Q4 2021 Global-E Online Ltd Earnings Call
Greetings and welcome to the globally fourth quarter and year end 2021 earnings call.
This call is being simultaneously webcast on the company's website in the investors section under news and events.
At this time all participants are in listen only mode. A question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
For opening remarks, and introductions I'd now like to turn the conference over to Erica Mannion.
At Sapphire Investor Relations.
Please go ahead.
Thank you and good afternoon with me today from globally on the Air Schlocky co founder and Chief Executive Officer.
Graham Chief Financial Officer and me.
Your Daddy co founder and President.
Amir will begin with a brief review of the business results for the fourth quarter and year ended December 31, 2020, 100, how will then review the financial results for the fourth quarter and year ended December 31, 2021, followed by the company's outlook for the first quarter and full year of 2022.
And then open the call for questions.
Certain statements we make today may constitute forward looking statements and information within the meaning of section 27 eight under the Securities Act of 1933 section 21 E of the Securities Exchange Act of 1934, and the Safe Harbor provisions of the U S. Private private Securities Litigation Reform that Act.
Of 1995 that relate to the current expectations and view views of future events.
Excuse me. These forward looking statements are subject to risks uncertainties and assumptions some of which are beyond our control. In addition, these forward looking statements reflect our current views with respect to future events and are not a guarantee of future performance.
Actual outcomes may differ materially from the information contained in the forward looking statements as a result of a number of factors, including those set forth in the section titled risk factors in our prospectus filed with the SEC on September 13, 2021, and other documents filed with or furnished to the SEC.
These statements reflect management's current expectations regarding future events and operating performance and speak only as of the date of this call.
You should not put undue reliance on any forward looking statements. Although we believe that the expectations reflected in the forward looking statements are reasonable we cannot guarantee that future results levels of activity performance and events and circumstances reflected in the forward looking statements will be achieved or will occur.
As required by applicable law, we undertake no obligation to update or revise publicly any forward looking statements whether as a result of new information future events or otherwise after the date on which these statements are made or to reflect the occurrence of unanticipated events.
Please refer to our press release dated February 16, 2022 for additional information.
Certain metrics, we will discuss today are non-GAAP metrics. The presentation of this financial information is not intended to be considered in isolation or as a substitute for or superior to financial information prepared and presented in accordance with GAAP. We use these non-GAAP financial measures for five.
On operating decision, making as a means to evaluate period to period comparisons.
We believe that these measures provide useful information about our operating results enhance the overall understanding of past financial performance and future prospects and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making.
For more information on the non-GAAP financial measures. Please see the reconciliation tables provided in our press release dated February 16 2022.
Throughout this call we provide a number of key performance indicators used by our management and often used by competitors in our industry.
These and other key performance indicators are discussed in more detail in our press release dated February 16 2022.
I will now turn the call over to Amir co founder and CEO .
Thank you Erica and welcome everyone.
Today marks our third quarter as a public company and our first Q4 reported one.
This is an exciting chance to reflect on what an unbelievable year.
We finished the year with the strongest quarter in the company's history.
<unk>, even got a consistent trend of delivering growth and strong execution against our ambitious targets.
During today's call, we will review, our Q4 and full 2021 results update you on the exciting developments going on in the business and provide guidance towards what we expect to see in 2022.
Starting with Q4 results I could not be prouder of the global <unk> team for producing yet another record quarter. Despite the tough year on year comp as we lapped last year's Covid impacted holiday period.
For the first time in our company's history, we surpassed $1 billion in quarterly GMB with $505 million generated in the quarter.
Together with our strong execution in the previous three quarters.
Annual GMB summed up to $1 $45 billion in 2021.
Delivering more than 87% growth versus 2020 GMB.
Revenues, followed a similar trend with $82 $7 million of revenues in Q4, and $245 3 million for the full year.
Delivering roughly 80% year on year growth in 2021.
Thanks to our growing economies of scale and our continued focus on operational excellence.
We managed to continue improving our gross profitability margin.
Which in Q4 reached 39, 5%.
As a result of the topline growth coupled with the scale average we more than doubled our gross profit in 2021.
Reaching 91 $4 million.
Third to $43 $5 million last year.
Delivering a 110% year on year gross profit expansion.
We continue to reinvest across our business as we rapidly scale up.
But as always we do it in a thoughtful and highly efficient manner maintain.
Maintaining our cash generating model with an adjusted EBITDA margin of 14, 3% for Q4 compared to 13, 5% in Q4 of last year and 13, 2% for the full year of 2021 up from nine 2% in 2020.
We continue to witness an immense and growing market opportunity ahead of us across all regions and market segments, we operate in.
