GLBE Q3 results

Buffjan2 · November 9, 2021, 4:09pm

Link to full press release: https://investors.global-e.com/news-releases/news-release-de…

Exhibit 99.1 Global-E Reports Record Third Quarter 2021 Results
Nov 09, 2021
PETAH-TIKVA, Israel, Nov. 09, 2021 (GLOBE NEWSWIRE) – Global-e Online Ltd. (Nasdaq: GLBE) the company that makes global e-commerce border agnostic, today reported financial results for the third quarter of 2021 as well as the outlook for the full year 2021.

“Our strong business momentum continued during the third quarter of 2021, once again breaking performance records, with quarterly revenues at an all-time high of $59.1 million, a 77% increase from the same quarter last year, and significant gross margin expansion”, said Amir Schlachet, Founder and CEO of Global-e. “With numerous client and partnership launches, a healthy and growing pipeline and strong execution across our strategic growth avenues, we are excited with the opportunities that lie ahead of us, as reflected also in our updated guidance for the full year 2021.”

Q3 2021 Financial Results

GMV1 in the third quarter of 2021 was $352 million, an increase of 86% year over year
Revenue in the third quarter of 2021 was $59.1 million, an increase of 77% year over year, of which service fees revenue was $23.0 million and fulfillment services revenue was $36.2 million
Gross margin in the third quarter of 2021 was 38.6%, an increase of 840 basis points from 30.2% in the third quarter of 2020
Adjusted EBITDA2 in the third quarter of 2021 improved to $7.7 million compared to $2.7 million in the third quarter of 2020
Net loss in the third quarter of 2021 was ($28.5) million, compared to a net profit of $1.2 million in the year-ago period. Net profit excluding the Shopify warrants related amortization expense of $29.4 million was $0.9 million
Q3 2021 Business Highlights

Outperformance across the business lines
Service fees revenue grew 89% year over year and its share constituted 39% of revenues; fulfillment fees grew 71% year over year
Continued accelerated growth of US-outbound
Continuing the strong penetration to the US market, US outbound revenues were up 91% year over year
Continued to launch new merchants across our main geographies, as well as continued ‘land and expand’ efforts. Select notable examples include:
Our relationship with the LVMH luxury group continued to expand during the third quarter of 2021, as we launched two more ‘maisons’ from the group – Givenchy and Sephora Asia, the latter contributing also to our growing Asia-Pacific based business
Merchants have continued expanding the scope of their existing partnership with us - for example, the consumer electronics brand Sennheiser added 15 additional markets; the luxury jewelry brand Boucheron (of the Kering group) added the US and Europe markets to the existing serviced countries; and the Spanish footwear brand Camper added 15 new additional markets

Established a strategic partnership with Australia Post that is expected to yield access to their vast Australian client portfolio, and provide further support for our penetration into Asia-Pacific markets
Continued to develop and enhance our multi-local support capabilities, launching Jabra, the global consumer electronics brand, as well as the UK-based football club Leeds United, representing the latest addition to our growing portfolio of sports club merchant partners

On track with the rollout of our exclusive strategic partnership with Shopify:

Continued signing up and going live with large Shopify-based merchants, such as Alo Yoga and Netflix, as well as with smaller emerging brands
Completed the first phase of our new native integration into Shopify, with the first pilot merchants already live and selling through the new plug-in. Netflix is one of the first enterprise merchants to be selling through the new native integration
Recently signed a long-term lease for our new headquarters and R&D center in Israel. We expect to move to our new home in the second quarter of next year, once the renovation is completed
Q3 and Full Year Outlook

Global-e is introducing fourth quarter guidance and raising previously issued guidance for the fiscal year as follows:

Q4 2021 Prior FY 21 Updated FY 2021
(in millions)
GMV (1) $465 - $475 $1,350 - $1,370 $1,410 - $1,420
Revenue $76.4 – $78.4 $227.0 – $231.0 $239.0 – $241.0
Adjusted EBITDA (2) $7.3 – $8.3 $22.0 - $24.0 $27.9 - $28.9

Lee

kakawa93 · November 9, 2021, 4:59pm

A disappointing quarter and guidance. I didn’t expect them to grow 100% this quarter, but 77% is really disappointing. Also, the guidance is weak. Assuming they will beat their own guidance by 5%, their revenue for next quarter is only 82M or 54% YoY

If that’s the case, their YoY growth rate in the most recent 8 quarters are gonna be: 54% - 77% (this Q) - 92% - 135% - 119% - 106% - 135% - 57%. A significant deceleration.

