Hello and welcome to Freightos Q3 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/investors [Technical Difficulty]. 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 rather than dialing-in by phone. The slides as well as a recording of this earning call will 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 will 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. Please note that in December, Management will participate in A.G.P.'s Transportation & Electric Vehicles Virtual Conference and in January in the Needham Growth Conference also virtually. Participation in investor conferences and events may be updated from time-to-time, and upcoming events are listed on Freightos Investor website. Today's earnings call will begin with an overview of Q3 performance by Zvi. Next, Ran will present the financial results and the guidance for Q4. 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 thanks for joining us to discuss Freightos' third quarter 2024 results. Before we start discussing the quarter, I wanted to mention that we just announced that Ran will be leaving Freightos at the end of this year to pursue another job opportunity. An active search is underway for a new CFO. Ran will remain engaged throughout Q1 to ensure a smooth handover. Ran has built a strong finance team that will keep everything working smoothly during the transition. We all thank Ran for his incredible contributions to the company over eight years. This quarter reflects another step forward in Freightos' mission to drive digital transformation in global freight with record transaction volumes, growth in unique buyer users and the successful integration of our recent acquisition of the Shipsta tender procurement solution, strengthening our position in the market. Our performance this quarter highlights the industry's growing reliance on digital solutions to bring transparency, efficiency and resilience to global freight and Freightos remains at the forefront of the shift. Before diving into the results, let's briefly discuss how market conditions have influenced our performance this quarter. Air Cargo rates and volumes in Q3 remained at similar levels to Q2 and elevated compared to Q3 last year. Global Air Cargo volumes increased 11% year-on-year and rates were 30% higher on China US routes and 17% higher on China EU routes, in part due to an accelerated international direct-to-consumer e-commerce trend. Meanwhile, ocean rates remained elevated, given the ongoing Red Sea crisis, although they have recently begun to ease as the peak season of shipping for the holidays comes to an end. Against this backdrop, let's turn to see how Freightos has performed this quarter. In my comments this quarter will focus on our progress across three areas. One is platform,…

Thank you, Zvi. Our third quarter results surpassed expectations across all metrics. We exceeded our guidance for transaction and outperformed on gross booking value driven by high transaction volumes and elevated market rates. Revenue grew at the fastest pace since going public, highlighting the adoption of our platform and the strength of our execution. Operational improvements and lower cost of goods sold also resulted in significant better-than-expected adjusted EBITDA continuing the previous trend and keeping us on track to achieve positive adjusted EBITDA by the end of 2026 and to get there with cash at time. Revenue for Q3 '24 was $6.2 million, reflecting a 21% year-over-year increase driven by strong performance across both transactional and subscription revenue. Platform revenue grew by 29% year-over-year to $2.3 million, with WebCargo continuing to lead growth through high transaction volumes. Solutions revenue increased by 17% year-over-year to $3.9 million, supported by the steady expansion of SaaS offering and early contribution from the Shipsta integration. These results reflect the growing adoption of Freightos platform and our ability to scale effectively while meeting the diverse needs of our customers. Gross margins in Q3 again showed significant improvement with IFRS gross margins rising to 65% compared to 54.9% in Q3 of '23 and non-IFRS gross margins reaching 72.7% up from 69.5% last year. These gains reflect Freightos focus on scaling efficiently while maintaining a disciplined approach to cost management. Adjusted EBITDA in Q3 '24 improved significantly to negative $2.8 million, outperforming our guidance range of negative $3.4 million to $3.3 million and representing a $1.3 million improvement year-over-year compared to negative $4.1 million in Q3 of '23. This improvement was driven by a combination of revenue growth, improved gross margins and disciplined expense management. These results highlights the scalability of our platform and our ability to…

Thanks, Ran. I want to take a moment to recognize Ran's contributions to Freightos. Since joining in 2016, Ran has been instrumental in shaping Freightos' financial operations including our public listing on NASDAQ, strategic acquisitions and consistent growth. His leadership has left Freightos financially strong and well positioned for continued growth. Ran, thanks for your dedication and the impact you've had on Freightos' success. We wish you all the best in your next chapter. A search is underway for a replacement and we have a strong finance team who will continue managing all operations during the transition. Ran's committed to be available and engaged as needed throughout Q1 as well. I'm excited to bring some fresh talent and new ideas under the executive team. We're in the midst of 2025 planning and budgeting and I can tell you that the team is very excited about the product roadmap and commercial initiatives we're planning for 2025. And we look forward to sharing those during upcoming investor calls. And now we'll be happy to take your questions.

