Freightos Limited (CRGO) Q3 2025 Earnings Call Transcript
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Overview
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.
Key Financial Performance
Transactions Processed 429,000 transactions in Q3 2025, up 27% year-over-year. This marks the 23rd consecutive quarter of record transactions. The increase is attributed to more buyers and sellers using Freightos more frequently, driving short-term revenue growth and long-term scalability.
Unique Buyer Users 20,600 unique buyer users in Q3 2025. The number of carriers with more than 5 bookings increased to 77. Growth is driven by expanding airline coverage in Asia and global expansion of smaller carriers leveraging the digital channel.
Air Cargo Volumes Increased 4% compared to Q3 2024. Growth in many markets was offset by headwinds from tariffs and changes to U.S. import regulations.
Global Air Cargo Rates Decreased 6% compared to Q3 2024. The decline reflects market volatility and nervousness due to tariffs and macroeconomic uncertainty.
Revenue $7.7 million in Q3 2025, up 24% year-over-year. Platform revenue was $2.6 million (up 15% year-over-year), and Solutions revenue was $5.1 million (up 30% year-over-year). Growth is attributed to increased transaction volumes and the adoption of mission-critical SaaS solutions.
Gross Margin Improved to 69.1% (IFRS basis) in Q3 2025 from 65% a year ago. Non-IFRS gross margin rose to 74.8% from 72.7%. The improvement is due to scaling, automation efforts in customer services, and infrastructure cost optimizations.
Adjusted EBITDA Negative $2.6 million in Q3 2025, an improvement from negative $2.8 million in Q3 2024. The improvement is driven by revenue growth, stronger gross margins, and disciplined cost management, partially offset by currency impacts.
Cash and Short-Term Bank Deposits $30.6 million as of Q3 2025. Cash position supports continued investments in product and commercial execution while scaling the business to breakeven.
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Operating Highlights
Multimodal rate management and quoting SaaS product: Freightos launched and validated the WebCargo Rate & Quote Ocean product, enabling unified air and ocean quoting. Nippon Express, a top 5 global freight forwarder, expanded its use of Freightos, increasing its annual commitment by multiples.
Airline coverage expansion: Freightos is expanding airline coverage in Asia and globally, focusing on smaller carriers to leverage its digital channel.
Ocean carrier integrations: Progress made with two more ocean carrier integrations, expected to go live in the coming quarters, enhancing real-time shipping options.
Transaction growth: Processed 429,000 transactions in Q3, up 27% year-on-year, marking the 23rd consecutive quarter of record transactions.
Revenue growth: Revenue for Q3 was $7.7 million, up 24% year-on-year, with platform revenue growing 15% and solutions revenue growing 30%.
Gross margin improvement: Non-IFRS gross margin improved to 74.8% in Q3 2025 from 72.7% a year ago, driven by scaling and automation efforts.
Partnership with Visa and Transcard: Freightos partnered with Visa and Transcard to provide modern financing solutions for freight forwarders and importers/exporters, enhancing payment efficiency.
Leadership addition: Michael Netter joined as Chief Revenue Officer to scale multimodal adoption and enterprise deployments, focusing on value-based selling.
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Risk or Challenges
Market Volatility and Nervousness: The freight market is experiencing volatility and nervousness due to tariffs and macroeconomic uncertainty. This environment creates challenges for selling solutions and impacts customer decision-making.
Longer Sales Cycles for Enterprise SaaS Deals: Due to tariffs and the current macro environment, enterprise SaaS deals are experiencing longer sales cycles, which has impacted anticipated revenue growth.
Foreign Exchange Headwinds: Currency fluctuations, particularly a stronger euro and SEKO versus the U.S. dollar, have negatively impacted adjusted EBITDA and profitability.
Revenue Composition Shift: A shift in revenue composition, with platform revenue performing better relative to solutions revenue, has modestly impacted overall profitability due to solutions typically generating higher margins.
Ocean Carrier Digitalization: The transition to digital booking for ocean carriers is progressing slowly, which delays the realization of significant revenue contributions from this segment.
Economic Uncertainty Impacting Logistics Industry: The logistics industry is facing a challenging year due to economic uncertainties, which has affected revenue growth and profitability.
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Guidance & Outlook
Q4 2025 and Full Year 2025 Revenue Growth: Continued year-on-year growth across transactions, GBV, and revenue is anticipated for Q4 2025. The company remains on track to meet its revenue guidance for the full year 2025 despite challenges in the logistics industry.
