Freightos Ltd. Q3 FY2024 earnings call

Key Points

• Zvi noted Q3 reflects progress in platform (339,000 transactions, 26% YOY growth; 19,700 unique buyers, 14% YOY growth; GBV $217.5M, 35% YOY growth), solutions (subscription revenue growth, Shipsta integration), and network (network effects, FreighTech Conference).
• Ran highlighted Q3 revenue growth (21% YOY to $6.2M), improved gross margins, adjusted EBITDA at -$2.8M (better than guidance), and a cash position of $41.3M as of September 30, 2024.
• Transition of CFO: Ran will leave at year-end, with an active search for a new CFO; Ran will remain engaged through Q1 for a smooth handover.

Platform revenue grew 29% year-over-year to $2.3 million in Q3 2024, with WebCargo leading due to high transaction volumes. Solutions revenue increased 17% year-over-year to $3.9 million, supported by SaaS expansion and the Shipsta integration. IFRS gross margins rose to 65% in Q3 2024 compared to 54.9% in Q3 2023, and non-IFRS gross margins reached 72.7% up from 69.5% last year. Platform transactional revenue experienced strong growth, reflecting growth in WebCargo, Freightos.com, and Clearit.

Q4 2024 Guidance

• Transactions expected to range between 338.5 and 348.5, representing 18% to 21% year-over-year growth.
• Gross booking value guidance increased to $257 million to $265 million, a 37% to 41% year-over-year growth.
• Revenue guidance narrowed upwards to $6.4 million to $6.5 million, indicating 21% to 24% year-over-year growth.
• Adjusted EBITDA guidance improved to a range of negative $3.2 million to negative $3.1 million, driven by Shipsta consolidation and hiring for 2025 growth.

• Market conditions: Impact of Red Sea crisis on ocean rates and potential effects of Trump administration policies on trade.
• Integration challenges: Delays in carrier integrations due to IT issues and ongoing Shipsta integration timeline.

Q: Why is EBITDA guidance down for Q4 over Q3 despite increased revenue?

A: Mainly due to first-time full quarter consolidation of Shipsta (closed mid-August) and hiring to support 2025 growth, including sales and marketing staffing.

Q: What does the Trump administration mean for the industry?

A: Uncertain, but trade trends and digitalization growth in the freight industry remain key drivers, with the industry still in early stages of digitization.

Q: What's the response to Shipsta cross-selling with existing customers?

A: Going well, with enterprise deals in progress and concrete cross-selling opportunities emerging, though enterprise deals take time to materialize.

Q: Impact of e2open integration on carriers?

A: e2open helps freight forwarders and shippers, but airlines integration is ongoing with new carriers added, including Qantas, despite some delays in large carrier integrations due to IT issues.