Hello, and welcome to Freightos Q2 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. Today, we also have pleasure in inviting Dr. Udo Lange, recently appointed Chairman of the Board, to share brief remarks at the start of the call. Following the prepared remarks, we will open the call for questions. We are sharing slides during the call and using video, 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 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. Before we begin, I'd like to note our upcoming investor events. In September, Freightos will participate in the H.C. Wainwright Annual Investment Conference in New York. In October, the company will participate in the LD Micro Main Event Conference in San Diego. Links to webcast when applicable and other event updates can be found on our website. In addition, at the end of September, we'll be holding our annual Freighter conference for industry executives from around the world in Barcelona. If you would like to attend, please e-mail us at ir@freightos.com. Today's earnings call will begin with an intro by Zvi, brief remarks from our Chairman, Dr. Udo Lange; and then an overview of Q2 performance by Zvi. Next, Pablo will present the financial results and the guidance for Q3 and full year 2025. 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.

Thanks, Anat, and welcome, everyone. I will start with updates on our Board of Directors before moving on to the business review. As you saw in our recent announcement, Udo Lange has been appointed Chairman of the Board after being a Board observer and then Director for 7 years. Udo has over 3 decades of global logistics leadership. He's currently CEO of Stolt-Nielsen, a sizable ocean liner and logistics company and was previously President of Healthcare Logistics and Americas International at Dex Logistics, where he was also a customer of Freightos. We also welcomed Rotem Hershko to our Board, Rotem has platform technology and logistics expertise, having led global e- commerce operations at Amazon and served as Chief Product Officer at Maersk Logistics. These Board changes reflect an exciting new chapter for Freightos as we continue growing and maturing as a public company. And I'm confident they'll help us to get even more value from our Board as well as even stronger governance. Now it's my pleasure to introduce you to Udo, and then I'll be back to walk you through the quarter's highlights and outlook. Udo?

Yes. Thank you so much, Zvi. First, let me introduce myself. I met we and the team when I was a customer of Freightos as COO of FedEx Logistics. And I was so impressed by Freightos' vision to digitalize international freight that I help drive the decision by FedEx to invest in the company in 2018, and I was a Board adviser for a number of years before joining the Board. One of the most exciting aspects of Freightos for me as a former customer, director and now as Chairman is the breadth of the vision and the platform. Freightos spans carriers, freight forwarders and both SMB and enterprise importers and exporters across air, ocean and some land. That footprint is incredibly powerful, truly unique and underpins our ability to deliver a seamless end-to-end solution for international freight. As a curious logistics executive, I can confirm to you that the opportunity to digitalize this industry is vast. Over the last 7 years, I've seen Freightos grow into a leading global freight platform. Stepping into the role of Chairman marks not only a personal milestone for me, but also a new chapter for the company, one that reflects its maturity. The role allows me to focus on drawing out the full value of our Board of Directors, facilitating strong engagement, aligning diverse expertise with our strategic priorities and ensuring we are providing meaningful support to management. I'm excited about the opportunities ahead and look forward to helping position Freightos to capture significant market potential in digitalizing global trade. I'm already enjoying working with our newest Director, Rotem. His track record in scaling complex technology-driven logistics platforms will be instrumental as we refine and expand our portfolio. As a Chairman, I'm excited to work with the Board and management to build the Booking.com of international freight. Back to Zvi.

