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.
Cheers
Ant