TIMELINE

Straker STG:ASX H1 FY22 Presentation 25 Nov 2021

H1 Financial Highlights

1H: A period of strong organic growth and margin expansion has set a strong platform as we head towards our aspirational $100m revenue target

Growth & scale on par with the leading tech stocks on the ASX

*guidance for FY22

Historically staff numbers have risen in-line with revenue growth as we built to critical mass and to deliver a $75m revenue business
We are at inflection point where revenue can accelerate faster than headcount positively impacting margins
Sales team has increased by 80% compared to the same period in the previous year and has built a significant pipeline of Enterprise leads set to be harvested
Delivering efficiencies in our production team sales on track to grow 60% to our guidance of $50m for FY22E, and production team only forecast to grow by 17%

Business now set to scale

As we head towards our aspirational goal of $100m in revenue we do not expect our headcount or operating costs to increase at the same rate as our revenue.

* These are milestones for revenue - for clarity there are no dates attached to these milestones

** Staff numbers as modelled by Straker's management based on current and projected productivity metrics

M&A

Revenue across all 8 acquisitions combined has increased by 16% compared to the total revenue at time of purchase

0.57x revenue including earn-outs 15% lower than the headline rate at purchase of 0.67x revenue

To date Straker has made 8 successful acquisitions, when you take a portfolio approach and look at all 8 acquisitions in total the strategy has been a very successful one for growth and contribution back to the Group

The translation margin has increased from 54.1% in FY21 to 56.8% in H1 FY22 (excludes Lingotek as still integrating)

Eurotext	Elanex	MSS	EULE	COM	On Global	NZTC
Ireland	USA	Spain	Germany	Spain/USASpain		NZ


2016	2017	2018	2018	2019	2019	2020

M&A

• The market remains very active for M&A and we are in advanced discussion with several opportunities.
• We remain confident we will close at least one more M&A this financial year and we have a strong balance sheet to support our negotiations.
• Material revenue contribution towards achieving the $100m aspirational target
• Transferable value underpinned by technology or key customer relationships
• Profitable
• EBITDA / Cashflow accretive
Only acquire business at a discount to our own revenue multiple, consistent with historical prices paid on a revenue and EBITDA basis

Our M&A Criteria

IBM update

The IBM global deal remains a major focus as we continue to onboard content.

In April we gave an indication of how we were tracking with regards to onboarding content in word volumes from IBM. You can see from our H1 results that the onboarding has been inline with this forecast.

We expect around 90% of IBM content to be onboarded by Dec

We have won our first project (worth around US$500k for CY22) in JV with the IBM consulting division (outside of our standard contract with IBM)

https://www.strakertranslations.com/about-us/investors/announcements/hear-from-ibm-senior-directorlily-ryzebolhighlights-lily-ryzebol-senior-director-globalization-quality-and-announcements-at-ibm/

The link below is an interview done with IBM Globalisation Executive Lily Ryzebol who answers questions on the IBM/Straker partnership.

Lily talks about why IBM needed a leading technology enabled global supplier, the integration process and how IBM is leveraging Straker to make it faster and easier for IBM to reach their customer in any language

SaaS Progress

We are continuing to work on our RAY SaaS project as reported in our September technology showcase. We have underlying SaaS revenue of $5m through our Lingotek TMS platform and see an opportunity to grow our SaaS revenue though advanced features and usage based pricing in RAY.

Our aim for FY22 remains to get the systems in place to leverage features of RAY in a SaaS model, these include updates to our platform, changes in the way we store and access data and implementation of a new finance system which is now live.

pricing

Integrated finance connectors for RAY SaaS
Leverage Lingotek SaaS connectors
Product marketing and sales team info
Move existing connectors into SaaS framework
Roll out over-usage charging for data storage and transactions Enable SaaS for enterprise features such as validation
Use the new ability to offer SaaS to grow a strong base of subscription revenue, which is based on value add features for customers
Over time we remain focused on getting ~20% of our revenue on a SaaS basis

