 8. 08See allDescriptionAdd descriptionOptionsHomeQ Find in channelெDMsදිමු Manage channel$\hskip 1.9pt\vartriangle$Q Channel notificationsActivityUpdates$\Box$Sheida Massoudi added Vijayeta SineLaterchannel. | $\leftarrow$ $\rightarrow$ $\circledcirc$ Q Search BuzzPro$\odot$Straker vBuzzPro Inc. v$\quad \equiv \quad \text{or} \quad$Messages AboutHomeAll workspacesTURNIR IV JOHNS THERMA THE JOHNS PTAnnouncementsJonathan 12:45Marketing BuzzPro Promo 2025.mp4 -O LocationsFo Help# help-data# help-finance# help-it# help-legal# help-marketing# help-pac# help-platform# help-productStraker 12:45The Please wait a moment and we transcribe your file.# help-professional-servicesStraker 12:46# help-securityWe have transcribed your file in English and SRT file can be downloaded below.ProjectsDownload Show more optionsB TechStraker 1246Choose an option below to continueSocialEdit the transcribed file in our editing studioEdit$\Rightarrow$ EventsAdd subtitles to my videoAdd to VideoD OtherTranslateTranslate in another languageExternal ChannelsVerifySend for human verificationChannelsDirect messages$B I \oplus \mathcal{O} \boxtimes \boxplus \oplus \oplus \varphi $- AppsMessage StrakerStraker |
Go to market - a new world of access to customers
Increased marketing to drive channel and ecosystem partner growth
| AI VERIFY | Slack/Teams | Managed Services | Gap Pro | AI VERIFY Toolkit |
|---|---|---|---|---|
| AI and BusinessConferencesOnline DirectPlatformsIBM Ecosystem | Salesforce/SlackecosystemSalesforceconferencesMicrosoftpartnershipIBM ecosystem | Direct approachat C level | Partnerships andecosystemsaround AuditsLarge integrators | Powerful APIWhite labelofferingDirect targetingplatformsTechconferences |
How we are tracking
- Swiftbridge major project with IBM in Japan.
- Verify first round of live customers, technology is working and entering ramp up phase
- IBM live with Slack internally, major rollout in place
- Joint bid with Salesforce(Slack) for major global customer as they needed multilingual support.
- Foxit platform integration underway
Summary & Outlook
-
- US$50billion plus industry ripe for disruption
-
- Unique technology offering ramping up with new customers
-
- Network effect eco-systems and partnerships IBM, Microsoft, Salesforce, Platforms
-
- Profitable and significant revenue/customer base to work from
-
- Profitable and free cash flow positive
-
- Transition year for the industry and Straker as AI impacts and creates opportunities
BUSINESS FUNDAMENTALS
INCOME STATEMENT
| 2024 | 2023 | Change | |
|---|---|---|---|
| $'000 | $'000 | % | |
| Revenue | 50,014 | 59,408 | $-16%$ |
| Gross profit | 31,921 | 33,892 | -6% |
| Gross margin % | 63.8% | 57.0% | 12% |
| Other income | 355 | 82 | 333% |
| Depreciation, amortisation, and impairment of non-financial assets | (9,599) | (6,787) | $-41%$ |
| Operating expenses excluding D&A and impairment of non-financial | (28,022) | (33,050) | 15% |
| assets | |||
| Operating expenses | (37, 621) | (39, 837) | 6% |
| Percentage of operating revenue | $-75.2%$ | $-67.1%$ | $-12%$ |
| Operating loss before net finance expense | (5, 345) | (5,863) | 9% |
| Percentage of operating revenue | $-10.7%$ | $-9.9%$ | $-8%$ |
| Net finance income | 2,874 | 3,186 | $-10%$ |
| Loss before income tax | (2,471) | (2,677) | 8% |
