Straker strengthens its relationship with IBM for three more years.

Straker Limited (ASX: STG), a global leader in AI-powered translation solutions, has announced the renewal and expansion of its strategic partnership with International Business Machines Corporation (IBM).

IBM has decided to extend its existing agreement with Straker for another three years, effective January 1, 2026. During this period, IBM also has the option for an additional one-year extension.

The value of the contract for the initial three-year term is expected to be approximately 28 million New Zealand Dollars (16.1 million US Dollars). The revenue under the agreement will be based on customer usage and may therefore vary between periods.

This renewal strengthens the relationship between Straker and IBM. Straker was appointed as a Strategic Translation Service Provider by IBM in January 2021. IBM exercised the option to extend the agreement for another three years in November 2022. With the latest renewal, Straker will maintain revenue visibility until December 2028. The agreement also grants IBM the right to terminate with 90 days' notice.

The new agreement includes Straker’s goal to deploy its AI-powered solutions more rapidly across IBM's global operations. Currently, it is reported that 10,000 users are utilizing Straker’s AI-powered Slack translation application.

It is believed that a significant portion of the agreement will transition to AI token billing, thereby increasing Straker’s AI revenues.

The collaboration between Straker and IBM has gone beyond localization services. Straker is now part of IBM's Ecosystem Partners network. The relationship will primarily be managed through IBM Japan, which will further strengthen Straker’s integration into IBM's innovation and technology ecosystem.

One of the key focus areas of this extended partnership is the joint development of customized small language models. These models are being built on IBM Cloud using IBM's Watsonx AI technology and Straker's proprietary Tiri platform. Straker and IBM are making progress in model development, training, and deployment.

The initial results are quite positive, with the co-developed models currently outperforming industry standards. This demonstrates the commercial value of specialized small language models and highlights collaboration opportunities in the broader initiative AI space beyond translation.

Straker’s CEO Grant Straker stated, "IBM has been a cornerstone client for Straker since 2021. The extension of our partnership for another three years and its broadening confirms the validity of our strategy and establishes a solid foundation for future growth. Together, we are not only transforming translation services with AI-powered solutions but also bringing forth broader initiative AI opportunities. Our partnership with IBM is evolving from service provision to co-innovation, strengthening our position at the intersection of language and AI. This renewal reinforces Straker’s transition to an AI-powered revenue and innovation-driven business model."

Straker confirms that this announcement contains all material information required to assess the effects of the contract and is not misleading.