Global-e (GLBE) Reports 2022 Q1 results

Investment Analysis Clubs Saul’s Investing Discussions
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https://investors.global-e.com/news-releases/news-release-de…

PETAH-TIKVA, Israel, May 16, 2022 (GLOBE NEWSWIRE) – Global-e Online Ltd. (Nasdaq: GLBE) the global leader of Direct-To-Consumer cross border eCommerce enablement, today reported financial results for the first quarter of 2022.

“The strength of our business model, as well as the huge market potential ahead of us, are reflected in the strong Q1 results we are reporting today,” said Amir Schlachet, Founder and CEO of Global-e. “The business is performing well across all the key metrics, with many exciting new merchant launches including global mega-brand Adidas, who selected Global-e to support its strategic direct-to-consumer growth plan. Despite the short-term macro and geo-political headwinds, we are excited with the opportunities ahead and believe we are well poised to continue our fast growth well into the future.”

Q1 2022 Financial Results

GMV1 in the first quarter of 2022 was $455 million, an increase of 71% year over year
Revenue in the first quarter of 2022 was $76.3 million, an increase of 65% year over year, of which service fees revenue was $31.9 million and fulfillment services revenue was $44.4 million
Non-GAAP gross profit2 in the first quarter of 2022 was $29.9 million, an increase of 94% year over year. GAAP gross profit in the first quarter of 2022 was $27.2 million
Non-GAAP gross margin2 in the first quarter of 2022 was 39.1%, an increase of 580 basis points from 33.3% in the first quarter of 2021. GAAP gross margin in the first quarter of 2022 was 35.6%
Adjusted EBITDA3 in the first quarter of 2022 was $3.3 million compared to $5.2 million in the first quarter of 2021
Net loss in the first quarter of 2022 was $53.6 million

Recent Business Highlights

  • Launched our partnership with Adidas, one of the world’s largest and most iconic consumer brands, to support their multi-year Direct-To-Consumer strategic initiative, based on our multi-local offering
    16 markets live and trading with additional markets planned to be rolled out gradually over the coming quarters

  • Continued launching with many more exciting brands across all geographies and verticals we operate in, with notable examples being:

  • Several iconic US brands including Brooks Brothers, Ralph Lauren, r.e.m. beauty by Ariana Grande and Rare Beauty by Selena Gomez

  • Prominent UK brands including SpaceNK and Dover Street Market

  • Leading French fashion brand Sezane; first ever Belgian brand – Buissonniere
    APAC expansion continues with high-street brand Esprit, selling out of Hong Kong

  • Expanded relationships with multiple existing merchants who opened new markets during the quarter, including Celine, FIGS, Full Beauty Brands (+20 additional markets) and La Redoute (added several key European markets)

  • Continued to strengthen our strategic relationship with the luxury group LVMH, with three new maisons signing up to our services, all of whom are expected to go live during 2022

  • Continued accelerated growth of our US-outbound business

  • Continuing the strong penetration into the US market, US outbound revenue was up 111% in the first quarter of 2022

  • Strategic partnership with Shopify remains on track:
    The new native integration emerged out of pilot phase in April; now in general availability for all Shopify Advanced and Shopify Plus merchants

  • The development of the white-label Merchant of Record, or MOR, solution for Shopify (based on technologies we acquired as part of the Flow Commerce acquisition) remains on track
    Flow Commerce post-merger integration process progressing well - former Flow teams already fully integrated into the corresponding Global-e ones, many of the planned synergies and scale efficiency efforts already in motion

  • During the quarter we continued to invest in further strengthening our growing ecosystem of strategic partners. We rolled out our partnership with Australian Post to extend our support for Australian based merchants. In addition, we expanded our partnership with Klarna to Canada. Klarna is now supported on Global-e in 15 markets

Q2 2022 and Full Year Outlook

Global-e is introducing second quarter guidance and is updating top-line full year guidance. The guidance reflects the recent trends, given the impact of the Ukraine-Russia war and macro environment headwinds on consumption, mainly in Europe. However, we re-iterate our previously established Adjusted EBITDA targets, given the resilience and the agility of our business model.


