Hello, everyone. Welcome to Freightos Q1 2025 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. My name is Anat Earon-Heilborn, and I'm joined today by Dr. Zvi Schreiber, the CEO of Freightos; and Pablo Pinillos, 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 rather than dialing in by phone. The slides as well as a recording of this earnings 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 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. Before we begin, I'd like to note our upcoming investor events. During tomorrow and Thursday, Freightos will participate virtually in the Sidoti Microcap conference. In June, the company will participate in the Investor Summit and in August in the Oppenheimer Technology, Internet & Communications Conference also virtually. Links to webcast and other event updates can be found on our website. Today's earnings call will begin with an overview of Q1 performance by Zvi. Next, Pablo will present the financial results and the guidance for Q2 and full year 2025. We will conclude with Q&A. Questions can be submitted in writing during the call using the Q&A feature in Zoom. Zvi, please go ahead.

Good morning, everyone, and thank you for joining us to discuss Freightos' first quarter 2025 results. I'm pleased to report another quarter of strong performance with record revenues and our 21st consecutive quarter of record transactions. I believe this demonstrates again that we're making steady progress in the monumental task of digitalizing international shipping. Here are some highlights. In Q1, we facilitated over 370,000 transactions. Representing a 25% increase from Q1 of last year. We added 4 new carriers to our platform this quarter, bringing the total number of carriers selling digitally on our platform to 71. Following quarter end, we launched a comprehensive Freightos enterprise Software-as-a-Service solution for enterprise importers and exporters. This Freightos enterprise product integrates our acquisition of Shipsta from last August into our software suite creating new sales and cross-sell opportunities. Let's talk about market conditions. In air cargo, where Freightos has its strongest presence, global volumes were up 8% year-over-year, reflecting healthy underlying market conditions. Rates as measured by our FAX index was 6% lower compared to last year which was when the Red Sea crisis began pushing ocean cargo to air. Having said that, some of the strength in air cargo may have been short term, front-loading ahead of expected tariffs. In Ocean, China's U.S. ocean volumes dropped significantly in the market during the few weeks when a 145% tariff applied on that lane. Our Bellwether FPX-01 index which has been elevated for 1.5 years since the Red Sea crisis started, approximately half in March, almost down to $2,000 for shipping a 40% container transpacific. It's the first time in a while that we're seeing the rates more similar to the long-term average. With that data as backdrop, let me address current effects, namely tariffs and trade policy developments. Strategically, we firmly believe that…

Thank you, Zvi. In the first quarter as CFO, I've had the opportunity to deep dive into our business model and operations and I have been particularly impressed by the robust unit economics, the effectiveness of our go-to-market strategy and the vast market potential of our platform. As digitalization becomes increasingly critical for efficient global trade, these strengths position us well for continued growth. I'm pleased to report that we met or exceed our guidance across key metrics this quarter, and we are well positioned to continue executing on our plans for the rest of 2025. We generated revenue of $6.9 million, representing 30% growth year-on-year. This growth was driven by platform revenue of $2.3 million, up 23% year-on-year and solutions revenue of $4.6 million, up 33% year-on-year. We saw strong contributions from enterprise procurement solutions added through the acquisition of Shipsta, SaaS solutions and customer clearance services. Our gross margin continued to improve reaching 66.8% this quarter on an IFRS basis, up from 62.6% in Q1 last year. While our non-IFRS gross margin increases to 73.7% from 70.3% a year ago, demonstrating the scalability of our platform. Since I joined, I've made it a priority to continue the disciplined cost management the company had displayed, all while investing in strategic growth initiatives. As a result, adjusted EBITDA improved to negative $3.0 million from negative $3.6 million in Q1 last year. Reflecting our revenue growth, gross margin expansion and continued operational efficiency gains as we scale. We remain on track to achieve breakeven adjusted EBITDA by the end of 2026. We ended the quarter with $36.4 million in cash and cash equivalents, maintaining a strong balance sheet as we progress towards our profitability goals. Looking ahead for the second quarter of 2025, we expect 380,000 to 385,000 transactions, representing growth of 20% to 22% year-on-year and GBV of $278 million to $285 million, up 37% to 40% year-on-year. Revenue is expected to reach $7.0 million to $7.1 million, representing growth of 23% to 25% year-on-year and adjusted EBITDA is expected to be a loss of $2.8 million to $2.9 million. For the full year 2025, we are reiterating our previous guidance. While we recognize the evolving macro environment, including present trade policy change, potential freight rate volatility and broader economic uncertainties, the resilience of our business model and our strong balance sheet position us well to navigate these dynamics while continuing to invest in growth opportunities. The fact that the vast majority of international freight is still being booked offline, represents significant growth opportunities for our digital solutions, regardless of short-term trade policy fluctuations. With that, we will open the call to questions.

