Freightos Limited Q2 FY2024 earnings call

• Q2 was a strong quarter with 32% year-over-year growth in transactions and 31% growth in GBV, reflecting the industry shift to digital solutions.
• Buyer users increased by 16% to ~19,000, and the sell-side network grew to 51 carriers from 37 in Q2 last year.
• New airlines like Singapore Airlines, Coyne Airways, and Thai Airways joined the platform, but some new carriers expanded capacity slower than anticipated and major airlines delayed go-live due to internal IT projects.
• Launched features such as scheduling in advance repeat bookings for air cargo, insurance services pilot, and improved air cargo rate comparisons.
• Made progress in trucking bookings in the US via 7LFreight, a subsidiary acquired.
• Announced acquisition of Shipsta, which helps manage long-term freight procurement tender and negotiation processes, complementing Freightos' focus on spot market digitization.

In Q2, Freightos facilitated 316.5 thousand transactions, a 32% year-over-year increase. Gross booking value (GBV) reached $203.4 million, a 31% year-over-year increase. Buyer users increased by 16% to approximately 19,000. The sell-side of the network grew to 51 carriers from 37 in Q2 last year. Revenue for Q2 '24 was $5.7 million, up 11% compared to Q2 of '23. Non-IFRS gross margins reached a record 72%, up 7 percentage points from 65% in the same period last year. Adjusted EBITDA in Q2 was negative $3.1 million, much better than the negative $5.3 million in the same period last year and a significant sequential improvement from the negative $3.6 million in Q1 of this year.

• Q3 transactions are expected to grow 20% to 24% year-on-year. Full year transactions growth expected 25% to 27%, but下半年 growth expected lower than first half due to market factors.
• Q3 revenues expected to reach $5.9 million to $6 million, adjusted EBITDA expected -$3.3 million to -$3.4 million.
• Shipsta's contribution expected mostly in Q4, with ~$800,000 in revenues and small loss.
• Full year adjusted EBITDA loss lower than previously expected due to strong execution and cost control.

• Some newer carriers expanded capacity availability on the platform at a slower pace than originally anticipated.
• A couple of major new airlines delayed their go-live purely due to delays in their internal IT projects.
• Red Sea crisis caused short-term shortage of air spot capacity in Asia, impacting transactions there.
• Reduced demand in some European countries presumably driven by macroeconomic conditions.

Q: Can you talk a little bit about the revenue and cost synergy opportunities between Freightos and Shipsta? And maybe what makes Shipsta unique relative to other tender management solutions out there?

A: In terms of revenue, for the balance of this year, about $800,000 of revenue expected. There are cross-sell opportunities with same customers. Shipsta is unique as it has a modern cloud-based software, fantastic customer base including top tier customers, and is a modern solution unlike many decades-old tendering platforms.

Q: It looks like good deal. And then this is probably the first time I've heard you mention U.S. trucking in quite some time. It sounds like you're seeing some green shoots there. Can you talk about recent trends in that segment of the business? And then could we also get an update on your Ocean initiatives?

A: Acquired 7L Freight for air cargo, which also does trucking, especially LTL in US. There's progress in US trucking as it complements air business. On ocean, platform has some ocean bookings but not fully digital yet, with a couple of ocean liners expected to have digital connection by end of this year.