Freightos(CRGO) - 2023 Q3 - Quarterly Report

Report Overview Management Commentary Management highlighted record transaction volumes for the 14th consecutive quarter, successfully offsetting depressed freight rates and reduced industry volumes, while reaffirming 2023 guidance with confidence in sustained growth and careful expense management - The Freightos Platform achieved record transaction numbers, marking 14 consecutive quarters of growth, which successfully counteracted the negative impact of depressed international freight rates[1][3] - The company has seen a 10% year-over-year growth in Unique Buyer Users, indicating increased market share and adoption of digital bookings[3] - An operational efficiency plan was implemented in July 2023, which is expected to improve profitability from Q3 onwards and enable the company to reach profitability with its existing cash reserves[3] - Freightos reaffirmed its 2023 guidance, citing sustained Solutions sales, a growing data business, improved take rates, and careful spending control as key drivers for maintaining high and stable gross margins[3] Q2 2023 Performance Financial Highlights In Q2 2023, Freightos reported revenue of $5.1 million, a slight decrease of 1.3% YoY, an IFRS operating loss of $5.9 million, and a negative Adjusted EBITDA of $5.3 million, while Non-IFRS Gross Margin remained stable at 65.0% Q2 2023 Key Financial Metrics | Metric | Q2 2023 ($) | Q2 2022 ($) | Change | | :--- | :--- | :--- | :--- | | Revenue | $5.1 million | $5.2 million | -1.3% | | IFRS Gross Margin | 57.3% | 59.6% | -2.3 p.p. | | Non-IFRS Gross Margin | 65.0% | 65.0% | 0.0 p.p. | | IFRS Operating Loss | ($5.9 million) | ($5.9 million) | 0.0% | | Adjusted EBITDA | ($5.3 million) | ($3.6 million) | +47.2% | | IFRS Loss Per Share | ($0.12) | ($1.03) | N/A | | Non-IFRS Loss Per Share | ($0.10) | ($0.77) | N/A | Business Highlights Operationally, Freightos achieved a record 239,000 transactions, a 59% YoY increase, with a Gross Booking Value (GBV) of $154.8 million, supported by growth in unique buyer users and carriers, alongside product advancements - Achieved a record 239,000 transactions, up 59% year-over-year, marking 14 consecutive quarters of growth[5] - Gross Booking Value (GBV) reached $154.8 million, with Platform Revenue increasing despite lower industry freight rates, driven by improved take rates on air cargo eBookings[5] - The number of unique buyer users grew over 10% YoY to 16,000, and the number of carriers selling on the platform increased 19% YoY to 37[5] - The new market intelligence solution, Freightos Terminal, launched in April 2023, is expanding its user base, including licenses from Fortune 1000 companies[5] Financial Outlook Q3 and FY 2023 Guidance Freightos provided its financial outlook for Q3 and the full year 2023, projecting continued strong growth in transaction volume, with revenue between $5.0-$5.3 million for Q3 and $20.0-$21.2 million for the full year, and expected improvement in negative Adjusted EBITDA Management Expectations as of August 2023 | Metric | Q3 2023 Expectation | FY 2023 Expectation | | :--- | :--- | :--- | | ** Transactions** | 243,500 - 259,500 | 973,000 - 1,042,000 | | YoY Growth | 27% - 35% | 46% - 57% | | GBV ($m) | $146.5 - $156.5 | $626.2 - $666.6 | | YoY Growth | (8)% - (2)% | 3% - 9% | | Revenue ($m) | $5.0 - $5.3 | $20.0 - $21.2 | | YoY Growth | 5% - 13% | 5% - 11% | | Adjusted EBITDA ($m) | $(5.1) - $(4.5) | $(21.5) - $(19.8) | Consolidated Financial Statements Consolidated Balance Sheets As of June 30, 2023, Freightos reported total assets of $97.2 million, a significant increase from $41.8 million at year-end 2022, primarily due to a rise in cash, cash equivalents, and short-term investments following its business combination, with total equity also increasing substantially to $77.8 million from $21.7 million Selected Balance Sheet Data (in thousands) | Account | June 30, 2023 (unaudited) | December 31, 2022 (audited) | | :--- | :--- | :--- | | Cash and cash equivalents | $9,294 | $6,492 | | Short-term investments | $31,119 | - | | Total Assets | $97,205 | $41,806 | | Total Current Liabilities | $13,993 | $17,080 | | Total Liabilities | $19,421 | $20,146 | | Total Equity | $77,784 | $21,660 | Consolidated Statements of Operations For the three months ended June 30, 2023, revenue was $5.1 million, slightly down from $5.2 million in Q2 2022, with a net loss of $5.7 million, an improvement from the prior-year period, while a significant non-cash share listing expense of $46.7 million contributed to a $55.0 million net loss for the six-month period Consolidated Statements of Operations Highlights (in thousands) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | | :--- | :--- | :--- | | Revenue | $5,093 | $5,159 | | Gross