Freightos Ltd

Freightos Ltd. operates in the international freight industry, which is characterized by its large size, with international trade of goods reaching $24.4 trillion ² in 2024, representing approximately 22% ³ of global GDP. The third-party logistics market, which facilitates this trade, generated $1.22 trillion ⁴ in revenue in 2024. Despite its significance, the industry remains largely offline, opaque, and inefficient, leading to delays, inconsistent pricing, and uncertain transit times. Freightos aims to digitalize this industry, drawing inspiration from the digital transformations seen in passenger travel, hotels, and retail.

The company's core business model revolves around a "SaaS-enabled-marketplace" strategy, where its Solutions segment drives adoption and engagement, which in turn fuels the Platform segment. Revenue is generated from two primary segments: Solutions and Platform. The Solutions segment provides software-as-a-service (SaaS) offerings, data subscriptions, and professional services, typically generating recurring subscription income. The Platform segment facilitates transactions between Buyers and Sellers of freight services, earning fees based on flat rates per transaction or a percentage of transaction value, and also includes revenue from ancillary services like customs brokerage. The company's primary customer segments include freight carriers (airlines, ocean liners, trucking companies), freight forwarders, and enterprise and SMB importers/exporters.

The Solutions segment encompasses several key products. "WebCargo Rate & Quote (Air)" and "WebCargo Rate & Quote (Multimodal)" offer freight forwarders tools for efficient price management, negotiation, sales, and margin management, with pricing typically per user or per site per month/year, or through negotiated global licenses. "Data Services" digitalizes static carrier rates. "WebCargo Airline" enables airlines to distribute rates, receive bookings, and optimize pricing. "Freightos Procure" (Shipsta) is an enterprise shipper solution for managing ongoing tender procurement processes, including annual bidding and smaller bids throughout the year. Freightos Terminal provides market intelligence, including price indices like the Freightos Baltic Index (FBX) and Freightos Air Index (FAX), and custom market pricing data reports, with most subscriptions being unpaid but contributing to brand awareness.

The Platform segment includes "WebCargo by Freightos" and "7LFreight by WebCargo," which connect freight forwarders to carriers, and "freightos.com," which connects importers/exporters to logistics service providers. WebCargo by Freightos facilitates air cargo bookings, with over 3,500 ²⁸ freight forwarders connecting to more than 75 ²⁹ operating airlines. Freightos.com allows over 21,000 ³⁰ importer/exporter Buyers to procure freight services from dozens of Sellers. Clearit, a licensed customs broker for imports to the United States and Canada, also contributes to the Platform segment by offering highly digitalized customs brokerage services.

For the fiscal year ended December 31, 2025, Freightos reported total revenue of $29,460 thousand ⁵. Cost of revenue was $9,777 thousand ⁶, resulting in a gross profit of $19,683 thousand ⁷ and a gross margin of 66.8% ⁸. Operating expenses totaled $38,839 thousand ⁹, leading to an operating loss of ($19,156) thousand ¹⁰. The company recorded a net loss of ($17,516) thousand ¹¹ for the year, with diluted EPS not explicitly provided in the summary financial table. Cash and cash equivalents were $27.9 million ¹² as of December 31, 2025, compared to $37.3 million ¹³ as of December 31, 2024. Total contractual undiscounted lease liabilities were $2,823 thousand ¹⁴ as of December 31, 2025.

Comparing 2025 to 2024, total revenue increased by $5,675 thousand ¹⁵, or 24% ¹⁶, from $23,785 thousand ¹⁷ to $29,460 thousand ¹⁸. Solutions revenue grew by $4,181 thousand ¹⁹, or 27% ²⁰, reaching $19,579 thousand ²¹ in 2025, primarily due to a full year of Shipsta revenue and growth in SaaS products. Platform revenue increased by $1,494 thousand ²², or 18% ²³, to $9,881 thousand ²⁴, driven by an increase in the number of transactions. Gross profit increased by $4,183 thousand ²⁵, or 27% ²⁶, from $15,500 thousand ²⁷ to $19,683 thousand ⁷, with gross margin expanding from 65% ³¹ to 67% ⁸. Operating loss improved from ($22,947) thousand ³² in 2024 to ($19,156) thousand ¹⁰ in 2025.

During 2025, Freightos accelerated integration across its ecosystem, including market intelligence in its procurement solution, creating unified air and ocean search for forwarders, and incorporating AI-native features. The company also launched its ocean solution and added annual freight contract benchmarking support to its market data and market intelligence solution. In August 2024, Freightos acquired Shipsta, a Luxembourg-based freight-tender procurement platform. The company also experienced a leadership transition with Pablo Pinillos appointed as Chief Executive Officer effective March 16, 2026, after serving as Chief Financial Officer since March 2025 and Interim Chief Executive Officer since December 17, 2025.

Freightos' strategy for 2026 is centered on "solution adoption," aiming to embed its SaaS and software tools into customer workflows to drive sustainable revenue growth, with platform bookings expected to follow naturally. The company anticipates reaching financial breakeven by the end of 2026 ³³ and expects free cash flow burn in 2026 to be less than in 2025 ³⁴. The company's current planned level of investment is considered appropriate given the market opportunity and high growth rate, supported by existing cash reserves.

