Q3 2022 Global-E Online Ltd Earnings Call
Greetings and welcome to the global E third quarter 2022 earnings call.
This call is being simultaneously webcast on the company's website in the investors section under news and events.
For opening remarks.
And introductions.
I'll now turn the call over to Eric Mannion, Erica Mannion at Sapphire Investor Relations. Please go ahead.
Thank you and good afternoon with me today from globally are a mere schlock it co founder and Chief Executive Officer.
So cran, Chief financial Officer, and near Debbie Co founder and President.
And the air will begin with a brief review of the business results for the third quarter ended September 32022 also will then review the financial results for the third quarter ended September 32022, followed by the company's outlook for the fourth quarter and full year 2022.
We will then open the call for questions.
Certain statements we make today may constitute forward looking statements and information within the meaning of section 27, a of 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 Securities Litigation Reform Act of 1995 that relate to our current expectations.
Views of future future events.
These forward looking statements are subject to risks uncertainties and assumptions some of which are beyond our control and.
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 risk excuse me 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.
C C.
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.
Except as required by applicable law, we make 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 the statements are made or to reflect the occurrence of unanticipated events.
Please refer to our press release dated November 16, 2022 for additional information.
In addition, 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 the financial information prepared and presented in accordance with GAAP.
We use these non-GAAP financial measures for financial and operational decision, making and as a means to evaluate period to period comparisons.
We believe that these measures provide useful information about 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 November 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 November 16 2022.
I will now turn the call over to Amir co founder and CEO .
Thank you Eric.
Welcome everyone.
We were fortunate today, our results for the third quarter 2022, which represents another very strong quarter for globally.
Despite various headwinds in the form of prevailing in complex microeconomic conditions in the market and the ongoing more in Ukraine globally continues its high pace of growth across all business parameter.
We delivered revenues of $105 6 million in Q3, representing 17, 9% growth year on year, and our GMB for Q3 totaled $621 million growing 77% year on year.
<unk> revenues came in over our forecasted range, beating the midpoint of the range by two 3% and four 5% respectively.
Our adjusted gross profit for the quarter was $43 8 million, representing a very strong growth of 92% year on year outpacing our revenue growth as we continue to pursue economies of scale benefits and realize cogs synergies with flu.
Our adjusted gross profitability was 41, 5% up from 38, 6% in Q3 of 2021.
As Ofer will elaborate on later in the school. It is important to note that this is the first quarter in which we include in our results the figures from the border free activity, which we acquired in July of this year.
In terms of operational expenses, we continue to reinvest in growing the business across all business lines or departments, but at the same time continuing to maintain strict cost control over all discretionary spending to ensure our ability to continue delivering strong profitable growth.
As such our adjusted EBITDA came in at $12 $5 million compared to $7.7 million in Q3 of last year.
Adjusted EBITDA margin for the quarter was 11, 9%.
Moving on from the financial results I would like to give you some updates regarding the many exciting developments in our business during the last quarter.
On the merchant activity front demand for our services continues to remain strong as more and more brands around the world put direct to consumer and cross border sales in the crosshairs of their growth strategy.
During the third quarter, we continued to launch with many new brands and more which where the U S. Based toy brand Martel creations part of the Mattel group of brands.
Fast growing tissue a brand a true classic the online store of the prominent fashion designer Karl Lagerfeld.
Classic high in London based brand drinks as well as the merchandise store of the famous Italian football club Inter Milan further extending our reach into the football clubs vertical.
We also went live during Q3 with the innovative sportswear brand Squawked Wolfe, our first ever merchant based in the United Arab Emirates.
We continued our expansion in the luxury segment as well from the high end shoes by Spanish designer Malone and planet.
To put you a lot of really small group to three additional <unk> zones Kvd only earnings instead of by Stella Mccartney all going live during the third quarter.
In addition, during the quarter several of our brands expanded the list of their lanes operated by globally, including Sundar, which once again added additional lanes and in being which opened up its European site Hugo boss and others.
