Freightos Q1 2025 Earnings Report

Freightos EPS Results

• Actual EPS: -$0.05
• Consensus EPS: -$0.10
• Beat/Miss: Beat by +$0.05
• One Year Ago EPS: -$0.06

Freightos Revenue Results

• Actual Revenue: $6.95 million
• Expected Revenue: $6.78 million
• Beat/Miss: Beat by +$172.00 thousand
• YoY Revenue Growth: N/A

Freightos Announcement Details

• Quarter: Q1 2025
• Date: 5/20/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, May 20, 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 Q1 2025 Earnings Call Transcript

Key Takeaways

• In Q1 the company delivered record revenues and its 21st consecutive quarter of record transactions, facilitating over 370,000 transactions, up 25% year-over-year.
• It generated $6.9 M in revenue (up 30% YoY), achieved a non-IFRS gross margin of 73.7% (versus 70.3% a year ago), and improved its adjusted EBITDA loss to $3.0 M from $3.6 M.
• The platform added four new carriers, bringing the total to 71, and launched the Freightos Enterprise Suite, integrating ShipStar into a unified digital freight booking and management solution.
• Fredos signed a major North American ground transportation partnership to enable end-to-end multimodal booking, allowing freight forwarders to seamlessly book air and trucking services on one platform.
• For Q2, the company expects 380,000–385,000 transactions (+20–22% YoY), revenue of $7.0–$7.1 M (+23–25% YoY) and reiterates full-year 2025 guidance while targeting breakeven adjusted EBITDA by end of 2026.

Presentation

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

Hello, everyone. Welcome to Schrader's Q1 twenty twenty five 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, fredos.com/investors. My name is Anaty Ron Haubern, and I am joined today by Doctor. Zvi Schreiber, the CEO of Fredos and Pablo Pinheos, CFO.

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

Following the prepared remarks, we will open the call for questions. 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.

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

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. Copies of these reports are available online. In discussing the results of our operations, we'll be providing and referring to certain non IFRS financial measures. You can find reconciliations to the most directly comparable IFRS financial measures, along with additional information regarding those non 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.

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

Before we begin, I'd like to note our upcoming investor events. During tomorrow and Thursday, Fredus will participate virtually in the Sidoti Microcap Conference. In June, the company will participate in the Investor Summit and in August in the Oppenheimer Technology, Internet and Communications Conference, also virtually. Links to webcast and other event updates can be found on our website. Today's earnings call will begin with an overview of Q1 performance by Zvi.

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

Next, Pablo will present the financial results and the guidance for Q2 and full year 2025. We will conclude with Q and A. Questions can be submitted in writing during the call using the Q and A feature in Zoom. Zvi, please go ahead.

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

Morning, everyone, and thank you for joining us to discuss Fratis' first quarter twenty twenty five results. I'm pleased to report another quarter of strong performance with record revenues and our twenty first consecutive quarter of record transactions. I believe this demonstrates again that we're making steady progress in the monumental task of digitalizing international shipping. Here are some highlights. In q one, we facilitated over 370,000 transactions, representing a 25% increase from q one of last year.

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

We added four new carriers to our platform this quarter, bringing the total number of carriers selling digitally on our platform to 71. Following quarter end, we launched our comprehensive Freightos Enterprise software as a service solution for enterprise importers and exporters. This Freightos enterprise product integrates our acquisition of ShipStar from last August into our software suite, creating new sales and cross sell opportunities. Let's talk about market conditions. In air cargo, where Freidos has its strongest presence, global volumes were up 8% year over year, reflecting healthy underlying market conditions.

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

Rates, as measured by our FAX index, were 6% lower compared to last year, which was when the Red Sea crisis began pushing ocean cargo to air. Having said that, some of the strength in air cargo may have been short term, front loading ahead of expected tariffs. In ocean, China's US ocean volumes dropped significantly in the market during the few weeks when a when a 145% tariff applied on that lane. Our bellwether f b x zero one index, which has been elevated for a year and a half since the Red Sea crisis started, approximately half in March, almost down to $2,000 for shipping a 40% container transpacific. It's the first time in a while that we're seeing the rates more similar to the long term average.

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

With that day plus backdrop, let me address current affairs, namely tariffs and trade policy developments. Strategically, we firmly believe that trade policy shifts won't fundamentally alter global trade or materially impact our opportunity to digitalize global freight. Supply chains simply don't reorganize overnight. These changes take years, and trade will continue to flow, albeit sometimes through different routes. In the short term, the impact of rapidly changing tariffs on our business is mixed.

