Straker Posts Record 67% Gross Margin and $4.8M EBITDA Despite 10% Revenue Drop

Financial Performance Amid Industry Transformation

Straker Ltd (ASX, STG) unveiled its FY25 results highlighting a nuanced story of transformation. While revenue fell 10% to $44.9 million, the company delivered a record gross margin of 67% and an adjusted EBITDA of $4.8 million. This performance was driven by disciplined cost control and a strategic pivot towards high-margin AI-driven language services.

Cash flow remained positive, with free cash flow generation and a strong balance sheet boasting $12.9 million in cash and zero debt. Notably, Straker avoided equity raises, underscoring financial resilience amid a rapidly evolving market.

AI at the Core, Verify Platform and Tiri Language Model

Central to Straker’s growth narrative is its AI-powered Verify platform, which blends machine translation speed with human linguistic expertise to ensure quality. The company’s proprietary Tiri language model underpins this technology, delivering superior accuracy and consistency tailored to client data.

Verify’s integration into popular collaboration tools like Slack and Teams, and document platforms such as Foxit, exemplifies Straker’s strategy to embed AI seamlessly into existing workflows. This approach aims to capture both legacy enterprise clients transitioning to AI and AI-native users demanding real-time, API-driven solutions.

Strategic Partnership and Market Positioning

Straker’s expanding partnership with IBM is a cornerstone of its strategy. Moving beyond a supplier relationship, Straker is now an IBM build partner, co-developing AI-powered solutions such as the SwiftBridge platform for Japanese listed companies and integrating Watson-powered translation agents into IBM’s ecosystem.

This collaboration not only validates Straker’s technology but also positions it to capitalize on the growing demand for AI verification and trust solutions in a fragmented, multi-billion-dollar language services industry.

Board Changes Signal AI Focus

Reflecting its evolving strategy, Straker announced key board changes. Long-serving director Stephen Donovan stepped down, while Helen Foley, CFO of major investor Bailador Technology Investments, joined the board. Additionally, Ron Heinz, a veteran in AI and technology investment, was appointed as a Non-Executive Director, bringing deep expertise to guide Straker through its AI-driven growth phase.

Outlook, Navigating Transition with Confidence

Looking ahead, Straker projects FY26 revenue between $38 million and $41 million with positive adjusted EBITDA. This reflects near-term impacts of transitioning legacy clients to AI solutions but underscores confidence in long-term growth fueled by innovation and ecosystem expansion.

Straker’s focus remains on scaling its Verify platform, deepening IBM collaboration, and broadening AI governance and compliance offerings, aiming for AI solutions to constitute over 70% of revenue in the longer term.