Freightos Q4 2024 Earnings Report

Freightos EPS Results

• Actual EPS: -$0.20
• Consensus EPS: -$0.09
• Beat/Miss: Missed by -$0.11
• One Year Ago EPS: N/A

Freightos Revenue Results

• Actual Revenue: $6.59 million
• Expected Revenue: $6.80 million
• Beat/Miss: Missed by -$208.00 thousand
• YoY Revenue Growth: N/A

Freightos Announcement Details

• Quarter: Q4 2024
• Date: 2/24/2025
• Time: Before Market Opens
• Conference Call Date: Monday, February 24, 2025
• Conference Call Time: 8:30AM ET

Freightos (NASDAQ:CRGO), together with its subsidiaries, operates a vendor-neutral booking and payment platform for international freight. It operates WebCargo, a platform for connecting carriers and forwarders; and Freightos.com, a platform for connecting service providers to importers/exporters. The company also offers software-as-a-service solutions, such as WebCargo Air for airline rates and ebookings; WebCargo AcceleRate, a multi-modal rate repository; data services; and WebCargo Airline Control Panel that enables airlines to control bookings and optimize pricing with real-time booking analytics. In addition, it provides digital customs brokerage services. The company is based in Jerusalem, Israel.

Freightos Q4 2024 Earnings Call Transcript

Presentation

[Anat Earon-Heilborn, VP - Investor Relations at Freightos]

and welcome to Freitas Q4 twenty twenty four Earnings Conference Call. A press release with detailed financial results was released earlier today and is available on the Investor Relations section of our website freitas.com/investors. My name is Anatir Ron Heilborn, and I'm joined today by Doctor. Zvi Schreiber, the CEO of Freitas Teresa Carreras, Director of FP and A in the finance team and Pablo Pinos, incoming CFO. Following the prepared remarks, we will open the call for questions.

[Anat Earon-Heilborn, VP - Investor Relations at Freightos]

We are sharing slides during the call, so we recommend using Zoom on a computer rather than dialing in by phone. The slides as well as a recording of this earnings call will be available on our website shortly after the call. Please be aware that today's discussion contains forward looking statements, which are subject to a number of risks and uncertainties. Actual results may differ materially due to various risk factors. Please refer to today's press release and our SEC filings for more information on risk factors and other factors which could impact forward looking statements.

[Anat Earon-Heilborn, VP - Investor Relations at Freightos]

Copies of these reports are available online. In discussing the results of our operations, we'll be providing and referring to certain known IFRS financial measures. You can find reconciliations to the most directly comparable IFRS financial measures, along with additional information regarding those known IFRS financial measures in the press release on our website at freighters.com/investors. The company undertakes no obligation to update any information discussed in this call at any time. Today's earnings call will begin with an overview of Q4 performance by its fee.

[Anat Earon-Heilborn, VP - Investor Relations at Freightos]

Next, Teresa will present the financial results and the guidance for Q1 and full year 2025. Teresa is stepping in as we are between CFOs. Then Pablo will introduce himself briefly ahead of his official start next Monday. We will conclude with Q and A. Questions can be submitted in writing during the call by using the Q and A feature in Zoom.

[Anat Earon-Heilborn, VP - Investor Relations at Freightos]

Zvi, please go ahead.

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

Good morning, everyone, and thank you for joining us to discuss Freitas' fourth quarter and full year '20 '20 '4 results. I'm pleased to report another quarter of strong performance, ending a fiscal year marked by significant transformation for us, driven by our commitment to innovation and operational excellence. We've continued to advance in capturing the massive market opportunity of digitalizing international freight, underscored by our robust revenue growth for the quarter. Before diving into the details, let me provide some high level context of our achievements. In Q4, revenue growth of 25% year on year exceeded our expectations.

