Freightos Limited Ordinary shares (CRGO)

Executive Summary / Key Takeaways

• Network Effects at Scale: Freightos has reached an inflection point where its digital marketplace is generating self-reinforcing growth—27% transaction volume growth in Q3 2025 demonstrates that more carriers attract more forwarders, while more forwarders attract more carriers, creating a deepening moat that traditional 3PLs cannot replicate.

• The Solutions Flywheel: The higher-margin Solutions segment (30% growth) functions as the engine that drives Platform adoption, with cohort data showing 3-4x transaction volume growth over two years. This embedded SaaS model reduces customer acquisition costs and creates sticky revenue that supports the path to EBITDA breakeven by Q4 2026.

• Strategic Mix Shift Sacrifice: Management is deliberately accepting slower Platform revenue growth (15% vs 27% transaction growth) as WebCargo's fixed-fee model scales faster than Freightos.com's higher-take-rate business, trading near-term monetization for market share dominance in the $600+ billion international freight market.

• Execution on Ocean Freight: With ocean representing 3x the Gross Booking Value of air freight, successful integration with major carriers positions Freightos for a potential revenue inflection in 2028, but investors must tolerate a multi-year wait before meaningful contribution materializes.

• Scale Disadvantage vs. Incumbents: Despite superior growth (24% vs peers' 0-11%), Freightos' $24 million revenue run rate remains a fraction of C.H. Robinson's $20 billion enterprise value, creating vulnerability to competitive pressure and limiting near-term pricing power.

Setting the Scene: The Digital Freight Imperative

Freightos Limited, founded in 2011 and headquartered in Barcelona, Spain, has spent fourteen years building what may become the definitive digital infrastructure for international freight. The company operates at the intersection of two powerful secular trends: the forced digitalization of a historically pen-and-paper industry, and the network effects that emerge when buyers and sellers congregate on a single platform. Unlike traditional third-party logistics providers (3PLs) that bundle execution with technology, Freightos offers a vendor-neutral marketplace where freight forwarders, importers, exporters, and carriers connect directly for air, ocean, and increasingly ground transportation.

The international freight industry represents a $600+ billion market characterized by fragmentation, opacity, and manual processes. Traditional players like C.H. Robinson and Expeditors (EXPD) have built moats around relationships and operational scale, but their technology stacks remain rooted in legacy EDI systems and human-driven brokerage. This creates an opening for a pure-play digital native. Freightos' two-pronged strategy addresses the market's core friction: the Platform segment (WebCargo and Freightos.com) solves the discovery and booking problem, while the Solutions segment (rate management, quoting SaaS, and data subscriptions) embeds deeply into customer workflows, making the platform indispensable.

The current macro environment—tariffs, trade tensions, and supply chain volatility—has paradoxically strengthened Freightos' value proposition. As CEO Zvi Schreiber notes, "Such conditions make speed, transparency and automation in logistics more important. When customers need to move faster and make decisions with less friction, they turn to digital platforms." This dynamic drives Platform transaction growth even as it creates headwinds for Solutions sales cycles, as nervous freight forwarders hesitate to write large checks for enterprise software during uncertain times.

Technology, Products, and Strategic Differentiation

Freightos' competitive advantage rests on three pillars: network effects, proprietary technology, and data assets. The network effects are quantifiable and accelerating. In Q3 2025, unique buyer users reached 20,600 while carriers with more than five bookings hit 77% of the network. Cohort analysis reveals that mature freight forwarder cohorts exceed 500% of their initial transaction volumes within two years, demonstrating that customers don't just stay—they dramatically increase engagement. This creates a classic flywheel: each new carrier (75 total, including recent additions like China Airlines (CALFF) and WestJet Cargo) instantly gains access to 20,000+ buyers, while each new buyer benefits from expanded capacity and real-time pricing visibility.

The technology stack reflects a deliberate unification strategy. The August 2024 Shipsta acquisition brought procurement and tender management capabilities, extending Freightos' data footprint to include freight contract rates. The Q4 2024 "Fusion" initiative merges all software onto a modern, scalable architecture, enabling the new generation of ocean SaaS that began serving customers in early 2025. This isn't merely technical housekeeping—it eliminates silos between air and ocean, allowing forwarders to manage multimodal shipments through a single interface. The November 2025 launch of WebCargo Rate & Quote Ocean, commercially validated by Nippon Express (NEXPF) expanding to multimodal deployment, demonstrates this integration in action.

AI-powered tools like Skyway, the dynamic pricing engine for airlines, show how data assets create differentiation. Early tests showed 70% revenue increases for participating carriers by optimizing price discovery in real-time. Similarly, the Visa (V) and Transcard partnership announced in Q3 2025 embeds modern financing directly into the platform, addressing a critical pain point for small and mid-sized forwarders while creating a new revenue stream that could improve take rates over time.