While we continue to grow our business and our bookings pipeline across our existing product lines and geographies I'm also happy to share that we are continuing to make significant progress in several of our business development initiatives, which we have shared with you in the past.
For example, the leading consumer electronics brand job bra expanded its suite of services with globally launching its presence on Amazon, Japan through global these market based connectivity offering which is in a pilot phase.
Another example is globally demand generation offering which is already serving over 40 merchants.
Over the next few quarters, we expect these initiatives to gradually expand to more merchants and geographies as well as the others to start and take shape.
Turning to our indirect go to market channels, our ecosystem of partners around the globe continues to support a robust bookings into markets. We already have established it as well as our international expansion efforts.
We continuously strive to expand this ecosystem with Google being the latest partner with whom we signed a referral partnership agreements.
Our strategic partnership with shopping slides also remains very much on track with great product advancements and high engagement between our respective teams on all levels.
On the direct side the stream of merchants going live using our new native integration is continuing to accelerate as this is now the default integration for any new shopify based merchant.
On the White label solution front I also trials were successfully completed with Shopify recently grunting early access to the solution Shopify markets crew for a small subset of relevant merchants.
We continue hanging Henry Shelby fly down to planned road towards general availability next year, we remain highly optimistic regarding the long term potential of our strategic partnership with shop before.
With regards to our corporate development efforts with the flow of post merger integration all but done our teams attention is focused primarily on integrating border free into the organization.
By now all of a boarder for your teams have been integrated into the relevant teams within globally.
Work is currently on its way to realize the many possible cogs synergies to gradually migrate border fees merchant onto the globally platform and to put into use several models assets and capabilities that had been built by border free as part of our future platform development.
We expect this integration work to continue over the next several quarters, we have synergies gradually realized along the way.
In parallel we are working on building a roadmap for the growth of the marketing and demand generation capabilities, we acquired as part of the transaction as well as the extended partnership with Pitney Bowes for advanced logistics solutions and joined approach to merchants.
In summary, and taking all of the above into account. We are very pleased with how the first three quarters of 2022 have unfolded.
We believe this strong performance in spite of the unusually volatile conditions in the market.
He is a true testament to the robustness of our model, our clear market leadership position and our execution capabilities.
Moreover, as we look towards next year and beyond we remain extremely enthusiastic regarding the global ecommerce market long term growth potential compounded by the growing adoption of direct to consumer as a key channel for brands on a global scale.
However in order to err on the side of caution we have decided to slightly lower our <unk> revenue forecast for 2022 by two 5% and 2% at the midpoint of the range respectively.
In order to take into account two extra ordinary factors, which we anticipate will have an unusually large adverse effect on our Q4 results.
First is the effect of the unusually large foreign exchange swings, which worsened through the third quarter and into November , especially those of the U S dollar vis vis other major currencies.
The other factor is the go live of a very large merchant, which was originally planned for Q4, but at the last minute was postponed to Q1 of 2023.
At the same time, though we have decided to update our full year adjusted EBITDA guidance upwards by three 4% as we have managed to progress more than we initially expected on cost optimizations.
<unk>, a move to reduce workforce head count as parts of synergy realizations post the border free acquisition.
Okay.
Okay.
We believe that such fast growth well above the growth rates of the e-commerce market itself.
It presents the immense greenfield opportunity, which lies ahead of us for years to come as more and more merchants around the globe put the cross border direct to consumer channel front and center in their future strategic plans.
And with that I will hand, it over to offer our CFO to dive deeper into our quarterly financial results and provide some additional details regarding our outlook for the full year of 2022.
Thank you Amir and good afternoon, everyone.
It's been another strong quarter on all fronts as we continue to demonstrate fast growth coupled with healthy margins amid the microenvironment, which continues to be challenging and volatile. Despite the macro headwinds the fundamentals of our business model remains strong and durable and we continue to see a clear path.
Of rapid profitable growth.
Before moving to the numbers. Please note again that this is the first quarter in which we incorporate border free into our financial statements.
