Freightos Earnings Show Digital Transformation Driving Traditional Industries

Can even the most traditional industries adapt to digital transformations?

For the international freight industry, the answer appears to be yes. Shippers and carriers have gotten a taste of digitization, and they want more of it.

On Monday’s (Feb. 26) earnings call for the quarter and year ended Dec. 31, Freightos, the operator of a vendor-neutral digital booking and payments platform for the international freight industry, reported strong tailwinds and significant engagement across its marketplace — powering over 1 million transactions during the fiscal year.

“As we reflect on our first year as a public company — a year marked by significant challenges for the freight industry — Freightos … achieved a significant milestone in the growth of our platform, powering over a million transactions in 2023. This pivotal year has solidified our position as a leading platform for international freight, highlighting how our relentless drive to digitalize the industry delivers exceptional value to our customers,” said Zvi Schreiber, CEO of Freightos.

“As we enter 2024, we aim to efficiently scale transactions and revenue, while further reducing our cash burn. Our long-term financial strategy is about establishing our platform as a standard in the digital international freight market,” added Ran Shalev, CFO of Freightos.

The growth of any platform centers around growing both transaction volumes and users, and the number of unique buyer users digitally booking freight services across the Freightos platform grew by 12% compared to the fourth quarter of 2022, the company reported.

The company also saw record transaction growth in Q4, with 287,000 transactions processed, a 53% increase year over year. Throughout 2023, over 1 million transactions were processed on the digital platform.

Freightos executives cited these results as a “significant outperformance” compared to overall international freight market volumes, which, as they explained to investors on Monday’s call, remained modest.

The company’s stock price remained relatively unchanged after earnings, down by just 1 cent.

Read also: Modernizing Legacy Industries Starts With Trust and Ends With Payments

How Digital Can Drive Growth

In addition to growing its marketplace, Freightos is focused on expanding its solutions business, which includes software-as-a-service (SaaS) and data subscriptions for freight forwarders, importers, and exporters. The company closed its largest SaaS contract ever in Q4, and its solutions revenue grew by 13% year over year.

“In 2023, we started to offer customs brokerage capabilities for freight forwarders to co-brand and embed in their own systems. In 2024, we hope to expand this trend as we explore offering more third-party services within our platform. And roll out payments for more countries,” Schreiber said.

Company executives see potential in the air cargo, ocean freight, and multimodal services sectors. The market size for air cargo was estimated at $134 billion in 2023, while ocean freight is about $250 billion, and multimodal services, which combines air, ocean and first- and last-mile transportation, has a market size of $208 billion. Freightos aims to capture a significant portion of these markets by providing value-added services and increasing its take rate.

“We aim to grow transactions by 20-30% annually,” said CFO Shalev, while noting, “The majority of our revenue comes from solutions, and it’s not directly related to the transactional growth.”

Still, revenue growth was up 6% for fiscal year 2023.

See more: Global Trade Sector Taps AI to Smooth Supply Chain Issues

Freightos went public in January 2023 after closing a business combination with special purpose acquisition company (SPAC) Gesher I Acquisition Corp. The company said at the time that it planned to further scale the business, increase transaction growth and revenue, and further develop the technology stack.

Schreiber told PYMNTS during an interview while the company was still private that the international freight market being a “largely offline endeavor” has led to “tens of billions of dollars of waste.”

During Monday’s earnings call, he noted that the Asian freight market, particularly Asian carriers and airlines, have “been a lot slower to digitize.”