Okay. Thank you, Pablo. The first question will come from the line of Jason Helfstein.

Great. So clearly, you're managing the business quite well over the past few quarters, particularly on the revenue side, given the volatility, I mean, I think you made a point that the China to U.S. is a relatively small part of your business, really not exposure, obviously, on the de minimis side, you might benefit. But I guess just from a high level, what could happen that could throw you off? Again, you're a very small player in a very big market. And so well, I guess one could argue you could kind of make it up in other areas. But just maybe unpack -- what are the factors that investors should be watching out for -- that would affect your ability to hit your targets for the year? And then I've got a follow-up.

Jason. So this is Zvi. So look, let's maybe -- let's divide into our two revenue segments of Platform & Solutions. So platform is, in the short term, sensitive to fluctuations in trade. So if trade is less in a certain lane, then we see fewer transactions in that lane. Maybe we see more transactions in another lane, again, in the long term, we can still grow that tens of X. But in the short term, yes, any differ in the market has some headwind we did see a dip, as I said, we did see a dip in China U.S. when the very high tariff applied. It was not a big part of our transactions, but it did affect us. So platform is sensitive to trade volumes. Again, with lots of room to grow, but it's always a headwind if volumes are less. On the other hand, as I mentioned earlier, sometimes even if overall volumes are less, but people are looking for alternatives, then actually that favors the marketplace. So even if the overall volumes are less, sometimes we pick up more volume from people quickly trying to stop and change. So it can work in our favor on the platform side as well. Solutions is sensitive like almost any business. It is sensitive to the macroeconomic environment. So if there's a serious trade war, now it looks like hopefully there won't be, but in fact, who knows. If there's a lot of economic uncertainty, then our ability to close big -- then enterprises are more hesitant to write big checks, right? And so that would be a headwind for our solutions. We saw it a little bit in Q1 actually. But then things come down with the so-called reciprocal tariffs for wound back. The China U.S. has wound back. So hopefully, now we're not going to see that. But we -- during those weeks were slightly west of 145% or during those days when there were so called reciprocal tariffs and enterprise customers were nervous and more hesitant to write big checks. So that can be a headwind. Any economic uncertainty or economic downturn is a headwind. Again, it doesn't change the overall opportunity, but it's a headwind for our ability to close solutions revenue.

And then just maybe longer term, obviously, you have many companies thinking about diversifying their supply chain not showing down China, but obviously diversifying. Maybe just given the flexibility of what you offer, just talk about how that could be a tailwind for you?

Yes, I think it is. I think I've sort of said that before, I hate to benefit from disruptions, but we do. When obviously, with trade, we've had a lot of stopping and changing during the last 3 months, the Suez Canal is still effectively closed to most shipping, although there was a -- President Trump announced the deal, there was a thought maybe it would reopen. People are looking -- right now, they're looking -- I mean, a week ago, they were looking to move from China to Vietnam right now, maybe they're looking to move from Vietnam to China who knows. So yes, I think overall, as a marketplace and a platform, change, we benefit from volatility, and we give tools, we get valuable tools to the industry to -- we give them data. We give them alternatives. And that is always people -- and it doesn't look like the world is going back to being very calm anytime soon between wars and trade wars and weather and strikes and labor, there's always something going on. And in a way, yes, that benefits us because we provide useful tools for dealing with that.

Okay. The next question will come from George Sutton.

So curious on the Temu, Shein opportunity. How quickly do you think that supply could come back online or onto your platform? Obviously, that was not -- that was all being done direct.

