Global-e: This one is a lot smaller position

Here’s a company that I’ve taken a smaller position in. Rubenslash introduced it to the board back in May of 2021 but I didn’t really get around paying attention until the past month, with help and encouragement from JabbokRiver.

Global-e handles all the complications of cross-border sales for mostly large well-known retail companies. That means taxes, customs, deliveries, refunds, returns, the whole works (in twenty-eight or so languages). As you might guess, that is quite a moat. It is growing quite rapidly.

In 2021, it had $245 million in revenue, up 80% yoy.
In 2022, it had $409 million in revenue, up 67% yoy.

The last two quarters of 2022 it grew at 79% and 69% yoy. This actually accelerated from 77% and 54% gains in the same quarters in 2021.

This is a company that may be able to keep expanding for quite a number of years, but it’s an e-commerce company, very tied to economic conditions, so I probably won’t buy more than a 6.0% position.

It has positive EBITDA every quarter, so note that the huge losses they announce in their press releases (ie: “Net loss for the full year was $195.4 million…”), are imaginary GAAP, and due to the rise in the stock price (believe it or not!), which causes repricing upwards of the outstanding warrants that Shopify holds, causing the obligation to go up, so GAAP profits sink because the stock price went up. It’s completely imaginary. And this from a system (GAAP) which is supposed to make things clearer for stockholders.



I probably should explain that better. Here goes:

When I was originally looking into Global-e’s 2022 fiscal year report, I was wondering how in the world could they have an Adj EBITDA for the year of positive $49 million, and in the same breath tell us that their net loss for the year was $195 million (which would be almost 50% of revenue and also almost as much as their $200 million plus in cash and equivalents)?

In thinking about it I decided that it must be some kind of GAAP nonsense with imaginary losses. I figured that some of you might have had the same questions so this post is to explain what is going on, and NOT to start a thread about GAAP.

It’s important that you realize just how insane some GAAP rules are. Let’s consider company ABC, which makes engines, and has some outstanding warrants. What would happen if some terrible news came out during the next quarter? For example, if their big new engine turned out to have a bunch of defects, or a new competing product showed up which was taking lots of their customers. Their revenue would drop like a rock, and their stock price would crash (for good reason!).

However, GAAP rules for repricing the warrants would mean that because the stock price plummeted due to awful business news, the company would show huge (imaginary) INCREASES in GAAP earnings for the quarter!!! No, I’m not kidding. This is the way it works. And this is from a system that is supposed to be giving the public a clearer idea about what is really happening at a company!

(For those who wonder what their rational is, it’s: stock price down, means potential obligation from warrants is reduced, and thus increased GAAP “profit”)

And if great business news pushed the stock price up, the stock price being up means more obligation from the warrants (which are now worth more), so GAAP earnings go down. Again, this is from a system that prides itself that it is giving the public a clearer idea about what is really happening at a company! And they do this up-and-down seesaw every quarter depending on the stock price.

Sure enough, Shopify is a big customer/partner of Global-e, and also has a 5% position in Global, and thirdly has a bunch of warrants, which if exercised would bring them up to a 10% position. These warrants are apparently way up in value from when granted, due to the stock price being up. Hence the imaginary losses.

This undoubtedly accounts for most of the imaginary losses. There may also be some acquired non-cash goodwill from one or both of their acquisitions, and/or some non-cash SBC.

Be aware though that Global-e doesn’t have to buy the warrants back at a high price. It can just give Shopify the shares that the warrants represent at the current price. It doesn’t matter to Global whether Shopify got the shares some years ago or got the shares now.

Here’s the explanatory quote from the 2021 fiscal year report:

“Net loss for the full year was ($74.9) million, compared to a net profit of $3.9 million in the year-ago period. Net profit excluding the Shopify warrants related amortization expense of $84.3 million was $9.4 million”

However, nowadays they just say “Net loss for the full year was …” I’m not sure why, but there may also be some acquired goodwill and some SBC, and they don’t want to have to give a complicated explanation.

Keep in mind that I’m not an accountant, and have zero accounting training. and I may clearly be off on some of the above details, but I’m NOT off on thinking that most of the imaginary Gaap loss is due to repricing of the warrants every quarter depending on the stock price.



Hi Saul - welcome aboard Global e Online! Having held Global e for several years now and posted on them here along the way, it is re-assuring to have more company on the journey with this one; (see recent write up I shared on the Q4 results a month or so back).