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

On the positive side, market volatility and rapid changes actually increase the need for our marketplace and for our real time data. However, we did see some headwinds when specific trade lanes were affected by high tariffs. For example, when China US tariffs peaked at a 45%, we experienced the dip in China to US transactions on our freighters.com platform and our clearance customs clearance. Though I should note that this particular trade lane of China to US represents less than 2% of our total transactions. The good news is that in the last two weeks, we're seeing a possible stabilization in trade relations.

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

The recent US China agreement has postponed the most significant tariffs for at least ninety days, with China reducing the tariffs to 10% and The US reducing theirs to 30%. Initial market reaction has been positive, and ocean freight volumes and rates are expected to hold up and normalize in coming months unless massive tariffs return later on. Besides general tariffs, one notable change which seems likely to stick is the cancellation of The US deminimis customs exemption for small imports. This exemption primarily benefited direct to consumer ecommerce vendors such as Xian and Tae mu, who were sending millions of small packages direct to consumer, mostly on charter airplanes. As such, it has no material impact on our business.

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

In fact, we expect some capacity to reenter the general air cargo spot market in Asia and become available on our platform. So this particular change may actually be positive for us. Overall, there's growing opt optimism, albeit no certainty, that we're on a path to more stable trade conditions. Looking ahead, we're well positioned to be a valuable resource for the industry during these dynamic times With shifting trade patterns and the Suez Canal still largely out of commission, our platform becomes even more valuable when market conditions require rapid adaptation and real time price visibility. With all of these factors in mind, we're pleased to reiterate our guidance for the year.

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

Of course, we'll continue to monitor the evolving market conditions. The fundamental shift towards digital freight booking remains strong, and our relatively small share of global volumes today, in fact, the relatively small share of digital transactions, gives us a tremendous headway for growth of digitalization. Having addressed current affairs, let me now walk you through our progress across our key strategic areas. As a reminder, we organize our business around two revenue segments, platform and solutions. A third strategic focus area is network effects, effects, which drive a sustainable competitive advantage and capital efficient growth.

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

Let's start with our platform, which connects importers, exporters, freight forwarders, and carriers to our marketplace. Our transaction volume growth was strong in q one, and the onboarding of four new carriers during the quarter further validates our platform's value proposition. Our airline network already represents carriers responsible for 70% of global capacity, although not all the carriers make all their capacity available yet. Our growth strategy focuses on expanding our platform across multiple dimensions, adding new types of transactions, enriching existing types with additional services, creating new buyer seller combinations, and leveraging our growing data asset. A great example of this strategy in action is an agreement we recently signed with a major North American ground transportation provider.

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

This partnership will enable freight forwarders to book trucking services relevant to air cargo directly through our platform, spanning door to door, last mile airport to door, first mile, door to airport, and airport to airport services. When integrated with our air cargo bookings, this creates a seamless connection between air and ground transportation, making it significantly easier for freight forwarders or carriers to manage multimodal shipments through a single interface. We expect to announce more details about this partnership soon. This type of expansion reinforces our flywheel effect. As we add more value to each transaction, we attract more participants to the platform, which in turn increases liquidity and creates opportunities for new services.

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

Moving to our solutions segment. Q1 saw several notable enterprise customer wins. For example, a global industrial conglomerate renewed their license for Fredos terminal data at favorable terms that reflect the growing value they derive from our platform. We also signed a new five year contract with a major European building materials manufacturer for our procurement solution, enabling them to streamline freight sourcing processes and optimize carrier selection. We continue to see progress in upselling existing customers across our growing suite of enterprise tools.

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

For example, in q two, a top five global pharmaceutical company that leverages Fredos enterprise procurement and benchmarking solutions renewed and expanded their contract. Our data solutions actually achieved a % customer retention in q one, demonstrating the critical value our market intelligence provides to customers during a period of significant market volatility and uncertainty. We also see a growing market interest in index linking, which should increase opportunities for our data and related products. This momentum in our enterprise and data businesses sets the stage for our comprehensive Fredos Enterprise Suite launch, which occurred shortly after quarter end. This new offering is designed to serve the complex needs of multinational shippers, bringing together our digital freight booking capabilities, rate management tools, and business intelligence all in one unified platform.

