Work-from-home hopefuls stand to benefit from corona epidemic

Working from home has become a requirement for many Picture: AP

Having been a euphemism for skiving off or perhaps minding sick kids, ‘‘working from home’’ (WFH) has become not just accepted but a compulsory requirement — or imposition — for white collar workers.

Our tip is that, post COVID-19, divorce lawyers will emerge as the premier growth sector as working spouses see far too much of each other.

In the meantime, investors are running the ruler over stocks that stand to benefit, such as telcos, network providers and teleconference operators.

Dubber Corporation (DUB) 83c

Call recording pioneer Dubber is on the list. Call recording does not sound like rocket science, with most call centre conversations routinely recorded. But Melbourne-based Dubber has commercialised a cloud-based re­cord­ing platform that provides easy callback and transcription to text.

The Dubber platform is essentially the same all over, but operates as platform as a service (PaaS) or software as a service (SaaS).

Under the PaaS model, Dubber is the white label provider. In other words, the telco sells the product under its own brand.

With SaaS the telcos connect their network to Dubber and the parties jointly go to customers.

“Most customers are choosing SaaS because of speed to market,” says CEO Steve McGovern. “As much as they would like get to market under their own brand, SaaS reduces the time frame from 18 months to months or weeks.”

Dubber in February reported December (first) half revenue of $4.5m, up 125 per cent, and a loss of $8.6m. Annual recurring revenue jumped 77 per cent to $11m. But the hockey-stick trend belies some disquiet.

In a report dated March 3, Morgans analyst Nick Harris opined that while Dubber was signing up telcos, the conversion of end customers to active users “remains slower than we would have liked”.

Dubber signed its pivotal deals with AT&T and Broadsoft (now part of Cisco) in August 2017.

As of March 20, Dubber claimed just over 150,000 users, double the numbers of a year ago and a 30,000 increase for the quarter.

But this growth emanates from new telco sign-ups, rather than from the existing telcos’ existing customer bases.

“We acknowledge that it takes considerable time to move from relationship to billing … but we are disappointed to see that after several years revenue generation remains anaemic,” Mr Harris says.

Dubber’s current half numbers will be more instructive, given they cover the corona crisis period.

Dubber this week seized on a mini share recovery to raise $10m in a placement at 60c apiece. The shares closed at 80c before a trading halt and at the time of writing were holding up well.

The moral of the story is that when you’re a small cap there’s never been a better time to have money in the coffers.

Straker Translations (STG) 70c

The work-from-home dictate and universal travel bans also bode well for demand for written translation services, at a time when machines increasingly take over the task of detecting nuances in dialects and making sense of idiom and slang.

The results from voice to text transactions are frequently hilarious: “hi Stacey” becomes “hi Sexy” and “home at seven” becomes “see you in Heaven”, etc.

In any language the sector is well served. Straker Translations founder Grant Straker says there are no fewer than 20,000 providers in a sector globally that’s worth $40bn-$50bn. Most don’t have the scale or resources to compete — in fact only the top are scale operations.

“They are in the dying zone. There’s no innovation and they don’t have capital,” he says.

“They have relations with existing companies that have had regional protections they are standing to lose.”

The Straker model isn’t all machine, in that complex or specialist topics still require a human overlay. For instance, they’re not that good at deciphering aeronautical engineering manuals.

“We need to use machines to get the volume but humans still have the refinement and quality,” he says. “It’s not as simple as getting Google Translate and having someone tidy it up.”

Straker recently decided to pull back from the consumer market in favour of enterprise (business) clients, which include Apple TV and Disney Plus.

With machine learning the old rule of ‘‘garbage in, garbage out’’ still applies and a key issue is the availability of data to ‘‘train’’ the algorithm. While not the most enthralling contents, voluminous European parliament transcripts are used to train the machines in Latin languages.

“Training a machine is generic. IBM, Microsoft and Google all do it but our core advantage is we can use the machine to optimise a commercial benefit,” Straker says.

“If a machine makes a human go faster you do get a commercial benefit and that’s our secret sauce.”

In the year to March 2019, 47 enterprise customers (billings of more than $100,000 a year) delivered 55 per cent of Straker’s revenue, with 2500 small to mid-sized clients accounted for the remainder.

Straker generated revenue of $NZ24.5m ($23.7m) in the 2018-19 year and posted a $NZ4.3m loss

In the September (first) half of 2019 the company turned over $NZ13m, up 13 per cent and lost $NZ230,000.

At last glance Straker had cash of $NZ14m and no debt.

Straker is 14 per cent-owned by the ASX-listed investment company Bailador Technology (BTI).

Tim Boreham edits The new Criterion

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