Freightos loses $5.9M as cost-cutting plan takes effect, highlights a FreightWaves news source.
Online booking portal
Online booking portal stabilizes revenue in Q2 despite soft freight market.
Freightos, a neutral sales platform for international air and ocean shipments, posted a second-quarter adjusted loss before accounting measures of $5.3 million, 47% more than the prior year but $500,000 better than the first quarter and in line with last month’s plan to cut costs and negative cash flow.
The loss underscored the continuing challenge of breaking even as the 10-year-old company continues to invest in new digital products and sales efforts to onboard new customers in an industry that has been slow to adopt digital workflows. Jerusalem-based Freightos said Monday it enabled a record 239,000 transactions through the site during the June quarter, but sales fees were undermined by the plunge in cargo rates and weak demand. Revenue narrowed only 1.3% year over year, despite the difficult market, to $5.1 million, mostly reflecting a downturn in subscriptions for freight data.
Freightos actually receives more revenue from its data ($3.3 million) than its online marketplace ($1.8 million), which saw sales tick up.
“We’re selling software to a distressed industry. If you look at the financial results of freight forwarders, ocean carriers, they’re down tens of percent year on year. And so we have been able to increase prices by a few percents this year and our retention rate has been quite good,” CEO and founder Zvi Schreiber said on a call with analysts. “But yes, our ability to sell big new tickets in this market right now with all our customers hurting, it’s been harder than we’d like.”
A large market for Freightos
On the marketplace, sales for European air cargo exports, a large market for Freightos, grew 40% in June year over year even as industry volumes dropped slightly year over year. Similarly, electronic bookings on Freightos grew 70% for North American exports even as volumes fell 6.5%, Schreiber said Monday.
A slight improvement in ocean shipping rates since mid-July portends an industry carryover into the traditional peak season, which would increase Freightos’ revenues because it makes money from charging a percentage of each transaction and because forwarders would have more money to spend on new tools, said Schreiber.
Management said it expects to reduce losses in the coming quarters. During the three months ended June 30, the company’s operating loss was $5.9 million.
Freightos in July laid off 50 employees, about 13% of the workforce, and took other measures to reduce expenses, saying those cuts would allow the company to eventually become profitable with existing cash reserves without compromising growth. Freightos lost $40.6 million during the past two years and reaffirmed guidance that in 2023 it will lose $19.8 million to $21.5 million — up to $3 million less than before the efficiency plan was implemented.
Freightos is a multiparty freight booking platform on which carriers sell their capacity and thousands of freight forwarders can conduct real-time rate comparison, book space, make payments and manage shipments in one place. The system, which is primarily used for unplanned shipments, also enables forwarders to share pricing and service to their import and export customers.
The company entered the public markets through a reverse IPO in January. It reported a $58 million operating loss in the first quarter, primarily related to a large payout for listing on the NASDAQ exchange.
Freight capacity on the WebCargo platform
Freightos attributed the relative strength of platform revenues to increased usage by existing customers and the addition of new participants. Freightos says it has 37 carriers, mostly airlines, offering freight capacity on the WebCargo platform and 16,000 unique buyers, which can include multiple people in the same company. In June, Nordic carrier Windrow agreed to deliver e-booking and payment capability to forwarders for exports from Norway, Denmark and the U.K. and the logistics arm of China Eastern Airlines went live on WebCargo, which brings together carriers and freight forwarders.
Last month Avianca opened routes from Miami; general sales agent ECS Group released an automatic airway bill feature; Finnair Cargo enabled e-bookings with lithium batteries; and block space agreements went live for Air Canada Cargo and Qatar Cargo in some regions. Delta Cargo launched booking capability in the United Kingdom.
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Source: FreightWaves