<unk> already mentioned a fast growth in <unk> continued in Q3, as we generated $621 million of DMV and increase of 77% year over year, while the overall e-commerce market growth has slowed down in 2022, our cross border opportunity remains Matt.
As merchants are continuing to put direct to consumer in the front and center of their strategy, which results in cross border direct to consumer continuously gaining share over other channels and growing.
In Q3, we generated total revenues of $105 $6 million up 79% year over year.
Service fees revenue were $47 $8 million up 108% and fulfillment services revenue were up 60% to $57 8 million service fee revenues continued to grow faster compared to fulfillment services revenue driven by growth.
<unk> of our multi local offering and the revenue mix of border free which is characterized by a higher share of service fees.
U S. Outbound revenue continued to grow rapidly in Q3 U S. Outbound revenue was up 184% year over year, driven by strong growth of the global it platform U S outbound business.
With a high share of U S outbound on the border free platform.
Our penetration efforts into new markets are continuing to show positive signs.
APAC and the Middle East outbound revenue, which are 3% of the total revenue have grown 496% year over year.
Our non-GAAP gross profit growth continued to outpace top line growth in Q3, non-GAAP gross profit was $43 $8 million up 92% year over year, representing a margin of 41, 5% compared to 38, 6% in the.
Same period last year, despite border freeze lower margin. This was primarily driven by the positive impact of higher share of service fee revenues, the realization of flow and border free cost of goods sold synergies and continuous optimization effort GAAP gross profit.
Our fleet was $48 million.
Moving on to operational expenses, we continued to invest in the development of the global enterprise and SMB platforms with emphasis on the new white labeled offering to power Shopify markets grow R&D expense in Q3, excluding stock based compensation was $16 six.
$6 million 15, 7% of revenue compared to $6 $4 million or 10, 8% in the same period last year total R&D spend in Q3 was $22 $2 million the increase of R&D expense as a percentage of revenue.
It's primarily driven by the consolidation of flow and border free.
We continue to invest in sales and marketing, enabling us to generate a robust and diversified pipeline, while maintaining efficiencies sales and marketing expense, excluding shopify warrants related amortization expenses amortization of acquired intangibles and stock based compensation was 9 million.
Or eight 5% of revenue compared to $5 2 million or eight 8% of revenue in the same period last year.
<unk>, probably warrants related amortization expense was $37 4 million.
Total sales and marketing expense for the quarter, including Shopify Ward and related amortization expenses were $52 $9 million.
General and administrative expenses, excluding stock based compensation acquisition related expenses and acquisition related contingent consideration were $6 $2 million or five 9% of revenue compared to three $6 million or six 1% of revenue in the St.
Last year total G&A spend in Q3 was $18 9 million.
Adjusted EBITDA continued to be well on track.
The EBITDA totaled $12 $5 million, representing 11, 9% adjusted EBITDA margin, increasing from $7 $7 million in the same period last year. Despite the continued reinvestment into the business, we continue to focus on optimization and synergy realization.
To further support adjusted EBITDA growth.
Turning to the balance sheet and cash flow statements. We ended the quarter with $191 million in cash and cash equivalents, including short term deposits and marketable securities net operating cash flow used in Q3 was $4 $2 million compared to generated cash.
Cash flow of $5 5 million in the same quarter a year ago net operating cash flow in the quarter was negatively impacted by one off border free transaction related expenses of $7 $2 million and out of the ordinary financial expenses of $10 $9 million, mainly due to the.
The impact of USD revaluation on non USD balances held as part of our day to day cash management.
Moving to our financial outlook and guidance for the full year 2022.
You mentioned due to the unusually high FX headwinds as well as a very large merchant postponing. It go lives by quarter, we have updated our full year <unk> revenue outlook by two 5%.
Percent and 2%, respectively. We now expect 2022 <unk> to be in the range of.
So for.
419.
2000, and $459 million at the midpoint of the range. This represents a growth rate of 68% versus 2021 of that border free is expected to contribute $125 million to $135 million of <unk> for the full year, we expect 2020.
