Global-E Online Q4 2024 Earnings Report

Welcome to the Global E Fourth Quarter and Full Year twenty twenty four Earnings Announcement Conference Call. This call is being simultaneously webcast on the company's website in the Investor Relations section under News and Events. For opening remarks and introductions, I will now turn the call over to Erica Menon at Sapphire Investor Relations. Please go ahead.

Thank you, Erica, and welcome everyone to our fourth quarter and full year twenty twenty four earnings call. 2024 was yet another record breaking year for us here at Globally as we continue to diligently execute on our strategy and further solidify Globally's leadership position in the global e commerce space. 2024 was brought to a great close by a fourth quarter, which was our strongest quarter ever and came in well above our guidance on all metrics. We finished Q4 with a record $1,710,000,000 in GMV, up 44% year on year. And with record revenues of $263,000,000 up 42% year on year, supported by the strong performance of our merchants over the holiday sales period including the Black Friday and Cyber Monday weekend.

The adjusted gross profit margin for Q4 was nearly 46%, up almost three thirty basis points from the same quarter of last year. Gross margin expansion, coupled with our continued focus on operational excellence and execution enabled us to reach a key milestone in our journey in Q4. For the first time ever, our quarterly adjusted EBITDA margin crossed the 20% mark, which was the long term profitability target we set for ourselves at the IPO less than four years ago, landing at 21.7% or $57,100,000 reflecting more than 62% growth compared to the same quarter last year. Such increased profitability coupled with the usual seasonality effect yielded accelerated cash generation with the business generating nearly $130,000,000 in operational cash flows in Q4. Not only that, but in Q4, we reached GAAP profitability for the first time since the IPO, another incredible milestone for us.

We expect 2025 as a full year to exhibit for the first time in our history as a public company a strong GAAP profitability as well on top of the continuation of our multi year strong free cash flow generation. As we report to you today the results for 2024, we are quickly approaching our fourth anniversary as a public company. As such, it is an opportunity to pause and reflect on our growth journey over the last few years and what an incredible journey it has been. GMV for the full year of 2024 came in at close to $4,860,000,000 and revenues for the full year came in at almost $753,000,000 This is more than six times the GMV and 5.5 times the revenue we had in 2020, the last full year prior to our IPO just four years ago. Our annual adjusted gross profit reached nearly $350,000,000 in 2024, more than eight times what we had in 2020 as our top line growth was coupled with a robust expansion of our adjusted gross profit margin from just 32% at IPO to 46.5% in 2024, an increase of 14.5 percentage points or more than 45% during this four year period.

Moreover, adjusted EBITDA for 2024 was roughly $141,000,000 growing even faster at almost 11 times compared to 2020 and representing a staggering compounded annual growth rate of over 80%, driven primarily by our operational leverage and commitment to cost control coupled with our track record of delivering fast and durable growth. Accordingly, net operating cash flows grew to nearly $170,000,000 for the year, yielding a cash and cash equivalents balance of nearly $500,000,000 at the end of twenty twenty four. As such, we believe that our consistent growth trajectory together with our strong cash generation ability will provide the necessary fuel to support our growth plans in the future as well, both organic and inorganic. Looking back at the last four years, I feel enormous pride in what our global team of remarkably dedicated globally professionals, now more than 1,000 people strong around the globe, has managed to accomplish, achieving and surpassing the key financial and strategic goals we have set for ourselves. We managed to beat our start of the year annual GMV guidance in every single year since going public, despite occasional intra year macro headwinds and challenges we had to push through.

Also setting a new record in GMV bookings each year with 2024 being no exception to that. But such growth did not come at the expense of profitability. As As I already noted, our relentless focus on efficiencies and cost control enabled us to beat the aspirational long term profitability target we set for ourselves at the time of the IPO. We crossed the 40% adjusted gross profit margin mark already several quarters ago, and now we crossed the 20% adjusted EBITDA margin milestone as well. Beyond the massive growth in all our financial metrics, over the past four years, we also managed to achieve the ambitious strategic goals we set out to conquer when we IPO ed.

On the platform side, we continue to expand the suite of capabilities and solutions we offer to our merchants, added multiple capabilities across all areas of global e commerce and sharpened our data capabilities and insights, all aimed at further growing our merchant business. In parallel, we significantly expanded our total addressable market or TAM in recent years by extending our global geographical footprint from just nine outbound markets operated in 2020 to the 39 outbound markets we currently support as well as by broadening our platform scope to enable more multi local offerings to serve the needs of large global merchants as well as consumer electronic brands. We also launched our SMB and demand generation offerings based on the flow and border free acquisitions respectively. From a merchant perspective, post IPO, we have made strategic investments in cultivating several new verticals, including sports clubs and consumer electronics, investments which have been paying off as we continue to onboard more and more such brands. As an example, the latest consumer electronics brand that recently went live on globally is Logitech, one of the world's largest and most innovative providers of computer peripherals, input devices, gaming accessories, audio and video gear and smart home devices.