| Percentage of operating revenue | $-4.9%$ | $-4.5%$ | $-10%$ |
| Income tax credit/(expense) | 282 | (80) | 453% |
| Net loss after tax | (2, 189) | (2,757) | 21% |
| 2024 | 2023 | Change | |
|---|---|---|---|
| $'000 | $'000 | % | |
| Operating loss before net finance expense | (5,345) | (5,863) | $-9%$ |
| Add: | |||
| Depreciation, amortisation, and impairment of non-financial assets | 9.599 | 6.787 | 41% |
| EBITDA | 4,254 | 924 | 360% |
| EBITDA Margin | 8.5% | 1.6% | 447% |
| Add: | |||
| Acquisition & Restructure costs | 245 | 504 | $-51%$ |
| Adjusted EBITDA | 4,499 | 1,428 | 215% |
| Adjusted EBITDA margin | 9.0% | 2.4% | 274% |
FINANCIAL POSITION
| 2024 | 2023 | |
|---|---|---|
| Notes | $'000 | $'000 |
| Current assets | ||
| Cash and cash equivalents | 12,165 | 12,505 |
| 10Trade receivables | 8,664 | 9,715 |
| Other assets and prepayments11 | 2,307 | 4,049 |
| Total current assets | 23,136 | 26,269 |
| Non-current assets | ||
| 12Intangible assets | 22,504 | 28,505 |
| Plant and equipment | 245 | 323 |
| Right-of-use assets17 | 1,032 | 1,246 |
| Total non-current assets | 23,781 | 30,074 |
| Total assets | 46,917 | 56,343 |
| Current liabilities | ||
| Trade payables | 2,467 | 2,606 |
| 14Sundry creditors and accruals | 3,422 | 4,545 |
| Contract liability15 | 4,875 | 6,403 |
| Employee benefits liability | 746 | 812 |
| Lease liabilities17 | 574 | 438 |
| Total current liabilities | 12,084 | 14,804 |
| Non-current liabilities | ||
| Contingent consideration16.2 | 1,711 | |
| Lease liabilities17 | 641 | 1,031 |
| Deferred tax liability | 3848 | 739 |
| Total non-current liabilities | 1,025 | 3,481 |
| Total liabilities | 13,109 | 18,285 |
| Net assets | 33,808 | 38,058 |
| Equity | ||
| Share Capital18 | 66,774 | 68,804 |
| Foreign currency translation reserve | (1, 140) | (875) |
| 24Share option reserve | 1,337 | 1,103 |
| Accumulated losses | (33, 163) | (30, 974) |
| Total equity | 33,808 | 38,058 |
CASH FLOW
| 2024 | 2023 | Change | |
|---|---|---|---|
| $'000 | $'000 | % | |
| Cash flows from operating activities | |||
| Receipts from customers | 52,190 | 62,037 | $-16%$ |
| Other operating cash flows | (47,142) | (60, 609) | $-22%$ |
| Operating cash flow | 5,048 | 1,428 | 254% |
| Capital investment | (2,711) | (2, 312) | 17% |
| Free cash flow | 2,337 | (884) | $-364%$ |
| Cash flow from financing activities | |||
| Shares repurchased | (2,030) | n/a | |
| Proceeds from issue of shares | 8 | $-100%$ | |
| Lease liability payments | (583) | (545) | 7% |
| Deferred and contingent consideration payments | ۰ | (1,703) | $-100%$ |
| Net financing cash flow | (2,613) | (2, 240) | 17% |
| Net cash flow | (276) | (3, 124) | -91% |
| Effect of exchange rate on foreign currency balances | (64) | 498 | $-113%$ |
| Cash and cash equivalents at beginning of the period | 12,505 | 15,131 | $-17%$ |
| Cash and cash equivalents at end of the period | 12,165 | 12,505 | -3% |
OUTLOOK
As we transition to new AI growth opportunities, our core focus is on delivering stable Gross Margin with reducing opex, and to be both cash flow and EBITDA positive for the fiscal year 2025.
Formal business
To receive and consider the Financial Report and Audit Report for the year ended 31 March 2024, all of which are set out in the Company's 2024 Annual Report.
