Freightos Limited Q1 FY2024 earnings call

Key Points - Transactions: First quarter saw nearly 296,000 transactions, a 29% year-over-year increase, marking the 17th consecutive quarter of record transactions. - Gross Booking Value: Over $192 million, up 14% year-over-year, despite Red Sea crisis impact on shipping routes. - Unique Buyers: Increased 11% year-over-year, reflecting platform appeal. - Carrier Expansion: Expanded carrier base with partnerships like United Airlines, Delta Cargo, and Singapore Airlines, enhancing service offerings. - Growth Strategies: Progress across four strategies: more transaction types, covering more aspects of transactions, increasing buyer-seller interactions (e.g., interlining), and data utilization. - Freight Market: Ocean volumes up 9% y-o-y, air cargo volumes up 13% y-o-y; rates affected by Red Sea crisis, with ocean rates easing but remaining elevated, air rates impacted by B2C e-commerce and Red Sea shifts.

In Q1 2024, Freightos reported revenue of $5.4 million, up 11% compared to Q1 2023. Total platform revenues were $1.9 million, up 12% year-over-year, with air cargo digital booking being a key contributor. Solution revenue was $3.5 million, up 10% from Q1 2023. IFRS gross margin was 62.6% (up from 58.3% in Q1 2023) and non-IFRS gross margin reached 70.3% (up from 65% in Q1 2023). Adjusted EBITDA in Q1 2024 was negative $3.6 million, an improvement from negative $5.8 million in Q1 2023, driven by cost restructuring and revenue growth.

Q2 Guidance - Transaction growth expected to be 27%-29%, aligning with long-term 20%-30% growth target. - GBV expected to grow 15%-18% year-over-year, despite current air freight rate decline. - Q2 revenue projected to be $5.5 million to $5.6 million, driven by platform monetization and solution sales. - Expect to continue improving adjusted EBITDA, with small hiring throughout the year to support growth.

The discussion notes that today's call contains forward-looking statements subject to risks and uncertainties. Actual results may differ materially due to various risk factors, as detailed in SEC filings and the press release.

Q: Could you walk through the cohort analysis and pricing related to platform participation?

A: As transaction volumes grow, Freightos becomes a more valuable sales channel for airlines, aiding in negotiations for higher fees as contracts renew.

Q: How unique is the United Airlines deal?

A: Freightos is building United Airlines' own portal, providing technology for all their booking channels, unlike typical platform partnerships where they connect to airlines but don't build their portals.

Q: Regarding the Red Sea issue, how does it affect air cargo from India and Dubai?

A: Extra demand for air cargo from India and parts of Asia exists, but some big companies have monopolized capacity, reducing spot capacity available on the platform.

Q: What's the pathway to sustain 20% plus revenue growth?

A: There's a balance between growth and breakeven; continued investment in R&D, sales, and marketing while seeking ways to accelerate growth without large capital expenditure.

Q: Can you expand on TAM in terms of available revenue for Freightos?

A: The potential TAM for platform revenue is easily tens of billions of dollars, as the market for air and ocean spot freight is hundreds of billions, with Freightos aiming for a significant take rate over time.