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01/11 13:58
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals strong financial performance with a 31% revenue increase and improved gross margins. Despite some challenges like FX fluctuations and slow digital adoption, the company is on track for EBITDA breakeven by 2026. The Q&A section supports positive sentiment, with strategic integrations and hedging minimizing risks. The unchanged revenue guidance amid a raised GBV indicates stable expectations. Overall, the strong growth metrics, optimistic future outlook, and effective risk management suggest a positive stock price movement in the coming weeks.
Revenue $7.4 million, marking a 31% increase year-over-year. Growth attributed to sustained demand for digital solutions and consistent execution capabilities.
Platform Revenue $2.5 million, up 23% year-over-year. Growth driven by the Web cargo platform connecting carriers with freight forwarders.
Solutions Revenue $4.9 million, up 36% year-over-year. Growth reflects proactive expansion of product capabilities and deepening client relationships.
Gross Margin (IFRS) 67% in Q2, up from 65% in Q2 last year. Improvement due to revenue growth and disciplined cost management.
Non-IFRS Gross Margin Nearly 74%, up from 72% last year. Improvement attributed to revenue growth and cost management.
Adjusted EBITDA Negative $2.5 million compared with negative $3.1 million in Q2 '24. Improvement due to revenue growth, gross margin expansion, and cost management, though partially offset by foreign currency fluctuations.
Transactions 397,000 transactions, a 26% increase year-over-year. Growth driven by platform expansion and addition of new buyers and carriers.
Platform expansion: Added new buyers and carriers, including China Airlines and Air Europa, increasing total to 75 carriers. Achieved 397,000 transactions in Q2, a 26% year-over-year growth.
Ocean freight integration: Completed a fully integrated contract and spot booking connection with a major ocean container carrier, expanding addressable market in container shipping.
AI-based features: Introduced AI-based features into solutions, leveraging unique data to optimize logistics strategies.
Air cargo market: Market volumes up 3% year-over-year in Q2, despite U.S. ending de minimis exemption for low-value imports from China. Freightos Air Index decreased 15% year-on-year.
Ocean freight market: Rates rose 43% from Q1 but were 11% lower than last year due to capacity growth and overcapacity concerns.
Revenue growth: Achieved $7.4 million in revenue for Q2, a 31% year-over-year increase. Platform revenue grew 23%, and solutions revenue grew 36%.
Profitability focus: Adjusted EBITDA improved to negative $2.5 million from negative $3.1 million in Q2 2024. On track to achieve breakeven adjusted EBITDA by end of 2026.
Board changes: Appointed Udo Lange as Chairman and Rotem Hershko as a new Director, reflecting company maturity and focus on governance.
Digitalization focus: Continued emphasis on digitalizing global freight, with strategic expansions in Asia and integration of modern APIs for ocean freight.
Market Volatility: Market volatility and rapidly changing trade conditions have increased the need for Freightos' marketplace and data. However, elevated tariffs on specific lanes, such as the 145% China-U.S. tariff, led to a dip in platform transactions on that lane.
Economic Uncertainty: Periods of high uncertainty have caused some enterprise customers to delay decision-making on large contracts, impacting the solutions business.
Regulatory Changes: The U.S. ending the de minimis exemption for low-value imports from China in May has impacted e-commerce air cargo demand, particularly on the China-U.S. lane.
Competitive Pressures: Freightos faces challenges in increasing its penetration rate within the global air cargo market, which is still mostly offline. Currently, Freightos accounts for less than 10% of overall bookings for any given airline.
Currency Fluctuations: Currency fluctuations, particularly the appreciation of the euro and the shekel against the dollar, negatively impacted profitability in Q2.
Technological Integration: While Freightos has made progress in integrating with ocean carriers, much of the ocean freight industry still relies on legacy systems, which slows the adoption of digital bookings.
Sales Cycle Delays: Certain deals with large shippers are taking longer to close due to current economic conditions, potentially impacting revenue growth in the solutions segment.
Q3 2025 Transactions: Anticipated to be in the range of 419,000 to 425,000, reflecting a year-over-year growth rate of 24% to 25%.
Q3 2025 Gross Booking Value (GPV): Projected between $329 million and $333 million, reflecting a growth rate of 51% to 53% year-over-year.
Q3 2025 Revenue: Expected to be between $7.6 million and $7.7 million, representing a 23% to 25% increase year-over-year.
Full Year 2025 Transactions: Guidance increased to reflect strong performance in the first half and expectations for continued robust platform activity.
Full Year 2025 Gross Booking Value (GPV): Estimate raised in line with transactions and prevailing market rates.
Full Year 2025 Revenue: Narrowed guidance to the range of $29.5 million to $30 million, reflecting sustained growth and cautiousness regarding longer sales cycles potentially impacting solutions revenue.
Adjusted EBITDA: Anticipated loss of $2.6 million to $2.5 million for Q3 2025 and a loss of $10.9 million to $10.5 million for the full year, with expectations for continued FX impact.
Breakeven Adjusted EBITDA: Targeted by the end of 2026.
The selected topic was not discussed during the call.
The earnings call presents a mixed outlook: while there are positive elements such as improved gross margins, reduced operational expenses, and strategic partnerships, these are countered by revenue softening due to supply chain issues and regulatory challenges. The Q&A section reflects a cautiously optimistic sentiment with clarity in responses. However, the absence of strong guidance and risks related to partnerships and regulatory compliance suggest a balanced view, leading to a neutral sentiment rating.
The earnings call presents a mixed picture. Positive aspects include strong shareholder returns through buybacks and dividends, a solid EBITDAX, and manageable net debt. However, concerns arise from anticipated production declines in 2026, cautious capital allocation due to oil price volatility, and unclear management responses on future guidance and M&A specifics. These elements combined with no clear market cap information lead to a neutral sentiment, indicating minor stock price movement.
The earnings call reflects a positive outlook with revenue growth, improved gross margins, and strategic partnerships like Visa. Despite negative adjusted EBITDA, there's a clear path to breakeven by 2026. The Q&A revealed management's strategic focus on efficiency and expansion, supported by strong cash reserves. The announcement of a Visa partnership is a positive catalyst, and the raised guidance further supports a positive sentiment. While there are some uncertainties, such as tariffs and FX impacts, the overall sentiment remains positive given the growth trajectory and strategic initiatives.
The earnings call highlights significant financial and strategic challenges, including zero revenue, increased expenses, and a substantial net loss. Regulatory and manufacturing hurdles for Deramiocel add uncertainty, while competitive and strategic execution risks further threaten market position. Despite a strong cash position, the lack of revenue and reliance on Deramiocel's approval create a precarious outlook. These factors, combined with the absence of positive catalysts, suggest a strong negative stock price movement over the next two weeks.
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