I’m sold out

chang88 · November 9, 2021, 5:18pm

kakawa93,

I would agree that guidance midpoint of 77% is weak.

However, I see this quarter’s result as actually better than expected - didn’t blow me away but

service revenue Q2 21.1M → Q3 23.0M
fulfillment revenue Q2 36.2M → Q3 36.2M

So fulfillment revenue is flat but service revenue went up, hence the margin expansion. Supply chain shocks in Q3 was a known after a few ERs from other companies.

Also according to the press release:

https://investors.global-e.com/news-releases/news-release-de…

Completed the first phase of our new native integration into Shopify, with the first pilot merchants already live and selling through the new plug-in. Netflix is one of the first enterprise merchants to be selling through the new native integration

I personally am very interested in seeing how Shopify integration plays out, which we knew was going to be a non-factor in Q3. So I am willing to hold onto my experimental position (3%) into Q4 based on this result.

anthonyms · November 9, 2021, 5:25pm

A disappointing quarter and guidance. I didn’t expect them to grow 100% this quarter, but 77% is really disappointing

The decline in growth might be disappointing but compared with every other ecommerce company out there that is not unsurprising. Everyone from Amazon to Shopify saw massive declines in their GMV and Revenue growth rates. eCommerce went flat to negative for the first time in history in July with re-opening.

Margins were up massively to over 38.6% and Service fees were ahead by 89%. US revenues were up 91%. GMV was up 86%, (more than double Shopify growth and higher than Mercadolibre).

They completed their first native integration pilot with Shopify - with NETFLIX no less.

On track with the rollout of our exclusive strategic partnership with Shopify:
Continued signing up and going live with large Shopify-based merchants, such as Alo Yoga and Netflix, as well as with smaller emerging brands:-
Completed the first phase of our new native integration into Shopify, with the first pilot merchants already live and selling through the new plug-in. Netflix is one of the first enterprise merchants to be selling through the new native integration

eCommerce is really struggling this quarter with a perfect storm of reopening and supply chain issues. I’m prepared to see this through to full Shopify roll out and passed these temporary issues.

Ant

LifeOfDreamer · November 16, 2021, 11:38am

GLBE is my current highest conviction, based on performance, but also price/value and mkt cap.
They had a messy lockup situation/confusion, which likely pressured the price in the weeks leading to the ER. They have been in the 50s-70s range since about May, and with lockup/ER being about same time, they dipped to $48 or so at one point. I really liked it in the 50s, so I loved it in the 40s.

It is rocketing back up past few days, hitting $60 at moment, with a ton of runway to go.
The numbers were already brought up earlier in this thread, so I wanted to add a couple things:

Shopify partnership: GLBE is looking at the top 1-2% of Shopify accounts that also make up the majority of GMV. Shopify has “Shopify Markets” which is akin to a basic/light global solution that all their merchants can use. Global-e, as was pointed out in Shopify’s recent ER, which be the full-service solution for global cross-border ecommerce needs.

Per AJ on another board, Shopify discloses number of merchants annually. As of the last report in February, the total at the end of 12/30/2020 was 1,749,000. So you are looking at 17,500 to 35,000 in total for the top 1-2%. If GLBE “only” gets 1.5% of the approx 1.5% of top Shopify clients, they could be adding something like 375-390 of the larger accounts using Shopify’s platform, starting in 2022. They are already in a rollout with Netflix via Shopify partnership (sounds like they were a pilot case). Either way, seems like a doable low-bar to hurdle, and shows the Shopify partnership at least gets them access to a ton of accounts.

Some color from the CC transcript:
https://www.fool.com/earnings/call-transcripts/2021/11/10/gl…

Samad Samana – Jefferies – Analyst

Good morning. Thanks for taking my questions. Maybe a follow up to James’ question around Shopify. The company rolled out Shopify Markets during the quarter, and we get a lot of questions about maybe what the difference is between what Shopify Markets is and what Global-e is offering? And we think we know the differences, but just could you help us maybe clarify how you think about Shopify Markets and how that impacts the relationship that Global-e has with Shopify?