Yes, that's a great question, George. So yes, Shein and Temu was mostly done direct and mostly in charter planes. So they rarely did what you do on our platform, you say I need 5 cubic meters or 300 kilograms or 1,000 pounds of cargo. They didn't do it that way. They chartered the whole plane and filled it with 2 little envelopes, right? That's what they were doing right until a couple of weeks ago when the de minimis exemption was canceled. I'll tell you the truth. I thought we would see it quickly but actually, as I mentioned in my remarks, when you look at the rates for Asia to U.S., for example, the air cargo rates based on our FAX index, they have not, in fact, dropped much in the last couple of weeks. And that would be the first indication, even before we saw the bookings on our platform, just the prices would reflect the fact at that. So I'm actually trying to find out what happened to this charter planes. Are they -- I would have expected that they were made available -- that'd be made available for normal air cargo and that would add capacity and bring down rates and help us increase our volumes. I haven't actually seen that yet. Now it's only been 2 weeks. So that's really very fast. But yes, we're staying tuned and also talking to our network to try to understand what's happening to those starter planes.

Got you. Could you walk through the revenue dynamic behind the new partnership? What will that do for you differently than your normal platform?

Sorry, which new partnership?

Trucking.

You mentioned a new massive end-to-end partnership in the U.S.?

The trucking partnership. Yes. For brands. So yes, I mean these things like anything in this industry takes some time. It won't have immediate effect, but it will start in other words, when have a big immediate effect, but it will start being having an effect, which will build up over many months. So it's exciting. We're trying to provide our -- the freight forwarders and eventually importers and exporters as well with the full service. door-to-door, all the modes. So what happens now, our biggest platform is WebCargo by Freightos air cargo only. So people are booking, for example, Heathrow to JFK. It's a classic route. And then the freight forward is going off our platform to say, okay, how do I do the last mile. Or another situation is they're booking, let's say, domestic U.S. because we have increasing bookings also domestic U.S. So let's say they book Boston to LAX and they're looking at the rates, the air rates on our platform, but they say, where in a second, I'm not in such a hurry, maybe it's worth trucking it. So they go off our platform to look for a truck. So in both of those scenarios with this new partnership, they will have the trucking, whether it's the last mile or it's what's called the middle mile, they want to check air but also truck for the hub-to-hub, to the airport-to-airport. They would have all of that on platform. So over time, that should attract more customers, bigger share of wallet. More stickiness, a competitive advantage. So it's part of our overarching strategy to be a one-stop shop for all types of transactions and all parts of the transaction.

Okay. That's it for me, a belated welcome to Pablo.

Thanks. I'll read a couple of questions from the chat. So the first one is, why does the guidance range imply potential acceleration in transaction growth for the remainder of the year, while the GBV outlook appears more conservative? The second question -- is -- do you expect further M&A in 2025? Are there gaps in the platform you're looking to fill via acquisitions?

Okay. So regarding the first question, thanks for the questions. The first question, we're being more cautious on GBV because we don't know what's going to happen to prices. And there are reasons to think that the prices in the market could drop. It doesn't affect our revenue too much because a lot of our transactional revenue is sort of flat fee. So it doesn't affect our revenue too much. But we do think that although our transactions will continue to grow, we think in ocean, there could be a price drop, especially if the Red Sea reopens. I think there's another question coming on that. That would significantly drop prices. But also if there's a slight slowdown because of tariffs, and also because as we mentioned before on the air side, with the de minimis, we haven't seen it yet, but that could reduce air rates. So we're just being cautious with our outlook to GBV because completely out of our control, the rates for ocean and airfreight could drop. Second question, do we expect further M&A? Probably not. You never know if some of the right opportunity comes up, but we've committed to preserve our cash to get to breakeven by the end of next year with the cash that we have. And the Shipsta acquisition luckily wasn't too expensive, and it's producing revenue and it's strategically important. So we did that one anyway. But now we're probably going to be cautious. So unless there's a very good opportunity, which isn't expensive or which we can finance. We're probably going to focus on organic growth and just for way of being cautious with our cash balance.