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

So enterprise shippers can now seamlessly manage their entire freight procurement and execution process in one product suite. Early feedback from pilot customers has been encouraging as they experience significant efficiency gains from having their entire workflow digitalized in one place. The Fredos Enterprise Suite also creates natural synergies with our platform business as these multinational shippers often work with multiple logistics service providers already active on our marketplaces. Moving to network effects, we continue to see strong cohort performance from both buyers and sellers on our platform. Looking at buyer buyer dynamics, unique buyer users grew 10% year over year to 19,700, demonstrating the continued appeal of our platform.

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

In addition, transactions per user grew approximately 8% compared to the previous quarter. Our cohort data further reinforces this trend. Once freight forwarders stop using our platform, their booking volumes consistently grow over time with mature cohorts reaching over 500% of their initial transaction volumes. Similarly, the carrier side, we're seeing strong adoption patterns with cohorts of carriers steadily increasing their activity on the platform. Our carrier network expanded to 71 carriers this quarter, including new specialized cargo operators that enhance our coverage.

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

This virtuous cycle of growing engagement from both buyers and sellers continues to strengthen our competitive position and drive sustainable growth. To sum up, although q one is typically the seasonally weakest quarter, q one twenty twenty five demonstrated the continued strength of our business model and the resilience of our digital transformation in global freight. We delivered record revenue, record transactions, expanded our carrier network, and broadened our product offering with the launch of Fredos Enterprise Suite just after the quarter. While macro uncertainties around tariffs and trade policies may affect global trade volumes, vast majority of international freight services are still booked offline represent representing a huge growth opportunity for our digital platform. These operational achievements were reflected in our financial results.

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

Let me hand over to Pablo Pinheos, our CFO since March, to present these for the first time.

[Pablo Pinillos, CFO at Freightos]

Thank you, Svi. In my first quarter as CFO, I've had the opportunity to deep dive into our business model and operations, and I have been particularly impressed by the robust unit economics, the effectiveness of our go to market strategy, and the vast market potential of our platform. As digitalization becomes increasingly critical for efficient global trade, these strengths position us well for continued growth. I'm pleased to report that we met or exceed our guidance across key metrics this quarter, and we are well positioned to continue executing on our plans for the rest of 2025. We generated revenue of $6,900,000 representing 30% growth year on year.

[Pablo Pinillos, CFO at Freightos]

This growth was driven by platform revenue of $2,300,000 up 23% year on year, and solutions revenue of $4,600,000 up 33% year on year. We saw strong contributions from enterprise procurement solutions added through the acquisition of Shipsta, SaaS solutions and customer clearance services. Our gross margin continued to improve, reaching 66.8% this quarter on an IFRS basis, up from 62.6 in Q1 last year. While our non IFRS gross margin increases to 73.7% from 70.3% a year ago, demonstrating the scalability of our platform. Since I joined, I've made it a priority to continue the disciplined cost management the company had displayed, all while investing in strategic growth initiatives.

[Pablo Pinillos, CFO at Freightos]

As a result, adjusted EBITDA improved to negative $3,000,000 from negative $3,600,000 in Q1 last year, reflecting our revenue growth, gross margin expansion and continued operational efficiency gains as we scale. We remain on track to achieve breakeven adjusted EBITDA by the end of twenty twenty six. We ended the quarter with $36,400,000 in cash and cash equivalents, maintaining a strong balance sheet as we progress towards our profitability goals. Looking ahead for the second quarter of twenty twenty five, we expect 380,000 to 385,000 transactions, representing growth of 20% to 22% year on year and GBV of $278,000,000 to $285,000,000 up 37% to 40% year on year. Revenue is expected to reach $7,000,000 to $7,100,000 representing growth of 23% to 25% year on year and adjusted EBITDA is expected to be a loss of $2,800,000 to $2,900,000 For the full year 2025, we are reiterating our previous guidance.

[Pablo Pinillos, CFO at Freightos]

While we recognize the evolving microenvironment, including recent trade policy change, potential freight rate volatility and broader economic uncertainties, the resilience of our business model and our strong balance sheet position us well to navigate these dynamics while continuing to invest in growth opportunities. The fact that the vast majority of international freight is still being booked offline represents significant growth opportunities for our digital solutions regardless of short term trade policy fluctuations. With that, we will open the call to questions.

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

Okay. Thank you, Pablo. The first question will come from the line of Jason Hilfstein. Jason, you can unmute.

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

Can you hear me?

[Pablo Pinillos, CFO at Freightos]

Yep.

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

Yep. Great. So, clearly, you're you're managing the business quite well, over the past few quarters, particularly on a revenue side given the volatility. I mean, I think you made a point that said that China to US is a relatively small part of your business, really not exposure. Obviously, on the de minimis side, you might benefit.