We are grateful for the opportunity to support the amazing team at Logitech and their ever growing focus on direct to consumer sales worldwide. More broadly, as we prepare to enter our fifth year as a public company, we are in high gear with our engines firing on all cylinders as our global team pushes forward along all our strategic pillars. On the new GMV front, looking back at Q4 twenty twenty four, we saw many new brands joining the platform and going live across all geographies. In The U. S, the successful shaporer brand Spanx went live as did Thursday Boots, the upcoming jewelry brand KAZAR and the web store of famous luxury fashion designer Tom Ford.

Europe saw many new brands go live as well, including Spanish brand, Tust, Italian fashion brand, Slower, UK footwear brand, Phoebe Filho, German brand, Ivy Oak, Swiss running gear brand, Compressport, famous Austrian lingerie brand Triumph, French brands, Zappa and Mollie and the successful Finnish pet brand, Huta. So now all European dogs can enjoy their unique pet gear and clothing. The APAC region saw its fair share of go lives as well. In Japan, we went live with Komei, one of Japan's largest retailers of secondhand goods with Kyoto based watch brand Koo, with novelty brand Taito and with the Japanese tailored shirt brand, Kamakura shirt. We also went live with the renowned Korean cosmetics brand, Deepology and with the Australian fashion brands, Zoe Craftsman and Second Left to name a few.

Besides adding new merchants, we also continue to expand the scope of our business with existing merchants and merchant groups. During Q4, we added Romania and Croatia to the list of markets we operate for Adidas, went live with a new outlet site for our long standing merchant, John Smedley and added Sterasan, the third brand to go live with us out of the Swiss Poli Fashion Group. As we strive to fulfill our mission of powering better global e commerce, we continue to invest in adding new services and new functionality to support the diverse needs and aspirations of merchants of all sizes and across all geographies. During Q4, our product and engineering teams concentrated on deploying several key new capabilities. Those included, among other things, a new revamped returns portal and returns process improvement, including new consolidated return options in Key Lane, support for B2B imports for relevant merchants known as Re B2C, an enhanced Live View as part of our merchant portal and several enhancements for our borderfree.com demand generation platform.

As we remain the leader of global e commerce as a service, we believe we are uniquely positioned to continue harnessing our unparalleled and fast growing data estimate, our accumulated know how and our unique expertise building and perfecting more and more services and capabilities for the benefit of new and existing merchants. Our robust product development pipeline as well as our continued investment in R and D are aimed at achieving just that. That is true also with regards to Shopify managed market, where we continue to work hand in hand with our partners at Shopify and invest in adding new features and functionalities to the Managed Markets offering aimed at making it applicable to a wider range of merchants on the Shopify platform. Another key area we continue to invest in is technological innovation with emphasis on harnessing the power of artificial intelligence to improve both customer and merchant experience as well as drive productivity and efficiency within our internal operation. One such innovation, which we have already discussed in the past is our successful customer services chatbot, Utilizing a specially trained version of the ChatGPT large language model, the chatbot is already handling a large percentage of customer ticket, almost half of which are solved by the bot in real time to the full satisfaction of the customer.

And we are constantly broadening the scope of issues the bot can handle. For example, now when customers approach customer services wanting to return a product, instead of being redirected to a returns portal, they can finish the entire process right there vis a vis the bot and get a return label, all the relevant implementation and clear instructions on how to proceed. Another example of a proprietary tool we are starting to experiment with is automatic AI assisted localization of merchant site text and visual content aimed at transforming the way merchants manage multilingual content on their site. Once operational, through this service, we plan to offer merchants instant high quality translation tailored to the specific context of their brand with minimal efforts, while maintaining the merchants' control over the final result through a resource management system, enabling edits and updates by human translators when needed. We are also continuing to develop and deploy internal automated systems aimed at increasing operational efficiency.

