Hello, and welcome to Freightos Q1 2024 Earnings Conference Call. A press release with detailed financial results was released earlier today and is available on the Investor Relations section of our website, freightos.com. My name is Anat Earon-Heilborn, and I'm joined today by Zvi Schreiber, the CEO of Freightos; and Ran Shalev, CFO. Following the prepared remarks, we will open the call for questions. We are sharing slides during the call, so we recommend using Zoom on a computer instead of dialing in by phone. The slides, as well as recordings of this earning call will also be available on our website shortly after the call. Please be aware that today's discussion contains forward-looking statements, which are subject to a number of risks and uncertainties. Actual results may differ materially due to various risk factors. Please refer to today's press release and our SEC filings for more information on risk factors and other factors, which could impact forward-looking statements. Copies of these reports are available online. In discussing the results of our operations, we'll be providing and referring to certain non-IFRS financial measures. You can find reconciliations to the most directly comparable IFRS financial measures, along with additional information regarding those non-IFRS financial measures in the press release on our website at freightos.com/investors. The company undertakes no obligation to update any information discussed in this call at any time. Today's earnings call will begin with an overview of Q1 performance by Zvi, will also provide insights into the current freight market trends. Next, Ran will present the financial results and the guidance for Q2. We will conclude with Q&A. Questions can be submitted in writing during the call by using the Q&A feature in Zoom. Zvi, please go ahead.

Good morning, and thank you for joining us. I'm pleased to report a strong start to the year with first quarter results exceeding our expectations in every metric, namely transactions, gross booking value, revenue and adjusted EBITDA. This performance highlights the robustness and growing acceptance of our platform and the strides we're making in digitalizing international freight in order to bring efficiency and transparency to this crucial sector. In the first quarter alone, Freightos facilitated nearly 296,000 transactions marking a significant 29% increase year-over-year, above our expectations for the quarter and at the high end of our long-term expectations of 20% to 30% annual growth. This is the 17th consecutive quarter of record transactions. We continue to consider transaction growth to be the most important KPI for our business and its consistent growth as the prime proof point of the benefits users gain from the marketplace we've built for them. Furthermore, the gross booking value of the transactions was over $192 million, growing 14% compared to Q1 last year and exceeding our expectations of only a modest growth, if at all. Our modest GBV expectations were based on the hope that the Red Sea crisis might pass. However, most shipping is still avoiding the Swiss canal. And as a result, rates remain somewhat elevated in Q1, as I will discuss in more detail later. In Q1, our platform experienced continued growth with unique buyer users, increasing 11% year-over-year. This reflects our platform's appeal and its capacity to continuously attract new buyers, expanding our market presence. Despite most large freight forwarders already been clients, we continue to expand by adding more users within existing customers and engaging new often smaller customers. We did also onboard a few larger freight forwarders from Asia, Europe and America this quarter, demonstrating our ability to…

Thank you, Zvi. I'm pleased to share our first quarter results, which exceeded our expectations in every metric, delivering top line growth while at the same time, driving operating leverage. We are pleased to see that focusing our resources into the growth areas of our business have been paying off. Revenue for Q1 '24 was $5.4 million, up 11% compared to Q1 of '23, the highest growth rate in our 5 quarters as a public company. Total platform revenues in the first quarter was $1.9 million, up 12% compared to the first quarter of '23. Within the mix of platform revenue, the main contribution to this growth came from air cargo digital booking by freight forwarders. Solution revenue was $3.5 million, up 10% from Q1 of last year. Solution revenue Q1 performance reflects solid and balanced growth across the components of this segment with both software and data subscription growing. We have been successful in maintaining profitability level with IFRS gross margin at 62.6%, up from 58.3% in Q1 of '23 and non-IFRS gross margin reaching 70.3% for the quarter, up from 65% in Q1 of '23. The improvement comes from both platform and solutions. Platform margins are benefiting from higher efficiencies of scale and increased automation. Solution margins are benefiting from economic of scales in customer service and operations team. We are operating more efficiently. Adjusted EBITDA in Q1 '24 was negative $3.6 million compared to negative $5.8 million in Q1 last year. This significant year-on-yield improvement was achieved primarily through our cost restructuring program, which reduced headcount from 387 at the end of March last year to 340 at the end of March of this year as well as increased revenues and profit margin contribution to the bottom line. We expect to continue to improve adjusted EBITDA each…

Our first question will come from George Sutton.

I wondered if we could walk through the cohort analysis and pricing that you're getting from folks that are participating on your platform, is there a point in time where the strength we're seeing starts to really turn into higher pricing? And it's more of a negotiating question.

George, yes, thanks for your question. Yes, I think it's related in the sense that as our transaction volumes grow, we become a more important channel for the sellers, particularly the airlines, which are the most significant sellers. And then as their contracts come up for renewal, we're typically able to demonstrate that we've become a very valuable sales channel for them and a bigger and bigger sales channel over time. And that certainly helps us in the negotiation that helps them to justify the return on investment on a higher fee. So yes, there is a correlation, definitely. The more we're a valuable sales channel, the more there's a willingness to pay for our platforms.

Curious on this United deal. How unique is this in terms of the portal you're creating for them? It sounded like it was a little broader than what you're normally doing. I just want to make sure I was clear on that.

Yes. Indeed, so it's actually -- What we're doing for most of the other airlines is that we're a platform that connects to them, but we're not building their portal. So, if you go to the website of whatever Lufthansa or Air France-KLM, then we're not involved in that. You're talking to them directly, and we're not involved in building their own private portals. If you come to our web cargo by Freightos, then of course, you can communicate with all the airlines through us, and that goes through us. But for United, we're actually being trusted as their partner to build their own portal, which means that all bookings on United, whether you go to their own website, whether you come even through one of the small third-party platforms, we're actually providing the technology for all their channels effectively.