Whilst I completely concur with the investment case here, (the superior growth trends in the International eCommerce space, the value in addressing the International eCommerce problem statements and Global e Online’s position), to me there is one key factor to watch out for and that is the importance of the Shopify integration and partnership which will have an outsized impact on the fortune of Global e Online.

The recent revenue acceleration has been in part due to 2 acquisitions that have added a combined ~15% to the top line in the past year, but also due to the partnership with Shopify and the shift from pilot mode to implementation with the Shopify Pro integration.

The reason I flag this, leaving aside partner/channel concentration risk (which given Shopify’s scale and its accommodative holding in Global e Online I don’t see as a major red flag), is the concern over the terms that Shopify and Global e Online might have struck for the integration.

If you look at a similar partner integration that Affirm had with Shopify (and Amazon) as an analog, (which Shopify also has an investment stake in), effectively whilst the integration might have juiced GMV growth for Affirm, it had a much lesser impact on revenues and margins and my one concern is that Shopify may have potentially negotiated such steep terms of agreement that revenue and profitability of business through the Shopify integration becomes diluted.

Probably Global e has a stronger negotiation position and moat than Affirm did with Shopify - who could have pulled off BNPL itself or chosen any number of providers, but even so it will be worth watching.

We should start to see this impact in current financial year. I hold a ~2% allocation in Global e Online and my base case expectation is that the Shopify partnership and Pro integration is going to be a major positive.



For those interested, here is the referenced post from May 2021.

I also looked into this around the same time and posted a review of the company and their Q1 2021 quarter. These two post should serve as a good introduction for anyone new to Global-e.

At the time, I passed on GLBE due to the valuation. I thought $7B was a lot to ask for a company of that size. Today, it is a much larger company and valued at only $4.5B. A much more reasonable valuation.

This had fallen off my radar but appears to be worth a second look. Thanks for bringing this back to the board, Jabbok & Saul.



Additional thread from the archive here…


Shopify just announced Q1 results and there was a lot to digest. In line with Amazon and MercadoLibre - consumer eCommerce still seems an area of strength in this economy.

In any case - apart from the massive amounts of news on the Shopify announcement front, there was considerable reference to Global-e related interest in the earnings call…

Harley Finkelstein
"Moving on to going global. One way we are driving greater penetration internationally is by making it easy for a merchant to sell globally as they do locally. During the quarter, approximately 15% of total GMV were cross-border as our primary products that were rolled out last year, Markets and Markets Pro, continue to gain traction. Markets makes it simple to localize the buyer experience for each region a merchant sells to by enabling local currencies, which is a key determinant for consumers, offering local payment options and collecting duties and taxes at checkout to create total cost clarity. All of this can be customized in one place in the Shopify Admin with ease. When we layer on the functionality of the translate and adapt app for our merchants who use markets, our data showed meaningful improvements to conversion rates.

Shopify Markets Pro, a fully integrated merchant of record solution is built on top of Markets. Markets Pro is a great option for merchants looking to scale to new markets quickly without having to navigate international tax compliance or fraud while tapping into best-in-class international shipping options with duties prepaid. Our team has continued to make improvements to Markets Pro and is on track to fully roll out the product in the U.S. this summer and then to the U.K. later this year. We’ve seen considerable interest in Markets Pro and believe there’s a lot of opportunity for us with this product to further unlock our merchants’ ability to reach more consumers around the world."

" Brian Peterson

So I’m curious on the timing of the decision to sell the logistics business. Why now? And maybe how should we be thinking about any changes that you may have in kind of the build by partner decision about future growth initiatives?

Harley Finkelstein

Brian, Harley, I’ll take the question. Look, I think Shopify, unlike a lot of technology companies, we actually do partnerships really, really well. If you sort of go back, I don’t know, 8 or 9 years ago, so when we first decided to go into the payments business, we deeply partnered with Stripe and was able to go to market much faster with an incredible product. And that partnership obviously continues. We’ve done the same thing with companies like Affirm when we felt that they were doing buy now, pay later better than anyone else globally on the cross-border commerce side of things. So I mean, Shopify, going back to what you heard today and Tobi’s letter, but our main mission, our main quest versus side quest, we do something in the world better than anybody else, which is building commerce software."
Ant here… (I think the transcript meant to capture Global-e)

" Darren Aftahi

Your comments about 15% cross-border GMV, could you just kind of speak to kind of Markets and Markets Pro and kind of how fast that GMV cross-border metric has been growing, kind of where you see that going in the next 12 months?

