Translations Soaring: SDL with +21% revenue, 80% increase in pre-tax profit

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Translation is a soaring business. With the increasing importance of global marketing translation has become a steady and ever growing market. Not only do translation agencies and freelancers profit from this, especially the global players in the industry are the ones who benefit. This is more than evident when one takes a look at the world's third largest language service provider (see Common Sense Advisory Top 20 Translation Companies ) and software-vendor of the de-facto standard translation tools (SDLX/TRADOS) of the industry.

In a preliminary earnings call SDL plc announced results for the year ended 31 December 2006 last week. According to the press release, the company recorded a 21 percent increase in revenue, amounting to a total of £ 94,7 million or US$ 186m / EUR 141m.

Profit before tax rose by 80 percent to £ 9.3million / EUR 13.8m. Stock holder can look forward to a 103 percent increase in earnings per share.

According to the company operational highlights in 2006 were:

• Results ahead of upgraded market expectations
• Solid growth in market share with 40 new enterprise software installations in 2006
• Global Information Management gaining in recognition
• Gross margins increased to 49% in 2006 from 47% in 2005
• Significant new business wins include Dell, BMC, Avaya, Salesforce.com and Intel

Commenting on the preliminary results Mark Lancaster, Chairman and Chief Executive of SDL, said:

"This excellent 2006 performance is as a result of SDL continuing to increase its lead in Global Information Management technology, combined with increased utilisation of technology to leverage service margins, and an effective hedging strategy to manage currency fluctuations."

The second half of 2006 saw SDL again achieve record operating profits which are significantly ahead of upgraded market expectations. Revenues for 2006 were up 21%  with approximately half of this revenue growth being organic and half contributed by a year of full trading in Trados which was acquired in July 2005.

The successful integration of former arch-rival Trados GmbH, vendor of the computer aided translation (CAT) software TRADOS, into SDL has led to a considerable improvement in gross margins, now at 49%, the company reports.

SDL now records some 140,000 installed desktop licenses (of CAT / GIM softwares TRADOS/SDLX) and added more than 40 installations of enterprise product into the market with such customers as Dell, BMC and Avaya. SDL launched SDL Trados Synergy at the end of the third quarter of 2006.

Read the complete SDL preliminary earnings call

Recent SDL News:

SDL announces SDL TRADOS 2007

SDL exceeds expectations and increases pre-tax profit by 45%