Okay. So for the Q&A session, please use the raise hand feature in Zoom. In the meantime, I will read a question that came in the chat. So I guess it goes to Ran. Why is EBITDA guidance down for Q4 over Q3 despite increased revenue?

Yes. Thanks, Anat. So it drives mainly from 2 things.

Ran we can't hear you.

I hear you, Ran.

Can you hear me, okay?

Yes, I hear you Ran.

Okay. Good. So I'll start from the beginning. So it mainly drives some two things. One is we are, for the first time, we are consolidating Shipsta for the whole quarter. I may remind you that we closed the deal middle of August. So in Q3, we only consolidated them for half a quarter. This time, it's a full quarter. As you all know, they are still burning some cash and we are helping them, but they are supposed to be breaking even in 2025 and also giving us some free cash flow already in 2025. So the support that the Freightos Group gives them for Q4, together with the fact that we are doing some staffing, some hiring to support the growth expected in 2025 in sales and marketing mainly. Those are the two elements that kind of slightly increases the EBITDA in Q4.

Okay. Our next call will come from the line of Jason Helfstein. Just a minute.

Thanks. Can you hear me okay?

Yep. All good.

Okay. So a few questions. First, just can you just give us some broad perspectives like what does the Trump administration in your mind mean for the industry? So kind of just broadly. Second, I know it's early, but if you have any initial thoughts about next year from a growth and a margin standpoint, obviously, you've given us the commentary on EBITDA. And then third, specifically around the guide, basically, you're increasing this year's GBV by 8%, but you're keeping revenue guidance unchanged. So just maybe talk about the dynamics there. Thank you.

Thanks, Jason. Yes, and I see on the chat that Mike asked the same as your first question about the Trump administration. So let me start with that. Look, of course, we don't know fully. I can say a few comments to put it in context. First of all, during the first Trump administration, there were a lot of tariffs imposed. At that time, they did not in any way reduce the trade with China or with anywhere else. So that was the experience in the first Trump administration. Of course, we don't know if the tariffs are a lot higher than perhaps this time they will affect it. But our experience last time was that there wasn't an effect. It wasn't a dampening of trade or freight. But the other thing to take into account is that where, as I mentioned in my remarks before, we're at an early stage of digitizing this industry. So although we're the leaders in digital, certainly for Air Cargo and Ocean is just getting started in a way, still 98% or something of the industry is off-line. So we have huge growth room here. Now if international trade and international freight goes up a few percent like it usually does then great. If it goes down a few percent, it doesn't really matter. It doesn't make a material difference to our opportunity because there's just so much to digitalize even if the industry trends down for a little bit. Having said that, World Trade has been growing very strongly for decades. So I don't know if the Trump policies will dampen it somewhat, but I wouldn't bet against World Trade in general, even if it goes down by a few percentage points for a while. Regarding your second question, so we're not putting out, obviously, we'll put out guidance for 2025 next quarter. But I can say that we're very excited about 2025. We hope and expect to grow faster in 2025 than we did this year. And in terms of EBITDA, you should see, we've said that we expect to break even by the end of 2026. So you should see us in 2025 trending from where we are now to towards the roughly getting us halfway towards the zero. But that's very rough. We'll put out a specific guidance in Q1 -- in the Q1 call for the year. Jason, I'm sorry, I don't think I caught your third question. Could you repeat it?

Sure. So you raised the full year gross bookings. I think it's by 8%, but you're not changing the guidance or the revenue guidance. So maybe just talk about the dynamic there?