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

We facilitated over 350,000 transactions representing a 22% increase from last year, extending our streak of consecutive quarterly transaction records to five straight years. Most notably, we added 12 new carriers to our platform, marking the quarter with our strongest onboarding of new carriers in our history and bringing our total to 67 carriers. While this is solid growth, I want to comment that we strive to grow even faster. And we do expect that at some future point, this huge conservative industry will reach an inflection point on its digital journey, then we should be able to accelerate growth much faster. We witnessed such inflection points in other industries as they went through a digital transformation.

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

And of course, we continue to invest in market education to encourage reaching that inflection point. Turning to market conditions, the air cargo market saw robust demand driven by e commerce with Q4 volumes up 10% compared to the previous year. Air cargo rates reached year highs during peak season on many lanes with a global average price as measured by our Freitas Air Index, FAX, essentially flat on Q4 twenty twenty three and up 5% from Q3. However, our platform focuses on mainstream air cargo, not e commerce. So our growth stems from our core business rather than being attributable to this market growth.

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

As you saw in the news, in early February, the U. S. Barred Chinese e commerce goods from entering The U. S. Duty free.

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

The U. S. Then temporarily reinstated this de minimis exemption to give U. S. Customs time to prepare.

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

This change, if reinstated, will affect the millions of daily e commerce parcels imported from China and will likely lead to a sharp drop in Transpacific air cargo volumes and rates and place downward pressure on rates across the industry of air cargo as capacity returns to the market. Ironically, this would actually be positive for volumes booked on Webcargo by Freitas. Since we focus on mainstream air cargo rather than e commerce, reduced e commerce volumes from Asia should actually increase capacity available for booking via our Webcargo platform. Regarding tariffs, we've seen Transpacific Shippers pull forward ocean freight shipments ahead of anticipated tariff increases, temporarily driving demand and rates up. If this trade war escalates, however, there is some risk that broader international trade volumes could be dampened.

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

That said, the long term digitalization of freight remains the most powerful driver of our business. We're still in the early stages of cargo booking platform adoption. And given the sheer scale of global trade, we expect any impact of tariffs on our business to be limited. Moreover, in periods of volatility, our marketplace solutions become even more valuable providing transparency and agility that shippers and carriers need to respond to changing circumstances. Finally, this impact is predominantly U.

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

S. Centric, while our platform usage is global. Now, let me address our progress across our three strategic pillars Platform, Solutions and Network. Platforms Platform and Solutions are the two ways we deliver our products to our customers. And these are also the segments in which we report revenue.

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

Network effects are how we ensure continued long term capital efficient growth and create a competitive moat. Let's start with platform growth and marketplace expansion. The quarter's carrier adoption was particularly notable. The 12 new carriers we added in Q4 are primarily regional and niche air cargo operators, many serving specialized markets or emerging trade lanes and are strong results of the two sided network effects. Our buyers attract more sellers and sellers attract buyers.

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

This supply expansion enhances our platform's value proposition as these carriers can instantly offer their services to most of our network of over 20,000 unique buyers by users worldwide. Transaction growth saw strong contribution from our airline sales portal solution further cementing our position as a vendor agnostic technology partner, empowering airlines to sell digitally both directly on their own websites as well as through our platform. The portal business has a higher GBV per transaction, but lower take rates than transactions on our own platform. As this segment grows, it does influence the relationship between transactions, GBV and revenue. So we're cautious on the overall average take rate in our 2025 guidance.

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

However, this expansion generates revenue and reinforces Freitas' role as the digital backbone of global cargo and strengthens our strategic value proposition for carriers and forwarders. Now on the buy side, unique buyer users increased 14% year over year, breaking the 20,000 mark of unique users, reinforcing the network effects that drive Frotos' scalability. We continue adding carriers after the end of the quarter, including Canada's WestJet Cargo and Norwegian Cargo. These additions reflect the growing adoption of digital freight booking and further strengthens Freitas' position as the leading platform for connecting carriers and freight forwarders globally. Let me spend a moment talking about the ongoing development of our platform offerings as we continue to enhance our capabilities across multiple fronts.