A major growth vector for Freightos is the expansion into additional modes, specifically ocean cargo. In 2025, the company relaunched a version of its ocean rate management and quoting platform, which has seen initial uptake from enterprise and midmarket forwarders. The company believes this will enable it to expand from a dominant air cargo market role to the ocean market. Another significant growth area is the expansion into tendering, building on strong traction in the global freight procurement space. Freightos aims to expand this across both enterprise shippers and forwarders, supporting annual tender negotiation processes for both demand-side and supply-side participants. These efforts are supported by the company's market intelligence, creating a positive feedback loop where increased solution usage provides more valuable aggregate data.

Operationally, Freightos intends to implement a responsible expenditure strategy, limiting its spending and negative free cash flow, while maintaining high gross profit margins. The goal is to achieve positive free cash flow with the cash reserves on hand. The company seeks to moderate the growth in its operating expenses so that such growth is much slower than the growth in its top line and gross profit, which is how it aims to improve profitability. The company also plans to continue investing significantly in scaling to enhance its growth prospects, particularly as it expands into new areas like ocean cargo.

Planned capital allocation includes continued investment in research and development to create new product features and launch new products, as these are considered important to achieve strategic goals. Capital expenditures were $0.1 million ³⁵ in 2025, $0.0 million ³⁶ in 2024, and $0.1 million ³⁷ in 2023, primarily for computers, peripheral equipment, and leasehold improvements. The company expects to issue additional share capital in the future, including equity awards to employees and directors under its equity incentive plans, and may raise capital through equity financings. Freightos does not expect to pay any cash dividends in the foreseeable future, as it plans to retain most, if not all, available funds and future earnings to fund business development and growth.

Management has explicitly flagged several structural headwinds and execution risks to the growth plan. The international freight industry is historically slow to adopt new technology, and the company's success depends on convincing industry participants to shift from manual processes to its digital solutions. Failure to achieve significant adoption of the Solutions segment, or if customers do not find the software essential, could severely limit Solutions revenue and subsequent transaction growth. The company's 2026 strategy represents a shift in resource allocation, and failure to execute on this "solutions-first" sequence may result in lower growth in 2027 and beyond. The international freight industry is also highly cyclical and susceptible to global economic trends and policy changes, including increases in tariffs and protectionist policies, which can impact freight rate levels and demand for services.

Geographic, regulatory, and macro factors identified as constraints include adverse global economic conditions, geopolitical issues, and trade policy shifts, which could negatively impact global operations. Acute disruptions to the global supply chain and international shipping and aviation, such as intermittent disturbances in the Red Sea and the closure of Middle Eastern airspace, pose material risks. The ongoing military conflict involving the U.S. and Iran, and the closure of sovereign airspace across much of the Middle East, has removed an estimated 16% to 22% ³⁸ of global air cargo capacity, forcing longer and more costly detours. This could lead to a catastrophic decrease in transaction volumes and revenue. The company is also subject to complex and evolving regulatory requirements related to data privacy and cybersecurity, including new regulations specifically targeting AI, such as the EU Artificial Intelligence Act, which could result in significant financial penalties of up to 7% ³⁹ of global annual turnover for non-compliance. The U.S. government's designation of Anthropic, whose AI models Freightos utilizes, as a "supply chain risk" could force the company to terminate use of its technology, leading to operational disruption and reputational scrutiny.

Freightos faces material risks from adverse global economic conditions, geopolitical issues, and trade policy shifts, which can negatively impact its global operations and the highly cyclical international freight industry. Acute disruptions to the global supply chain, such as the Red Sea crisis and the closure of Middle Eastern airspace due to military conflicts, have already removed an estimated 16% to 22% ³⁸ of global air cargo capacity, forcing costly detours and potentially leading to a catastrophic decrease in transaction volumes and revenue. The company is also exposed to significant regulatory risks, particularly concerning data privacy and the rapidly evolving landscape of AI regulation. The EU Artificial Intelligence Act, which becomes fully enforceable as of August 2, 2026, could impose fines of up to 7% ³⁹ of global annual turnover for non-compliance with its stringent standards for "high-risk" AI systems and transparency. Furthermore, the U.S. government's designation of Anthropic, whose AI models Freightos uses, as a "supply chain risk" could force the company to cease using Anthropic's technology, leading to operational disruption, technical debt, and reputational damage. Operational risks include the challenge of effectively driving adoption of its software solutions, as the international freight industry is historically slow to adopt new technology, and failure to do so could severely limit revenue growth. The company also faces intense competition from both online and offline platforms, including larger, well-established internet companies with greater resources.

Management's message to shareholders emphasizes a strategic shift for 2026, focusing on "solution adoption" by embedding the company's SaaS and software tools into customer workflows. This is viewed as the critical enabler for long-term Platform growth, with platform bookings expected to follow naturally from increased software integration. The company anticipates reaching financial breakeven on an Adjusted EBITDA basis by the end of 2026 ³³ and aims for free cash flow burn in 2026 to be less than in 2025 ³⁴. Key strategic priorities for the period ahead include expanding into additional modes, particularly ocean cargo, and extending support for annual tender negotiation processes across enterprise shippers and forwarders. Management also highlights a commitment to financial responsibility, monetization, and capital efficiency, seeking to moderate the growth in operating expenses to be slower than top-line and gross profit growth.