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

But I guess just from a high level, you know, what could happen that that could throw you off? Again, you're a very small player in a very big market, and so, well, I guess, one could argue you could kind of make it up in other areas. But, you know, just maybe unpack what are the factors that investors should be watching out for, you know, that that would affect your ability to kinda hit your targets for the year? And I've got a follow-up. Thank you.

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

Sure, Jason. So this is Zvi. So look. Let let's maybe let's divide into our two revenue segments of, you know, platform and solutions. So platform is, in the short term, you know, sensitive to fluctuations in trade.

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

So if trade good is less in a certain lane, then we see fewer transactions in that lane. Maybe we see more transactions in another lane. Again, in the long term, we can still grow that, you know, tens of x. But but in the short term, yes, any dip in the market has some headwind. You know, we did see a dip, as I said.

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

We did see a dip in China US when when the very high tariff applied. It was not a big part of our transactions, but it did affect us. So so, you know, so platform is sensitive to trade volumes, again, with lots of room to growth, but it but it's always a headwind if if volumes are less. On the other hand, as I mentioned earlier, sometimes even if overall volumes are less, but people are looking for alternatives, then actually that favors the marketplace. So even if the overall volumes are less, sometimes we pick up more volume from people quickly trying to stop and change.

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

So it can work in our favor on the platform side as well. Solutions is is is sensitive like almost any business. It is sensitive to the macroeconomic environment. So if there's a serious trade war, which now it looks like, hopefully, there won't be, but if that come, know, who knows? If there's a lot of economic uncertainty, then our ability to close big you know, then enterprises are more hesitant to write big checks.

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

Right? And so that would be a headwind for our solutions. We saw it a little bit in q one, But then things come down with the, you know, with the the the so called reciprocal tariffs were wound back. The China US was wound back. So that a so hopefully now we're not gonna see that.

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

But with the you know, during those weeks where China US was a 45% or during those days when there were the so called reciprocal tariffs, then enterprise customers were nervous and and more hesitant to write big checks. So that can be a headwind. Any economic uncertainty or economic downturn is is a headwind. Again, it doesn't change the overall opportunity, but it's a headwind for our ability to close, to close solutions revenue.

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

And then, just maybe longer term, obviously, you have, you know, many companies thinking about diversifying their supply chain, you know, not showing down China, but, you know, obviously diversifying. Maybe just given the flexibility of what you offer, just talk about how that that could be a tailwind for you.

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

Yeah. I I think it is. I think I've sort of said that before. I I hate to hate to benefit from disruptions, but but, you know, but we do. When suddenly when when with the obviously, with trade, we've had a lot of dropping and changing during the the last three months.

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

The Suez Canal is still effectively closed to most shipping, although there was a president Trump announced a deal. There was a thought maybe it would reopen. People are looking right now, they're looking, I mean, a week ago, they were looking to move from China to Vietnam. Right now, maybe they're looking to move from Vietnam to China. Who knows?

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

So, yeah, I think, overall, as a as a marketplace and a platform, change we we benefit from from volatility where and we give tools. We give valuable tools to the industry to we give them data. We give them alternatives. And that that is always, you know, people and and it doesn't look like the world's going back to being very calm anytime soon between wars and trade wars and weather and strikes and labor. You know, there's always something going on.

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

And in a way, yeah, that benefits us because we provide useful tools for dealing with that.

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

Thanks. That's helpful. I'll go back in the queue.

[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, Partner- Co-Director of Research at Craig-Hallum]

There we go. So curious on the Timu Shine opportunity. How quickly do you think that supply could come back online or onto your platform? Obviously, that was not that was all being done direct.

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

Yeah. That's a great question, George. So yeah. The you know, Shien and Temu was mostly done direct and mostly in charter planes. So they they rarely did, you know, what you do in our platform.

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

You say I need I need a five cubic meters or or 300 kilograms or a thousand pounds of of cargo. They didn't do it that way. They chartered the whole plane and filled it with two little envelopes. Right? That's what they were doing right till a couple of weeks ago when the de minimis exemption was canceled.

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

I'll tell you the truth. I thought I thought we would see it quickly. But actually, as I mentioned in my remarks, when you look at the rates for Asia to US, for example, the air cargo rates based on our FX index, they they have not in fact dropped much in the in the last couple of weeks. And that would be the first indication even before we saw the bookings on our platform. Just the prices would would reflect the fact that that so I'm actually trying to find out what happened to those charter planes.

