The Straker Translations Ltd (ASX: STG) share price has been an exceptionally strong performer on Wednesday.
In early trade the translation platform provider’s shares were up a massive 37% to $1.24.
Why is the Straker share price rocketing higher today?
Investors have been fighting to get hold of the company’s shares this morning after it announced a major deal with global tech giant International Business Machines Corporation (IBM).
According to the release, IBM has appointed the company as a strategic translation service provider on a two-year agreement. This agreement commences in January and comes with an option for an additional two years.
The agreement will see Straker support IBM Cloud Services, IBM Adaptive Translations Services, and IBM Global Media Localisation.
It also extends the company’s current relationship with IBM from one language (Spanish) to 55 languages. This includes a number of key popular languages such as French, Chinese, Portuguese, and Japanese.
The agreement will utilise Straker’s proprietary artificial intelligence-powered RAY platform by directly linking with IBM’s technology platforms.
Straker Translations’ CEO and Co-Founder, Grant Straker, commented: “We are thrilled to have secured this strategic agreement with IBM, and further build our existing relationship with a world leader in data management, software, artificial intelligence and cognitive computing.”
“Our industry, like almost every other, is being fundamentally changed by the accelerating use of AI across all facets of localisation. The agreement requires extensive integration with IBM and the opportunity to build a deep partnership with the world’s leading AI company is hugely exciting. We expect it will open up new opportunities for us to partner on innovation within our industry,” he added.
What is the deal worth?
Due to the nature of the agreement, management advised that it is not possible to quantify the potential revenue that will be generated from IBM.
This is because such financial effect can only be determined over time based on usage volume. However, it notes that historically, the contribution from IBM related translation services has been a material contributor to company revenue.
In addition to this, management advised that the expanded scope means the company anticipates a ~30% increase in its headcount to support future service provision.