Q4 2023 Global-e Online Ltd Earnings Call

February 21, 2024

Operator: Welcome to the Global-E 4th Quarter and Full Year 2023 Earnings Announcement Conference Call. This call is being simultaneously webcast on the company's website in the Investor Relations section under News and Events. For opening remarks and introductions, I will now turn the call over to Ericka Mannion at Sapphire Investor Alliance. Please go ahead. Thank you and good morning.

Welcome to the globally fourth quarter and full year 2023 earnings announcement conference call. This call is being simultaneously webcast on the company's website in the Investor Relations section under news and events for opening remarks, and introductions I will now turn the call over to.

Erica Mannion at Sapphire Investor Relations. Please go ahead.

Thank you and good morning with me today from Global E. R. A mirror socket co founder and Chief Executive Officer, Ofer, Koren, Chief Financial Officer, and near Gebbie Co founder and President.

Ericka Mannion: With me today from Global-E are Amir Shloket, Co-Founder and Chief Executive Officer, Ofer Karin, Chief Financial Officer, and Nir Jebi, Co-Founder and President. Amir will begin with a review of the business results for the fourth quarter and full year of 2023. The CEO will then review the financial results for the fourth quarter and full year of 2023, followed by the company's outlook for the first quarter and full year of 2024. 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 27A of the Securities Act of 1933, Section 21E 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 expectations and views of future events.

<unk> will begin with a review of the business results for the fourth quarter and full year of 2023.

Ofer.

Will then review the financial results for the fourth quarter and full year of 2023, followed by the company's outlook for the first quarter and full year of 2024, 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.

18, 95 don't really expectations and views of future events.

Ericka Mannion: 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 Perspectives, 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 place undue reliance on any forward-looking statement.

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.

Ericka Mannion: 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. Unless 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 February 21, 2024 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 financial information prepared and presented in accordance with GAAP.

Although we believe that the expectations reflected in the forward looking statements are reasonable we cannot guarantee that future results level 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 February 21, 2024 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 financial information prepared and presented in accordance with GAAP.

Amir Shloket: 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 operating decision-making. For more information on the non-GAAP financial measures, please see the reconciliation table provided in our press release dated February 21, 2024. 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 21, 2024. I will now turn the call over to Amir, co-founder and CEO.

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 operating decision making.

For more information on the non-GAAP financial measures. Please see the reconciliation table provided in our press release dated February 21 2024.

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 21 2024.

I will now I will turn the call over to Amir co founder and CEO.

Okay.

Thank you Erica and welcome everyone to our fourth quarter and full year 2023 earnings call.

2023 was a record breaking year for us here at globally and it was brought to a great close by fourth quarter, which was our strongest quarter ever.

Amir Shloket: Thank you, Erika, and welcome everyone to our fourth quarter and full year 2023 earnings. 2023 was a record-breaking year for us here at Global-E, and it was brought to a great close by a fourth quarter that was our strongest quarter ever, crossing for the first time a milestone of over $1 billion of GMV within a single quarter. We finished Q4 with a record $1.19 billion in GMV, up 42% year-on-year, and record revenues of over $185 million, up 33% year-on-year. This was supported by the strong performance of our merchants over the holiday sales period, including Black Friday and Cyber Monday. The adjusted gross profit margin for Q4 was 42.7%, up 140 basis points from the same quarter last year.

<unk> for the first time, a milestone milestone of over $1 billion of GMB within a single quarter.

We finished Q4 with a record $1 19 billion and GMB up 42% year on year and record revenues of over $185 million up 33% year on year supported by the strong performance of our merchants over the holiday sales period, including Black Friday and cyber Monday.

The adjusted adjusted gross profit margin for Q4 was 42, 7% up 140 basis points from the same quarter of last year.

And our adjusted EBITDA margin was 19% or $35 2 million, our highest ever in a single quarter, reflecting nearly 62% growth compared to the same quarter of last year.

Such increase profitability yielded an accelerated cash generation with the business generating $93 $5 million in operational cash flows in Q4.

Looking at the full year of 2023.

<unk> came in at close to $3 56 billion.

An increase of over 45% year on year.

And revenue for the full year came in at $570 million, an increase of over 39% year on year.

