Straker Delivers Record EBITDA Amid AI Subscription Surge Despite Revenue Dip
Straker Ltd has reported a record adjusted EBITDA of NZ$4.8 million for FY25, driven by strong growth in AI subscription services and operational efficiencies, even as overall revenue declined 10.3%. The company’s strategic pivot towards AI-powered offerings signals a promising shift in its business model.
- FY25 revenue at NZ$44.9m, top end of guidance but down 10.3%
- Record adjusted EBITDA of NZ$4.8m, up 5.6% year-on-year
- Gross margin improved to 67%, a 300 basis point increase
- AI subscription revenue exceeds NZ$1m, with new product launches
- Debt-free balance sheet with NZ$12.9m cash and ongoing cost reductions
Financial Performance Highlights
Straker Ltd (ASX: STG), a New Zealand-based AI-driven language services provider, has announced its FY25 financial results, showcasing a strong operational turnaround despite a modest decline in revenue. The company posted revenue of NZ$44.9 million, which, while down 10.3% from the previous year, landed at the top end of its guidance range. More notably, Straker achieved a record adjusted EBITDA of NZ$4.8 million, marking the fourth consecutive year of profitability and a 5.6% increase over FY24.
Gross margin expanded impressively to 67%, up over 300 basis points compared to the prior period, reflecting the company’s successful shift towards higher-margin, technology-driven services. This improvement was underpinned by efficiency gains, including a 15% reduction in headcount and significant cuts in production and sales operating expenses.
Strategic Shift to AI and Recurring Revenue
Straker’s FY25 results highlight a clear strategic pivot from legacy language services towards AI-powered solutions and recurring revenue streams. Legacy language services revenue declined by 24%, primarily due to contract non-renewals in the EMEA and North American markets, including the impact of losing a major client like Nike. However, this was offset by robust growth in the Asia-Pacific region, where revenue increased by over 20%, driven by managed services and subscription offerings.
The company’s inaugural AI subscription revenue, generated through a token billing initiative, surpassed NZ$1 million. Additionally, Straker launched SwiftBridge AI, an AI-powered fintech compliance solution developed in partnership with IBM, in the Japanese market. A new partnership with Foxit aims to integrate Straker’s AI translation technology into Foxit’s PDF ecosystem, further expanding its footprint in AI-driven services.
Balance Sheet Strength and Future Outlook
Straker maintains a robust balance sheet with NZ$12.9 million in cash and no debt, positioning the company well for future growth opportunities. Operating cash flow was NZ$3.4 million, and free cash flow stood at NZ$1.2 million, reflecting disciplined cash management amid revenue pressures.
The company recorded a non-cash goodwill write-down of NZ$6.8 million related to acquisitions in the US market, reflecting the challenges in legacy segments. Despite this, management remains optimistic about FY26, expecting continued growth in recurring AI revenues and the full-year impact of recent product launches and partnerships.
CEO Grant Straker emphasized the company’s focus on cost control and revenue mix improvement, noting that the business is now better configured to support higher revenue levels as market conditions improve. The transition to AI-driven services and subscription models is expected to drive margin expansion and sustainable profitability going forward.
Bottom Line?
Straker’s FY25 results mark a pivotal step in its AI transformation journey, setting the stage for renewed growth and margin expansion in FY26.
Questions in the middle?
- How quickly can Straker scale its AI subscription revenue to offset legacy declines?
- What impact will the goodwill write-downs have on investor confidence and future acquisitions?
- Can the company sustain margin improvements as it invests in new AI products and partnerships?
