Freightos, a digital marketplace for international air and ocean shipping, announced Tuesday that it will reduce staff levels by 13% and lowered its full-year outlook again in an effort to stem mounting losses as revenues fall short of expectations because of a prolonged downturn in freight markets.
The news is the latest example of the ongoing freight recession taking a financial toll on companies in the freight transportation space.
Freightos (NASDAQ: CRGO) revised its revenue projections for 2023 to between $20 million and $21.2 million. In March, the Jerusalem-based FreightTech company said it expected to generate $22.3 million to $23.6 million in revenue, before lowering the figure in May. Management said last summer it expected $26.6 million in platform revenue this year. On Tuesday, It said bookings could range from 973,000 to slightly more than 1 million, down from more than 1 million to 1.1 million transactions in March.
Gross booking value, a metric Freightos promotes as indicating the scale of its platform and ability to generate revenue based on the value of freight moved plus fees, is now estimated at $626.2 million to $666.6 million vs. $802 million to $873 million in March.
The cut of about 50 positions and other unspecified cost measures will improve adjusted earnings before interest, taxes, depreciation and amortization by $5.6 million per year.
Freightos posted an operating loss of $24.3 million last year, up from $16.3 million in 2021 despite revenue growing 71% to $19.1 million. In the first quarter, adjusted losses before accounting measures increased 83% to $5.8 million. Management in May announced a hiring freeze and other steps to control spending. It also said revenue growth would keep cash burn in check.
“Despite challenging market conditions, our successful push for industry adoption of digitization has resulted in strong continued growth in total transactions and growing revenue on our Freightos platform,” said CEO Zvi Schreiber. “However, given the persistently weak market conditions, we are refining our priorities to deliver on our plan to reach profitability with the capital already raised. This includes efficiency measures that should keep us on the path to long-term, sustainable growth.”
Freightos raised $80 million when it merged in January with a blank-check company listed on the Nasdaq exchange. It is still spending heavily on R&D and marketing to expand globally in an industry that has been slow to adopt digital processes for comparing freight quotes, booking capacity in real time and making payments. Last month, Eastern Air Logistics, the freighter arm of China Eastern Airlines, began making its capacity available and collecting payments on WebCargo, a Freightos platform used by freight forwarders.
CFO Ran Shalev said Tuesday the company expects more modest growth from small and midsize freight forwarders that don’t have the resources now to pursue new customers.
Freightos stock price dropped 4.6% on Tuesday to $3.73 and is down about 64% since its initial public offering in January.
Freight transportation and logistics companies are increasingly feeling squeezed by significant revenue reductions while overhead expenses continue to rise with inflation. Cargo airline Amerijet recently laid off 15 workers after earlier shutting a small logistics division and outsourcing accounting functions to a Caribbean island. Cargojet is deferring plans to add converted freighters to its fleet. Difficult market conditions combined with poor management decisions have Western Global Airlines struggling for its survival. Logistics providers Flexport and C.H. Robinson each eliminated about 700 personnel. And mighty FedEx is parking aircraft, consolidating crew and maintenance bases, and reducing flight hours to bring operations in line with demand.
Click here for more FreightWaves/American Shipper stories by Eric Kulisch.
Twitter: @ericreports / LinkedIn: Eric Kulisch / ekulisch@freightwaves.com
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