Two revenue to be in the range of 404, seven to $410 7 million at the midpoint of the range. This represents a growth rate of 66% versus 2021.
Meanwhile, we are updating our adjusted EBITDA outlook upwards by almost three 5% at the midpoint and it is now expected to be in the range of $43 5 million to $46 5 million for 2022.
This is driven by the continued realization of cost synergies with border free which includes our workforce right sizing activities.
In conclusion, we continue to focus on strong execution and profitable growth in our journey to enable and accelerate global direct to consumer Cross border E. Commerce, We will continue to further enhance our offering and add value to merchants to supported their direct to consumer growth.
We believe this will enable us to tap into the massive and growing opportunity in front of us.
And with that Nate and I are happy to take any other questions operator.
Thank you.
We'll now be conducting a question and answer session.
You'd like to ask a question. Please press star one on your telephone keypad.
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One moment, please while we poll for questions.
Our first question is from the line of somewhat Samana with Jefferies.
Please proceed with your question.
Hey, good evening and thanks for taking my questions.
Maybe first on the quarter growth is quite good.
Did your guidance can you maybe help us understand how much of that was better spending trends versus the timing of go lives in the quarter end and how much of a headwind was FX in the quarter off air.
So our Q3.
In terms of the pit.
We have seen I would say.
Relatively stable demand from the consumer side for growth of existing merchants.
It was in line with our projections, we did see a bit over expectation in the launch of merchant and within the quarter. Some of them launched earlier within the quarter than what we expected and it is gives us gave us a bit of that.
A bit of a tailwind versus our guidance.
Hopefully I answered your questions unfold.
Yeah, and then maybe just understanding I know, it's just one customer, but it's large enough to impact the fourth quarter guidance. So can you help us understand maybe why that the merchant would delay I would think that the holiday season is typically a pretty strong quarter for any companies <unk> and CAD.
Push out to 123, maybe what drove that decision and are you seeing other customers think about delaying <unk> go lives and how is that factored into maybe your early thoughts on 2023.
Yes.
It's amir so actually it wasn't.
I would say a conscious decision to delay obviously, neither on our side nor on the merchant side of view as you rightly noted the holiday period is coming through our <unk>.
Both the merchant and us would.
We would have liked to be alive. However, unfortunately in this specific project that was a dependency on a third party.
Didn't manage to complete the.
Their side of the integration in time, so while everything else was was really.
We and emergent were forced to delay.
The launch into Q1 because.
Both of US went into a into a code freeze.
Other than that we don't see.
Any any movement to delay anything if at all.
The countries. So I wouldn't expect any impact on next year.
Great maybe I'll squeeze one more in.
Eric can you just clarify.
What FX the FX impact of the <unk> guidance. The revised 2020 to your guidance I think that it's been so volatile just what where are you guys, assuming before or how much of a headwind is it I think that the constant currency number would just help everybody out.
Yes.
That was the first.
Firstly, we report in USD, but obviously over 50% of our revenue is in our other currencies, mainly the euro and GBP, we got hit.
In the previous quarters as well, but this accelerated since we guided in the previous quarter till November .
With the revaluation of the USD versus all currencies, but mainly for us the main impact was versus.
The euro and yen and the GBP and basically the impact is taken into account in the Q4 guidance and.
And as we mentioned this along with the.
With the merchant.
That didn't go live.
Is the reason that we are updating our.
Top line guidance.
Okay understood. Thanks, again for taking my questions.
Thanks, a lot.
Thank you.
Our next question is from the line of will Nance.
Golden Sachs. Please proceed with your question.
Hey, guys. Appreciate you taking my questions I just wanted to ask on some of the spending trends that you guys are seeing I mean I think.
Specifically the overseas exposure, we're supposed to the e-commerce, particularly some things like luxury and Paul I think there's just a lot of people are curious on what you guys are seeing on what the boots on the ground.
Spending behavior, how has that turned out over the course in October .
