Freightos Limited Ordinary shares Q2 FY2025 earnings call

Board Changes - Udo Lange was appointed Chairman of the Board, and Rotem Hershko joined the Board. Udo has over 3 decades of global logistics leadership, and Rotem has platform technology and logistics expertise. ### Business Review - Q2 saw 397,000 transactions, a 26% increase year-over-year, with 22nd consecutive quarter of record transactions. Platform expanded to 75 carriers including China Airlines and Air Europa. Air cargo market had 3% volume growth but FAX global benchmark average decreased 15% year-on-year. Ocean freight had tariff changes driving transpacific volumes, rates rose 43% from Q1 but were 11% lower than last year. - Platform: Maintained robust transaction volume growth, expanded network to 75 carriers, reached major milestone with a large ocean container carrier for integrated contract and spot booking connection. - Solutions: Revenue up 36% year-over-year. Successful deployment of contract benchmarking feature in Freightos Terminal, partnership with SEKO Logistics, notable wins with a leading North American fiber networking company and a top global retailer. AI playing growing role in solutions. - Network Effects: Observed robust cohort performance from buyers and sellers on the platform, with unique buyer users increasing by 6% year-over-year.

In Q2, Freightos reported revenue of $7.4 million. Platform revenue was $2.5 million, up 23% year-over-year, accounting for approximately 33.78% of total revenue. Solutions revenue was $4.9 million, up 36% year-over-year, making up around 66.22% of total revenue. The platform's 397,000 transactions in Q2 marked a 26% increase from the same period last year, and solutions revenue saw a 36% year-over-year growth.

Q3 2025 - Transactions expected in the range of 419,000 to 425,000, year-over-year growth of 24% to 25%. - GPV expected between $329 million and $333 million, year-over-year growth of 51% to 53%. - Revenue expected to be $7.6 million to $7.7 million, year-over-year increase of 23% to 25%. ### Full Year 2025 - Increased transactions guidance, revenue guidance narrowed to $29.5 million to $30 million. - Adjusted EBITDA in Q3 2025 anticipated to be a loss between $2.6 million and $2.5 million, and a loss between $10.9 million and $10.5 million for the full year.

- Foreign currency fluctuations impacted adjusted EBITDA, with the euro and shekel appreciating against the dollar during the quarter. - Tariffs had a mixed impact on the business, with elevated tariffs on specific lanes leading to a dip in platform transactions on some lanes and enterprise customers in the solutions business being more cautious in bidding for large contracts during periods of high uncertainty. - The international freight shipping industry is fragmented, conservative, and international, which has contributed to it not being fully digitalized until now.

Q: You raised full year GBV guidance but kept revenue at the midpoint largely unchanged. Is there something that you're seeing that would suggest take rate weakness for the second half? And just curious on an update on how the Shipsta acquisition is helping you drive solutions revenue.

A: Zvi Schreiber said it's to do with the mix of transactions, with some types of transactions growing faster and bringing down the mix a bit but all going in the right direction. Regarding Shipsta, it's helping in cross-sell and having a more interesting portfolio, with big enterprises being helped by the broader suite and it being an important source of data for Freightos Terminal.

Q: Why do you think the international freight shipping is not fully digitalized until now?

A: Zvi Schreiber said it's a very fragmented, international, and conservative industry, but there's no excuse for it not being digitalized yet. Udo Lange added that in times of supply chain complexity, customers are leaning into digitalization more, and Freightos' capabilities are helping in this growth story.