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

For Freighters.com, our public marketplace, where small importers and exporters book directly with freight forwarders, we plan a major product upgrade this year. After reducing investment in mid-twenty twenty three, we will reinvest in platform development, while maintaining a disciplined approach to costs. Results should materialize in 2026 when we scale our go to market activities for freighters.com. We're also rolling out the next version of our airline interlining solution, which enables airlines to book with other airlines and will later enable freight forwarders to instantly book multi carrier routes, significantly expanding network reach. This is equivalent to codeshare in passenger airlines and we're leading the way in digitalizing it.

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

Following early success in 2024, we believe that interlining will scale in 2025. Now turning to our Solutions segment, where we derive mostly recurring revenue from SaaS and data subscriptions. Our solutions enable freight forwarders, importers, exporters and carriers to enhance operational efficiency and make data driven decisions and actions, especially around braiding, booking and selling. The SaaS Solutions sub segment generated its highest quarterly revenue ever in Q4, supported by our recently acquired Chipster business. This highlights strong demand for digital procurement and benchmarking solutions in freight management.

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

Our vision is very much to create a unified end to end solution stack, seamlessly integrating all modes, players and functions. In 2024, we launched a major initiative to unify all our software in one modern, efficient, scalable software stack. This initiative is now known internally as Fusion and virtually all development this year will be on this modern Fusion architecture and older products will be migrated. For example, the new generation of our Ocean SaaS for freight forwarders has already been developed on Fusion and is already serving the first customers as one of the first big wins for Fusion with a pipeline of more interested customers in this Ocean SaaS. It provides a fully integrated one stack platform from carrier booking and rate management to pricing, quoting and digital sales.

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

This Ocean SaaS solution enables seamless rate management for both air and ocean freight, allowing forwarders to streamline operations, optimize pricing and enhance their customer experience. With thousands of freight forwarders in 10,000 offices or so already using our air solutions, we're excited to now offer them our newest OceanSaaS. This quarter, we advanced our AI driven solutions, leveraging our proprietary data to optimize freight pricing and procurement. Our newly launched AI powered airline dynamic pricing tool, which is called Skyway, is already showing promise in the market with one airline seeing a 70% revenue increase during a test. Unlike generic generative AI, this is a proprietary machine learning solution, which analyzes millions of pass freight bookings to predict customer behavior and optimize pricing for the airlines in real time with high accuracy.

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

Embedding AI across our platform reinforces Freitas' position as a leader in digital freight and we're on our way to doing that. The integration of Shipster is progressing well and we're preparing to retire the Shipster brand and incorporate our newly acquired procurement and tender management capabilities into Freitas' Fusion solutions. We already have Freitas ships to cross selling wins, including a top five global chemicals company and a leading multinational industrial manufacturer as well as top freight forwarders. The other part of our Solutions segment is data subscriptions. We used to be mainly strong in spot pricing data, but thanks to the Shipster acquisition and other data sources, our data capabilities now extend to freight contract rates or long term rates, expanding our market potential for data solutions.

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

So we'll focus this year on growing our data subscription revenue. Related to that, last week we announced a toolkit to support index linking for freight contracts. It's a recommended new industry business practice that we're promoting, enabling rates to adjust dynamically based on market conditions, as is common in other industries. This reduces the tensions and cost of fixed price term contracts, minimizes renegotiations and supports more defensible competitive pricing. Our index linking toolkit is now available in our Freightos Terminal product and it uses our own industry leading indices FBX for containerized freight and FAX for air cargo, which are built on billions of data points.

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

Complementing index linking, container shipping prices can be hedged via Forward Freight Agreements or FFAs, which are derivatives tied to our Freitas FBX index. And these derivatives are traded on the world's leading derivative exchanges, CME in Chicago and the Singapore Exchange SGX. While volumes are still minimal, there's a lot of potential for this to grow, especially as index linking hopefully becomes more prevalent in the industry. Now, the third pillar of our growth is network. That is the network effects created within our customer base.