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

You know, are they are they I would have expected that they were made available that be made available for normal air cargo and that that would add capacity and bring down rates and and help us increase our volumes. I haven't actually seen that yet. Now it's only been two weeks, so that's really very fast. But, yeah, we're we're staying tuned and also talking to our network to try to understand what's happening to that to those starter planes.

[George Sutton, Partner- Co-Director of Research at Craig-Hallum]

Gotcha. Could you walk through the revenue dynamic behind the new partnership? What what will that do for you differently than your normal platform?

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

Sorry. Which new partnership?

[George Sutton, Partner- Co-Director of Research at Craig-Hallum]

Trucking. A new massive end to end partnership in The US.

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

Oh, the trucking partnership. Correct.

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

Yeah. Yeah. For brands. So yes. I mean, that these things, like anything in this industry, takes some time.

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

It it won't it won't have immediate effect, but it will start in other words, won't have a big immediate effect, but it will start being having an effect which will build up over many months. So so it's it's exciting. You know, we're trying to provide our the freight forwarders and and eventually, importers and exporters as well with with, you know, with the full service, you know, door to door, all the modes. So what happens now, our our biggest platform is Web Cargo by Freightos is air cargo only. So people are booking, for example, you know, Heathrow to JFK.

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

It's a, you know, classic route. And then the freight forwarder's going off our platform to say, okay. How do I do the last mile? Or another situation is they're booking, let's say, domestic US because we have we have increasing bookings also domestic US fire. So let's say they book, you know, Boston to LAX, and they're looking at the rates, the air rates on our platform.

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

But they say, wait a second. I'm not in such a hurry. Maybe it's worth trucking it. So they go off our platform to look for our trucks. So in both of those scenarios with this new partnership, they will have the trucking, whether it's the last mile or it's what's called the middle mile, you know, they wanna check air, but also truck for the for the hub to hub for the airport to airport.

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

They would have all of that on platform. So so over time, that that should attract more customers, you know, bigger share of wallet, more stickiness, competitive advantage. So it's it's part of our overarching strategy to be a one stop shop for all types of transactions and all all parts of the transaction.

[George Sutton, Partner- Co-Director of Research at Craig-Hallum]

Okay. That's it for me. A belated welcome to Pablo.

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

Mhmm.

[Pablo Pinillos, CFO at Freightos]

Thank you. Thanks. Thank you, Jorg.

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

Thanks, George.

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

Thanks, George.

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

I'll read a couple of questions from the chat. So the first one is why does the guidance range imply potential acceleration in transaction growth for the remainder of the year while the GBV outlook appears more conservative? The second question is, do you expect further m and a in 2025? Are there gaps in the platform you're looking to fill by acquisitions?

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

Okay. Regarding the first question thanks for the question, Abli. The first question, we're being more cautious on GBV because we don't know what's going happen to prices. And there are reasons to think that that the prices in the market could drop. It doesn't affect our revenue too much because a lot of our transactional revenue is sort of flat fee.

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

So doesn't affect our revenue too much, but we do think that although our transactions will continue to grow, we think in ocean there could be a price drop, especially if the if the Red Sea reopens. I think there's another question coming on that. That would significantly drop prices, but also if there's a slight slowdown because of tariffs and also because we mentioned before on the air side with the de minimis, we haven't seen it yet, but we we that could reduce air rates. So we're just being cautious with our outlook to GBV because completely out of our control, the the the the rates for ocean and air freight could drop. Second question, do we expect further m and a?

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

Probably not. You never know if someone the right opportunity comes up, but, you know, we we've committed to preserve our cash to get to breakeven by the end of next year with the cash that we have. And the Shiptra acquisition luckily wasn't too expensive, and it's, you know, producing revenue and it's strategically important. So we did that up with that one anyway. But now we're probably going to be cautious.

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

So unless there's a very good opportunity which isn't expensive or which we can finance, we're probably going to focus on organic growth and just by way of being cautious with our with our cash balance.

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

Sveo mentioned that there's a question on the Red Sea. I think you answered it in a previous question, but maybe it's worth sort of clarifying the point.

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

Yes. I want to clarify this is a question about what's the effect of the Red Sea being reopened. So I wanna clarify the Red Sea has not reopened. I think what the thanks for the question, Ari. I I think what you're referring to here is that president Trump announced a deal with the with the Houthi rebels, And it wasn't exactly clear what the deal was, but it seemed to be seemed to be saying that they won't shoot on American ships.