Interesting our services remains as strong if not stronger than ever.
And we believe the effects of the Covid pandemic on merchants priorities and decision making processes is largely permanent.
As we mentioned in the past, we do expect the gradual normalization of e-commerce growth rate to continue over the coming quarters as the impact of the pandemic wears off and shoppers around the world increase the percentage of their spend in physical stores.
It is also worthwhile mentioning that given our scale and the strategic relationships, we have with a variety of logistics service providers Cup.
Coupled with the fact that merchants tend to prioritize direct to consumer over all of our channels today.
To date, we have not witnessed any meaningful impact from supply chain challenges, while merchant inventory shortages.
Over the last quarter, we continued launching with many more incredible brands and.
<unk> continued to expanding our relationships with prominent retail groups.
During the fourth quarter, we launched with yet more brands from the <unk> group. This time Fenty beauty incentive scheme, Rihanna cosmetics brands.
Easy Gap County, West much discussed fashion cooperation with gap also launched with US during Q4 as did the fast growing sports clothing brand navigation.
During the quarter, we also expanded our relationship with several of our merchants, serving more and more lanes for them.
Among these we can mentioned Cartier stookey soon until the French brand, the coupons and the Spanish couture brand camera.
All of which added additional key lanes to be operated by globally.
In addition, the German audio equipment brands Anheuser added the U S. One of its largest destination markets to be operated by globally, continuing our growth in the exciting new vertical of consumer electronics.
Besides our strong momentum in the markets, we already operate in namely North America, the UK and Continental Europe . We also continue pursuing our geographical expansion efforts.
We expanded our team on the ground in Tokyo established a partnership agreement with the Japanese Global digital transformation leader Trans Cosmos.
And now also have a first team member underground in Melbourne, Australia with the first repeatable all the merchants already signed.
On the strategic partnerships front, our joint efforts together with shopify to deliver the new native integration remain on track.
We recently met additional important milestones in the technical development roadmap.
Our gearing up towards general availability of the new integration once we complete the pilot phase.
All the while we continue to onboard new shopify based merchants or various sizes on the existing third party integration.
As a matter of fact, some of the new brand launches I mentioned earlier, such as Fenty beauty easy GAAP and navigation are all shopify based added a remarkable direct to consumer health care apparel and lifestyle brand fixed which is the latest Shelby five based enterprise merchant to launch with US just a couple of weeks ago.
I'm also happy to let the fans of the U K based Formula One racing team Mclaren note that you can now order your favorite merch, regardless of where you are in the world as Mcclaren recently implemented globally is offering under headless Shopify based online store.
Finally, I would like to give you the latest update on the strategic acquisition of <unk> Commerce, we signed in Q4.
We closed the transaction early in Q1 this year welcomed the team into the globally family and immediately went full steam ahead with integrating fluids team and capabilities into globally.
The motivation for the acquisition with our strategic wish to better support emerging brands as well as be able to provide our solutions through channels and white label for them.
As such and based on fluids technology.
Our recently established a new channels and emerging brands Division.
The division's first priority is to complete and launch the first channel partnership agreement, which is already signed with shell before.
And on which work is well underway by the former fluid second product organization augmented now by personnel and Knowhow from global <unk> teams.
In addition to pursuing various other white label channel opportunities. The New Division is now in the midst of formulating its new go to market strategy and product sizing additional aspects of our branded offering taking into account globally knowhow scale and expertise in order to ensure we deliver the best.
<unk> experienced for the worlds emerging brands.
We expect these strategic work to continue over the next couple of quarters as we gear up to launch this exciting new offering towards the end of the year.
In parallel to a strong push into the channels and emerging brand space on the back of our flu Commerce acquisition.
Looking ahead to 2022, we first and foremost plan to continue leveraging our clear market leading position to continue our accelerated growth across North America, the UK and Continental Europe , and all of which the market is still very much greenfield.
As in the past. This will include signing up new merchants, expanding our relationships with leading brand groups and operating additional lanes for existing merchants leveraging both our ultra efficient direct sales channels and our growing list of strategic partnerships with the likes of DHL Shopify, Florida.
Facebook and others.
In addition, we plan to continue investing into building, our offering and presence in the APAC region.
Both directly and through local strategic partners, such as the Australian Post group.
While we expect our existing markets to continue exhibiting SaaS growth well into the future give.
Given the large untapped potential in the region, we do expect APAC to start gaining a meaningful part of our activity mix in the coming years.
On the product side over the last quarters, we welcome many new members to our expanding global R&D team.
As we continue to reinvest into product innovation and the building of new capabilities as future growth levers.