The moat deepens through comprehensiveness. While competitors like Descartes offer point solutions for tracking or compliance, Freightos provides end-to-end booking, rating, and payment. While CHRW and EXPD operate closed networks biased toward their own carrier relationships, Freightos maintains vendor neutrality. This matters because it reduces switching costs for participants—forwarders can maintain relationships with multiple carriers without being locked into a single 3PL's ecosystem.

Financial Performance & Segment Dynamics: Evidence of a Working Model

Q3 2025 results provide clear evidence that Freightos' strategy is working, albeit with necessary trade-offs. Consolidated revenue grew 24% year-over-year to $7.7 million, marking the 23rd consecutive quarter of record transactions at 429,000. The Platform segment generated $2.6 million (15% growth), while Solutions delivered $5.1 million (30% growth). The divergence between these growth rates tells a crucial story.

Platform revenue growth lags transaction volume (27%) by design. WebCargo, which connects forwarders to carriers, operates on a fixed-fee model that generates lower implied take rates but scales faster. Freightos.com, serving importers/exporters directly, carries higher take rates but grows more slowly. As management explicitly states, "The WebCargo platform... consistently grows at a faster rate than Freightos.com... As WebCargo continues to outpace Freightos.com, the aggregate platform revenue naturally grows more slowly than transaction volume." This is a strategic choice: sacrifice near-term monetization for network density and long-term pricing power.

Solutions revenue, representing the majority of revenue today, carries higher margins and functions as the platform's growth engine. The segment's 30% growth in Q3, while below management's initial expectations due to tariff-related sales cycle elongation, still outpaces Platform growth. More importantly, Solutions creates stickiness. Data shows forwarders using Freightos tools grow transaction volumes 3-4x over two years. The Shipsta integration has already delivered cross-selling wins with a top-five global chemicals company, a leading industrial manufacturer, and major freight forwarders. Nippon Express's multimodal expansion, increasing its annual commitment by multiples, validates the land-and-expand strategy.

Gross margins expanded meaningfully, from 65% in Q3 2024 to 69.1% on an IFRS basis and 74.8% on a non-IFRS basis. This reflects automation benefits in customer service and inherent operating leverage as revenue scales over a fixed cost base. The path to Q4 2026 EBITDA breakeven relies on three levers: continued Solutions growth, Platform revenue acceleration as Freightos.com scales, and disciplined cost management. Management has already reduced total costs by almost 5% in Q3 and 3% year-to-date on a constant currency basis, though FX headwinds (stronger Euro) have offset some savings.

Cash management shows marked improvement. The company ended Q3 with $30.6 million in cash and short-term deposits, projecting $27 million at year-end. This implies a 2025 cash burn of approximately $10 million, down from $15 million in 2024. At this pace, Freightos has roughly 2.5 years of runway without additional capital, providing a credible timeline to reach breakeven.

Outlook, Management Guidance, and Execution Risk

Management's guidance for Q4 2026 EBITDA breakeven anchors the investment thesis. CFO Pablo Pinillos explicitly commits: "We're going to manage expenses as needed to breakeven in Q4 2026 even if the Solutions revenue doesn't accelerate." This creates a clear success metric and demonstrates capital discipline. The path assumes continued revenue growth, margin expansion from automation, and flat to modestly growing operating expenses.

The ocean freight opportunity represents the largest long-term upside but also the greatest execution risk. Ocean GBV is approximately 3x air cargo, and Freightos has achieved a major milestone with one of the world's largest container carriers completing a fully integrated contract and spot booking connection. However, management cautions that meaningful revenue contribution won't arrive until 2028. For 2026, "we probably won't assume revenue for ocean bookings at all," and 2027 will see only "really, really, really probably a small" contribution. This timeline requires investor patience and introduces risk that competitive dynamics could shift before Freightos captures value.

The tariff environment creates a bifurcated impact. Platform segment benefits as customers seek speed and transparency during volatility. Solutions segment suffers as enterprise buyers delay purchasing decisions. Management notes that while "things have somewhat stabilized, people are still more nervous than they used to be to write big checks." The hiring of Michael Netter as Chief Revenue Officer in November 2025 directly addresses this challenge, bringing experience in scaling digital logistics sales.

Take rate expectations provide another signal. Management states "for sure, the take rate will not decline year-on-year, and we are expecting that to grow." This suggests that as Freightos.com scales and financing solutions from the Visa partnership ramp, the company can offset WebCargo's fixed-fee dilution. The partnership itself could be transformative, embedding payment and credit solutions that increase airline monetization where "the monetization is still modest."