Amir Shloket: And our adjusted EBITDA margin was 19%, or $35.2 million, our highest ever in a single quarter, reflecting nearly 62% growth compared to the same quarter last year. Such increased profitability yielded an accelerated cash generation, with the business generating $93.5 million in operational cash flows in Q3. Looking at the full year of 2023, GMV came in at close to $3.56 billion, an increase of over 45% year-on-year, and revenue for the full year came in at $570 million, an increase of over 39% year-on-year. Annual Adjusted Gross Profit increased even faster, growing by almost 46% from 2022, reaching roughly $245 million, and representing an adjusted gross profit margin of 42.9% for the full year, an increase of nearly 190 basis points year on year.

Annual adjusted gross profit increased even faster growing by almost 46% from 2022, reaching roughly $245 million and representing an adjusted gross profit margin of 42, 9% for the full year, an increase of nearly 190 basis points year on year.

Finally, adjusted EBITDA for the full year was $92 7 million.

More than 90% compared to $48 $7 million last year.

Representing our continued commitment to delivering durable profitable growth, thanks to the high efficiencies and tight cost controls.

Last but not least we finished the year with more than $300 million of cash and cash equivalents on our balance sheet.

Providing a solid foundation for the continuation of our fast and profitable.

Gross trajectory and for the realization of our strategic plans going forward.

As we reflect on these strong annual financial results and the substantial growth we managed to generate it is important to remember that these were achieved while we faced a challenging and at times volatile macroeconomic environment.

Further exuberate it by the challenges presented by the ongoing war in Ukraine, as well as the aftermath of the horrific Hamas terrorist attack on October seven.

Amir Shloket: Finally, Adjusted EBITDA for the full year was $92.7 million, up more than 90% compared to $48.7 million last year, representing our continued commitment to delivering durable yet profitable growth thanks to high efficiencies and tight cost control. Last but not least, we finished the year with more than $300 million of cash and cash equivalents on our balance sheet, providing a solid foundation for the continuation of our fast and profitable growth trajectory and for the realization of our strategic plans going forward. As we reflect on these strong annual financial results and the substantial growth we managed to generate, it is important to remember that these were achieved while we faced a challenging and at times volatile macroeconomic environment. Further exuberated by the challenges presented by the ongoing war in Ukraine, as well as the aftermath of the horrific Hamas terrorist attack on October 7. Our hearts go out to all those who were affected by these events, and we continue to provide all possible support to our team members and their families in both Israel and Ukraine.

Our Hearts go out to all those who are affected by these events and we continue to provide all possible support.

Our team members and their families in both Israel and Ukraine.

As such we could not be more proud of our incredible team members across all of our offices in locations worldwide for having navigated all these challenges so successfully and.

Could not be more thankful to the thousands of merchants, who entrust us with their business every hour of every day.

Beyond the strong financial growth and vigorous 200 to 2023 I'm sorry. It was also another pivotal year for us in terms of the substantial Leafs. We took forward all our long term strategic pillars, as we continue to enrich and develop our various offerings.

First and foremost we continue to onboard and add many new brands across the globe to the large portfolio of enterprise brands, we work with.

As global direct to consumer online trading continues to be a strategic priority for our brands worldwide.

We are not just a leader in global direct to consumer E. Commerce. We're also the only true global player in the market.

We already support 31 different outbound markets and last year alone, we actively ship packages to 224 distinct destination countries and territories around the world.

We quite literally enable our merchants to sell to anyone in nearly every place on earth.

As an example of a discontinued expansion just this last quarter, we launched with <unk> 11 by Venus Williams and perfect moment in the U S with FEMSA Malton, Canada whistles and the Harry Potter store by Warner Brothers in the U K.

<unk>, Brian John Fogarty Ledger, a leading creep the wallet branded fully in France.

Amir Shloket: As such, we could not be more proud of our incredible team members across all our offices and locations worldwide for having navigated all these challenges so successfully, and we could not be more thankful to the thousands of merchants who entrust us with their business every hour of every day. Beyond the strong financial growth and figures, 2023, I'm sorry, was also another pivotal year for us in terms of the substantial leaps we took forward along all our long-term strategic pillars as we continue to enrich and develop our various offerings. First and foremost, we continue to onboard and add many new brands across the globe to the large portfolio of enterprise brands we work with. Global direct-to-consumer online trading continues to be a strategic priority for brands worldwide. We are not just the leader in global direct-to-consumer e-commerce. We are also the only true global player in the market. We already support 31 different Albon markets. And last year alone, we shipped packages to 224 distinct destination countries and territories around the world.