Over the course of the coming year, we plan to continue adding more localization capabilities to the platform with emphasis on further developing the granularity of our multi local support features.
Furthermore, we expect some of the value added services, we are piloting with such as demand generation for example to move towards full scale deployment throughout the few next quarters, providing merchants of all sizes with yet another layer of differentiated services and support for the growth of their cross border business.
During 2022, we also plan to begin a few additional pilots of our new managed services offering towards a full launch next year.
2022 started well both in terms of activity and in terms of new business coming in and.
And we are optimistic regarding what this coming year Hasnt stopped for cross border D to C in general and for Us in particular.
As Ofer will describe in more details in just a few minutes time, we are guiding for strong <unk> revenue growth of 70% in 2022 at the midpoint of the range, representing our strong market leadership position and diverse and long runway that lies ahead of us.
With the conclusion of our first decade of operations already inside next year.
We believe we're literally just at the beginning of this exciting journey.
As we continue our relentless focus on flawless execution on operational excellence and above all on delivering exceptional consistent and long term value to all our loyal merchants the.
The future looks bright with tremendous opportunities for long term growth ahead of us.
And we very much plan to continue seizing them effectively and efficiently as we have done to date.
And with that I will hand, it over to offer our CFO to go over our financial results in more depth as well as provide more details regarding our outlook towards 2022.
Thank you Amir and thanks again, everybody for joining us today for our quarterly earnings call. We are very pleased that we ended 2021 with another strong quarter of fast growth as we continue to execute well on all fronts I'd like to point out again that in addition to our GAAP results.
I'll also be discussing certain non-GAAP results, our GAAP financial results along with the reconciliation between GAAP and non-GAAP results can be found in our earnings release.
As Emil mentioned, our rapid growth in <unk> continued in Q4, as we generated $505 million of <unk>, an increase of 66% year over year.
While growth of the overall e-commerce market is showing signs of normalization, we continued to benefit from the large and fast growing direct to consumer cross border e-commerce market opportunity in.
In Q4, we generated total revenues of $82 $7 million up 54% year over year service fee revenues were $35 5 million up 73% and fulfillment services revenue.
Up 43% to $47 2 million.
The higher growth in service revenues compared to the fulfillment services revenue was driven by the continued growth of our multi local offering and the mix of merchant volumes generated on our platform in Q4.
Throughout 2021, our existing merchant base continued to stay and grow with us as reflected in our annual MTR rate of 152% and <unk> rate of over 98% at the same time, we continue to see significant contribution of GSV and revenue.
From the new merchants that have launched with us. During 2021, we have continued to experience higher pace growth in our U S outbound revenue.
As our strong momentum in the U S continues in 2021 U S. Outbound revenue was up 108% year over year.
As Amir mentioned, our gross profit continues to outpace top line growth as we continue to improve gross margins leveraging our scale and improving efficiencies.
In Q4 gross profit was $32 $7 million up 82% year over year, representing a gross margin of 39, 5% compared to 33, 5% in the same period last year also affected by the higher share of service fee revenue.
We continue to put efforts and leveraging our scale as we strive to further improve our efficiencies.
Moving on to operational expenses, we are committed to continue investing in the development and enhancement of our platform to further strengthen our current offering and support new initiatives, the new initiatives Amira as mentioned.
<unk> expense in Q4, excluding stock based compensation was $8 4 million or 10, 2% of revenue compared to four 6 million or eight 7% in the same period last year total R&D spend in Q4 was $10 $3 million.
We also continue to invest in sales and marketing and cultivate a very healthy and growing pipeline, while maintaining high levels of efficiency.
Marketing expense, excluding the amortization expenses related to the shopify warrants and stock based compensation was $6 $7 million or eight 1% of revenue compared to $3 6 million or six 8% of revenue in the same period last year.
Certify warrants related amortization expense was $29 4 million.
Including these expenses and marketing expenses for the quarter totaled $36 7 million.
General and administrative expense, excluding stock based compensation and one off flow transaction related expenses was $5 $8 million or 7% of revenue compared to $2 6 million or four 8% of revenue in the same period last year. This.
<unk> reflect the impact of additional expenses related to being a public company, including our DNO insurance policy Corp.
Total G&A spend in Q4 was seven 8 million.
Adjusted EBITDA totaled $11 8 million, representing a 14, 3% adjusted EBITDA margin, increasing from $7 2 million or 13, 4% margin in the same period last year net.
Net loss was $22 5 million compared to a net income of $4 3 million in the year ago period, a direct outcome of the amortization expense related to the shopify warrants net profit excluding the amortization expense related to the shopify warrants was $6 9 million.