As part of November .
In general when we talk about the revision to the guidance being due to FX and due to the implementation delay what gives you guys confidence that we don't see a deceleration in kind of underlying spending levels for the remainder of the quarter, just maybe talk around some of the macro assumptions and what you're actually seeing on the ground.
Hi, Neil.
So for the first part of your question.
We did we do see different trends around different parts of the world in terms of consumer spending.
We did see.
In the recent quarters.
The larger heat with European clients spending is.
Zelda and more effective to where were more affected.
The macroeconomics, especially interest rates and and CPI increases.
However in Q3, what we started to see especially in the second part of Q3. He is also a some slowness in the APAC region, mainly Australia and New Zealand.
We've seen a decrease in consumer spending.
While U S is still holding relatively are relatively strong.
So still we see growth when we look at the existing merchants, we do see growth.
But it is a software growth than what we've seen in previous quarters, but this was basically already built in and we as we've seen this trend is stopping.
Starting even prior to reporting all of Q2 are lethal.
Yes.
Yes.
Yes.
Oh, sorry, Yeah go ahead.
No. Please please go ahead.
Yes, I just wanted to add that I think it's always important to note that the consumer spend and consumer sentiment Mosley effects are.
Performance I would say in the shorter term when we look at the longer term.
It is much more impacted by the demand over services from the merchant side and on that front because.
As we mentioned we believe it is a massive greenfield opportunity and we are in prime position to pursue it.
We believe that this would be the main deciding factor when you look at the long term growth.
On that we're not seeing any softness whatsoever.
Got it makes sense.
I guess I'm, just I'm asking another short term questions can I just circle back to the commentary.
I was just wondering if you can kind of quantify when you guys are striking FX rates in this guidance I mean, unfortunately, seven days sort of matters, given what our thoughts of Arkansas worldwide over the past week. Just wondering if you can sort of provide a little color in terms of what's baked into the guidance for the fourth quarter.
Yes.
Regarding gas fix the base assumption always is.
To assume that it's stable because no one knows the direction.
Of FX, so basically we looked at the <unk>.
The average of the last few days and this is what we incorporate that in.
In our guidance for Q4.
Got it Thats helpful. Appreciate you taking all my questions.
Thanks Luke.
Thank you.
Next question is from the line of Brian Peterson with Raymond James. Please proceed with your question.
Hi, Thanks for taking the question. This is John on for Brian on the pipeline of New deal activity are you seeing any changes in your pipeline build metrics, including demos I think last quarter. You mentioned it was stronger than Q1 has that continued or what indicators are you tracking there.
So basically on the on the new bookings and the pipeline development, we are very optimistic.
We continue to see very solid the build of the pipeline and all of the signings to date is a significantly higher than what we had lost deals. So we are able to Neil we see a very significant growth even IL.
Although the revenue and J&J reported growth and this should fuel our growth into the future.
We also start to see the contribution into the pipeline and also into the signed deals out of APAC region, where we started to invest.
Late last year and early this year in Australia, Japan, and so we do see that starting to contribute and we do with that and we do expect.
To be to be a significant part into our sales next year.
Yeah.
Perfect that was great color there and then one more if I may.
The expansion trends progressing and any notable changes in the cadence of Geo or brand expansion I'm just curious how merchants are approaching these efforts.
This macro maybe accelerating or decelerating.
I think and what we see much more.
Our success management team is Oh say discussions with all our merchants on how can we grow the business.
In equivalent reagent or new regions with minimum additional investment so.
So we are taking are and we're doing more for them.
More discussions on our growing your business with.
Better usage of all the smart insight based on our data model. So how can I optimize my proposition.
Versus the product five versus returns are also leading to a best in class shipping offering and we do see a lot of interest related to that.
And although that any geographies, we can add without a significant investment for global he sees an opportunity for the merchants. So we have much more.
Those calls currently was our success management team.
Yeah.
Okay. Thank you very much.
Okay.
Thank you.