And then lastly for me, relative to the Red Sea issue. You mentioned it's creating more air cargo out of India and Dubai, but rates are down pretty significantly. And that just from a supply-demand perspective, I want to make sure we understand that.

I don't have at my fingertips the specific rate Sutton, if you have that maybe you could check, I thought that rates Origin Asia are actually up in the air. Overall rates may be not. I can tell you though, while there's been extra demand for air cargo out of India and some other parts of Asia, to be perfectly honest, it hasn't helped us very much because in many cases, some big companies have sort of monopolized some of that capacity, and there hasn't been a lot of spot capacity available. In fact, there's been less spot capacity available for us to sell on our platform, Origin Southeast Asia, Origin India. So, if anything, when hopefully that situation normalizes, it will actually help our bookings out of Asia.

The next question will come from Jason Helfstein.

So, you pretty much have the model at this current spending level seems to be kind of -- I want to say it's on autopilot. Obviously, you're working very hard to keep boosting both sides of the marketplace. But I mean, what's the kind of the path to break out to kind of sustainable 20% plus revenue growth? I mean, you kept the full year guide the same. It does look like you can get to the high teens or maybe 20% by the end of the year. But just what's the pathway to kind of sustain 20% revenue growth? And are you in the desire to kind of prove profitability on the EBITDA line? Are you not leaning into growth as much as you could have if that wasn't the focus?

Yes. Thanks, Jason. Look, there's always some balance between growth and breakeven, obviously, growing cost money, which doesn't return itself immediately. But I think we've found a balance that I'm comfortable with right now in the sense that, yes, we do have a lot of emphasis on reaching breakeven with our existing cash reserves. So, we're still investing a fair amount in growth. We're investing a lot in research and development, as you can see. We're investing a lot in sales and marketing. Obviously, if money wasn't an issue, we'd invest even more, yes. But I'm very comfortable that we found a balance, which allows us to break even on our current cash reserves, but still to grow considerably. I hope at least 20%. I think 20% were already in that grove. Now we're continuously looking for ways to accelerate that further without spending a large amount of capital. So overall, I think we've found a fair balance between getting to profitability and growing and always exploring ideas how can we grow even faster for sure without breaking the bank.

And then to the extent that certain dynamics we're seeing, obviously, you're playing in the overall kind of shipping of goods system. We're still seeing kind of spending, consumer spending, at least in the U.S., but kind of not growing as fast as services. I mean, when you think about the macro, do you ultimately think that we're still going through some kind of COVID hangover with the consumer and that there is more growth that can be unlocked broadly and you will benefit whether it's on rate ease or et cetera, but that consumer spending, remote consumer spending in a broader way can have a positive impact on the business.

I mean it's predicting consumer spending in the U.S. or elsewhere is not something I'm going to -- smarter people than me given that the best guess and nobody really knows. I think at this point, we've got so much of the market to capture. The market is still 98% off-line. So, if consumer spending is up 5% or down 5%, I think it's a slight headwind if consumer spending increases, but it's not all that material. We have -- the main emphasis for us is to take all of the off-line freight and digitalize it. And that's such a huge growth opportunity that the macroeconomics is almost -- is pretty marginal to the opportunity that we have, if that makes sense.

And then just one last question. Are there any products without being specific, but as you're thinking about the product pipeline and potentially new features or new products that you plan to release kind of end of this year into next year that could meaningfully inflect the growth curve around solutions?

I think potentially, yes, I've got to be careful. I can't say too much about product plans. But we've got a -- we're investing a lot in research and development. We have many ideas to sell more to airlines. You saw the United announcement. And so that's given us validation that we can sell solutions to airlines as well as platform to airlines, which is encouraging. Within the world of freight forwarders, we have different products because we made some acquisitions over time. We're now working hard to unify those and create a stronger multimodal product. And then we mentioned also some new directions that I mentioned in my comments about interlining and payments. So yes, we have a lot of exciting things going on. I can't say too much. But yes, rest assured that product and development teams are innovating in the whole time.

So next, we have a question from the chat. The question is, can you talk about number of daily or weekly flights as it related to United and Delta.

So, I don't know the number of daily flights off the top of my head. I apologize. But as you know, these are 2 of the 3, and then if you add United as well, which we talked about, those are the 3 biggest carriers in the United States. So, we're talking about thousands of flights a day, but I don't know the exact number. But I believe that we have -- we're on track to have all of their cargo capacity, domestic and international available on Web Cargo by Freightos. So, it's a huge number of flights. I don't know the exact number. And the 3 of them are very big -- between them are a very big proportion of the American air market.

And another question from the chat is can you expand on TAM, not in gross booking terms, but in terms of available revenue for Freightos?

Yes. I alluded to that before. I think if we're talking -- if you start with the gross bookings because that's where our revenue -- in the end, the biggest revenue opportunity over time is platform revenue. So, it is related to the gross booking value TAM. So, if the gross booking value time, the entire market is well over $1 trillion, but the most relevant sort of air and ocean spot market is hundreds of billions of dollars. I won't say an exact number because it fluctuates quite a lot as the rates change. I won't give an exact number, but let's say it's hundreds of billions. And our take rate today is order of magnitude 1% but in some segments, it's multiple percent. And so, our platform revenue is potentially several percent, maybe eventually 10% of hundreds of billions of dollars. So, it's many -- the potential TAM for our platform revenue is easily tens of billions of dollars.

[Operator Instructions]

By the way, Anat, just to mention, I just got somebody just looked up for me about the rates, which George asked. And he confirmed that although air rates overall may not be so strong, the China to Asia, China to U.S., China to Europe are indeed elevated for the reasons that we discussed.

Thank you, Zvi and thank you, everyone, for joining. Have a good day.