Financial Performance

	year ended30-Sep2021$'000	For the half- For the half-year ended30-Sep2020$'000
Revenue	23,325	14,805
Gross margin	13,094	7,564
Gross margin %	56.1%	51.1%
Other income	51	415
Depreciation & amortisation	$-2,256$	-658
Operating expenses excluding D&A	$-14,190$	-8,275
Operating expenses	-16,446	-8,933
Percentage of operating revenue	$-70.5%$	-60.3%
Loss from trading operations	$-3,301$	-954
Percentage of operating revenue	$-14.2%$	-6.4%
Amortisation of acquired intangibles	-1,092	-644
Acquisition & integration costs	-107	-165
Operating loss before net finance expense and tax	-4,500	-1,763
Net finance expense	$-1,239$	-842
Loss before income tax	$-5,739$	-2,605
Percentage of operating revenue	$-24.6%$	-17.6%
Income tax credit	241	108
Net loss after tax	$-5,498$	-2,497
EBITDA	$-1,152$	-461
Adjusted EBITDA	$-1,045$	40

Revenue growth of 57% YOY (68% constant currency) driven by organic growth and the acquisition of Lingotek.
Gross Margin % up 500 basis points, driven by continuing efficiencies in the translation process and the addition of higher margin subscription revenue from Lingotek.
Increased depreciation and amortisation reflects that Lingotek has a technology solution where we amortise the capitalised development costs over it's useful life.
High operating expenses reflect the addition of Lingotek and the increased investment in growth initiatives, including the onboarding of our major contract win with IBM.

Financial Position

Cash bolstered by capital raise in June of A$25m (NZ$25.8m net) less repayment of $8.4m in loans.
Trade receivables: Substantial growth in revenue and timing of customer payments increase receivables.
Intangibles SW & acquired: $15.4m increase reflects purchase of Lingotek in February.
Debt free following repayment of loans.
Net effect of doubling net assets to $40.6m

	30-Sep2021$'000	31-Mar2021$'000
Cash and cash equivalents	18,205	7,175
Trade receivables	8,633	5,752
Other assets and prepayments	3,382	3,074
Total Current Assets	30,220	16,001

Plant and equipment	348	335
Intangibles - software & acquired	27,302	28,799
Intangibles - right of use assets	438	653
Total Non–current Assets	28,088	29,787

Trade payables & accruals	6,774	5,626
Contract liability	5,594	5,234
Contingent & deferred consideration	953	1,435
Loans and borrowings	-	8,400
Other current liabilities	1,440	1,442
Total Current Liabilities	14,761	22,137

Contingent consideration	1,693	1,899
Lease liabilities	164	334
Deferred tax liability	1,098	1,357
Total Non-current Liabilities	2,955	3,590

NET ASSETS	40,592	20,061

Cash Flow

	year ended30-Sep2021$'000	For the half- For the half-year ended30-Sep2020$'000
Receipts from customers	20,260	14,725
Other operating cash flows	$-23,578$	-15,097
Operating cash flow	$-3,318$	-372
Capital investment	$-1,355$	-669
Free cash flow	$-4,673$	-1,041
Investment in acquisitions
Investing cash flow	$-1,355$	-669
Net Capital raise	25,831	$-13$
Interest paid	-688	$\blacksquare$
Borrowing repayment	$-8,400$	$\blacksquare$
Lease liability	$-370$	-260
Deferred consideration and contingent payments	-649	-1,907
Net financing cash flow	15,724	-2,180
Net cash flow	11,051	-3,221
Foreign exchange	$-21$	272
Opening bank balance	7,175	11,228
Closing bank balance	18,205	7,735

Receipts from customers were up 38% to $20.3m reflecting revenue growth and customer payment terms.
Increased other operating cash outflows reflects an increased investment in on-boarding a major client (IBM), investment in sales and marketing initiatives, and the addition of Lingotek to the Group.
Capital investment increase reflects the addition of Lingotek R&D spend.
Net capital raise of $25.8m reflects the A$25m capital raise in June.
$8.4m in loans were repaid including $688k in associated interest following the capital raise.
$649k paid following acquisitions achieving earn-out targets.

Continued delivery on plans

At our IPO in 2018 we indicated (without guidance) that we should be able to use the proceeds from the IPO to get to a $50m run rate in revenue.

At our IPO in 2018 we indicated the market was ripe for consolidation and we would continue to make acquisitions and get consolidation and margin benefits.

We stated in FY20 that our technology had reached a maturity where it was highly appealing to large Enterprise customers and announced in Q3 of that year a major global deal with IBM

We have an aspirational goal to get to $100m in revenue as this is a point where size and scale will deliver strong shareholder value