Our next question is from the line of James Faucette with Morgan Stanley . Please state your question.
Thanks, very much just following up on the FX.
Continuing to try to.
To sensitize ourselves there.
How much of an incremental drag was FX on third quarter results versus when you.
Originally formulated that outlook Oh for any idea.
Okay.
So versus versus a formulation is an additional drag.
Phil.
One 3% versus the versus a formulation and we see it deepening into into Q4.
Got it got it and then.
Talking about margins in both near and medium term.
How should we be thinking about the mix shift aspect.
Fulfillment or are.
Are we seeing other parts of the gross margin expanding independently and if we are seeing kind of margins expand independent of Max can you talk about what's driving some of that contribution.
Regarding the margins we have been able.
To gradually improve the margins over a long period of time, so it hasn't been a very clear trend of improvement.
However, as we previously said.
We don't expect to get.
200, or 300 basis points every quarter over time, we think that we can.
Continue to expand.
The margin in terms of the mix.
Service fees have been growing.
Faster.
For several reasons, however margins were improved on both.
Revenue generation pillars, so we have been able over time.
To improve margins on the services side, but also on the fulfillment side.
Got it and then.
In the medium term and.
You, probably arent going to be expanding margins.
Few hundred basis points per quarter, but.
How should we think about the appropriate rate of margin expansion say on an annual basis et cetera.
You can bring to bear are going forward.
Yeah.
I think that.
Yeah.
It's still early to put a number on next year. However.
We do think that we can.
Maintaining the margins that we got to just last quarter and again over time also a theme.
The improvement.
But we will.
Guide on that.
Coming into next year.
Great. Thank you.
Thanks, Dave.
Thank you.
Next question is from the line of <unk> of Kita.
With Bank of America. Please proceed with your question.
Yeah, Hey, guys. Thanks for taking the questions I definitely appreciate all the color.
Earlier on that on the.
The go live questions. So thank you for that and I wanted to ask you.
A question and the way that your end market is viewing the importance or maybe the strategic newness of cross border is a growth category for these businesses heading into next year.
Is there any change in the way at the end market is Union partners, our strategic mix of cross border.
I think hi, Goodyear this is Amir <unk>.
In general.
No different than the trend that we.
We have seen over many years now this is a this is not a.
A new trend.
Businesses are moving into direct to consumer is it boosts benefits for both the brands and the consumers alike.
So we are seeing a continuation of that trend, we're seeing more and more and more merchants more and more verticals that are adopting.
Direct to consumer on a global scale.
As a key pillar of the strategy going forward I.
I think we've mentioned in the past that.
Brands like Adidas.
Good this is.
As a key part of their strategic plan or kind of a five year plan.
And other prominent Brendan.
Those are following suit.
We are seeing definitely a continuation of that trend in the market across all geographies basically.
Yes.
Got it got it. Thank you and then just one follow up for me wanted to ask you a question on border free.
Help us understand the contribution of border free for total revenue.
And then also I noticed and you mentioned U S. Outbound revenues definitely up a 184 up 184% a great number there, but maybe help us understand how much of contribution was born are free to use that thanks guys.
Yes.
As we guided the border free is expected to contribute this year $125 million to $135 million in GM V with a similar take rates to our average take rate.
Gives you a very good indication of the revenue contribution regarding U S. Outbound since our border freeze its very biased toward the U S. Most of it.
Activity is U S. Outbound and then obviously it has a significant contribution however, even putting border affiliate side.
Globally the business you lose out on the on the global it platform.
<unk> grown very fast this quarter and for the last.
Nine quarters in previous years as well.
Yeah.
Okay, maybe just last follow up just the border free <unk> for the third quarter did it come in maybe at the range below the range or above the range of the guide for the third quarter of about $50 to $54 million. Thanks, guys.
It came in slightly above the range.
Got it. Thank you. Thank you so much.
Thanks.
Yeah.
Thank you our.
Next question is from the line of Josh Beck with Keybanc. Please proceed with your question.