Thanks, Udo. I think we've reached a stage where we're separating the role of CEO and Chairman is positive for our governance and very much look forward to working with the Chairman. So let's turn to the business review. I'm pleased to report another quarter of strong performance with record revenue and our 22nd consecutive quarter of record transactions. In Q2, we facilitated 397,000 transactions, a 26% increase compared to the same period last year, demonstrating consistent transaction growth. Our platform's reach expanded with the addition of new buyers as well as notable carriers, including China Airlines and Air Europa, pushing our total to 75 carriers. This expansion, combined with the continued relevance of our comprehensive portfolio of solutions has been instrumental in achieving record revenue, underscoring Freightos' strong performance and strategic growth trajectory. Let's talk about the market that we operate in leveraging our unique data. The air cargo market remained solid in Q2 with market volumes up 3% compared to Q2 last year. This strength comes despite the U.S. ending the de minimis exemption for low-value imports from China in May, which had a big driver of e-commerce air cargo. While China U.S. demand has eased since then, stronger volumes on other lanes like Asia, Europe have kept the overall market growing. At the same time, more capacity freed up from China U.S. services, and they may have put some pressure on rates. The Freightos Air Index, FAX, global benchmark average for Q2 decreased 15% year-on-year despite the volume gains. In ocean freight, tariff changes drove sharp swings in transpacific volumes with front loading ahead of tariff deadlines boosting demand in Q2. Rates rose 43% from Q1, but were still 11% lower than last year, reflecting capacity growth and signs of overcapacity that will keep downward pressure on…

Thank you, Zvi, and good day, everyone. I'm pleased to report that we continue to build momentum into Q2 despite the dynamic economic landscape. Our Q2 results reflect the relevance of our offering and our consistent execution capabilities. We successfully surpassed our guidance in transactions, gross booking value and revenue, demonstrating the sustained demand for our digital solutions. Even though currency fluctuations negatively impacted profitability, our adjusted EBITDA was within our guidance, thanks to our focus on disciplined cost controls. Now let's take a look at the specifics of our revenue growth. We reported revenue of $7.4 million, marking a 31% increase year-over-year. Platform revenue of $2.5 million was up 23% year-over-year, marking our fourth consecutive quarters of growth that exceeded 20% year-on-year. Growth continues to be higher on the Web cargo platform that connects carriers with freight forwarders than for the freightos.com platform that connects freight forwarders with importers and exporters. Solutions revenue of $4.9 million was up 36% year-over-year. Gross margin on IFRS basis was approximately 67% in Q2, up from 65% in Q2 last year. Non-IFRS gross margin increased to nearly 74% from 72% last year. Operating profitability benefit from revenue growth, gross margin expansion and our disciplined cost management, but these benefits were partially mitigated by foreign currency fluctuations, especially the euro and the shekel appreciated against the dollar during the quarter, impacting our adjusted EBITDA and holding it back from showing an even greater improvement. Adjusted EBITDA for the second quarter was negative $2.5 million compared with negative $3.1 million in Q2 '24. It is important to note that our effective hedging strategies have mitigated the effect of exchange rate in an overall cash position. We remain on track to achieve breakeven adjusted EBITDA by the end of 2026. We ended the quarter with $34…

The first question will come from the line of Jason Helfstein. Eitan, can you please enable that?

This is Steve Perman on for Jason. Two questions from us. One, so you raised full year GBV guidance, but kept revenue at the midpoint largely unchanged. Is there something that you're seeing that would suggest take rate weakness for the second half? And then just curious on an update on how the Shipsta acquisition is helping you drive solutions revenue.

Yes. Thanks, Steve. Yes, I think it's -- as usual, it's to do with the mix of transactions. There are certain types of transactions like portal, which are performing well, contributing to GBV and of course, contributing to revenue as well, but contributing a little less in terms of the mix. So overall, everything is going in the right direction, but sometimes the transactions which have the lower take rate sort of grow faster and bring down the mix a bit, but all going in the right direction. And sorry, Steve, what was your second question?

Just curious if you could give some color on how Shipsta is helping drive the software business.

Yes. Very well. I mean we don't even break out Shipsta anymore. We just call it now -- their product is called Freightos Procure, but it's mostly sold as the Freightos Enterprise Suite. And yes, we've had some specific wins of cross-sells. So as we anticipated, we're selling -- it's still a handful, but some big names who bought Freightos Procure, which is Shipsta and now buying our who bought our data and now buying Shipsta Procure. So it's helping us in terms of cross-sell and just having a more interesting portfolio. Some of the names -- well, I don't know if I should say names, but some of the big enterprises I referred to in my remarks, definitely were helped by the fact that we have the broader suite now. And also, it's an important source of data. So I mentioned that we've now -- one of the big moves sort of steps forward for Freightos Terminal is that we now have contract data as well as short-term spot data, which is a really important enhancement for Freightos Terminal. And in a large part, that's part of the data asset we acquired with Shipsta. So it's -- we're really achieving the strategic benefits that we hoped with that. And it's exactly a year, I think, almost to the day since we closed that deal. So it's a timely question.