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

Our cohort analysis validates this flywheel effect. Freight forwarders and carriers who join our platform not only stay active, but also significantly increase their engagement and the transactions they place over time, reinforcing the buyer brings seller brings buyer effects and the long term stickiness of our platform. Anecdotally, in a recent meeting with a leading European airline, the Chief Executive shared with me that they had projected 1,000 bookings in their first year on Webcargo platform, but received 7,000 bookings, demonstrating how quickly airlines can scale digital bookings once they connect to our platform. Looking ahead to 2025, we remain focused on executing our strategy. While potential tariff changes create slight near term uncertainty, we continue to scale our network, expand carrier adoption and enhance our product and technology offerings, laying the foundations for sustained long term growth in this vast industry, which is still at an early stage of digitalization.

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

And now to walk us through our Q4 financial performance, I'll hand over to Teresa, our Director of Financial Planning and Analysis, who is covering while we're briefly between CFOs.

[Teresa Carreras, Director of Financial Planning & Analysis at Freightos]

Thanks, Sveed. Our fourth quarter results reflected solid growth, exceeding our guidance in transactions and revenue and meeting the high end of our adjusted EBITDA guide. These results show our continued focus on scaling our platform efficiently while maintaining financial discipline and progressing toward profitability. Revenue for q four twenty twenty four was $6,600,000 reflecting a 25% year over year increase, which is the highest quarterly growth rate since going public. Growth was driven by growth strength across both transactional and subscription revenue.

[Teresa Carreras, Director of Financial Planning & Analysis at Freightos]

Platform revenue grew 21% year over year to 2,300,000 supported by a steady transaction growth. Solution revenue increased 28% year over year to $4,300,000 benefiting from SaaS expansion and inclusion of Chipster. Gross margins improved once again with IFRS gross margin reaching 68%, up from 62% in Q4 twenty twenty three, and non IFRS gross margin pricings to 74% compared to 70% last year. These gains result from scale and from ongoing cost efficiencies, positioning us well for further margin expansion. For the full year, non IFRS gross margin was 72%, increasing by five percentage points from 2023, demonstrating consistent efficiency gains.

[Teresa Carreras, Director of Financial Planning & Analysis at Freightos]

Adjusted EBITDA for Q4 twenty twenty four was negative $3,100,000 within our guidance range. Excluding the impact of Shipstead's first full quarter of consolidation, adjusted EBITDA loss would have been lower than q three at approximately $2,700,000 For the full year of 2024, adjusted EBITDA was negative $12,600,000 significantly improved from negative $19,000,000 in 2023. As we move through 2025, we expect continued improvements in adjusted EBITDA, reflecting revenue growth and ongoing operational efficiencies on track for breakeven by the end of twenty twenty six. Cash and cash equivalents stood at $37,300,000 at the end of the quarter, giving us all the resources we need to execute our strategy while maintaining financial discipline. I'm pleased to present you with our q one outlook and introduce the full year 2025 guidance, which underscores our expectations for continued top line growth and improving profitability.

[Teresa Carreras, Director of Financial Planning & Analysis at Freightos]

We expect q one number of transactions between 362,000 and 370,000, showing year over year growth of 22 to 25%. We expect this trend to roughly continue throughout the year, although we remain a slightly cautious with respect to global trade dynamic. We expect E1 GBV between $272 and $280,000,000 representing year over year growth of 41% to 45%. Additionally, our guidance reflects the evolving mix of our business, including the continued growth of our portal segment, which contributes higher GBV per transaction with more modest platform revenue. Q1 revenues expected to be between 6.7 and $6,800,000,000 A 25 to 27% increase compared to Q1 twenty twenty four.