A recent example is an automated system developed by our innovations team designed to streamline the handling of payment dispute and potentially lower unforced chargebacks. Other examples include AI powered tools that could enable internal users and software developers to interact more easily with our data, our knowledge bases and our code base using natural language, as well as AI based tools like Copilot and others that are designed to accelerate coding as well as testing and quality assurance. In summary, we are extremely pleased with our achievements and results for the past few years since the IPO, as well as with the results of 2024 in particular. We are even more excited about the many growth opportunities that lie ahead of us in 2025 and beyond across all our strategic pillars. From a financial perspective, besides the continuation of our solid growth trajectory, 2025, our fifth year as a public company, is set to bring with it two significant milestones.

First, as mentioned already, 2025 is expected to be globally's first GAAP profitable year as a public company. We exhibited positive and improving adjusted EBITDA and free cash flow figures every single year since we went public. But this year, we also expect to be GAAP profitable for the full year and hit our 20% adjusted EBITDA long term IPO target for the full year, which are both very significant milestones for us. The second important milestone for us is that in the back half of 2025, we are expected to cross for the first time ever an annual run rate of $1,000,000,000 in revenue and likely finish 2025 just shy of the $1,000,000,000 mark for the full year. The journey from $0 to $1,000,000,000 in revenues over the past twelve years has been an amazing one and we're only getting started.

And with that, I will hand it over to Ofer to dive deeper into our quarterly and annual financial results as well as our outlook for Q1 and for the full year 2025.

Thank Your first question is from Andrew Baut from Wells Fargo. Your line is now open.

Andrew, thanks. So I'll start just in terms of the growth rates for the first quarter. So in general, for the first quarter and for 2025, in general, we are happy with what we are looking at and we believe the GMV is going to continue to grow fast over 30% as is reflected in our guidance. There is, I would say, somewhat slower growth expected in revenues. And the main reason for that is the what we expect would be the effect of the tariffs that are being imposed by The U.

S. And by some of its trading partners, as we believe it will drive more merchants to adopt either 3B2C or even multi local strategy as a means to manage the risks of these growing tariffs and that will inherently lower the take rates on that and that's what we baked into our guidance going forward.

And just to add that in terms of the deceleration from Q4 to Q1, in the second half of twenty twenty three, as you know, we've onboarded many merchants including some large ones. And those large ones have performed very well in Q4 and they are actually skewed more than others towards Q4. So that will have an impact on our following quarters. In addition to that, we saw very strong consumer demand in the last few months of 2024 and we assume a certain normalization going into 2025.

Thank you. Your next question is from James Faucette from Morgan Stanley. Your line is now open.

Hi, James, it's Nir. So basically just to start with overall, most of the GMV out of the border free platform either already migrated or churned. So we see less impact going forward than what we've seen on 2024 numbers. But those merchants that were mentioned that did not migrate to Globally, actually the vast majority had other priorities and to invest in an integration with Globally. The typical merchant is much more traditional merchants from department stores and in traditional retail in The U.

S. They have their own priorities due to the current situation and many of them decided not to unfortunately of those that did not move decided not to invest in integration currently. With some of them, however, we are still in discussions. So I do assume that there is an opportunity that over time once the urgent priorities are done, we will see some of it actually coming back as a new merchant into the globally platform. However, on those that actually migrated to globally, we are very happy with the results.

We have seen a great traction. We've seen their sales going up. We've seen much better conversion out of their current traffic. So all in all, what we wanted to achieve with them, we did see it becoming a reality. So we're quite optimistic on the growth trajectory with them.

And as I said, going forward, the factoring on our NDR, NRR is going to be much lower.

Thank you. Your next question is from Patrick Walravens from JMP. Your line is now open.

So the business that actually went bankrupt was actually resolved, so there is a new partner managing it. We are, as we do with other prospects now, work in order to be connected, but it's a completely different tech stack. It's a completely different owner. It's like selling to a new client again. It's part of our pipeline.

And hopefully, we would be able to have to be able to work with them.

Thank you. Your next question is from Rob Wildhack of Autonomous Research. Your line is now open.

Hi, it's Neil. So I think you're correctly on your assumption. Yes, we did hit our budget. It is skewed towards slightly lower size of merchants versus what we budgeted for. However, it did give so far a solution for thousands of merchants that adopted it and are trading and happy on the platform.

We do believe and we work with Shopify in order to build, I would say, additional tools as I mentioned earlier and capabilities to make it more simple and streamlined with other Shopify processes and activities. And we believe it will also give a greater set of capabilities that will allow to go further upstream in terms of also the size of the clients. It will mature over time in the coming quarters, but we have high expectations over the coming years for managed market.

Thank you. That concludes our question and answer session. I will now hand the call back to Amir for the closing remarks.

Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect your lines.