Freightos is cutting costs by laying off 13 percent of its staff, or roughly 50 workers, leaving the freight booking and payment platform with about 350 employees.
The company expects this move to improve its adjusted EBITDA by approximately $1.4 million per quarter beginning in the 2023 fourth quarter, while allowing it to become profitabie with existing cash on hand.
In a statement, Zvi Schreiber, CEO of Freightos, said that increasing digitization within the supply chain has resulted in growth in total transactions and revenue via the platform. But profit often comes first in business—especially in uncertain economic conditions.
Related Stories
“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,” said Schreiber. “Despite the tough decision to part with teammates, I am confident that these changes will position Freightos for sustainable success in the years ahead, through cyclical downturns and upturns, as we continue to digitize global freight procurement for thousands of carriers, freight forwarders and importers/exporters globally.”
The layoffs came as the Israeli company downgraded its full-year outlook for revenue, total transactions and gross booking volume (GBV) for the second time this year. Revenue projections are now between $20 million to $21.2 million, down from the range of $21.2 million to $23.1 million in May. And while transactions were once forecast to be between 1.01 million to 1.12 million, expectations have since dropped to a range of 973,000 to 1.04 million.
As part of the cost savings, the company lifted its adjusted EBITDA for 2023, and cut its operating loss projections.
“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 Ran Shalev, chief financial officer of Freightos, in a statement. “This plan allows for continued rapid and capital-efficient growth of our Platform business for carriers, freight forwarders and enterprise importers/exporters, as well as continued growth of our profitable Solutions business.”
Shalev said Freightos expects “more modest” growth in its small-to-midsize importer/exporter segment, where progress depends on capital-intensive activity.
Freightos is managing through a “freight recession” marked by falling ocean freight and air freight rates—both of which the company tracks using different indices—while consumer demand for goods dries up.
The company, which operates as a digital marketplace for air- and ocean-freight booking and shipping management services, has seen its stock fall 64 percent since it went public just five months ago.
In the company’s first quarter, revenue increased 9.9 percent year-over-year to $4.8 million and total transactions increased 100 percent to 229,000. But net losses reached $49.3 million.
Freightos’ 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.
Carriers selling on the platform, primarily on air booking service WebCargo, reached 37 in the quarter, up 19 percent year over year. To date, carriers available on the platform represent approximately 57 percent of global cargo capacity.
The layoffs come after another digital freight platform and marketplace, Convoy, laid off employees for the fourth time in 13 months. The job cuts impacted its customer experience operations team.
Convoy did not disclose how many employees lost their jobs and did not provide an updated headcount.
Convoy previously cut jobs in February and closed its Atlanta office, which it opened in 2019. Last year, cuts were made in June and October.
The mass layoffs come on the heels of a $260 million funding round in April 2022 which valued the business at $3.8 billion.
Freightos and Convoy are not alone in trimming staff. Logistics giants like Amazon and FedEx, a former logistics player in Shopify, and trucking, freight forwarding and technology firms like Flexport, C.H. Robinson, DHL Supply Chain, U.S. Xpress and GXO Logistics have cut jobs in recent months.