Thanks for taking my question I wanted to ask a little bit.
About the market backdrop with the E Commerce I think what we've heard from.
Some of the domestic companies as U S was maybe up a tad in Q3 flattish I think the view on Europe is that likely declined in Q3 that you've seen a lot of people backing off effectively the other market forecast for domestic so I'm just kind of curious when you double click.
In the cross border sector, what Youre seeing maybe.
At a sector level and how youre thinking about the growth algorithm for cross border at a market level going into next year.
Oh.
As we mentioned.
So she is here.
As we mentioned O'neil.
We did see.
The growth rate.
Slightly lower Q3, and the beginning of Q4 than what we've seen.
Previously.
However, we do see our merchants continue to grow.
As the merchants are still growing we don't see we don't see we don't see a decrease we can see a specific regions that are trading.
Slightly lower.
O'neill Aneel, but overall for merchants, we do see and this is where we differentiate from <unk>.
They do a lot of merchants our global.
<unk>, making it the making it I would say a brilliant but we do see on the overall aggregate, though we do see a positive effect regardless of.
Different regions trading lower we do see a stronger effect.
For us what we see in mainly in the U S. When you look at U S domestic and shoppers in the U S actually see a global shopping cheap bill.
Because of the strength of the U S D a.
It's cheaper for them to source to source externally in the end is the more than 50% of all of our sales are coming for merchant outside the U S.
It's actually growing for us so the U S are still looks very solid.
And on the aggregates for globally due to the strength of the consumer spending due to the weakening of the currencies in other regions.
Yeah.
Okay very helpful and then maybe a follow up.
On Shopify, certainly you had some constructive.
Constructive updates there if there was an acceleration in the go lives on the direct side.
That something that you think can be more material to revenue I respect that you may not.
Clothes that because that's obviously one.
Partnership but.
That is something that we should be thinking about kicking into the model next year is it more of a multi year opportunity how should we be framing that in our heads.
Our current expectation and we haven't finalized the budgeting for next deal with.
With shopify.
But we do expect that philosophy globally, there will be a positive effect.
As of Q3.
And with the with building up a third of the demand for the so the white label solution.
However, we do believe that on the on the on the growth rate on the overall company growth rate. The main effect would come on in 2024.
Onwards, as a bulk of it.
Of merchants.
I'd say launch sometime and started on sometime within a late Q3 late late 2020 fleet and affect our 2020 for growth rate.
Very helpful. Thank you.
Thanks Ross.
Thank you.
Question is from the line of Pat Walraven with JMP Securities. Please proceed with your question.
Oh, great. Thank you.
Yes.
So as I look at next year.
I heard you.
You haven't finalized it yet, but the consensus is at 606 and the midpoint of your new guidance is.
Or else happen, so that's like 49% growth.
It seems like a lot. So I just thought maybe this would be a good opportunity to comment a little bit about.
What's a reasonable expectation for people to have for next year.
Okay.
As a as we said.
Although there are obviously some headwinds in a lot of volatility the segment that we focus on.
Both Florida and even more importantly, the direct to consumer is still growing very very fast we expect.
To continue with that fast growth.
Into next year.
And we think that our take.
Taking into account.
The fact that the market is huge and we are just starting to tap into it.
We will be able to grow fast.
For the next few years.
And then this is our this is our target.
Yeah.
Okay, great Great Super helpful. And then just very very.
Roughly on the FX impact so if I look at Q4. The consensus previously was at 150 mid.
The midpoint of the guidance now is around 138, so that's like a $12 million Delta is it fair for us to assume that's basically $6 million of FX and $6 million of the.
That one merchant being delayed is that about right.
Is that ballpark direction.
I think youre not youre not far off.
Okay, great. Thank you.
Thanks Beth.
Before we move on I would just.
Like to clarify one one item in our press release as we've gotten a couple of questions. Our prior full year revenue guidance was 406 to 426.
Millions of dollars there was a typo in the release so prior guidance again for revenue $406 million to $426 million.
Yeah.