Nir Debbi – Co-Founder and President

Yes. Thank you for the question, Samad. It’s Nir. Basically, as we see it and Shopify sees it as well, Shopify Markets is a complementary solution to what Global-e offers.

Shopify Markets comes to cater for the smaller SMB brands that I would say is the vast majority in terms of number of Shopify clients. However, the vast majority of the potential GMV in cross-border trading is concentrated at the top 1%, 2% of Shopify merchants. And those do need, I would say, a more comprehensive solution, including the MOR solution that Global-e provides, including the high-touch, I would say, guidance into best practices, including customer services around the world in multiple languages that are not part of the current or future Shopify Markets offering, so with much more differentiation on high-touch services that are catered more for the larger brands.

Brent Bracelin – Piper Sandler – Analyst

Thanks for taking the question here. One for Amir and a clarification for Ofer. Amir, it’s exciting to hear the Netflix Merch Shop and Alo Yoga go live on Shopify’s platform this quarter. I was hoping just to drill down a little bit and really looking for color on like the scope deployments.

Are you lighting up a handful of geos similar to the traditional merchants? Are you lighting them up globally? How long did the onboarding process take in that kind of high-touch approach? Just any additional color as you think about kind of onboarding now new merchants via kind of that Shopify integration will be interesting.

Amir Schlachet – Co-Founder and Chief Executive Officer

Yes. Brent, just to make sure you’re asking in terms of whether it’s regional or global in terms of the market that we support for these brands or in terms of our ability to deploy the solution for brands around the world on Shopify? I just want to make sure that I’m answering the right question.

Brent Bracelin – Piper Sandler – Analyst

Yes. Just love to know onboarding, like how much challenging it was to onboard merchant, number one. And then, number two, you’ve talked about Camper go into 15 new markets. You typically start with a retailer, a large retailer and a handful of markets and then spanned over time.

Is that the same deployment method for these? Or do they light up all 200 markets as they launch?

Amir Schlachet – Co-Founder and Chief Executive Officer

Got you. Thank you for clarifying. So first, in terms of deployment, both these merchants deployed globally with us. So it wasn’t a gradual or a subset launch.

It really – it’s on a case-by-case basis with the larger merchants, these two specific ones, regard – irrespective of the fact that they’re on Shopify just as merchants decided to launch the entire world at the first go. In terms of complexity in deployment, I would say they were fairly in line with our, call it, regular process. Netflix, as we mentioned on the call, went on the new integration. So as you can probably imagine, since this is the first deployment, there were some additional steps and checks, and it was slightly more complex from a project point of view.

But all in all, I would say there is nothing out of the ordinary in terms of these merchant deployment.

Some numbers to think about, looking down the road.
I think we get spoiled at some of the 70-100% growers, which typically aren’t able to sustain that level of growth. We used to look at 50% growth as amazing, especially if it was sustained. I think it is more fair to expect GLBE to be growing, over next 2 years, at a 40-60% range, with fluctuations depending on compares and seasonality. Because it is ecommerce, you should NOT get hyper-focused on sequential numbers, imo…instead I would focus on y/y for any given Q and overall annual growth rates compared to previous years.

2020 was $136m
q120 57.6% ($19.7m)
q220 134.6% ($29.7m)
q320 106.8% ($33.3m)
q420 118.8% ($53.3m)

2021 est $247m
q121 134.5% ($46.2m)
q221 92.3% ($57.3m)
q321 77.5% ($59.1m)
q421 60% ($85m) (my perhaps optimistic projections)

proj 2022 of 60% growth
would have to do something like:
Q122 $74m (seems doable. and investors need to note the Q4-to-Q1 seasonality)
Q222 $91m (may be toughest compare in 2022)
Q222 $94m (with Shopify integration ramping each Q, may be impacting just in time here)
Q422 $136m (see above comment, combined with the Q4 seasonality, and perhaps supply chain relief)

Looks fairly apparent that you have a covid impact.
Q120…covid barely begun.
Q2-Q4 2020, obviously covid pops. All ecommerce popped…this makes sense.
Q121 laps over a largely non-covid Q120.