The next question will come from George Sutton.

Zvi, I've been doing this long enough to know that you're excited -- you're newly excited about Ocean. And I'm curious if you could give us some sense of what's driving the pressure. Obviously, you've got a few ocean players. Where is the pressure coming for the modernization?

Yes. So yes, we've been discussing this, as you say, George, for a while. But I'm pleased that this quarter, we have a concrete another major carrier live with us. And remember, Ocean is a pretty consolidated industry. You know this, George, but for the benefit of other people on the on the call, each carrier can be -- each big carrier can be 10% or 20% of the world market. So each one is a big win, even more than an air where the biggest carriers are sort of 6% or so of the market, the biggest ocean liners are 20%. And so each carrier is a big win. I'd love to tell you the pressure is coming that they just so much want to work with Freightos. That's part of it. But really, of course, what we're leveraging here is our network. So it's not so much that they want to work with us, but they want to work with that work. We have these big freight forwarders. We have these big enterprise retailers and manufacturers. And these guys are just fed up of getting Excel sheets. It's very simple. The value proposition is just you send Excel sheets, there's a delay, there's mistakes, just give them a digital connection. So more than ourselves, we're leveraging our customer base to just remind the ocean carriers that there's a way you do these things in the 21st century and e-mailing Excels is not that way anymore. And it's happening one step at a time.

So I wanted to take advantage of having Udo on the call. Given his background, and he had sort of reemphasized what we've talked about for years of being the Bookings.com of the space. I wondered if he could just give his perspective on that opportunity and also the secular dynamics that you referred to offsetting everything else right now.

Yes. Thank you so much for the question. So I think we are really at a great moment right now at Freightos. And with my appointment, we really also drive a clear focus where we are so much at how can we win now and how can we win in the future. So with these changes, Zvi and the management team can fully focus on driving the full value that we have of Freightos. And then I can work with the Board, but also bring in new expertise into the Board like Rotem, which helps us to accelerate. So how we really look at this business, we want to win now. And I think Pablo and Zvi are very clear winning now shows these tremendous growth rates, but then also delivering on our breakeven in regards to EBITDA. But then even more important, we also want to win in the future, win this race towards Booking.com and deliver tremendous shareholder value. So how do we do this? We really look at our portfolio as part of our annual strategy process, we just went through this. And we go through our solutions and we look at what is the maturity of the solution that we have and what is the hyper growth potential that each of these solutions have. And based on that, we then decide where do we allocate resources to drive even value faster.

Okay. Next are a couple of questions from Able Zamanov. The first one is with the appointment of a new Chairman and additional Board expertise, are you evaluating any strategic changes or new growth areas that could further diversify and accelerate revenue growth?

Well, thanks for the question, Able. We review that the whole time because the world is dynamic. Right now, we've not decided and not necessarily expecting to decide on any major changes. As Udo mentioned, we're always fine-tuning where we prioritize resources. So we do that often. Certainly as we budget for next year, we'll do that again and fine-tune the resource allocation. But not haven't decided and not necessarily expecting to make any dramatic changes. One thing, of course, that is horizontal is that we're looking at AI in every aspect of the business internally and within the product. That's something which we do anyway. But otherwise, we're really expecting to carry on largely on the same business plan, which is working well for us.

Another question from Able is you mentioned FX headwinds moderating adjusted EBITDA. Can you quantify how much FX impacted Q2 profitability? And what portion of that is structurally hedged versus still exposed in half 2?