Right. Zvi you mentioned that there's a question on the Red Sea. I think you answered it in the previous question, but maybe it's worth sort of clarifying the point.

Yes. I want to clarify; this is a question about what's the effect of the Red Sea being reopened. So I want to clarify the Red Sea is not reopened. I think what the -- thanks for the question, Ari, I think what you're referring to here is that President Trump announced a deal with the Houthi Rebels, and it wasn't exactly clear what the deal was, but seem to be saying that they won't shoot on American ships. The reality is that the number of American ships carrying containers is virtually 0, depending exactly how you define that. So in reality, I don't know of a single carrier who's gone back to using the Red Sea, the Suez route. So in practice, that has not reopened. All those ships are still going -- the ships that were going around Africa are still going around Africa. If the Red Sea reopens, that will reduce rates. Again, that doesn't affect us too much. It affects us a little bit but we're not overly sensitive to the rates. But yes, ocean rates could drop significantly if that supply came back online. Having said that, we expected to see ocean rates drop dramatically during the slowdown in China U.S. when the tariffs was temporarily down. We didn't see that as much as we expected and that's because the ocean liners have gotten quite good at blanking sailings. In other words, parking a ship to reduce capacity. So even if the Red Sea reopens, potentially, we could see a big drop in rates. But it's also possible that the carriers will counteract that and artificially reduce the supply to support the rate. So that's also possible.

Okay. Last question, I believe, probably for Pablo. Why do we see a mismatch between GBV and revenue growth? Can we expect revenue to improve as a percentage of GBV?

Sure. So as Zvi mentioned before, a large portion of our transactional bookings is based on a flat fee. And our transactional bookings mix between flat fee and not flat fee, we try to evolve it over time. But that's the main reason why that mix match is happening right now. As we evolve and scale, we will try to correct and continue to grow that.

And just to add also that the revenue -- it's only the platform revenue that relates to GBV in any way. So if you're looking at all the revenue, the solutions revenue is only very indirectly connected to GBV, the platform revenue is, of course, related to GBV. But as Pablo said, often, it's -- in most cases, in fact, it's a flat fee. So it's more related to the number of transactions in the way.

Okay. And we actually do have another question. What constitutes the economic mode for freighters? Can other competitors' intermediate freight with the digital platform sort of jump into the same business model? And is there any player in the market that can make a similar platform like Freightos?

Yes. So look, the biggest mode for a platform or a marketplace is the network effect. That's why I emphasize them in my remarks every quarter. I always say that if you want to buy some secondhand dishwasher on eBay, it's not the technology, which is the reason you go to eBay, you go to eBay be because that's where the sellers are. And if you want to sell your secondhand toaster, then you go to eBay because that's what the buyers are. So our network is -- our customers are the moat, the network of buyers and sellers. And that's why every quarter we report not just how many transactions we have, but how many carriers are selling and how many users are buying and so we give you all the tools every quarter to really follow how we're deepening that moat. Can someone else do it? Well, I mean, we do have some competition, for example, for air bookings, which is our biggest volume. There are a couple of smaller companies who compete with us, but we're still significantly ahead of them because we have that moat. We have that -- those network effects and also because -- they do just air, but we do air and ocean, and we work with freight forwarders as well as with importers and exporters. So that's also important, not just having more buyers and sellers, but also -- we talked about this a little bit before when George asked about the trucking partnership. So the fact that we've got air and ocean and now we announced that some trucking is coming, and that's also a moat because then as a buyer, you go to the place where, a, where all the sellers are, but b, where you can buy air and ocean and tracking. So I think the comprehensiveness of our platform and the number of buyers and sellers that we are create a very deep moat. And you'll see that many marketplaces survive for decades or centuries because if you look at the New York Stock Exchange or the London Stock Exchange or various other forces they're very, very defensible businesses because yes, somebody else can open an exchange, but they don't have the liquidity. So I think book but a very exciting moat, which I hope will keep us as market leaders for many, many years and beyond.

Okay. So we have no more questions. We wish everyone a good day, and thank you.

Thanks, everyone. Thanks, Anat.

Thank you, everyone. Thanks, Anat.