Risks and Asymmetries: What Could Break the Thesis

Three material risks threaten the investment case. First, scale disadvantage versus incumbents. C.H. Robinson's $20 billion enterprise value and 80,000-carrier network dwarf Freightos' $129 million enterprise value and 75 carriers. While Freightos grows faster, its smaller network creates thinner liquidity during off-peak periods and limits pricing power. In a price war, CHRW and EXPD can subsidize losses with profits from other segments, while Freightos lacks that cushion. This vulnerability is most acute in the U.S. market, where management acknowledges "we're growing nicely, but it's still smaller penetration" compared to Europe's near-complete airline coverage.

Second, tariff and macro uncertainty elongating Solutions sales cycles. While Platform benefits from volatility, Solutions revenue growth slowed to 30% in Q3 from 36% in Q2. If trade tensions persist or escalate, enterprise SaaS deals could face even longer cycles, delaying margin expansion. Management's commitment to breakeven by Q4 2026 "even if Solutions revenue doesn't accelerate" provides some mitigation, but would require more aggressive cost cuts that could impair long-term growth.

Third, ocean freight execution and timing risk. The 2028 revenue contribution timeline assumes successful integration with multiple carriers and forwarder adoption. If technical challenges emerge, if carriers resist full automation, or if competitors like Descartes or Expeditors launch competing solutions, Freightos could miss this window. The company is "among the first platforms to receive rates from several major global ocean carriers," but being first doesn't guarantee winning.

Asymmetry exists on the upside. If digital adoption accelerates beyond expectations, if the Visa partnership generates financing revenue sooner than anticipated, or if ocean carriers push for faster automation to reduce costs, Freightos could exceed its 2026 breakeven target and see multiple expansion. The network effects create non-linear value creation—each incremental carrier and forwarder disproportionately increases platform value, potentially leading to inflection points that linear models miss.

Valuation Context

Trading at $3.06 per share, Freightos carries a market capitalization of $158 million and enterprise value of $129 million, implying an EV/Revenue multiple of approximately 5.4x based on trailing twelve-month revenue of $23.8 million. This positions the company at a discount to pure-play logistics software provider Descartes Systems (DSGX) at 11.0x EV/Revenue, but at a premium to integrated 3PL C.H. Robinson (CHRW) at 1.2x and Hub Group (HUBG) at 0.8x.

The multiple reflects Freightos' growth premium—24% revenue growth in Q3 compares favorably to CHRW's 4.5% forecast, EXPD's 0.2%, HUBG's flat outlook, and DSGX's 11%. However, it also prices in the company's unprofitability: -56.5% operating margin and -82.3% profit margin compare starkly to DSGX's 30.5% operating margin and CHRW's 5.6%. The balance sheet provides some cushion with $30.6 million in cash, minimal debt (0.04 debt-to-equity), and a 2.02 current ratio, but the quarterly burn of $3-4 million requires disciplined execution.

Unit economics show improvement. Gross margins expanded to 74.8% (non-IFRS), approaching DSGX's 76.8%, suggesting the business model can support software-like economics at scale. The path to profitability hinges on maintaining Solutions growth while Platform revenue accelerates in 2026 as Freightos.com scales and the Visa partnership contributes. If management delivers on Q4 2026 breakeven, the current valuation could appear attractive relative to the addressable market, but investors are paying for execution certainty that doesn't yet exist.

Conclusion

Freightos stands at an inflection point where fourteen years of platform building are beginning to generate self-reinforcing network effects. The deliberate strategy to sacrifice near-term Platform monetization for market share dominance, powered by a higher-margin Solutions engine that embeds deeply in customer workflows, creates a credible path to EBITDA breakeven by Q4 2026. The macro environment of tariffs and trade uncertainty, while creating Solutions sales headwinds, simultaneously accelerates Platform adoption as customers demand speed and transparency.

The investment thesis hinges on two variables: execution of the ocean freight opportunity and maintenance of Solutions growth momentum despite macro headwinds. Success in ocean freight could unlock 3x the current addressable market by GBV, while the Solutions flywheel's 3-4x cohort volume growth demonstrates that once customers adopt, they rarely leave. However, the scale disadvantage versus incumbents and the 2028 timeline for ocean revenue contribution require patience and tolerance for execution risk.

For investors willing to underwrite management's ability to navigate these challenges, Freightos offers exposure to the digital transformation of global freight at a valuation that doesn't yet reflect the potential network effect moat. The improving cash burn, expanding gross margins, and clear breakeven target provide tangible milestones to monitor. The story will be decided not by whether digitalization happens, but by whether Freightos can scale fast enough to own it before incumbents adapt.