Freightos Limited Ordinary shares (NASDAQ:CRGO) Q1 2026 Earnings Call Transcript

Freightos Limited Ordinary shares (NASDAQ:CRGO) Q1 2026 Earnings Call Transcript May 26, 2026

Freightos Limited Ordinary shares misses on earnings expectations. Reported EPS is $-0.13 EPS, expectations were $-0.075.

Anat Earon-Heilborn: Q1 2026 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. My name is ah Anat Earon-Heilborn, and I’m joined today by Pablo Pinillos, Freightos’ CEO and Interim CFO; and Ian Arroyo, Chief Strategy Officer. Following the prepared remarks, we’ll 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 a reconciliation 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 fredus.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.

This week, Freightos will participate in the virtual [ Lytham Partners ] Spring Investor conference. In September, management will attend the H.C. Wainwright Annual Investor Conference in New York. Links to the webcast when applicable and other event updates can be found on our website. Today’s earnings call will begin with a business overview and outlook by Pablo, followed by Ian, who will deep dive into our strategy. Next, Pablo will present the financial results and the guidance for Q2 and full year 2026. We will conclude with Q&A. Questions can be submitted in writing during the call by using the Q&A feature in Zoom. With that, I will hand it over to Pablo.

Pablo Pinillos: Thank you, Anat, and thank you, everyone, for joining us today. Before discussing the quarter, I would like to briefly acknowledge the leadership transition announced earlier this year. I’m honored to step into the role of CEO after joining Freightos as CFO a little over a year ago. During that time, I have developed a deep understanding of both the strengths of the business and the areas where we need to sharpen execution and operating discipline. We have initiated the search process for a permanent CFO, and we will provide updates as appropriate. Let me start summarizing a few things in regards last quarter. First, while Q1 was softer quarter than we expected, we continue making important progress across several strategic priorities, including expanding our carrier network, growing our solution sales pipeline and advancing workflow integration across procurement, pricing and execution.

Second, the freight market remained volatile during the quarter, particularly following the disruption across Middle East trade corridors. That volatility impacted capacity routing behaviors and transactions activity during the quarter. But it also reinforced the customer demand for procurement intelligence, multi-model visibility and more connected operational workflows. The broader direction of the industry continues moving exactly where we believe Freightos is positioning to win. Customers increasingly need faster procurement decisions, multimodal visibility, integrated operational workflows and better market intelligence across air and ocean freight. That trend directly supports our long-term strategy. Third, as discussed during Q4 earnings call, 2026 is a transition year for Freightos and during the quarter, we continued executing on our priorities by improving go-to-market execution, sharper operating discipline, focused R&D investments on the highest-return initiatives deepened customer adoption and position the company for durable profitable growth.

Q&A Session

Importantly, this is not a change in strategy. It is a stronger focus on execution, accountability and scalability. During Q1, we took several important steps in that direction, tightening prioritization, simplifying organizational complexity, improving operational accountability and aligning resource more directly to our highest conviction growth opportunities. And finally, while near-term conditions remain challenging, we remain confident in both our long-term strategic positioning and our path towards adjusted EBITDA breakeven by the end of 2026. Now let me turn to solutions. Q1 performance was below our expectations, reflecting both a cautious enterprise environment and areas where we need to improve execution and consistency. Customers are expressing growing demand for benchmarking and forecasting capabilities, procurement intelligence and index-linked purchasing strategies designing to help customers manage volatility more dynamically across air and ocean freight.

At the same time, we are seeing a stronger commercial momentum in our solutions pipeline, – which is currently approximately double what it was a year ago. As we outlined it in February, our focus in 2026 is improving commercial execution, sharpening prioritization and increasing operating consistency across the business. On the product side, we continue aligning our R&D investments around integrating procurement, pricing, quoting, booking and market intelligence into a more connected operational environment. We believe this becomes increasingly valuable in volatile freight markets where customers need faster decision-making across transportation modes, suppliers and trade lines. We are also continuing to expand our multi-model capabilities, including ocean and procurement management as part of the broader strategy.

Importantly, we continue seeing the same structural dynamic across the platform. Customers that adopt our solutions transact approximately 3x more retain at higher levels and expand usage over time. That remains one of the most clear validation of our long-term strategy and why our focus remains on building a stronger recurring customer value first, while transactions scale from a more durable foundation. Moving to transactions. Q1 revenue and platform activity reflected the shortfall we reported in our KPI update last month. We processed 425,000 transactions in the quarter, up 15% year-over-year, but below our 20%-plus target. The shortfall was driven primarily by disruptions in the Middle East where capacity was unavailable for extended periods across important trade corridors.