And then we start to have the tough compares to covid pops starting in Q221.
I do think they will be 60% or more in q421.
I would like to see them maintain 60% in 2022 overall. Might be lumpy Q2 2022 due to compare.

My targets are:
By EOY 2021, finish between $60-70, depending on how macro market treats us.
By EOY 2022, finish between $80-100, or about 40% stock price appreciation. I am purposely targeting a stock price appreciation rate BELOW my expected projected rev growth rate for them of 50-60%, because we do likely see some multiple compression as the expected 2022 rate hikes kick in over time.
By EOY 2023 - no idea. Have to see how Shopify partnership, organic growth, and expected acquisitions play out. Mgmt has hinted to expect at least one acquisition by EOY 2021, and more after. These could be “tuck-in” for capabilities vs anything too ambitious, but they stated in Q2 CC that they will be growing organically, growing with Shopify, and growing with acquisitions. I do hope that I still own this one by EOY 2023, as that means it was a great run.

Dreamer

chang88 · November 16, 2021, 12:47pm

I decided to check out their Netflix integration after hearing it in the earnings call.

Netflix’s store is at https://netflix.shop/

Let’s say I want to buy a shirt from the merch shop for The Witcher

https://www.netflix.shop/products/first-encounter-geralt-by-…

When I choose Croatia in the country dropdown, I can see that the

price displayed changed from $30 to 257,00 kn

this means 257 Croatian Kuna, the comma 00 is the European way of writing 257.00
Converts to about $38 USD. $8 higher than buying for US and I’m guessing that’s where GLBE gets their service fee from.

Next to the checkout button you can see a paragraph “For customers outside the US, checkout is powered by Global-e. For more info, please visit the International FAQs”

When you follow that link to

https://www.netflix.shop/pages/faqs-outside-us

It has a lot of stuff that I haven’t thought of with regards to cross border e-commerce. For example, this one:

Q: Why can’t I purchase all the items available on Netflix.shop?
A: Not all items will be available globally due to various laws and rules regarding import of certain goods. Global-e will contact you if a particular article is restricted from shipping to your country.

So it is clear that the non-US customer service in the Netflix store is handled by GLBE, which makes sense. Netflix would need to have their own Croatian-speaking customer support center otherwise. GLBE has the economies of scale here.

You can also see the things Netflix store don’t currently provide to non-US customers like gift cards, pre-order etc - they are opportunities for GLBE.

I didn’t go through the checkout process but when you click on the cart, it takes you to a typical Shopify checkout page.

Overall it felt like a seamless integration. I liked what I saw.

Texmex · November 16, 2021, 2:52pm

This stock has been on my watchlist. The potential growth of cross-border eCommerce and D2C seems good. But there was not much commentary on the EC of the rapid slowdown in growth. From Q1 to Q4 of this year this is the revenue growth rate - 134%, 92%, 78%, 54%. I have projected Q4 based on a 7% revenue beat which is consistent with their Q3 beat. At this rate revenue growth rate may very well dip below 50% next year. The TAM is supposedly huge, they have no good competitors and they are small with just $216 M TTM rev. I get that Covid accelerated eCommerce last year but they should be putting up 100%+ yoy every Q kinda what Shopify was doing at this stage. Shopify association will surely help of course. The question is how much GMV can that add and how does the relationship impact the take rate/gross margin. Remember this was never a high GM business to begin with.

LifeOfDreamer · November 16, 2021, 3:39pm

Like I mentioned in previous post, I think the 100%+ growth was misleading due to covid.

Growth will come from:

continued expansion with existing clients. They state their largest clients tend to start with certain product or geos vs all-in everywhere. So good land and expand.
new client growth outside of Shopify (recent announcements tied to Australia and Japan, for example)
new client growth with Shopify. 2021 had none…this is a 2022 story.
M&A. In both their public ER/CCs, mgmt mentioned to expect at least 1 acquisition before xmas and that they expect to supplement growth and capabilities with M&A.

Here were the numbers. I see a long-term 40-60% grower, depending on how Shopify impact materializes.