Switching gears and turning to the balance sheet and cash flow statement. We ended 2022 with $509 million in cash and cash equivalents, including short term deposits and marketable securities prior to the closing of the flow transaction, we continue to generate cash with.
Operating cash flow in the quarter at $24 million compared to an operating cash flow of $33 million a year ago moving.
Moving to our financial outlook and guidance for 2020 tool as you will see the guidance reflects the strength and the continued momentum of the business.
For Q1, 2022 we are expecting <unk> to be in the range of 446% to $456 million.
At the midpoint of the range. This represents a growth rate of 69% versus Q2 of 2021.
We expect Q1 revenue to be in the range of 74, 5% to $76 5 million.
At the midpoint of the range. This represents a growth rate of 64% versus Q1 of 2021.
For adjusted EBITDA, we're expecting a profit in the range of 0.7% to $1 $7 million.
For the for the full year of 2022, we anticipate <unk> to be in the range of $2 45 to $2 $5 billion, representing nearly 70% annual growth at the midpoint of the range revenue is expected to be in the range of 411.
<unk> million dollars to $421 million representing.
Representing a growth rate of 70% at the midpoint of the range for adjusted EBITDA, We're expecting a profit of $38 million to $42 million.
Our outlook for 2020 to reflect the impact of the flow transaction acquisition, which in 2022 is still expected to generate negative adjusted EBITDA as well as additional investment in personnel related costs sales and marketing and product development.
In conclusion, we believe that the opportunity ahead of us remains massive and that we are well positioned to capture it we will continue to execute on all fronts to drive strong topline growth, while leveraging economies of scale and continuing to generate cash we are gearing ourselves gearing ourselves up in order.
To continue to create value to our merchants and to accelerate our business momentum.
And with that EMEA near and I are happy to take any of your questions operator.
Thank you very much.
At this time, we will be conducting a question and answer session.
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One moment, please while we poll for questions.
Our first question comes from the lineup with Nazi with Goldman Sachs. Please go ahead.
Hey, guys. Good afternoon, congrats on a nice quarter I was hoping I could ask a question about how youre thinking about the opportunity with shopify over kind of a longer term and im wondering how youre thinking about what's the lowest hanging fruit once the once the full integration gets off the ground and the partnership really starts ramping up we will look at shopify buys today there is a.
A significant amount of cross border volume on their platform already.
So I guess when you look at that opportunity are you more excited to penetrate the existing cross border activity. That's already on the platform or is it the merchants with no cross border footprint that you guys are excited to actually start for the first time and enable cross border and I'm sure. The answer is both but I guess I'm just curious on how you think about the opportunity for the two different opportunities.
And thank you for the question, it's near Debbie.
First of all we are very excited looking forward to the general availability of our native integration for the enterprise product on Shopify platform.
For this product.
We are aiming and focusing our efforts on merchants that currently have cross border activities most of them.
Is it typically this would be a larger merchants.
Already trade.
Trading well and trading cross border is part of it a.
Looking further into the future as part of our enhanced I would.
Say.
A partnership with Shopify related too.
Also on the flow acquisition, and we do expect to support many more smaller merchants.
Many of them would be new into.
Cross border activity.
Got it that's helpful. I appreciate it and just maybe one on margins I wanted to ask about the fulfillment side of the business I guess the implied take rate on fulfillment came down again and I assume that's largely a function of the multi local offering that you discussed I think this quarter and last quarter.
And a lot of the outperformance this quarter came from the services side of the business. So I was wondering if you could maybe talk about expectations for fulfilling that revenue growth relative to services revenue growth and.
Related how to think about gross margins as we as we projected a year.
Yes, so hi, so first thank you for the question.
You said service fee take rate has increased to over 7% while the decrease in overall take rate was the result of the decrease in fulfillment take rate.
And as you mentioned the one of the main drivers for that is the expansion of our multi local offering for which we typically do not provide.
Fulfillment services as the model is largely based on local shipping however, the mix in Q4 also.
The take rate as it was biased toward towards higher average order value merchants.
We expect going forward.
For the multi local offering to continue to expand however, we don't expect the same mix effect in the coming quarters and I think that is reflected in our guidance, which reflects an overall take rate of approximately 16 <unk>.
7%.
Got it I appreciate you taking all my questions guys. Thank you.
Thanks, a lot.
Thank you.
We have next question from the lineup James Fawcett with Morgan Stanley . Please go ahead.
Thanks, I wanted to talk about acquisitions.
And I guess within acquisitions.
Much or are you contemplating flow will contribute this year and how should we think about its impact on the overall P&L, including profitability and as part of that.