Profit | $2,918 | $3,074 | | Operating Loss | $(5,906) | $(5,867) | | Loss | $(5,711) | $(5,980) | | Basic and diluted loss per share | $(0.12) | $(1.03) | Consolidated Statements of Cash Flows For the six months ended June 30, 2023, net cash used in operating activities was $18.8 million, net cash used in investing activities was $51.5 million, and net cash provided by financing activities was $73.3 million, primarily from share capital issuance, with the company ending the period with $9.3 million in cash and cash equivalents Cash Flow Summary - Six Months Ended June 30, 2023 (in thousands) | Cash Flow Category | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(18,809) | $(7,003) | | Net cash used in investing activities | $(51,470) | $(4,989) | | Net cash provided by (used in) financing activities | $73,272 | $(281) | | Increase (decrease) in cash and cash equivalents | $2,802 | $(12,644) | | Cash and cash equivalents at end of period | $9,294 | $12,435 | Reconciliation of IFRS to Non-IFRS Measures Reconciliation of Gross Profit For Q2 2023, Non-IFRS gross profit was $3.3 million with a margin of 65.0%, consistent with the prior year's margin, achieved by adjusting the IFRS gross profit of $2.9 million for share-based compensation and depreciation & amortization IFRS to Non-IFRS Gross Profit Reconciliation (in thousands) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | | :--- | :--- | :--- | | IFRS gross profit | $2,918 | $3,074 | | Share-based compensation | $77 | $31 | | Depreciation & Amortization | $314 | $247 | | Non-IFRS gross profit | $3,309 | $3,352 | | IFRS gross margin | 57.3% | 59.6% | | Non-IFRS gross margin | 65.0% | 65.0% | Reconciliation of Operating Loss to Adjusted EBITDA Adjusted EBITDA for Q2 2023 was negative $5.3 million, compared to negative $3.6 million in Q2 2022, with the reconciliation from the IFRS operating loss of $5.9 million primarily adjusting for non-cash items and changes in contingent consideration fair value IFRS Operating Loss to Adjusted EBITDA Reconciliation (in thousands) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | | :--- | :--- | :--- | | Operating loss | $(5,906) | $(5,867) | | Share-based compensation | $546 | $374 | | Depreciation & Amortization | $719 | $608 | | Redomicile costs | - | $516 | | Transaction-related costs | - | $812 | | Changes in the fair value of contingent consideration | $(642) | - | | Adjusted EBITDA | $(5,283) | $(3,557) | Reconciliation of Loss to Non-IFRS Loss and Loss Per Share Non-IFRS loss for Q2 2023 was $4.5 million, or ($0.10) per share, compared to a Non-IFRS loss of $3.9 million, or ($0.77) per share, in Q2 2022, calculated by adjusting the IFRS loss for several non-cash or non-recurring items IFRS Loss to Non-IFRS Loss Reconciliation (in thousands) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | | :--- | :--- | :--- | | IFRS loss | $(5,711) | $(5,980) | | Share-based compensation | $546 | $374 | | Depreciation & Amortization | $719 | $608 | | Transaction-related costs | - | $812 | | Changes in the fair value of contingent consideration | $(645) | $(256) | | Change in fair value of warrants | $553 | - | | Non IFRS loss | $(4,538) | $(3,926) | | Non IFRS Basic and diluted loss per share | $(0.10) | $(0.77) | Appendix Definitions of Key Metrics This section provides definitions for key operational and financial metrics used throughout the report, such as Gross Booking Value (GBV), Transactions, Unique buyer users, Platform Revenue, and Solutions Revenue, to ensure clarity and comparability - Key metrics are defined to provide clarity on performance evaluation. These include: - GBV: Total value of transactions on the platform - Transactions: Number of bookings for freight services, net of cancellations - Unique buyer users: Number of individual users placing bookings - Platform Revenue: Fees charged to buyers and sellers for transactions - Solutions Revenue: Primarily subscription-based SaaS and data revenue[11] Forward-Looking Statements & Disclaimers This section contains standard "safe harbor" statements, warning that forward-looking statements are subject to numerous risks and uncertainties, and clarifies that the press release includes non-IFRS financial measures and does not constitute a full interim financial report under IFRS standards - The report includes "forward-looking statements" which are subject to risks and uncertainties and are not guarantees of future performance[7] - The press release uses non-IFRS financial measures such as Adjusted EBITDA and constant currency revenue, which are provided for supplemental informational purposes[9][10] - It is clarified that the financial figures in the press release do not constitute a full interim financial report as defined by International Accounting Standards[8]