Yes. I mean the reason is, Ran, tell me if you want to add anything to this, but I'll say that a lot of, as you probably know, Jason, the GBV sort of went up a) because transactions were performing strongly and b) because the prices in the market are a little higher than we expected. As I said earlier, that's partly due to the fact that the Suez Canal, believe it or not, has been virtually closed for more than a year and is still not functioning plus some demand from e-commerce like Temu and Shein taking up some capacity on air. So the rates are a bit higher. But a fair proportion of our transactional revenue of our platform revenue is, in fact, flat fees per transaction. So a lot of it is not actually tied to the price. Some of it is. But that's why when prices in the market are higher than we expected, it only to a limited extent flows through to our platform revenue.

And just maybe one quick follow-up. If the canal was to reopen like how do you think that impacts next year?

Well, I think it would, I think it would actually be good, net good for us. I mean it would definitely cause almost certainly would cause the ocean prices to ease to go down. So that would have a small negative effect but there would also be some good positive effects. It could probably increase volumes in the industry to some extent. And it would free up some Air Cargo. We've actually -- we've suffered a little bit that there's virtually no spot capacity in Air cargo out of Asia as a sort of spillover from e-commerce and from the Suez Canal. So we'd be quite happy to see sort of the Air Cargo patterns normalizing a bit. So it would have a, I think it would obviously be good for the world. But for us it would have a mixed effect, probably a slight net positive I would think.

Appreciate it. Thank you.

Sure.

Okay. Thanks. The next question will come from Logan Lillehaug. Please unmute.

Hey, good morning, guys. This is Logan on for George. Zvi, my first question is on Shipsta. I'm just wondering if you can give us a little more information on kind of what the early takeaways are as you try to kind of go cross-sell that with your existing customers. I'm just curious kind of what the response has been? And then the follow-up to that would be I think you guys had said 800,000 was kind of the contribution you expected in the remainder of this year. Is that still a good number to use for Shipsta?

So the second question, I'll defer for Ran, and I don't know if we want to give an update on that because our plan -- because Shipsta is rapidly being integrated into our solutions segment. And so going forward, we're not planning to break out Shipsta revenue because the products are already getting sort of tied together and sometimes we'll be doing more and more. I guess the answer to your first question is we'll be doing more and more joint deals, so it won't always make sense to break it out. So I'm not sure if we want to give an update on that specifically because it's becoming less and less relevant in a way. Overall but going back to your first question, overall, it's going well. I mean it's only been -- we only closed it in August, so that's three months ago. And these are enterprise deals, so they take time. But already Shipsta has closed several purchase orders on their own since we acquired them, which was good momentum. And we've already started several discussions of cross-selling in both directions, both us talking to us introducing our product to their customers and vice versa. I say there, but it's of course us, it's all us now. So the cross-selling, there's already some concrete cross-selling opportunities. Given that these are enterprise deals, it will take some time to actually get purchase orders. But, yes, so far so good. So far, it's living up to our expectations and the customers definitely understand, the enterprise shippers, the big importers and exporters definitely understand the value of how these products complement each other.

Okay. Understood. And then just one other for me on the e2open integration last week. I'm just curious kind of what you think that maybe does to your pipeline of carriers. I know you've talked about it being delayed a little bit with some of the internal projects that they have going. But do you think it could speed up the pipeline, I guess, at all?

Yes. Actually, to make a distinction, so e2open is -- they have products for freight forwarders and for shippers in others words importers and exporters. And we partnered with them on that side. They won't help us as far as I know with airlines specifically. Airlines are going well. Like I said we launched -- we launched Qantas, which is a big partner. We've been launching new, you don't even see it, we don't even put our press releases, but almost every day, we add new countries or new products. So that's going fine. And even those big airlines that are delayed, it's happening. They just had some delays on their IT projects. So airlines is going very well. e2open is specifically, they're a fairly big player in software for supply chain and specifically some of the big freight forwarders that we work with, one which has publicly mentioned is Crane are using them. And so it's part of our strategy, it's part of our strategy. We've done integrations into other leading software systems. We want to play nice with the ecosystem. Our customers want our Freightos product to work well with their suite of other products. And so it's part of an ongoing strategy, which I think we're doing well to make sure that our customers can use our software together with the other software that they have.

Got it. Thank you.

Thanks, Logan.

Okay. That concludes the Q&A session. Thanks, everyone. Have a good week.