 	               Q2 2022	 	FY 2022	 	Previous FY 2022 (in millions)
GMV 	            $495 - $505	 	$2,280 - $2,400	 	$2,445 - $2,495
Revenue	            $82.5 - $84.5	$383 - $403	 	$411 - $421
Adjusted EBITDA (2) $2.8 - $3.8	 	$38 - $42	 	$38 - $42

Additional data and thoughts from me

Quarterly revenue


       Q1   Q2   Q3   Q4
2020   19   29   33   53
2021   46   57   59   83
2022   76

2022 Q1 guidance 75 and actual is 76, so only a 1% beat. The Q2 guidance of 83 vs previous year of 57 is only a 46% YoY growth!

My Thoughts

Bad quarter.

  • QoQ revenue decrease from Q4 was expected. Guidance cut was not. Also net loss increased by a lot. I haven’t looked into why yet (my guess is acquisition.)
  • It is a bad quarter. The headline really is “revenue guidance revised down” despite all the business highlights in the article.
  • Guidance cut from 416 to 393 vs 245 in 2021 means their inorganic growth is guided at 60%. Because of the Flow acquisition which accounts for 5% of revenue, the organic growth would be 373 vs 245 or 52% YoY guidance.

I have posted before this data from their 6-K - their breakdown of revenue by merchant outbound region in 2021


               Revenue         Pct
UK                    80           59%
US                    34           25%
EU                    21           16%
Israel                 1            1%
Other                 --            --

and it seems that the impact on UK/EU (75% of revenue) from recent trend is what led to them revising guidance down.

I don’t think the story of their business has changed much, but I do think that, right now, there are better bets for my money with companies that are increasing profitability and high growth. I’ve posted before that I view them as a payment company and closer to fintech: https://discussion.fool.com/read-through-the-earnings-call-trans…

Because I don’t want story stocks in my portfolio, I cut most of my position down to about 0.5% after market but will keep GLBE on the radar.

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Bad quarter.

  • QoQ revenue decrease from Q4 was expected. Guidance cut was not. Also net loss increased by a lot. I haven’t looked into why yet (my guess is acquisition.)
  • It is a bad quarter. The headline really is “revenue guidance revised down” despite all the business highlights in the article.
  • Guidance cut from 416 to 393 vs 245 in 2021 means their inorganic growth is guided at 60%. Because of the Flow acquisition which accounts for 5% of revenue, the organic growth would be 373 vs 245 or 52% YoY guidance.

I went the complete opposite direction and gained 38% already.

Because it wasn’t a bad Q, and they are still growing over 50% y/y organically, despite Fed, Inflation, Supply Chain, and a war in Ukraine that impacted the European segment of their business.

Their GM % continues to grow, Net Retention continues to stay high, and their native integration with Shopify (a major go-forward growth driver) just entered general availability in April.

Their Q2 guidance is lower because it is seasonal, as they mentioned on CC, and due to fact they expect the 2H of year to be heavier due to onboarding of clients from Shopify’s largest cohort.

So they have:

  1. Organic growth
  2. Shopify integration growth
  3. Flow Commerce (their acquisition) growth that will kick in over course of rest of this year.

The Flow acquisition was cause for the increase in expenses…again, as clearly mentioned on their CC.

Some excerpts from CC:

"adjusted gross profit grew 94% year on year, outpacing our strong top line growth.

For the full year of 2022, we anticipate GMV to be in the range of 2.28 to $2.40 billion, representing a 61% annual growth at the midpoint of the range. Revenue is expected to be in the range of $383 million to $403 million, representing a growth rate of 60% at the midpoint of the range. For adjusted EBITDA, as Amir mentioned, we are reiterating our previous guidance of 38 to $42 million. In conclusion, we believe that while there are macro headwinds, our execution remains strong on all fronts as we continue to talk on the massive opportunity ahead of us.