Outside that region, transaction growth was healthier, supported by continued activity across other markets and increased use of alternative routine. April improved relative to March, which is encouraging. However, activity involved in the Middle East remains below prior year levels. And while we expect conditions to improve gradually through the rest of the year, we do not expect to fully recover the shortfall already incurred in Q1. On the carrier side, our network reached a record of 79 active carriers in the quarter, up from 77 in Q4. Shortly after quarter end, we also secured a major carrier addition that we expect to further strengthen our position in APAC, a region where we continue to see meaningful room to expand relative to Europe and Americas.

We hope to announce this carrier formally soon. Gross booking value was $343 million in the quarter, up 24% year-over-year. While GBV has a limited direct impact on revenue, because much of our transaction monetization remains fee-based, it remains an important measure of platform scale, liquidity and customer relevance. Let me pass it to Ian to discuss our strategy in more details.

Ian Arroyo: Thanks, Pablo. One of the most important structural shifts we continue seeing across global freight is that procurement execution, market intelligence decisions are becoming increasingly interconnected across transportation modes and counterparties. Historically, many of these systems operated independently across air cargo, ocean freight, procurement and execution environments. This is rapidly changing. Our customers increasingly need to compare alternatives, reroute freight, adjust sourcing decisions and execute [indiscernible] decisions dynamically across both air and ocean networks. A very recent example involved a Fortune 500 oil and gas services company with a major spare parts distribution hub in the Gulf region.

During the Middle East disruption, they were able to rapidly shift operations to the Americas to maintain customer support and supply chain continuity. Moves like these create significant complexities across procurement, across routing, capacity management and execution. That reinforces our view that the long-term opportunity is not simply digitizing freight transactions. The larger opportunity is connecting procurement, pricing, quoting, execution and market intelligence within a single operational environment, spanning multiple transportation modes and participants. That is the direction that Freightos is building. You can think about the platform as a reinforcing flywheel model, solutions drive transactions, transactions generate additional operational data and market intelligence.

That intelligence that improves procurement, pricing and execution decisions across the broader network. We believe that model becomes increasingly valuable as freight markets become even more dynamic and operationally complex. This is also where we believe Freightos is strategically differentiated. There is obviously significant discussion across software markets around AI. But in fragmented industries like global freight, long-term value will not come from AI alone. It will come from combining live operational data, our carrier connectivity, integrated operational levels and deeply embedded customer relationships. The operational data and connectivity across carriers, freight forwarders and shippers create an infrastructure layer that is very difficult to replicate.

In many ways, AI increases the value of connected platforms because customers increasingly need actionable intelligence, embedded directly into live procurement and execution workflows. Going back to my earlier oil and gas example, Freightos recently launched predictive risk forecasting, and that could have identified the need for network adjustments before the disruption materially impacted operations, allowing procurement teams to proactively secure capacity and reduce downstream disruption. Over time, we believe increasingly intelligent and automated decision support can materially reduce friction across freight procurement and execution while improving responsiveness, efficiency and operational resilience. Overall, we continue seeing the market evolve in a direction that reinforces our strategic priorities: deeper multimodal connectivity, stronger procurement capabilities, integrated operational workflows, embedded market intelligence and more disciplined execution.

With that, Pablo will go over our financial review.

Pablo Pinillos: Thanks, Ian. Revenue in the first quarter was $7.2 million, up 3% year-over-year. Within platform where cargo by Freightos remain healthy, partially offset by softer activity within [ Freightos ] and [indiscernible], the customs transaction segment, and lower-than-expected transaction activity related to Middle East disruptions. Within solutions, data products performed well, while SaaS solutions underperforms relative to our expectations. Non-IFRS gross margin was 73.5%, remaining within our long-term target range of 70% to 80%. Adjusted EBITDA was negative $2.8 million during the quarter, in line with our expectations. During the final week of the quarter, we began executing the cost optimization plan announced in March.

These actions are designed to align organizational structure with the strategic priorities, improve execution focus, simplify complexity and support our path towards adjusted EBITDA breakeven by the end of 2026. Importantly, this is not just a cost reduction initiatives. It is about building a more disciplined organization capable of executing in a more predictable way and scaling more efficiency over time. We expect these actions to generate approximately $4.5 million in annualized savings beginning in Q4 2026. We closed the quarter with $23.5 million in cash and short-term bank deposits, which we believe provides sufficient liquidity to support our operating plans. Turning to guidance. We are updating our full year outlook to reflect softer-than-expected first quarter performance, continued impact from Middle East disruptions and a more cautious enterprise spending environment.