What are you looking at for incremental acquisitions are there opportunities in and then I have a follow up.
Hi.
I will start.
Regarding the guidance and the financials its offer.
Basically.
LOE is integrated into our guidance and.
Sure.
They do represent over 5% of the topline.
However, they are weighing on our adjusted EBITDA, mainly in the next two three quarters. It's flows adjusted EBITDA. It is not positive yet.
We expect that to improve.
Over time.
As we leverage our scale and efficiencies, but basically that is the impact on on the next few quarters.
And.
Regarding.
The higher level question I will pass it.
The linear.
Thank you Chantelle.
<unk>.
Basically looking into the future we do expect that in the next quarter, we will be focused on integrating flow as part of the globally offering.
Building I would say.
He is a breach of flow into the emerging brands.
Native support of Shopify, as well as enhancing the capabilities towards the better support for Smbs.
We expect this to I would say.
Hilda.
The growth and momentum looking forward as of 2023 onwards.
We do have high expectations for.
For the acquisition however, it will take us a few months.
I would say alignment in terms of the.
R&D investments needed.
To get the platform geared for.
It's a high pace growth.
Great and then a.
Separately now.
Announced here on the call.
Incremental brands from Lv MH.
<unk> really kind of taking over their operations in the U S et cetera.
When you think about the growth algorithm for this year and into next year, how much should we be thinking about weighting between new geographies new brand.
And then.
Just incremental services and capabilities that youre looking to rollout.
So as you've seen from the number that offer spoke about.
We've seen.
In 2021 more than a 150% net dollar retention.
Which means our merchants actually staying with us and growing with us.
Tempted to continue going into 2022 so.
At considerable.
A component of our growth would come out of existing merchants continuing to grow with US is some of it is the organic growth some of it is.
Opening more lanes.
As you mentioned in the examples now.
But.
I would say the majority of the growth from there.
I would say.
<unk> would come out of out of signing new merchants, we have a very very robust pipeline, which continues to develop we see at the cross sell operations in USA Continental Europe .
UK and now also building up nicely.
In Asia Pacific and we intend and we expect.
In terms of new <unk>, a lot of it to come from.
New bookings.
And James This is this is Amir I would just add on the back of that that.
As we mentioned earlier, we see.
Very much of the.
The opportunity in those markets that near mentioned the U S Continental Europe , and the U K to be still very much greenfield so.
So as we've already mentioned, we are investing a lot of efforts and attention into growing into the APAC region.
We do expect the majority of the activity over the coming.
Years to still come from our existing territories as they continue to grow.
<unk>.
That's great. Thanks, Matt Thanks, Matt.
Thank you we have next question from the lineup Samad Samana with Jefferies. Please go ahead.
Hi, great great to see the strong finish to 2021 I wanted to ask the flow question slightly differently I guess.
I know you guys gave a specific revenue level. When you when you announced the acquisition. So I was hoping for a more specific amount that you're assuming for 2022.
And then could you tell us if flow is growing at the same rate better or slower than globally on a standalone basis.
Going into 2022 as we advised in there.
Acquisition.
Slow to contribute.
To the growth.
I would say in line with GE internal growth.
I think with some of the focusing in building and focus on the R&D.
The internal growth of flow should be a bit lower than globally itself, but not materially different.
So this is our expectation for 2022 onwards.
Set to accelerate as a division once everything is deployed I would say.
Later, this year and especially looking into 2023 onwards.
Great and then maybe a fair just we're about halfway through the calendar quarter and I definitely appreciate that the company gave guidance could you help us maybe understand what youre seeing in terms of <unk>.
<unk> seasonality for for brands that have been with you for a while just everything kind of normal seasonal GMB trends for a for established merchants just any color you can give halfway through the first quarter from a seasonality perspective.
I think in terms of.
And I'll, let the we're seeing.
Standard.
Standout quarter.
If you compare it to previous quarters to the previous two or three quarters. However, as we mentioned that I think this is this is very obvious there is.
Some normalization in the overall growth of E Commerce and that is also <unk>.
Since we are able to.
To add.
A lot of new logos to <unk>.
Our platform and also.
Execute on land and expand basically we were able.
To generate very high growth rates, but.
Overall the market is.
Normalizing physical stores are reopening and there is.
Going back to two.
The traditional balance.
Great. Thanks for taking my questions.
Thanks, a lot.
Thank you we have next question from the line of Brian Peterson with Raymond James. Please go ahead.
Hi, gentlemen, I'll Echo my congrats on a strong close to 2021, so I wanted to hit on some of the sales investments it looks like sales and marketing doubled.