We ended the quarter with $278 million in cash and cash equivalents, including short-term deposits and marketable securities. Net operating cash flow used in Q1 was $6.9 million, compared to net operating cash flow used of $20.6 million in the same quarter a year ago.

In Q1, U.S. outbound revenue was up 111% year over year, driven by strong growth on the Global-e platform, coupled with the high share of U.S. outbound on the Flow platform. Our non-GAAP gross profit continues to outpace top line growth.

Our guidance for Q2 growth is lower than our full year expectations due to typical seasonality tilted toward the second half of the year as well as the fact that the majority of the large merchant launches that are planned to take place are at or after the middle of the year. We have taken these factors into consideration also in our updated full year top line guidance for 2022, which, at the midpoint, reflects fast growth of 61% in GMV and 60% in revenues, a slight reduction from the previous guidance.

Adjusted EBITDA for the quarter came in at $3.3 million, well above the top of the outlook range, which was $1.7 million. However, it was slightly down from the $5.2 million in the same quarter of last year, mainly due to the impact of the flow acquisition as well as the incremental costs associated with being a public company. Demand for our services continues to rise."

I sold some of the GLBE to pocket the big 1-day gains, and if they retrace, I would look to buy in again, as their long-term future is bright, and mgmt seems very solid and focused on execution.

Dreamer

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I went the complete opposite direction and gained 38% already.

I guess this means you bought low after hours yesterday. I’m happy for you, but…

Because it wasn’t a bad Q, and they are still growing over 50% y/y organically, despite Fed, Inflation, Supply Chain, and a war in Ukraine that impacted the European segment of their business…

…but that doesn’t mean the quarter wasn’t bad. These factors are affecting a lot of businesses, and a lot of them aren’t missing their own guidance and/or revising it down. In fact, many are revising it up.

I think what’s happening today, for whatever reason, is that the most beaten down stocks, like Global-E, are bouncing off the lows, while less beaten down stocks are being sold a bit, or at least not bouncing. That’s just what I see and I could be wrong.

Personally, I decided to add to Datadog, who just raised their FY revenue guide from 1530m to 1620m, and I’m not even tempted by Global-E, who just lowered theirs from 421m to 403m.

Of course you can say a million reasons why Global-E is still doing well, and you may be right, but how do you trust a company that can’t even hit their own numbers?

Bear

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Personally, I decided to add to Datadog, who just raised their FY revenue guide from 1530m to 1620m, and I’m not even tempted by Global-E, who just lowered theirs from 421m to 403m.

Of course you can say a million reasons why Global-E is still doing well, and you may be right, but how do you trust a company that can’t even hit their own numbers?

Bear

Ukraine war headwinds is only cause for change in guidance.
They are still growing 60%+ y/y, which I am pretty sure is considered “high-growth” still.

Datadog is performing better, no question, as a company.

You also once said I was off by orders of magnitude that ZM might peak due to high mkt cap of $40b.

By the time Datadog hits ZM levels of revenue, will they still be growing perfectly linear fashion? Maybe. Maybe they are the exception in Enterprise software and they become the next MSFT.

Otherwise they are still a $30b mkt cap on forward revenues of $1.7b or so.
ServiceNow (NOW) is a truly entrenched mission-critical enterprise software company, about 10 years ahead of DDOG in revenues, and they are at $83b mkt cap.

Your goal is to capture the S-curve and not necessarily where the puck ends up, I get it.
AMPL was a bad idea. So was MNDY. So were a lot of discarded broken hyper-growth toys.

My goal is buying at a price that easily projects to a profitable exit.
I felt pretty good about GLBE at $14 with a forward P/S of 5.6 as a 60%+ growing company, despite headwinds.

Not sure where I feel that same level of comfort with DDOG, but my price target to buy is in the upper $60’s (or call it $70), which may never hit. That gets them “down” to just $22b mkt cap. ZM at $26b currently as a reference point.

You have to hope to ride them, in my scenario, from $22b to $33b for a nice 50% gain, and hopefully before the market eventually reprices them like NOW or CRM or ZM, when growth inevitably goes from incredible to merely good.