Thank you.
Our next question is from the line of Scott book.
And company. Please proceed with your question.
Hi, everyone. Congrats on a good quarter I apologize for any background noise Mathew airports, but.
Pre scripted remarks, I know you talked about.
Shopify White label partnership.
Statement around there, but just wanted to clarify is that progressing this year kind of in line with your expectations is it ahead of your expectations over the last 90 days behind just trying to get a sense of that.
You are in that rollout maybe.
And maybe what are your thoughts.
Once again, thank you.
So on first of all.
Good travels.
Yes, we are advancing.
I would say very much on track in terms of debt.
That part of the partnership with shell before.
Yeah.
Okay.
Got it very helpful. Thank you and then from a follow up perspective.
New customer bookings.
Someone else's question earlier was that just any commentary.
But if you look at your new bookings or new customer signings in Q3 were there any regions or areas that were materially different than what's your expectations going into the quarter.
Yeah, I think that the.
The new bookings.
Continue to see good momentum though.
Uh huh.
With hundreds of millions.
Signs are assigned within the within the quarter.
And we do expect that to continue.
We are positively surprised with the expansion in the pipeline of Australia.
And also with the improvement in the last couple of months of the pipeline in Japan, and we do expect to see a.
Contribution Bell.
Significant contribution until 2023, but even contribution we didnt signed agreements as it would.
Most probably come in even in Q4 this year.
All very positive about it.
Yeah.
Got it very helpful. Thanks for taking my questions everyone.
Desktop CFO .
Thank you.
Our next question is from the line of Ryan Brinkman with Piper Sandler. Please proceed with your question.
Thank you good afternoon I wanted to go back to the maybe the primary driver for new merchants to adopt global E I totally get the benefits.
Of of capitalizing on that international traffic and driving higher International cross border growth, but given the recessionary backdrop, given merchants' desire to actually reduce costs have you seen any new or existing merchants now looking to globally to actually help them.
Lower costs or is it still all about driving incremental growth.
Okay.
Yeah, that's a great question and thanks, Brian It's Neal.
We see both to be honest when we are when we speak to merchants.
Growth comes first merchants want to want to grow the topline and want to have a profitable growth and international expansion.
Is about fully.
However globally it allows them to do it in a cost effective manner.
Where they use a lot of the complexities that would require significant capex.
On the merchant side to develop processes, whether it be.
A local payment methods and integration for multiple the PSP or currencies management.
Oh duty management et cetera, et cetera, we have a lot of it.
Is that actually we are getting out of the bulk savings in development as well as efficiencies of scale that we have.
Using our logistics services, which you'll see the growth.
And the adoption.
For logistics services, we do have the economies of scale that can actually save money for many of our merchants. So it was a combination of both the efficiency and the ability to expand the top line and we see it combined and the discussion is usually a combined.
<unk> points with new merchants.
Got it helpful color there and then just one quick follow up on border free. This has now been part of the operations here for four months are there any new products or customer cross sell opportunities that.
Youre optimistic could actually materialize next year or is it kind of a little too early to discuss.
We are very optimistic with the build.
We're advancing on the back of the basically bought in demand generation software.
The rationale for the transaction was actually our demand generation assets that board. If he had related to our registered users international buyers asset as well as it is where does the international quarter and we are advancing in our plan to utilize it of course.
All the globally group merchants, which is a.
More than a 10 times bigger than what then what is it that there's a group of merchants of border free Standalone and we do believe.
We will be able to utilize it at sometime I would say second half of next year.
Helpful color. Thank you.
Thanks, Brad.
Thank you.
This brings us to the end of our question and answer session I would like to turn the floor back over to Amit for closing comments.
Yes.
Thank you and thank you everyone for joining us today for your interest and your questions and for your continued support during what was another very strong quarter for us.
You heard from US today, there are a lot of exciting developments in our business and a bright future ahead of us.
And as such we very much look forward to seeing you again on our future or any force now goodbye and take care.
Yeah.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Yeah.
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