Harley Finkelstein

I’ll take that call. Look, in both – Shopify Markets is getting a lot of traction. In Q1 alone, around 100,000 merchants use either Markets or Markets Pro feature to make a cross-border sale. We launched Markets Pro into early access in September. We see more and more merchants that are adopting it now. But if you think about the business models of our merchants, U.S. merchants on average are selling to 14 countries. And so going back to your comment made earlier about Shopify being the essential retail operating system for our merchants, if we want to be the center of their business, which we are, we need to enable them to sell across every single geography. And obviously, there are some geographies that they have not sold to yet. Making that easier is really, really important.

In the case of Markets Pro, what’s really interesting is that it really introduces this idea like a merchant of record solution. So you think – you have things like tax and duty compliance, but you also were able to provide, obviously, compliant with local laws, chargeback protection. And then if they want to go sort of one step further, of course, they can always go and leverage globally as well. But we saw – but in last year, we saw about $28 billion in cross-border sales. In Q1 of this year, we saw, as you mentioned, 15% of total GMV. And so we think the international – the ability to help our merchants sell internationally easier with greater speed and efficiency is going to be very important. But also, remember that it also allows us to bring on new merchants from new geographies. Obviously, the majority of our merchants are still in our core geographies. But every time we make it easier to sell across the entire globe with all those features that I just mentioned, more and more merchants join Shopify and that also is a huge benefit to both these products."
Ant here (again I think this is meant to say Global-e).


Hi Saul,

In the past you have always focused very much on the “numbers”. In your reasoning for buying GLBE you mention the increase in revenue YoY growth the last two quarters, and the positive EBITDA. It’s no doubt that these are good metrics.

However, GLBE seems to have as many metrics which are not trending in the right direction:

a) They are guiding for -18% QoQ revenue decline in Q1. (Consider, in Q4, 2022 they achieved QoQ revenue growth of 32,5%; and in Q1, 2022 -7.7% - a decline to QoQ growth to -18% seems to be big drop)

b) FY 23 revenue guidance is for 42.8% YoY growth, which is down from 66.8% in 2022 (contrast this with their initial guidance for 2022 which was for 71,6% growth)

c) Their initial guidance for 2022 was 421M, they achieved revenue of 409M in 2022 so they did not meet their initial guidance in 2022; even in Q3 of 2022 they were still guiding for 416M but they only achieved 409M at the end of the year.

d) Fulfillment services is still hovering around 55% of total revenue – it has not come down at all over the past 3 quarters.

e) They are guiding for -19.5% QoQ GMV decline in Q1.

f) In Q3, 2022 they guided for 848M GMV in Q4; they missed this coming in at 839M for Q4.

g) For FY 23 they are guiding for 38% YoY growth in GMV, which is down from 75.7% YoY growth in GMV in ’22.

h) Gross margin has been dropping since Q2, 2023: 41.8% → 41.5% → 41.3%

I’m wondering if you could explain a bit about how you view those above metrics? In your monthly recaps you usually give a detailed analysis of the numbers for each company in your portfolio - I have not seen such a detailed numbers analysis for GLBE (maybe I missed it). Considering that GLBE is such a large position in your portfolio it suggests that GLBE is a high conviction for you – it would be nice to see your usual detailed analysis of the numbers for GLBE so that I could understand what metrics are making you so convinced about GLBE?

Thank you.


Money Spin,
They are a e-commerce company. Of course the first quarter will be smaller than the previous fourth quarter which includes the Xmas holidays!

For example, in Q4 of 2020 they grew revenue 61% sequentially, and then in Q1 of 2021 they grew minus 14% sequentially%. In Q4 of 2021 they grew 40% sequentially and then in Q1 they grew minus 8% sequentially.

HOWEVER, in Q1 of 2021 when they fell back 14% sequentially, they were actually GROWING 134% over the same quarter the year before. In Q1 of 2022 when they fell back 8% sequentially, they were up 65% yoy.

And you are so cherry picking talking about GM falling from 41.8% to 41.5 to 41.3 in the 4th Q sequentially. That 41.3% was up from 39.5% a year ago and from 33.5% two years ago.

And you complained that they came in at $839 million for GMV instead of a guided $848 last quarter. You forgot to mention that that $839 was up 66% from just $505 the year before, and up 35% SEQUENTIALLY from $621 the quarter before.

And their GMV always declines (of course) from the Xmas quarter to the next quarter, just like revenue.

As far as annual guidance, have you seen any ordinary company that is not guiding to a lower rate of growth this year than last? Everyone is being super-conservative and super-cautious in their guidance.

Etc, etc, etc.