[Teresa Carreras, Director of Financial Planning & Analysis at Freightos]

Full year revenue is expected to be between 29 and $30,600,000,000 growing 22 to 29% year over year and mirroring our views regarding transaction and GBP, as well as a moderate change in business mix. We expect Q1 adjusted EBITDA between negative 3,000,000 and negative $3,200,000 roughly flat on Q4. While in general, we do aim to improve EBITDA every single quarter, Q1 is affected by seasonal cost increases and seasonal weak freight volume. Full year adjusted EBITDA is projected between negative $10,900,000 and negative $10,200,000 demonstrating our continued focus on improving profitability as we scale. As you can see, our annual guidance shows a gradual improvement throughout the year, and we expect losses to decline as we progress on our path to breakeven.

[Teresa Carreras, Director of Financial Planning & Analysis at Freightos]

Let me now turn the call to Pablo, who will be joining officially next week to introduce

[Teresa Carreras, Director of Financial Planning & Analysis at Freightos]

himself.

[Pablo Pinillos, CFO at Freightos]

Thank you, Teresa, and thank you, SV. I'm thrilled to be joining Freitas at such an exciting time for the company. Freitas has built a category defining platform that is transforming how global freight is booked and managed. Having spent my career helping high growth technology companies scale efficiently, I have worked across finance, strategy and operations to support companies through rapid expansion, IPO processes and acquisitions.

[Pablo Pinillos, CFO at Freightos]

My experience in driving financial disciplines while enabling growth aligns well with freight transmissions as we continue to expand and digitalize this vast industry. As Freitas is a truly global company, I am excited to be based in Spain with an easy access to Freitas Barcelona headquarters. I look forward to engaging with investors and the analysts on future quarterly calls and throughout the year, virtually or in person, as we execute on our strategy, drive operational efficiencies and work toward long term profitability.

[Anat Earon-Heilborn, VP - Investor Relations at Freightos]

Thank you, Pablo, and welcome. We will now open the call for questions. The first question will come from, Jason Helfstein from Oppenheimer.

[Jason Helfstein, Managing Director - Head of Internet Research at Oppenheimer & Co. Inc.]

Hey. Good good morning. Good afternoon, everyone, depending on where you are. Two questions. So, I mean, one, the financial outlook looks pretty basically in line with what we're expecting kind of solid growth, and things should continue, I guess at that level.

[Jason Helfstein, Managing Director - Head of Internet Research at Oppenheimer & Co. Inc.]

So, Svea, I mean, you talked about like the key thing is really like the industry hitting some kind of inflection point with understanding the need to embrace digital products. So I guess maybe as you we look at going into 2025 versus going to 2024, I mean, is there anything you can call out like maybe examples where you think the industry is closer to that inflection point? And if investors were to look out a few years, how they should think about it? Because to your point, this is really about kind of like the secular trends really are progressing as expected. But what does it take to really get the industry to the next level?

[Jason Helfstein, Managing Director - Head of Internet Research at Oppenheimer & Co. Inc.]

Thank you.

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

Yes. Thanks, Jason. I think I've sort of commented before that we're mainly looking at Air and Ocean and they're in different situation. Air is already well along the trend, but Ocean, which is the bigger part of the industry, is really at the very beginning. So I think one of the key things I'm hoping to see this year is that the Ocean line is finally fully created APIs, digital connections, like the airlines did already five years ago in many cases.

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

So that's one major sort of milestone that we're looking for is having Ocean API connectivity. Even within air, of course, there are parts which are Europe's well along the way to digitalization, but Asia is at a very early stage. So I think more air bookings out of Asia would be a key trend. And then that's all sort of between freight forwarders and carriers. Then when you get to the end customer, what we call the shippers or the importers and exporters, there we're still at the very early stage.

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

So as you know, our freighters.com hasn't been we haven't been growing it aggressively the last eighteen months. We plan to, I hope, again next year. But so seeing activity on that, but also seeing even not just on freighters, but seeing more freight forwarders selling online, more freight forwarders quoting online, more self-service by importers and exporters would be a very important sign that the end customer is adopting digital techniques. And we are seeing some progress in all of that. Everything is going in the right direction.