Sure. So thank you for the question. So as I said, the FX fluctuations were significant in the quarter. And with more than half of our operating expenses in euro and shekels, the dollar depreciation affected our adjusted EBITDA to the point that we landed in the bottom of the expectations instead of exceeding them. So yes, we quantified that, and we would have exceeded our expectations for adjusted EBITDA. And to the second part of the question about what portion of that is structurally hedged, I can tell you, and you can see in the financial results that from a finance interest in under adjusted EBITDA, we have been able to cover almost 100% of the hedging.

Yes. So I think Pablo has really done -- Pablo and the team have really done a great job on this. This doesn't affect our cash or our strength as a company in any way. It's just a cosmetic thing that the fluctuations appear over the EBITDA line and the hedging appears below. So it affects our EBITDA number, but doesn't actually weaken our business in any way whatsoever, except perhaps marginally, but really, it's mostly covered.

A question -- I'll switch to a question that came over e-mail. With 2.5 years after you've gone public, you have 2.5 years left on the warrants until they expire. Do you plan to do anything about that structure?

The warrants? No, I think the warrant -- I mean there's a bunch of warrants out there, but the strike price is high. I think it's $11.5, isn't it, which is unfortunately far from our market price. So I don't think it's an overhang that actually bothers anyone. So at this time, we've got no plans to spend time and money dealing with that.

Okay. The next question is from Scott Ba. With the introduction of tariffs, are you seeing any change in the booking schedule? Are customers booking earlier, waiting longer to make their booking decisions?

Yes. I mean, certainly, in the second quarter, tariffs were driving a lot of decisions. Now tariffs have kind of settled down to some extent. So the U.S. has done -- has signed trade agreements with a bunch of countries. The tariffs are very high. They're higher than they've been for 100 years. And I don't think that's actually good for anyone. But at least the fact that it settled down is definitely helpful. So the uncertainty was worse than the -- uncertainty is even worse than having high tariffs. But in Q2, certainly, there were announcements that came from the White House in rapid session. People try to quickly ship ahead or wait for agreements. So that was definitely driving behavior. Now I think less because not all, but most of the tariffs, there's a lot more -- most of them seem to settled down. So now people are trying to get back to long-term planning and trying to do less sort of whiplash shipping.

Okay. Next question. Why do you think the international freight shipping is not fully digitalized until now?

Well, that's a great question. And I don't fully know the answer. It's clearly a very -- it's a very fragmented industry, a very international industry, a very conservative industry. And -- but even so, there's no excuse. It should have been digitalized by now. But the good news is it isn't giving us the opportunity that we have. So I'm grateful for the fact that there's this one digitalized industry left for us all to digitalize.

Maybe I can add something there out of my experience with customers. I think what is very interesting right now in these times of supply chain complexity, customers are actually even stronger leaning into digitalization. And as part of that, including solutions that Freightos has is actually becoming more front and center. And that helps them also in interfacing with the airlines, with the ocean liners and the rest of the ecosystem. So I think these changes in the overall from a trade perspective in this VUCA environment actually playing nicely into our growth story and showing that now it's even more important to digitalize with the Freightos capabilities.

Thanks, Udo. And now our last question. Can you please expand on how you expect to be breakeven by the end of next year? Would it require the same 2025 revenue growth and margins? Or would you need further improvements?

I think, Pablo, largely on the same trends we get there, right? We're not the...

I can answer that. The first thing that I want to say is that the confidence to breakeven in Q4 2026 is 100%. And we -- if you look at the long-term model that...

Very high. I don't like to say 100%.

If you look at the long-term model that we put out there with the same growth ratios that we are delivering right now and improving in the gross margins, we will get to breakeven in Q4 2026. We may be getting the operational expenses as we plan from a flat investment perspective for minimal growth.

Yes. So if there's any inflection point in the industry or other accelerant, that would be even better. But we're planning to get there even without assuming any sort of extra tailwind.

Okay. I believe that concludes all the questions. Always, you can send us more questions to ir@freightos.com. Have a good day, everyone.

Thanks, everyone.

Thank you.