I agree DDOG is a great company. Probably the best out there by metrics at present. I just don’t have to like the price. Saul may have rules of the board weighed towards SaaS now, but if I read his 2014 posts, it seems valuation did matter then. Pretty sure it still does now.

Dreamer

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Dreamer, I don’t have any problem with you holding GLBE, I believe that each one holds for good reason, but I want to point out that using P/S on GLBE is deceiving because they have lower margin from their fulfillment side vs the fee side. Their margin is 39% which has already improved from 33% a year ago. This is one metric I will constantly monitor as I invest in them.

I think GLBE will be great long term because they solve a problem that I don’t see will ever go away. And they don’t have real competition. But so are Datadog and Cloudflare. Both of which I use daily and are better hold for me this moment in the sense of being “keepers for my fantasy teams” than having better metrics.

When I go in and out of a company, I try to remind myself what Phil Fisher said: “more money has been lost in the market because investors hold onto stocks they don’t want so they can break even than any other reason.” I am taking my loss here. In the case of GLBE execution, I really want to see them execute in APAC, and I’m happy to put them back on my fantasy team when that happens.

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I see a lot of potential with GLBE.

And I used to own a good chunk… back when the price per share was high.

But there is a red flag nobody has mentioned…

Go to SEC.gov and look at their financial statements.

Do you know what you see?

Nothing.

No financial statements since their prospectus from September 2021. So what are there? Just filings with the SEC of their press releases.

If I’ve missed them, I’d love to have it pointed out. But I don’t think I’ve missed them.

For me, that’s an ISSUE.

Rob
Rule Breaker Home Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.

”If you are in the right companies, the potential rise can be so enormous that everything else is secondary. Every $1,000 I and my clients put into Motorola in 1957 is now worth $1,993,846 — after all the ups and downs of the stock and of the market…
If I’d sold Motorola because I thought it was overpriced 10 or 15 years ago, chances are I would not have known when to get back in, and I would have missed a tremendous profit. If one of my stocks gets overpriced, I warn my clients that things may be unpleasant for a little while but it will rise to a new peak later.” Phillip Fisher

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No financial statements since their prospectus from September 2021. So what are there?

They publish the quarterly financial statements in the Investor Relations/Financials section of their website.

https://investors.global-e.com/financials-filings/quarterly-…

Lee

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They publish the quarterly financial statements in the Investor Relations/Financials section of their website. – Lee

That’s NOT a financial statement.

It’s just their press release. Did you actually look at it?

Rob
Rule Breaker Home Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.

”If you are in the right companies, the potential rise can be so enormous that everything else is secondary. Every $1,000 I and my clients put into Motorola in 1957 is now worth $1,993,846 — after all the ups and downs of the stock and of the market…
If I’d sold Motorola because I thought it was overpriced 10 or 15 years ago, chances are I would not have known when to get back in, and I would have missed a tremendous profit. If one of my stocks gets overpriced, I warn my clients that things may be unpleasant for a little while but it will rise to a new peak later.” Phillip Fisher

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Rob

Global-E is a foreign company. Instead of listing ADR shares, GLBE is registered as a Foreign Private Issuer - like Shopify.

And the two companies file financial information to the SEC in the same manner.

The SEC information page on Foreign Private Issuers and what companies qualify as such:

https://www.sec.gov/divisions/corpfin/internatl/foreign-priv…

Here is an overview of the reporting requirements for Foreign Private Issuers:

https://www.lw.com/thoughtLeadership/non-us-financial-statem…

As to quarterly reporting, that is not required.

