Freightos expands digital freight with Shipsta acquisition

BARCELONA - Freightos (NASDAQ: CRGO), a global freight booking platform, announced today the strategic acquisition of Luxembourg-based Shipsta, a freight-tender procurement platform. This move is set to enhance Freightos' spot pricing and booking services by integrating Shipsta's tender management and procurement capabilities, thus broadening its total addressable market.

The merger aims to create a comprehensive digital platform for freight services, connecting carriers, freight forwarders, and importers/exporters. Shipsta's technology is recognized for optimizing tender management processes for multinational corporations in various industries. The acquisition is expected to accelerate Freightos' revenue growth and support its financial goals, including achieving positive Adjusted EBITDA by the end of 2026 with the current funds.

Freightos CEO Zvi Schreiber highlighted the strategic importance of the acquisition, stating it will significantly contribute to the company's vision of digitizing the freight industry. He emphasized the value Shipsta's platform and team will add to Freightos' services. Shipsta's leadership, including MD and founder Christian Wilhelm, will continue to drive the product's development and innovation within the Freightos ecosystem.

The acquisition terms include a cash payment of approximately €4.5 million from Freightos' reserves and the issuance of around 640 thousand Freightos shares to a principal Shipsta shareholder. Shipsta is projected to contribute about $800 thousand to Freightos' revenue for the remainder of 2024, with a moderate negative impact on Adjusted EBITDA. Revenue contributions in 2025 are forecasted to be between $4-5 million.

Freightos CFO Ran Shalev expressed confidence in the deal, noting the immediate cross-selling opportunities and its alignment with the company's path to financial sustainability without the need for additional capital.

This announcement is based on a press release statement and contains forward-looking statements that are subject to risks and uncertainties. Factors that could cause actual results to differ include the ability to integrate Shipsta effectively and market conditions. The forward-looking statements should not be relied upon beyond the date of the press release.

In other recent news, WebCargo by Freightos reported a strategic partnership with Coyne Airways, enhancing its service offerings in Africa, the Gulf, and the Caspian regions. This partnership allows forwarders and airline partners access to real-time rates, booking options, and payment solutions, including for dangerous goods. Coyne Airways has also become the first carrier to offer dangerous goods booking through WebCargo's platform.

In other recent developments, Freightos announced robust first-quarter earnings for 2024, exceeding expectations with substantial growth in transactions and gross booking value. The company facilitated nearly 296,000 transactions, marking a 29% increase year-over-year, and saw its gross booking value grow by 14% to over $192 million. Revenue for Q1 stood at $5.4 million, up 11% from the previous year, fueled by a surge in air cargo digital bookings.

Freightos also expanded its carrier base, adding airlines such as Fits Cargo, Delta Cargo, Singapore Airlines (OTC:SINGY), and United Airlines to its platform. The company expects Q2 transaction growth between 27% and 29%, with a projected Q2 revenue between $5.5 million and $5.6 million. Despite a negative adjusted EBITDA, Freightos maintains a positive outlook, anticipating positive cash flow while continuing to invest in future growth.

InvestingPro Insights

As Freightos (NASDAQ: CRGO) forges ahead with its acquisition of Shipsta, the financial metrics of the company provide a glimpse into its market position and future prospects. With a market capitalization of $78.7 million, Freightos is navigating the competitive landscape of digital freight services. The company's gross profit margin stands at an impressive 59.3% for the last twelve months as of Q1 2024, underscoring its ability to maintain profitability on its core services. However, the pursuit of growth and expansion is not without its financial challenges, as indicated by the company's operating income margin of -125.03% for the same period, reflecting significant investment and costs associated with scaling operations.

InvestingPro Tips for Freightos highlight both strengths and areas of concern. On the positive side, analysts have noted that Freightos holds more cash than debt on its balance sheet, providing a cushion for strategic moves like the Shipsta acquisition. Additionally, two analysts have revised their earnings upwards for the upcoming period, signaling confidence in the company's financial trajectory. On the other hand, analysts do not anticipate the company will be profitable this year, and the valuation implies a poor free cash flow yield, suggesting that investors may need to be patient for returns.

These insights, along with additional InvestingPro Tips available on the platform, can help investors form a more complete picture of Freightos' financial health and strategic direction. As of now, there are 11 more InvestingPro Tips listed for Freightos, which can be accessed for a deeper analysis of the company's potential and risks. For those interested, the full list of tips is available at https://www.investing.com/pro/CRGO.

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