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

But we're still looking whether it's this year or next year or the following year. Sometime, I do believe there's going to be a tipping point where it all gets adopted much quicker.

[Jason Helfstein, Managing Director - Head of Internet Research at Oppenheimer & Co. Inc.]

And then just a second question. So with the rebound in the stock price, do you how do you think about potentially using the stock for strategic M and A now that the stock is meaningfully higher than it was for a while? Is that something you're thinking more about or it's really more just about kind of heads down in day to day business?

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

Yes. I mean, that's a great question. Look, as you know, some of our biggest investors paid $10 a share. So they're still going to be quite reluctant for us to use our stock even if it's a $4 which is a lot better than $1 So we're not actively planning any acquisitions using our stock. But you're right, it does give us more options.

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

So if something opportunistic comes up and the price is very attractive, so much so that we're willing to use our stock at this price, it's not impossible. But we don't have any we're not dependent on any acquisitions for our growth plan. And so we're not planning any acquisitions. But if a bit like happened with Schibsted a few months ago, if another opportunity like that comes about and the price is great, then we'll keep an open mind for sure.

[Jason Helfstein, Managing Director - Head of Internet Research at Oppenheimer & Co. Inc.]

Thank you.

[Jason Helfstein, Managing Director - Head of Internet Research at Oppenheimer & Co. Inc.]

Appreciate it.

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

Thanks, Jason.

[Anat Earon-Heilborn, VP - Investor Relations at Freightos]

Okay. The next question will come from George Sutton. George, you can unmute.

[George Sutton, Senior Research Analyst at Craig-Hallum Capital Group LLC]

Thank you. Zvi, I wondered if you could walk through just to make sure we're clear, the potential tariff impacts that you see. My sense is in the short term, it could be a positive because you see some accelerated shipping to avoid the tariffs, but then there's a midterm question mark. So just could you walk through what we should anticipate there?

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

Yes. Thanks, George. Very hard to anticipate. As you know from the news, this has been evolving very rapidly even in the first few weeks of the current administration. And yes, as you said and the front loading is very short term, so we're not banking on that.

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

It's true that when tariffs are expected in a few weeks, some people quickly ship some stuff. But that's a very, very short term trend and not one that we welcome. Beyond that, I sort of mentioned briefly in my remarks, I think there's two possible effects, a negative effect and a positive effect. The negative effect, of course, is that tariffs could dampen world trade. We don't expect to have a major impact on world trade.

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

World trade is very robust. We saw in the first Trump administration that there were tariffs and they didn't reduce trade with China or world trade at all. Maybe this time, the tariffs will be more aggressive. We don't know. It keeps changing.

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

But supply chains are very resilient because you can't just move electronic manufacturing out of China because they've got the whole supply chain there, thousands of components. So in most cases, if there's a tariff, then people pay the tariff and it gets paid passed on to the consumer. So prices go up. It normally doesn't have a major impact on the world trade, but it will have some. So we can that's why we've been also a little more cautious with some of our projections for this year because there could be some headwind from tariffs.

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

There's another respect there which we think will actually be good for us. One of the more aggressive, threatens things, I mentioned it briefly in my remarks, is canceling the de minimis, this exemption to bring in goods under $800 And it was canceled and it was reinstated. Probably, it will get canceled again once the customs authorities are ready for it. That actually would only impact e commerce. It wouldn't impact the sort of commercial import and export.

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

It would impact Taemu and Xi'an and AliExpress who send small parcels directly to consumer. And we don't see that business. So if that business goes down, it will actually create more capacity for the conventional air cargo, which is on our platform. So we actually think it could significantly help our volumes out of Asia if the de minimis is canceled and there's a clampdown on the sort of e commerce. So that may actually we actually project that would be good for us.

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

Now having said that, overall, there is uncertainty and World Trade isn't going anywhere, but it could go down a few percent. And so we have taken that into account in our projections.

