Freightos, a Jerusalem-based smart freight booking and payment platform that started trading on Nasdaq this year, is laying off 50 employees, or 13 percent of its workforce, as it contends with a slump in global shipping markets and “persistent global headwinds.”
The job cuts are part of a cost-saving and operational efficiency plan announced Tuesday to allow the company to reach profitability with available “cash on hand” and without having to raise more capital, Freightos said. As a result of the layoffs, the majority of which are not in Israel, Freightos’s workforce will be reduced to 350 people in Israel and globally.
Founded in 2012, Freightos has a global booking and payment web platform that operates like booking.com or Expedia, but for international air and ocean freight. The platform allows businesses to get instant comparisons, booking, and management of services from multiple logistics providers, thus bringing technology to an industry in which much of the work had been done manually and which had very little price transparency.
The cost efficiency plan comes six months after the smart freight firm went public on Nasdaq through a merger with a special purpose acquisition company (SPAC) at a valuation of $500 million. Freightos raised over $80 million in capital through the public offering, including $10 million from Qatar Airways, the world’s largest air cargo carrier, and $60 million from M&G Investments and the Prudential Assurance Co. Since the IPO, the company’s stock has plunged about 63% and is currently trading at a market value of $185 million.
In recent months the global economic slowdown led to a downturn in freight markets affected by dampened consumer demand, as shipping rates and freight volumes fall and manufacturers struggle with excess inventory levels.
“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 Freightos 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,” Schreiber noted.
The efficiency measures are expected to improve adjusted earnings before interest, taxes, depreciation, appreciation, and amortization (EBITDA) by about $1.4 million per quarter starting in the fourth quarter of 2023, the company said. On an annual basis, the operational efficiency plan is forecast to cut expenses and improve adjusted EBITDA by about $5.6 million.
“We believe that this plan will enable us to reach positive free cash flow on existing cash reserves as planned, despite a tougher market,” said Freightos CFO Ran Shalev. “As a result of the changes, we are reducing our operating loss and raising our FY 2023 Adjusted EBITDA outlook on lower forecasted revenue, remaining on track to build and scale Freightos as a profitable, sustainable company.”
“We expect more modest growth in the small or midsize importer/exporter segment, where growth is more dependent on capital intensive activity,” Shalev added.
The company’s technology digitizes freight operations for over 10,000 logistics providers and global supply chain companies, including hundreds of airlines, ocean liners and trucking carriers, such as American Airlines, Air Canada Cargo, China Southern Airlines, Emirates SkyCargo, and LATAM Cargo.
According to the company’s revised outlook, it now targets 2023 revenue of $20 million to $21.2 million versus prior guidance given in May for revenue of $21.2 million to $23.1 million. For this year, Freightos expects 973,000 to 1.04 million booking transactions, down from 1.01 million to 1.12 million transactions previously. Loss before interest, taxes, depreciation and amortization is expected to be between $21.5 million and $19.8 million versus previous expectations of $24.4 million to $21.5 million.
In 2022, the firm recorded 700,000 booking transactions, representing an increase of 54% from the previous year, and posted an adjusted loss of $14.7 million.