There is no formal resolution required for this item but questions for the Board, CFO or the Auditor are welcome.
"To record that BDO Auckland continue in office as the Company's Auditor and to authorise the Directors to fix the remuneration of BDO Auckland as the Company's Auditor for the ensuing year."
| FOR | AGAINST | OPEN | |
|---|---|---|---|
| Number of Votes | 23,309,629 | 111,116 | 201,594 |
| Percentages of Votes | 98.68% | 0.47% | 0.85% |
"That, Ms Linda Jenkinson be elected as a Director of the Company"
| FOR | AGAINST | OPEN | |
|---|---|---|---|
| Number of Votes | 23,424,277 | 16,489 | 164,245 |
| Percentages of Votes | 99.23% | 0.07% | 0.70% |
"That, Mr Stephen Donovan be re -elected as a Director of the Company"
| FOR | AGAINST | OPEN | |
|---|---|---|---|
| Number of Votes | 23,298,769 | 248,465 | 64,245 |
| Percentages of Votes | 98.68% | 1.05% | 0.27% |
"That, pursuant to ASX Listing Rule 7.1A and for all other purposes, Shareholders approve the Company having the additional capacity to issue equity securities up to 10% of the issued capital of the Company (at the time or agreement to issue) calculated in accordance with the formula prescribed in ASX Listing Rule 7.1A.2 and on the terms and conditions set out in the Explanatory Statement."
| FOR | AGAINST | OPEN | |
|---|---|---|---|
| Number of Votes | 20,828,804 | 6,971,688 | 64,245 |
| Percentages of Votes | 74.75% | 25.02% | 0.23% |
"That, for the purposes of ASX Listing Rule 10.14 and for all other purposes, Shareholders approve the issue of 165,100 Options and the issue of underlying Shares in respect of the Options, to Grant Straker, the CEO of the Company, or his nominee(s), pursuant to the Company's 2020 LTI Employee Share Option Plan, on the terms and conditions set out in the Explanatory Statement."
| FOR | AGAINST | OPEN | |
|---|---|---|---|
| Number of Votes | 14,870,018 | 6,832,961 | 64,245 |
| Percentages of Votes | 68.31% | 31.39% | 0.30% |
"That, for the purposes of ASX Listing Rule 10.14 and for all other purposes, Shareholders approve the issue of 78,300 Options and the issue of underlying Shares in respect of the Options, to Merryn Straker, a related party of the Company, or her nominee(s), pursuant to the Company's 2020 LTI Employee Share Option Plan, on the terms and conditions set out in the Explanatory Statement."
| FOR | AGAINST | OPEN | |
|---|---|---|---|
| Number of Votes | 14,855,018 | 6,847,961 | 64,245 |
| Percentages of Votes | 68.24% | 31.46% | 0.30% |
"That, for the purposes of ASX Listing Rule 10.14 and for all other purposes, Shareholders approve the issue of 300,000 Options and the issue of underlying Shares in respect of the Options, to Linda Jenkinson, a Director elect of the Company, or her nominee(s), pursuant to the Company's 2020 LTI Employee Share Option Plan on the terms and conditions set out in the Explanatory Statement"
| FOR | AGAINST | OPEN | |
|---|---|---|---|
| Number of Votes | 20,832,376 | 6,968,116 | 64,245 |
| Percentages of Votes | 74.76% | 25.01% | 0.23% |
"That, for the purposes of ASX Listing Rule 7.2, Exception 13(b) and for all other purposes, Shareholders re -approve the adoption of the 2020 LTI ESOP and any issue of Options under the 2020 LTI ESOP for a further three years from the date of this Resolution as an exception to ASX Listing Rule 7.1 on the terms and conditions set out in the Explanatory Statement."
| FOR | AGAINST | OPEN | |
|---|---|---|---|
| Number of Votes | 14,718,506 | 6,952,303 | 64,245 |
| Percentages of Votes | 67.72% | 31.99% | 0.30% |
Voting
CONTACT
CEO - [email protected]
CFO - [email protected]