Key Points
- Straker shares leap on strong revenue results
- Management noted the business is on track to hit milestone $100 revenue goal
- Margins expected to fall slightly in Q4 due to integration of IDEST
The Straker Translations Ltd (ASX: STG) share price is rebounding sharply today following a trading update from the company.
At the time of writing, the translations company's shares are rocketing 23.53% higher to $1.68 apiece.
Straker on track to meet revenue growth targets
Investors are snapping up Straker shares after the company revealed its FY22 revenue has ramped up significantly.
According to its release, Straker reported it has achieved revenues of $15 million for the third-quarter of FY22. This represents an increase of 99% over the prior corresponding period (pcp), and a 26% lift quarter-on-quarter (QoQ).
Management noted that the $60 million run-rate recorded indicated that Straker is on track to meet its $100 million revenue goal.
The roughly even split of organic and acquisition growth showed that the company has multiple growth opportunities.
Margins remained stable at 54%, however, this is expected to slightly decrease going into the fourth quarter of FY22. This is because the business will begin to include IDEST margins, dragging the over group margins lower.
Straker stated that over the next couple of quarters, margins may lift as it integrates IDEST onto the RAY platform. IBM integration with the vendor pool is also expected to continue.
At the end of the period, management declared a cash balance of $17.5 million, with no debt.
Straker CEO, Grant Straker touched on the company's latest deal, saying:
We have market leading technology, a global footprint and offer our customers opportunities to automate and consolidate their global translation requirements with a single provider delivering significant productivity benefits and cost savings.
The upgrade to our guidance for FY2022 largely reflects stronger than expected organic growth but also the continued execution of the Company's M&A strategy with the acquisition of IDEST positively impacting in the current Quarter. The demonstration of accelerating and profitable growth supported by a robust net cash balance sees Straker head into calendar 2022 in a very strong position.
Straker share price summary
Over the past 12 months, the Straker share price is down almost 7%, with most of these losses occurring in December. The company's shares hit a 52-week low of $1.30 at the end of 2021.
Based on valuation grounds, Straker commands a market capitalisation of roughly $109.29 million, with 67.78 million shares outstanding.