Adjusted EBITDA Outlook: The company plans to reach adjusted EBITDA breakeven by Q4 2026. Adjusted EBITDA for Q4 2025 will likely continue to be impacted by foreign exchange headwinds, leading to a more modest year-on-year improvement than initially projected.
Cash and Liquidity: The company expects to end 2025 with cash and equivalents of approximately $27 million, reflecting a cash burn of about $10 million for 2025 compared to $15 million in 2024.
Platform Revenue Growth: Platform revenue is expected to grow faster than Solutions revenue over the long term, with the company targeting Platform revenue to ultimately outpace Solutions revenue.
Ocean Booking Transactions: Progress with two more ocean carrier integrations is expected to go live in the coming quarters, contributing to midterm revenue growth. However, meaningful revenue contribution from ocean bookings is anticipated in the midterm, not immediately.
Gross Margin Improvements: The company plans to continue improving gross margins through restructuring hosting agreements and optimizing infrastructure costs.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Is there anything you could do to grow faster organically or inorganically, and how much of the gating factor of growth is the path to breakeven EBITDA and managing the cash balance?
A:The company is balancing growth and breakeven EBITDA by the end of next year. They have improved efficiency significantly, with revenue growing 40% over two years without team expansion. AI is being explored for further efficiency. The budget is being finalized to grow as fast as possible without compromising breakeven.
Q:Where do you feel we are with tariffs volatility and its impact on shipping volumes?
A:There is less uncertainty compared to earlier in the year, but tariffs still create friction for U.S. imports. Global trade is up, but U.S. trade is slightly down. The uncertainty and tariffs affect the market, but the platform benefits from the need for marketplaces to adapt to changes.
Q:What is the current penetration level in terms of air cargo carriers and freight forwarders?
A:Penetration varies by geography. In Europe, penetration is very high with most airlines on the platform. In the U.S., penetration is growing but smaller, and in Asia, penetration is still in single digits.
Q:Can you explain the Visa partnership and its impact on your opportunity?
A:The Visa partnership enhances the payment solution, providing credit lines and financial technology. This is expected to grow payment handling, increase take rates with airlines, and improve monetization of airline revenue.
Q:How do you define midterm growth relative to ocean carriers?
A:Midterm growth is defined as significant revenue contribution starting in 2028. Minimal revenue is expected in 2026 and 2027, with meaningful growth beginning in 2028. Solutions revenue for ocean will contribute earlier, starting in 2026.
Q:What target do you have for the take rate by the end of 2026?
A:The take rate is expected to grow year-on-year, depending on the business mix and growth in the WebCargo platform versus Freightos.com. The plan for next year is being finalized.
Q:Why is revenue growth slowing down in Q4 despite the addition of carriers and forwarders? How much do you expect FX headwind to affect revenue, and will it delay the breakeven point?
A:Q4 slowdown is due to delays in closing Solutions revenue deals and the completion of a nonrecurring project in Q3. FX headwinds mainly affect expenses, not revenue, and are not expected to delay breakeven in 2026.
Q:What early traction have you seen with major forwarders for WebCargo Rate & Quote Ocean? How quickly do you expect Ocean to scale relative to air?
A:Ocean platform is connecting to major carriers but is not yet at critical mass. Solutions side is seeing traction with existing customers, including small forwarders. Ocean is expected to be a major growth driver for solutions revenue next year.
Q:What is the revenue share arrangement with partners like Megacap Aviation?
A:There is no revenue share. Partners like Megacap are treated as carriers or virtual carriers, paying a fee for bookings. Their arrangements with airlines are separate.
Q:What proportion of Solutions revenue is recurring versus non-recurring?
A:A very large majority of Solutions revenue is recurring, with non-recurring revenue being less than 5%. Non-recurring projects are rare and not part of the core business model.
Q:Review of Unclear Management Responses
A:Management avoided providing specific numbers or detailed breakdowns for certain questions, such as exact penetration levels, take rate targets, and the proportion of recurring versus non-recurring revenue. Additionally, some responses were vague, such as the impact of FX headwinds and the timeline for achieving critical mass in the Ocean platform.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Nippon Express
Ocean
Pablo
SaaS
Visa
air cargo
air ocean
booking
buyer
capacity
contract
customer
deployment
enterprise
experience
freight forwarder
freight forwarders
freight market
importer exporter
integration
inventory
logistics
midterm
nervousness
network progress
ocean carrier
payment
platform airline
product network
relationship
solution
success
tariff
transaction
transformation
transition
user
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