Double the year over year in 2021, I know, that's going to be an incremental investment areas going forward and maybe help us understand.
Stack rank, where are those two or three incremental investments going how much or how productive are those today in terms of driving new merchant growth or is that going to be more felt in 2022 and 2023.
Sure. Thank you Hi, Brian it's there and thank you for the question.
Yes, we did.
We did invest quite a lot in sales and marketing versus what we did the previous year.
However, we are still below the 10% Mark in terms of spend on sales and marketing out of out of revenues.
The growth.
Is that we've seen have gone towards the I would say two main focuses.
One of them is establishing.
<unk> is establishing the spearhead into new territories.
Have people on ground in Tokyo, Japan.
Building, the pipeline and cultivating a relationship.
With.
With a strategic partner on the ground transco smallest as well as as well investment already in Australia.
In parallel to eat.
We've seen the market opportunity.
And the ability to capture higher growth as we've seen in the states, which is growing more than 100% for us.
So we are doubling up our teams.
In order to.
So enjoy the momentum.
So it's an expansion across our Cowen gravity center as well as establishing the spearhead in different locations in the world, where we where we defined a high opportunity markets.
We intend to continue and invest in that going forward.
But at the pace that will not.
It will not be dramatically different in terms of spend on sales and marketing out of the out of revenues.
And then maybe just a follow up on that if I think about the investments that you're making in Australia or Japan.
How do we think about the ramp I know its early days I mean this is an unfair question, but just thinking about when those markets could make material revenue contributions. Thanks guys.
Sure I think that.
We would see.
C J.
<unk> ramping up considerably in Asia Pacific as of 2023.
But we do expect to see already this year so.
We have the first men on the ground in Melbourne and on the back of it we have the first reputable brand out of Australia already signed and expected to contribute already as of late Q2.
And we expect more to come within the deal and launch we did that deal most of the asset it would come on in 2023, because they were launched later in the year. So most of the FX would come later in the year.
However, we do see a lot of the investment already.
Bearing fruits.
As our bookings.
When considerably up.
<unk> 2021 versus 2020 and this is part of.
Part of the push and momentum we have into 2022 planning and result, as a lot of.
A lot of.
A lot of the growth would come from clients that already signed with globally.
I would add on that Brian that were coming in.
Strong into these markets not just with our teams on the ground, but also with.
A couple of strategic partnerships.
Hum that we've already signed that are already.
Operating so we expect that to also be a force multiplier in our ability to ramp up.
Quite quickly in these regions.
Great to hear thank you.
Thanks, Brian .
Thank you we have next question from the lineup Koji Ikeda with Bank of America. Please go ahead.
Great Hey, Amir House there, okay. Thanks for taking the questions.
Had a question on guidance here so over the past few days, we've recently heard from some other e-commerce companies or maybe the outlook outlook was a little bit less certain and here you are with confidence, giving 'twenty two guidance.
Not only confidence, giving it but really a nice number here at 70%. So wanted to dig in a little bit on what youre seeing out there hearing out there from your customers that is what is giving you all of that confidence to give the 22 is that right now.
Yeah. So thank you for the question this is nir.
Basically.
We have seen with our clients.
Giving priority into investment in direct to consumer cross border.
And we've seen it with.
Multiple of our clients opening more lanes and investing more in the in the penetration into new geographies.
Which expected to continue going into 2023 in parallel.
'twenty one was a record deal for us in finding new business.
And new logos in and a lot of this effect would come into play only in 2022.
And would contribute to this accelerated growth.
We do see.
And as we spoke about in previous calls.
A lot of the effects of Covid that are here to stay.
And the need for brands.
And the desire to go direct to consumer was accelerated.
And through the pandemic and this does not change there might be certain relief.
With shops being opened however, the trend of brands, especially larger brands.
Moving into a direct to consumer on a global basis is not stopping and we see it in our pipeline and this gives us I would say quite a lot of confidence building.
Planning into 2022 and onwards.
Got it got it thanks for that commentary.
Wanted to ask you a question on net revenue retention.
52% here in the fourth quarter or for the full year for 'twenty, one and that's really off the back of a very strong pandemic of 172%. So I guess.
Looking for some commentary you don't have to give the exact numbers, but how should we be think about net revenue retention driven by customer cohort cohorts are pre 2020.
Versus customers that were maybe brought onto the platform more recently in 2021 and 2000 and later 2020.
I think that generally speaking, we see the newer cohorts coming.
Coming in.
A bit stronger compared to the previous cohorts.
When you take a bird's eye view at it.
As we previously said, we don't expect the pandemic figures to be stable figures for the future. We do believe that if you look at our.