Quarterly Reporting Not Required; Current Reporting on Form 8-K Not Required
Unlike domestic US issuers, foreign private issuers are not required to file quarterly reports (including quarterly financial information) on Form 10-Q. They are also not required to use Form 8-K for current reports, and instead furnish (not file) current reports on Form 6-K with the SEC.1Some foreign private issuers, however, choose (or are required by contract) to file the same forms with the SEC that domestic US issuers use. In that case, they must comply with the requirements of the forms for domestic issuers (and would file quarterly reports on Form 10-Q and current reports on Form 8-K, in addition to annual reports on Form 10-K).11

However, Global-E does report quarterly results and file them with the SEC, like Shopify does, on a Form 6-K. An Edgar search for GLBE provided me this:

https://www.sec.gov/edgar/search/?r=el#/q=quarterly&cate…

The press release that detailed the quarterly results of the company was filed on Form 6-K and incorporated into the original S-1 form. So, is it a traditional quarterly report? No, it’s not. Does it contain the same information? Pretty much does.

Although quarterly reporting is optional, Foreign Private Issuers are required to report audited financial information annually on Form 20-F:

GLBE’s annual report, Form 20-F, was filed in March:

https://www.sec.gov/ix?doc=/Archives/edgar/data/0001835963/0…

Don’t know if the separate reporting requirements are an issue for me personally as long as the companies are reporting quarterly.

T.

And FWIW, ADRs have separate reporting and filing requirements depending on the type of ADR. An outline of those requirements can be found here:

https://www.investopedia.com/ask/answers/041015/what-are-dif…

T.

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From their IR site, this was pretty easy to find: what they filed with SEC, including the 6k on 5/16/22 (yesterday)

https://investors.global-e.com/financials-filings/sec-filing…

Dreamer

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However, Global-E does report quarterly results and file them with the SEC, like Shopify does, on a Form 6-K. An Edgar search for GLBE provided me this

https://www.sec.gov/edgar/search/?r=el#/q=quarterly&cate…

Normally, I’d say “Golly, T! Thanks!”

But now I’ll say “Golly, T! Thanks… but this is all really weird!”

You see, I pulled up the Form 6-K using a different search technique (still at sec.gov) and I get this 6-K that references a press release instead of the document you’ve found:

https://www.sec.gov/Archives/edgar/data/0001835963/000117891…

And ALL the 6-Ks are like on that on the above page! >>>

https://www.sec.gov/edgar/browse/?CIK=1835963&owner=excl…

Well, thanks for helping! I’m at a loss with what’s going on though. The approach I take works fine with every other company I’ve ever researched (including foreign). Just… duh… and I’ll look over the numbers I was looking for (which aren’t in the press release).

Befuddled…

Rob
Rule Breaker Home Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.

”If you are in the right companies, the potential rise can be so enormous that everything else is secondary. Every $1,000 I and my clients put into Motorola in 1957 is now worth $1,993,846 — after all the ups and downs of the stock and of the market…
If I’d sold Motorola because I thought it was overpriced 10 or 15 years ago, chances are I would not have known when to get back in, and I would have missed a tremendous profit. If one of my stocks gets overpriced, I warn my clients that things may be unpleasant for a little while but it will rise to a new peak later.” Phillip Fisher

2 Likes
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Earlier: They publish the quarterly financial statements in the Investor Relations/Financials section of their website. – Lee

That’s NOT a financial statement.

It’s just their press release. Did you actually look at it? – Rob

So, I got a follow-up from Lee and here’s my response:

First response: I DID look, Lee. I wouldn’t have responded as I did if it showed what you said.

Checking again: I’ve completely lost it. I DIDN’T see the financials because I DIDN’T scroll to the bottom!

Oh wow! I’m sorry Lee. Carelessness on my part… my downfall…

I apologize!

And I apologize to the board:

  1. For my carelessness in my initial post!

  2. For suggesting Lee hadn’t looked at what he referenced.

I will now head off and try to not cause more “issues”.

Rob
Rule Breaker Home Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.

”If you are in the right companies, the potential rise can be so enormous that everything else is secondary. Every $1,000 I and my clients put into Motorola in 1957 is now worth $1,993,846 — after all the ups and downs of the stock and of the market…
If I’d sold Motorola because I thought it was overpriced 10 or 15 years ago, chances are I would not have known when to get back in, and I would have missed a tremendous profit. If one of my stocks gets overpriced, I warn my clients that things may be unpleasant for a little while but it will rise to a new peak later.” Phillip Fisher

13 Likes