News / Freightos freezes hiring plan as it absorbs SPAC costs

Photo: Freightos

High SPAC costs, and public scrutiny in a “cynical” market has clouded Freightos’ Q1 results, resulting in a hiring freeze, even as the company tried to focus on its record growth.

Revenues rose nearly 10% year-on-year, to $4.8m, but the company, which has only announced its results publicly in the last two quarters since listing, made a loss of $49.28m, compared with a loss of $4.2m a year earlier. However, noted Freightos, the SPAC and listing cost some $46.7m, while another $3.7m went on transaction-related costs, essentially accounting for the entire loss.

Nevertheless, the poor numbers have resulted in a freeze on hiring, and the company has “already taken actions to reduce full-year spending”, said chief executive Zvi Schreiber, which would lead to slower growth.

“We have a good-sized team. We have about 400 people,” he told analysts.

“There were a few areas which we plan to double down on higher this year. We’ve decided not to, out of, you know, sort of a fiscal caution to make sure that our cash reserves last.”

But, he added that “the impact will be marginal”. Freightos had hoped to put in a “few more software engineers, so of course, there will be some impact, but we believe it will not be a major impact. We’ll still do all the things we want to do. Some of them will take a little longer.”

Freightos’ free cash flow is some $60m, it said.

Dr Schreiber preferred to focus on growth – although he was careful to point out that Freightos’ preferred measure of growth, the booking value of transactions, GBV (Gross Booking Value) is dependent on freight rates. The number of transactions increased 100%.

The company also noted the launch of Freightos Terminal, which combines air and sea pricing and transit times on an individual lane level, and Freightos.com Enterprise, a cost-effective solution for shippers, trialled with Electrolux.

Freightos is certainly in a growth market, but its share price has not reflected that. Dr Schreiber noted his disappointment following the listing – although as he pointed out, it was impressive to get it done at all in a tough market for SPACs.

“The negative side, I don’t need to tell you, we’ve found ourselves in the public markets, which are cynical. And [it’s] still going to take us time.

“I mean, you’ve seen our share performance. It’s not what we hoped. Again, we’re focused on the long term, so it doesn’t affect us in the short term, but we hoped for better.

“So we need to keep telling the story and keep people understanding there’s fast growth there, there’s … massive addressable markets, and we’ve got real momentum. So even in this cynical market we need to find, and we are to some extent, we need to find more investors who care about the long term and care about huge opportunities, which are going to take a few years and I believe we’re going to keep performing consistently and keep telling the story.”

Source: Google Finance