February 28, 2024

Freightos loses $19M, eyes profit breakthrough in late 2026


Freightos, a neutral sales platform for international air and ocean shipments, expects to make its first profit in the fourth quarter of 2026, company leadership said Monday after posting an adjusted loss of $19 million for 2023.

The results follow losses of $14.6 million and $12.4 million in 2022 and 2021, respectively. In July, Freightos laid off 13% of its staff, or about 50 people, and implemented other cost controls.

Jerusalem-based Freightos estimated it will narrow losses to about $14.5 million this year on revenue of about $23 million. But officials say growing interest in digital booking by carriers, freight forwarders and shippers, more variety of cargo types available to book, and a huge amount of latent demand will propel the FreightTech company into the future.

CEO and founder Zvi Schreiber said during a briefing for analysts that the total addressable market by value for air, ocean and final-mile shipments transacted on the short-term market is $600 million, with the vast majority of transactions still executed through email and phone calls. Up to $300 million of that shipment value has the potential to be offered on freight marketplaces. Freightos makes money through a combination of flat fees and taking a small percentage of each transaction. As it takes a greater share of the digital market, it could achieve $10 billion in revenue by the end of the decade, he said.

Freightos (NASDAQ: CRGO) operates a multiparty freight reservation platform where carriers sell their capacity and thousands of freight forwarders conduct real-time rate comparison, book space, make payments and manage shipments for immediate delivery in one place. The electronic booking system also enables forwarders to share pricing and service to their import and export customers through sister site WebCargo, which functions similarly to travel agency intermediaries Amadeus and Sabre in the passenger sector.

The FreightTech company brought in $20.3 million in revenue in 2023, an increase of 6% from the prior year, after breaking the threshold of 1 million transactions. The results were achieved despite a 2% drop in global cargo volumes last year. Most Freightos business is in the air cargo sector as ocean carriers have been slow to adopt e-booking.

Higher platform activity was offset by lower air and ocean rates, which reduced the value of Freightos’ cut from each transaction. Management’s guidance is for revenue to increase about 15% to $23 million and for transaction activity to grow about 30% during 2024. It projects gross booking value (freight transaction value plus Freightos fees) will rise about 22% to more than $800 million.

CFO Ran Shalev said targets for 2025 to 2030 are for transactions and core booking value to each grow 20% to 30% annually by adding buyers, sellers, more choices and transaction features. Freightos currently generates the bulk of revenue from its solutions business but expects fast-growing platform revenues to become the dominant revenue stream and drive annual revenue growth of 25% to 30%, with gross margins approaching 80% versus 58% today. By the end of the decade, Freightos anticipates it will achieve adjusted earnings, minus certain bookkeeping expenses, of 8% to 12% per year, “bringing us to profitability by the end of 2026 and leading for this to become a highly profitable company in the later years,” said Shalev.

Freightos also has a white-label offering to be the booking engine on forwarders’ own websites and sells subscriptions for data related to industry pricing and other trends.

The number of carriers selling through the Freightos system now stands at 47, after Japan Airlines and Virgin Atlantic Cargo joined WebCargo in recent weeks.

Freightos said it has several new avenues for growth, such as the recent feature allowing forwarders to obtain estimates for trucking costs from a U.S. airport to the final destination. The company expects to soon integrate the actual booking of these travel services into the platform alongside the airline bookings, similar to add-on services such as payments, insurance and customs brokerage that are now available on the platform.

Freightos last year also introduced interlining, where a customer books with one airline that purchases cargo service from a partner carrier, similar to code sharing in passenger air travel. It also launched Freightos Terminal, a dashboard with global air and ocean intelligence. The current disruption in Red Sea shipping has drawn interest in the Freightos data, including from manufacturers and retailers, said Schreiber.

The air cargo market has shown signs of improved demand in recent months, but excess capacity from passenger airlines may prevent carriers from significantly raising rates this year.

Freightos was listed on the Nasdaq exchange in January 2023 through a reverse IPO that raised $65 million. The stock is down 34.5% over the past 12 months at $2.94 per share. The companyhas $52 million in the bank to pursue its growth strategy and is focused on reducing cash burn, management said.

Competitors in e-booking for international freight include cargo.one, Cargo AI and Cargo Wise.

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South American cargo airline joins Freightos e-booking platform


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