Relative to our prior outlook, transactions growth expectations have moved lower, primarily due to the Q1 shortfall and the continued Middle East disruption, as said before. Revenue expectations have been moderated. And at the same time, we remain committed to achieving adjusted EBITDA breakeven during Q4 2026. The cost reduction actions, combined with tighter prioritization and improved operating discipline, support that path even as revenue expectations moderate. While near-term conditions remain volatile, we remain highly confident in the long-term opportunity ahead. Freightos has built an increasingly connected global freight platform, supported by a broader carrier network, deep ecosystem integrations, growing adoption across procurement and execution and increasingly valuable operational data and market intelligence capabilities.

As freight markets become more digital, interconnected and intelligence-driven, we believe the strategic importance of neutral infrastructure platform capable of supporting procurement, execution and interoperability across the ecosystem will continue increasing. Our long-term vision remains unchanged, and we continue expecting to return to a 20% plus growth trajectory in 2027 and beyond. Thanks for joining us today and sharing your time.

Anat Earon-Heilborn: Thank you, Pablo. We can now take questions. So the first question will come from the line of George Sutton. George, you can unmute now.

Logan Lillehaug: This is Logan hopping on for George. So Ian, it was interesting to hear your comments about recently launching predictive risk forecasting. It sounds like, in general, trying to kind of move to more intelligent and automated solutions. I wondered, first, if you could just go into more detail on that predictive risk forecasting. And then in general, where do you see the biggest opportunities to kind of launch some of these more automated solutions? Are these built on AI? Or how should we think about the level of automation here?

Ian Arroyo: Yes, it’s a great question, Logan. Thanks for asking. Predictive risk forecasting takes into account many factors, right? Something that Freightos’ Terminal has been doing for quite some time is going out and pulling all of the data that could impact freight capacity and pricing globally. And over this last, let’s say, 9 months, turning that into kind of 5 key areas that can predict risk on capacity and pricing in ocean and air. And yes, that is built off of an enormous amount of data that we have and that has been sitting for some period of time, and we’ve been using it for various different things, using AI to be able to take that plus client input data on kind of what are their key risk factors, what are the areas that they’re currently operating in and provide risk forecasting around pricing and capacity and disruption in their network.

Where do we — I think that’s answers the first part, second part was where do we see more and more opportunities? I think that — if you look at our strategic priorities, it’s very much around automated procurement, actionable intelligence, right. Being able to not only provide data outputs but being able to provide recommendations and/or even automated execution, right, against preset inputs that are coming from the clients where they — let’s take a procurement event, for instance, where all of a sudden they recognize there could be disruption in a key region for them in the next 6 weeks. Making sure that they have the right backup in place from a procurement — or from a pricing and capacity perspective to be able to execute against that.

So we see lots of opportunities, both in the market intelligence space, in the procurement space and also in the network design.

Logan Lillehaug: Okay. Helpful. And then, I mean, it sounds like solutions was a bit weaker this quarter, but the pipeline has developed pretty nicely. Can you just help us square those things? I mean, our sales cycle is a little bit longer right now at all? I mean, is the progression of AI in general, having any impact on budgets? Just maybe help us understand what you’re hearing from customers right now compared to 6 months or a year ago and then just sort of the visibility into the reacceleration?

Pablo Pinillos: Yes, sure. Let me take this one, Logan. Sorry that George didn’t us. So we are seeing the solutions that did not perform lower than we expected. The platform transaction shortfall is fully market related and is the cost of the revenue shortfall from the guidance that we had this quarter. Q1 is also the first quarter of our focus change. So we didn’t expect solutions sales execution to deliver at a higher level that it happened. As you said, uncertainty in the market is delaying some decisions and in order to — from a customer perspective, and in order for us to have full control and understand how the sales cycle goes, is all the changes that we have done from an execution perspective. So we expect to have a full visibility and control over the rest of the year, and we are starting to see that on the pipeline that we have been able to build in Q1, which doubled what we did in last year at the same time.

Anat Earon-Heilborn: Okay. The next question is from the line of [indiscernible]. Well, you can unmute.

Unknown Analyst: Sorry. Hopefully, you can hear me okay. Can you just talk — can you just talk about the cost savings program you implemented in March? Will we see anything in the second quarter? Can you just sort of give us an idea of the cadence of that cost savings target of $4.5 million by the end of the year?

