by Slator | February 25, 2020
The Slator 2020 Language Service Provider Index is a ranking and index of the world’s largest language service providers, translation agencies, localization providers, interpreting services providers, and language technology companies.
Capital remained cheap in 2019, fueling increased M&A activity among many of the largest language service providers, with Slator tracking 60 mergers and acquisitions in 2019. Yet as a number of private equity investments are maturing, PE-backed LSPs were collectively responsible for fewer deals than in the previous year.
As in the 2019 edition, Slator 2020 Language Service Provider Index participants are listed in order of their revenues (in USD) for 2019. The ranking is supplemented with information relating to each company, such as 2018 revenues, year-on-year growth, corporate headquarters, ownership and year-end date.
Building on the 2019 edition of the LSPI, which segmented the landscape of providers into separate lists of “Super Agencies and Leaders” and “Challengers,” the 2020 LSPI has been expanded to include a new group of smaller “Boutique” companies. The 2020 LSPI features more than 130 companies in total, more than 70 of which are making their debut this year.
Super Agencies are defined as full-service, multi-vertical LSPs whose revenues are greater than USD 200m. Leaders are defined as LSPs whose revenues are greater than USD 25m and who do not fall into the Super Agencies category. Challengers are defined as LSPs whose revenues are between USD 8m and USD 25m, and the new Boutique category refers to LSPs whose revenues are between USD 1m and USD 8m.
While the rank assigned to the 40 plus Super Agencies/Leaders is meaningful, this is not the case for the Challenger and Boutique lists. Assigning a rank to these groups is no longer meaningful given the overall fragmentation of the industry.
Of course, there is still value in making this data available, however. Companies may choose to use it as a benchmark for their own performance and growth, as an indication of growth in the language services industry, and a starting point for evaluating strategic options including M&A.
The combined US-Dollar revenue of the Slator 2020 Language Service Provider Index (LSPI) companies grew 14.2% in 2019 to USD 6.99bn. This is an attractive headline rate. However, a significant portion of this growth is caused by M&A-driven consolidation. We estimate organic growth across the 130 plus featured companies in the mid single digits (around 5%).
Growth among the Super Agencies/Leaders came in at 14.7%, outpacing the Challenger group (9.0%) and the Boutique group (10.1%).
While one driver of the Super Agencies/Leaders’ outperformance was M&A, the data suggests larger LSPs are indeed growing faster than smaller ones on average. 17 companies on the Boutique list reported negative revenue performance in 2019 (27%), compared with four on the Challenger list (11%) and six on the Super Agencies/Leaders list (14%).
The 2020 Slator Language Service Provider Index is a useful resource for language industry stakeholders such as service vendors, buyers, advisors, consultants, and investors when used in conjunction with Slator’s online news service and research, such as the recent the Slator 2019 Language Industry M&A and Funding Report, and other in-depth Data and Research.
For the most part, Slator LSPI data is self-reported by the companies included, and sense-checked by Slator. Where possible, the data has been independently verified by Slator using publicly accessible sources such as annual reports filed with regulators or stock exchanges. The data will change over time as more companies file their financials for 2019.
The Slator LSPI is the industry’s first look at 2019’s growth and we will be publishing a brand new Language Industry Market Report in early Q2 2020, with market-sizing and in-depth sectoral analysis.
Interested companies should contact Slator Research Director Esther Bond to submit their company for inclusion in the next release of the 2020 Slator LSPI. Please contact Slator Commercial Director Andrew Smart if you would like to discuss our advisory services including M&A advisory, strategy review, senior management workshop, technology assessment or custom industry research.
2019 was a positive year overall, with double digit growth for many of the leading 40 or so players. Growth among Super Agencies/Leaders was marginally stronger than among Challengers and Boutiques.
Industry leader TransPerfect delivered another year of strong growth, both in absolute (+USD 59m) and percentage terms (+8.4%) through a mix of organic and acquisitive growth.
Rivals Welocalize and RWS recorded an above-average year of organic growth at 12.2% and 16.2% respectively, while M&A was the key driver of growth for fellow Super Agency SDL (15.6%). Lionbridge, which completed one small acquisition in 2019, retained its No. 2 position and delivered solid, mostly organic growth of nearly 9%.
M&A was also the key driver of growth for many industry Leaders, including Keywords Studios, IYUNO Media Group, Stratus Video, Acolad Group and LanguageWire, which were major all beneficiaries of acquisitive growth.
There was (again) no major private equity exit in 2019, which means a number of investments in leading players such as Welocalize, Lionbridge, LanguageWire and others are beginning to mature. Lionbridge’s rumoured listing would be a major PE exit and the biggest listing of an LSP to date. (Stratus Video’s private equity investors exited in 2020 as the company was sold to AMN Healthcare for USD 475m).
Private equity (PE) remains a driving force in the language industry, but the overall volume of deals by PE-backed language service providers (LSPs) slowed a bit in 2019. Private-equity backed LSPs were responsible for 26% of trade sales in 2019 vs 54% in 2018.
Media localization providers are growing strongly overall, but a number faced headwinds in 2019, including SDI Media and ZOO Digital, while others grew through a mix of acquisitions (IYUNO) and organic growth (VSI, Dubbing Brothers and Plint). Competition in this space has heightened as a number of companies made moves to acquire in media localization in 2019 (including TransPerfect, Keywords and Straker).
Interpretation is growing, with LanguageLine Solutions, CyraCom International, Stratus Video, thebigword, and Easy Translate performing strongly in 2019. More interpreting revenue is being routed towards bigger providers and away from individual contractors or boutique LSPs as governments increasingly bundle spend under nationwide framework agreements.