Financial Data and Key Metrics Changes - Revenue for Q3 was $7.7 million, up 24% year-over-year [14] - Platform revenue was $2.6 million, up 15% year-over-year, while solutions revenue was $5.1 million, up 30% year-over-year [14] - Gross margin improved from 65% a year ago to 69.1% in Q3, with non-IFRS gross margin rising from 72.7% to 74.8% [16] - Adjusted EBITDA improved to -$2.6 million in Q3 2025 from -$2.8 million in Q3 last year [17] - Cash and short-term bank deposits at the end of the quarter were $30.6 million [18] Business Line Data and Key Metrics Changes - The company processed 429,000 transactions in Q3, up 27% year-on-year, marking the 23rd consecutive quarter of record transactions [4] - Unique buyer users were approximately 20,600, and the number of carriers with more than five bookings increased to 77 [4] - Solutions revenue growth was 30% year-on-year, but anticipated stronger growth was impacted by longer sales cycles due to tariffs and macroeconomic conditions [9][19] Market Data and Key Metrics Changes - Air cargo volumes increased by 4% compared to Q3 2024, despite headwinds from tariffs and changes to U.S. import regulations [5] - Average global air cargo rates decreased by 6% compared to Q3 last year [5] - The overall freight market is characterized by volatility and nervousness due to tariffs and macroeconomic uncertainty [6] Company Strategy and Development Direction - The company is focused on expanding airline coverage in Asia and expects further global expansion as smaller carriers leverage digital channels [5] - A strategic partnership with Visa and Transcard was announced, aimed at providing modern financing solutions for freight forwarders and importers/exporters [7] - The launch of the new multimodal rate management and quoting SaaS product, WebCargo Rate & Quote Ocean, is expected to enhance service offerings [8] Management's Comments on Operating Environment and Future Outlook - Management noted that while there is less uncertainty than earlier in the year, tariffs still create friction for imports to the U.S. [30] - The company anticipates meaningful revenue contribution from ocean bookings in the midterm, with significant growth expected by 2028 [41][44] - The focus remains on growing revenue and margins while maintaining operational efficiency to reach adjusted EBITDA break-even by Q4 2026 [18][21] Other Important Information - The company closed the quarter with a cash burn of about $10 million for 2025, compared to $15 million in 2024 [21] - The revenue mix has shifted, with platform revenue performing slightly better than initially expected, impacting overall profitability [20] Q&A Session Summary Question: Can you discuss the contribution margin and growth factors? - Management acknowledged a balance between growth and achieving break-even EBITDA, emphasizing efficiency improvements and potential AI-driven efficiencies [25][26] Question: How is tariff volatility affecting shipping volumes? - Management indicated that while there is some stabilization, uncertainty and higher tariffs still create friction for imports, impacting customer behavior [30][31] Question: Can you elaborate on market penetration and growth opportunities? - Management highlighted high penetration in Europe, moderate growth in the U.S., and low penetration in Asia, indicating significant growth potential in the latter [36] Question: What impact will the Visa partnership have? - The partnership is expected to enhance payment solutions, potentially increasing average take rates with airlines [40] Question: When will ocean bookings start contributing significantly to revenue? - Significant revenue from ocean bookings is not expected until 2028, with some contributions anticipated from solutions in 2026 [44][45] Question: What is the proportion of recurring versus non-recurring revenue in solutions? - The majority of solutions revenue is recurring, with non-recurring revenue not exceeding 5% [57][58]
Freightos(CRGO) - 2025 Q3 - Earnings Call Transcript