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

The reality is that the number of American ships carrying containers is is virtually zero, depending exactly how you define that. So in reality, I don't know of a single, you know, carrier who's gone back gone back to using the Red Sea, the Suez route. So in practice, that has not reopened. All the ships are still going the one ships that were going around Africa are still going around Africa. If the Red Sea reopens, that will that will reduce rates.

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

Again, that doesn't affect us too much. It affects us a little bit, but we're not overly sensitive to the rates. But, yeah, ocean rates could drop significantly if that supply came back online. Having said that, we expected to see ocean rates drop dramatically, you know, during the slowdown in China US when the tariffs were were temporary temporarily down. We didn't see that as much as we expected.

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

And that's because the ocean liners have gotten quite good at blanking sailings. In other words, parking a ship to to reduce capacity. So even if the Red Sea if the Red Sea reopens, potentially, we could see a big drop in rates. But it's also possible that the carriers will counteract that and and artificially reduce the supply to support the rate. So that's also possible.

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

Okay. Last question, I believe, probably for Pablo. Why do we see a mismatch between GBV and revenue growth? Can we expect revenue to improve as a percentage of GBV?

[Pablo Pinillos, CFO at Freightos]

Sure. So as we mentioned before, a large portion of our transactional bookings is based on a flat fee. So and and our transactional bookings mix between flat fee and not flat fee. We try to evolve it over time, but that's the main reason why that mismatch is happening right now. As we evolve and scale, we will try to correct and continue to grow that.

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

And just to add also that the that revenue it's only the platform revenue that relates to GBV in any way. So if you're looking at all the revenue, the solutions revenue is is only very indirectly, you know, connected to GBV. The the platform revenue is is of course related to GBV, but as Pablo said, not often it's a in most cases, in fact, it's a flat fee. So it's it's more related to the number of transactions in a way.

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

Okay. And we actually do have another question. What constitutes the economic moat for Freighters? Can other competitors intermediate freight with the digital digital platform? Sort of a a jump into the same business model?

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

And and is there any player in the market that can make a similar platform like cargo like freighters?

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

Yeah. So look, the the biggest moat for a a platform or marketplace is the network effects. That's why I emphasize them in my remarks every every quarter. I always say that, you know, if you if you wanna buy some some secondhand dishwasher on eBay, it's it's not the technology which is which is the reason you go to eBay. You go to eBay because that's where the sellers are.

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

And if you wanna sell your your secondhand, you know, toaster, then you go to eBay because that's where the buyers are. So our network is our customers are the moat, the the network of buyers and sellers. And that's why every quarter we report not just how many transactions we have, but how many carriers are selling and how many users are buying. And so we give you all the tools every quarter to really follow how how we're deepening that moat. Can someone else do it?

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

Well, I mean, do have some competition for example for air bookings which is our biggest volume. There are a couple of smaller companies who compete with us. But we're still significantly ahead of them because we have that that mode. We have that those network effects. And also because they do just air, but we do air and ocean and we work with freight forwarders as well as with importers and exporters.

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

So that's also important not just having more buyers and sellers, but also we talked about this a little bit before when George asked about the trucking partnership. So the fact that we've got air and ocean and now we announced that some trucking is coming and that's also a moat because then as a buyer, you know, you you go to the place where a, where all the sellers are, but b, where you can buy all, you know, air and ocean and trucking. So so I think the comprehensiveness of our platform and the number of buyers and sellers that we are create a create a very deep moat. And and you'll see that, you know, many marketplaces survive for for decades or centuries, you know, because, you know, if you look at the the the New York Stock Exchange or the London Stock Exchange or or various other forces, they're very, very defensible businesses because, yeah, somebody else can open an exchange, but they don't have the liquidity. They so so think we've got a very exciting moat, which I hope will will keep us as market leaders for for many, many years and and beyond.

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

Okay. So we have no more questions. We wish everyone a good day, and thank you.

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

Thanks, everyone. Thanks, Annette.

[Pablo Pinillos, CFO at Freightos]

Everyone. Thanks, Annette.

Participants

Executives

• Anat Earon-Heilborn, VP - Investor Relations
• Zvi Schreiber, CEO & Chairman of Board
• Pablo Pinillos, CFO

Analysts

• Jason Helfstein, Managing Director - Head of Internet Research at Oppenheimer & Co. Inc.
• George Sutton, Partner- Co-Director of Research at Craig-Hallum