Pre COVID-19 averages.
We will be able to achieve that so.
We don't think that we will.
870, or $160 150 every year. However, we are confident that we will have a strong NDA our numbers moving forward.
Okay.
Thank you we have next question from the lineup brand Breslin with Piper Sandler. Please go ahead.
Thank you good afternoon, I should say good evening team here I wanted to go back to the the optimism around GMB growth youre guiding to $1 billion of incremental G. M D.
Even if I assume 5% of that is tied to flow it looks like organic GMB growth could be well north of 60% again. So just as we think about the levers to growth how much of this is just the luxury channel youre addressing that has really strong versus.
It sounds like Theres, some new logos that are driving the optimism.
Could you double click a little bit more into the.
The optimism here, maybe is there a big chunk of.
Contribution coming from Shopify or do you think this is largely.
Going to be kind of organic could you think about the construct of that <unk> optimism you're guiding to here. Thanks.
Thank you Brent this is Neil.
Basically our optimism is based on.
I would say, it's a robust pipeline of new logos.
On the one side, which brings with it.
A very large brands.
One thing too.
Do cross border and use also our multi local offering.
Across multiple geographies and in parallel to it we have a great pipeline of land and expand we have discussions ongoing in advance discussions with larger brands already operating on our platform. We're looking to expand our operations with us and add to it the organic growth of our cash.
Lines is that even from as aforementioned form previous sales cohorts still growing very nicely and is a combination of all three.
Actually bring us to a point.
Well, we do believe that.
Even organically as you mentioned, 60% Mark.
<unk> is a reasonable target for 2022.
Yes.
The demand is there for sure go ahead.
Yeah, No I just wanted to add that.
I think the.
In addition to that we.
We put a lot of effort.
Attention into also keeping the.
The GDR high so if you couple the growth of the existing and new cohorts with the fact that.
Churn rates.
<unk> sub 2% consistently over.
Quite a few years now.
That is the.
The other side of the growth algorithm, keeping making sure that our merchants.
Remain very happy with the results that they're seeing and stay with us for the long term.
Great to hear there and then my last follow up here for her.
We do have some new mechanics, as we think about the take rate.
Shopify flow should we assume.
Yes.
These newer partnerships should be slightly lower take rates same take rate higher take rate just trying to think through the take rate assumptions as we start to ramp up some of these.
Hello contribution and Shopify contribution.
And.
The wildcard there would be the mix of multi local but just trying to understand the take rate.
Assumptions for those two channels going forward. Thanks.
Yes, Brian Thank you for the question.
Basically looking.
Martin from the bottom line I think that we are expecting 2022 solid.
Take rates at around 16 point.
7% and we don't expect the mix to change significantly.
Current shopify.
<unk> business or the Shopify partnership that we already.
Had before the flow acquisition.
This this tends to be at a very similar take rates to our overall average.
And again, putting aside the multi local which we mentioned few times, we don't expect any additional impact on the take rate in 2022 going forward into the future ones.
The slow offering.
We'll develop and start.
Gaining traction.
That will have.
Some impact and we do expect lower take rates on that offering but it will take.
It would take.
Take a few quarters until we see the impact of that.
Very helpful color, there and thanks again for the call. Thank you.
Yeah.
Thank you we have next question from the line of Scott Berg with Needham. Please go ahead.
Hey, guys. This is John Godin on for Scott Berg, Thanks for taking my questions.
First just on the flow platform just curious if you guys frame up the opportunity over the next couple of years.
And expanding flows reach more internationally compared to kind of be increased go to market capability accelerating penetration. It can help you drive in the U S.
Thank you for the question it's Neal.
<unk>, we expect that the slow.
With first deepened our partnership with Shopify as part of the acquisition.
We signed as we announced an additional extension of our partnership allow us basically.
Flow platform to.
To support additional elements.
Of the Shopify native.
Cross border solution.
And we expect that to give us access to as many more smaller emerging brands.
And a new in a new segment, we're not really focused on with our current solution.
And this will also enable us to accelerate our smaller merchants.
Solution.
I would say.
<unk>.
Deployment time.
Inability for more product.
<unk>.
Globally coolant.
Enterprise platform.
So overall, we expect it to as I said increase our footprint into additional.
Additional verticals a lot of it would come as you stated out of the state, but we believe that we are going to roll it out over the next.
Over the next couple of years on a global scale.
Great talent next just wondering if you could talk about Europe , specifically, a little bit highlight maybe the demand trends youre seeing there curious if youre seeing kind of an additional migration of companies previously or not.
Operating in Europe on your platform migrating on given the VAT changes.