Pablo Pinillos: Sure. So we did execute at the end of March, the cost optimization plan. Of course, in Q1, we didn’t benefit much of that. We will start benefit in Q2 going forward. And the majority of that benefit will come during Q2 and partially Q3 and to finalize completely in Q4. So in Q4, those $4.5 million run rate annual savings will be materialized, mainly starting in — now in Q2.

Unknown Analyst: Okay. Great. And then if you could just talk about your cash position? It dropped $5 million in the first quarter. Is that your cash burn? Is that equivalent to your cash burn? And then could you talk about sort of the path over the rest of the year as far as how your cash burn looks?

Pablo Pinillos: Well, the cash burn was affected in this quarter by the cost optimization plan that we did that we executed at the end of March, and we have to put some cash up on that. Normally, our cash burn is linked almost very, very similar to our adjusted EBITDA number, and that’s the expectation for the rest of the year. So our guidance for Q2 is similar to our cash burn expected in Q2. And our cash burn for the year is expected in the same range as the guidance that we put for EBITDA adjusted, only caveat with the cost optimization action that we have taken — that has taken — we said it was going to be around $1.3 million on top of that. But for the rest, should be very aligned.

Anat Earon-Heilborn: Okay. Let’s now take a few questions from the chat. So the first one is, how should we think about monetization per transaction in the current environment of elevated freight rate and lower volumes? Are you seeing any meaningful change in take rate or pricing mix?

Pablo Pinillos: Ian, do you want to take this one?

Ian Arroyo: Sure. monetization per transaction, as we’ve discussed on these calls quite a bit over the last couple of years, the vast majority of our transactional revenue coming from carriers is flat, therefore, the revenue mix doesn’t necessarily change significantly as freight rates go up or down. So if it’s flat, right, and it’s just purely lower volume, then you can understand how we had a softer quarter due to the Middle East disruption. But GBV gross booking value, right, could stay the same or even go up. In this case, gross booking value went up due to the fact that freight rates were higher and much more elevated. But from a pure take rate perspective, down due to the fact that we missed on the transactional numbers due to the Middle East disruption.

Anat Earon-Heilborn: Thanks, Ian. Another question, which I think we partly answered, but maybe it’s worth fine-tuning. You mentioned that solutions represent the majority of revenue and is less directly tied to platform KPIs. Given the software transaction environment in the Middle East, how did solution revenue perform relative to your internal expectations? And are you seeing any delays in enterprise spending or deal closures?

Pablo Pinillos: So let me take this one. So we partially answered this question. So as you said, in Q1, solutions revenue was not softer than expected. We — Q1 is the first quarter that we really start focusing on the change. And of course, internally, we didn’t expect solution sales execution to be at the level that we expect to be in the following quarters. And the guidance that we provided at that time were in that line. Just a reminder, this shortfall that we have versus the guidance is 100% related to the platform transaction shortfall that we had in Q1. So enterprise customers, due to these uncertainties, are delaying decisions, but we are day-to-day talking to them and showing them the value and improving the value of our solution with a much tighter approach. So we are more in control of the sales cycle, and we are more closer to the customer. So all the guidance that we provide in the future are related to the activities that [indiscernible].

Anat Earon-Heilborn: Thanks, Pablo. So another question is, can you remind investors of the long-term vision 5 years in terms of business mix, revenue targets and margins?

Pablo Pinillos: So from a long-term vision right now, we see a framework of 2027-2030 of transactions and GBP growth between the 20% and 30% growth year-over-year. Revenues going back to over 20% plus, between the 25% and 30% per year. Gross profit margin continued to be in the range of the 70% to 80% in non-IFRS perspective, and adjusted EBITDA improvements between 8 to 12 percentage points year-over-year. That’s how we’ve seen right now in the following 3 years.

Anat Earon-Heilborn: Thank you. And our last question, I believe, is referring to one of the comments that you already made, Pablo. Someone is asking for clarification, is cash going to be enough to reach cash flow positive?

Pablo Pinillos: Yes, we are confident that with the burn that we’re expecting to have and with $23.5 million in cash right now, it provides sufficient liquidity to support our operating plans for the rest of the year as well as adjusted cash positivity 2 or 3 months after we become breakeven.

Anat Earon-Heilborn: Okay. I see no further questions. So thanks, everyone, for joining. Have a good day.

Pablo Pinillos: Thank you, everyone.