[George Sutton, Senior Research Analyst at Craig-Hallum Capital Group LLC]

Great. And just and by the way, I meant to say welcome to Pablo, so welcome to Pablo. But I did want to ask the question on AI. So you did mention in your prepared comments that there was going to be an aggressive adoption of AI. You talked about this test that you had that resulted in a 70% increase.

[George Sutton, Senior Research Analyst at Craig-Hallum Capital Group LLC]

Can you just walk through kind of the timing that you anticipate the rollout of the AI opportunity?

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

Yes. I mean, AI is something we deal with, we look at every day. It's obviously a very fast evolving and very powerful technology. And so we look at it, obviously, in two levels: one, for adoption by our own team and just to make us more efficient. And we did quite a bit of that in 2024, but I think it was still marginal.

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

I don't think we saw a real productivity increase in 2024. This year, we're rolling out AI tools to all our developers. We're rolling out really encouraging every single member of our team to be using it in different ways. And I think it will start to have an impact on it should start to have a measurable impact on productivity during this year, I think, for internal use. And then in our products, we've already got some at least two major features sort of live.

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

One of them is really a product on the cylinder. The one that's the two that I mentioned, one of which is what you said, one is within our Freitas terminal, which is our data product, we now have an AI report generator so that a logistics manager at Walmart can go in and say, I need to report to my management on the impact of the Trump administration tariffs or the Red Sea crisis. And it prepares an intelligence report based on the style that they want, based on current data from Freitas data, based on third party data. So that's a tool which is ready. I mean, it's quite new, but we're already seeing or feature that's a feature which is getting some nice use by our customers.

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

And the other one which you referenced is called Skyrate, which is our quite new it's still in pilot stage, but it's a very advanced product for dynamic pricing for airlines using our unique data set because we've got a history of millions of bookings. So we have we can really see the patterns of buying behavior. And it really is to walk you through it as you requested. It's really a price sensitivity tool. So we can say if Airlinex wants to raise their price from $1.5 per kilogram to $1.7 per kilogram, how much business will they lose?

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

Or if they want to raise the lower the price to $1.2 how much will they gain? So it's trained. It's not based on ChachiPT or any generic AI. It's trained on our own data to model customer behavior, particularly freight forwarder behavior and freight forwarder price sensitivity. So it can, in a very sophisticated way, model the price elasticity or the price sensitivity for air cargo.

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

And it's still in a stage where we've got some airlines who are sort of piloting it. We haven't sort of launched it as a commercial product just yet. But as you kindly quoted from our remarks, we've already seen some very positive feedback on how it's helped their revenue in the proof of concept. And yes, more of this to come. I mean, we're now everything we do internally and everything, every product we develop, we're at least thinking how do we use AI.

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

Sometimes it's relevant, sometimes it isn't, but it's part of our thinking for every internal process and every product we develop.

[George Sutton, Senior Research Analyst at Craig-Hallum Capital Group LLC]

Perfect. That's it for me. Thank you.

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

Thanks, George.

[Anat Earon-Heilborn, VP - Investor Relations at Freightos]

If anyone else wants to ask a question, please, you can either raise your hand or you can chat in the Q and A feature in Zoom. We'll give it maybe few more seconds. Okay. So I'll hand it over to Zvi to close the call. Thank you all.

[Zvi Schreiber, CEO & Chairman of Board at Freightos]

All right. Thanks everyone for joining. Look forward to seeing you in the quarter's time, and I'll be joined by Pablo not just as an introduction, but as a fully onboarded CFO by then. Thank you all for joining. Goodbye.

Participants

Executives

• Anat Earon-Heilborn, VP - Investor Relations
• Zvi Schreiber, CEO & Chairman of Board
• Teresa Carreras, Director of Financial Planning & Analysis
• Pablo Pinillos, CFO

Analysts

• Jason Helfstein, Managing Director - Head of Internet Research at Oppenheimer & Co. Inc.
• George Sutton, Senior Research Analyst at Craig-Hallum Capital Group LLC