Okay.
Yes, we do continue to see an increased demand.
For our services.
As the complexity of trading close boarded in general.
<unk> to increase.
It's not only is it.
Change in Europe with the Io SaaS.
Rajiv now applies also to our cross border sales not only the distance selling with renewable.
But and I can say it because we just did a summary for our clients recently as they will more than 30 changes in regulation cross border only in the last 12 months.
Across different markets.
And this overtime convinced this emerge.
Merchants that the time it takes to adjust to the investment and the know how of how to do it efficiently.
And does not does not make sense doing it in house and we see more interest.
Coming coming our way out of that in Europe , specifically.
Based on the I always says if we do see more interest from cross border retailers.
Looking into how they can leverage.
Globally.
And avoids the need for registration as well as enjoy.
Additional capabilities related to international duty drawbacks, and other than I would say more complicated processes globally enables.
Great. Thanks, guys.
Thank you we have next question from the line of Josh Beck with Keybanc. Please go ahead.
Thank you for taking the question maybe I'll just ask.
<unk>.
Focus one certainly seems like multi local has progressed.
Progress really nicely you talked about expanding some of the localization capabilities. So maybe just stepping back can you give us some sense of.
How widely adopted the product is today and maybe over.
Multiyear timeframe public frame up where where it could head.
Yes, so the product is.
It is already well developed in terms of multi local.
And it allows us to support already the two very large brands the job and then zero in not only allows us to support them allowed us to also increase I would say and take additional chunk and substantial chunk of their business.
Such as the U S recently being allocated to us format forms in either.
We do plan and we continue to invest highly in making it available in additional markets.
Yes.
So we continue to rollout additional legal entities additional operational and logistic setup in different markets.
We are launching.
And next month, our first merchant out of the GCC region working out of UAE.
With SAP.
Support out of the free trade zone as well as support for mainland.
Dubai.
And we continue.
<unk>.
With the men on the ground now in Singapore as well as the other locations as well so we do.
<unk> invested heavily in continuing to deploy it.
On the back of it we had additional local careers.
To support localized return an additional part of the world as well as.
The local.
Payment methods and services for those specific domains, so well I would say that the product itself is develop however.
The rollout fully.
He is much more local specifics then.
Our cross border approach and we all based on the demand we see from clients. They are rolling out additional services and geographies.
Thank you we take the last question from the line of Pat <unk> with.
JMP Securities. Please go ahead.
Oh, great. Thank you and congratulations.
Hey, American can we very briefly recap.
The conversation we had over breakfast.
Sure.
In Tel Aviv about the durability of this model.
In particular like large brands.
Rollout in every market with you at one time right. They have to do it over a period of years can you just talk about why that is.
Thanks, Pat it's not that they can't.
Theoretically they can and to be honest some of them do it its more a question of.
Of choice.
In many cases kind of their internal set up so.
As we discussed.
When we met.
In Tel Aviv.
Typically.
The kind of small and medium sized brands.
Well basically rollout the entire world in one go.
The bigger brands typically do put in place.
Kind of.
A gradual rollout plan.
And sometimes it.
Because.
They have a <unk>.
Local representatives of local distributors in certain markets.
Where they want to run these contracts off before they internalize these.
These lanes in other cases, they have local setups underground of their own and the first one to start with the markets, where they don't have such setups and later on.
Progress rollout of these markets as well, but.
There are always exceptions, and I think on the <unk>.
Previous call.
The previous quarter, we mentioned all of our yoga, which went live with US which is a big enterprise merchants in day, one cloud we've all markets in one go so.
It's really it's really there is nothing inhibiting them structurally from doing that it's more a matter of choice and strategy on a per merchant basis.
Yeah, and I'll bet a lot of people in Israel celebrated when you did that with all of our yoga.
Thank you very much absolutely.
Yeah.
Thanks, guys. Thank you.
Gentlemen, we have reached the end of the question and answer session and I'd now like to turn the call back to Amish socket for closing remarks over to yourself.
Thank you and on behalf of full for Nir and myself and the entire <unk> team I would like to thank you all for joining today and for your continued support and interesting and globally.
As the year 2021 comes to its conclusion I would also like to take this opportunity and thank our merchants all around the globe for entrusting us with their business and as always none of this would have been possible without the unbelievable professional abilities and dedication of our teams around the world, who put their heart and mind Deane and day out to make sure.
We delivered the best of globally, so kudos to all of you.
Goodbye, all keep safe and we very much look forward to seeing you again on our future earnings calls.
Thank you very much.
This concludes today's conference you may now disconnect your lines at this time. Thank you for your participation.
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