Why the Straker Translations (ASX:STG) share price is rocketing 37% higher today

Here’s why the Straker Translations Ltd (ASX:STG) share price is rocketing materially higher on Wednesday…

| More on:
Rocket launching into space

Image source: Getty Images

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.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of August 16th 2021

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Straker Translations. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Gainers