Ethylene modes in Italy, we flew obviously in the Netherlands with jet set in Germany.

Ideally in Belgium, with <unk> in Australia.

In Australia.

We sold Murphy in the Vaca <unk> in Hong Kong, and we've retouch in Japan, just to name a few of the many brands that went live with us in the last quarter of 2023.

During Q4, we also went live with stellar equipment out of Sweden as well as we've got to Queens are first Polish merchant further extending our geographic outreach.

Besides adding new merchants, we also continue to expand the scope of our business with existing merchants and merchant groups.

Just this last quarter Adidas noble and the coupons all extended the list of markets operated through globally.

Wrangles Swimwear went live with an additional brand called Casa del Mar and Kylie Jenner went live with a number of our brands the fashion brand <unk>.

From a product perspective looking back at 2023, we introduced many new features and key developments into our enterprise platform.

Those included improved support for Preorders via took innovation support for crypto currency payments via our new integration of crypto Dot com.

Support for orders, which include items fulfilled from different countries as part of a single order.

Support for several new countries in a multi local offering integrations into new platforms, such as <unk> dot com and much more.

Alongside we continue to work towards the launch of our enhanced demand generation offering based on the assets and capabilities, we acquired as part of the border fee transaction.

Amir Shloket: We quite literally enable our merchants to sell to anyone in nearly every place on earth. As an example of this continued expansion, just this last quarter, we launched with Glossier, 11 by Venus Williams and Perfect Moment in the U.S., with Phantom Wallet in Canada, with Whistles and the Harry Potter store by Warner Brothers in the U.K., with Moogler, a L'Oreal brand, Jean-Paul Gaultier and Ledger, a leading crypto wallet brand all in France, with Etoile and Modes in Italy, with Luavis in the Netherlands, with Jetset in Germany, with Ideal in Belgium, with Zenerobe in Australia, with Salt Murphy and Avecamore in Hong Kong, and with Retouch in Japan, just to name a few of the many brands that went live with us in the last quarter of 2020.

And except expect the first major parts of this exciting new offering to be released towards the second half of the year.

Moreover.

As we've discussed in earlier quarters. During 2023, we also invested considerable resources in harnessing the new and transformative technology of charity of AI to enhance the quality and efficiency of various aspects of our business.

The most recent example of such a successful implementation comes in the form of our shopper facing customer services.

After several months of beta testing and before the recent peak trading season, we introduced into production, our new automated customer service Jetblue based on open AI chat GPT technology, which has been security connected to our systems and databases, thereby enabling many of our shoppers to receive highly accurate answers to their support.

<unk> in real time without a need for human intervention.

We believe this is a manifestation of the tremendous business value such technologies can unlock over the next few years.

Another area in which we have made great progress during 2023 was our strategic relationship with shelf before.

Amir Shloket: During Q4, we also ended live with stellar equipment out of Sweden, as well as with God Save Queen, our first Polish merchant. Further extending our geographical reach, Besides adding new merchants, we also continue to expand the scope of our business with existing merchants and merchant groups. Just this last quarter, Adidas, Nobu, and the Koopas all extended the list of markets operated through Global-E. Triangle Swimwear went live with an additional brand called Casa Del Mar, and Kylie Jenner went live with another of her brands, the fashion brand KHY.

The agreement for which was renewed for another year during Q4.

On the enterprise side, we have almost finalized the migration of all our legacy installed base onto the new native integration.

In addition, our support for <unk>, New Checkout Extensibility feature has gone into general availability. Since January 2024, we have a significant number of merchants already running on this new and improved checkout with globally is cross border capabilities seamlessly embedded within it.

On the Shopify market's pro side, which went into general availability in the U S. In September we continue to see an encouraging adoption rate with more and more merchants every week effortlessly switching it on and going global.

Amir Shloket: From a product perspective, looking back at 2023, we introduced many new features and key developments into our enterprise platform. Those included improved support for pre-orders via tokenization, support for cryptocurrency payments via our new integration with Crypto.com, support for orders that include items fulfilled from different countries as part of a single order, support for several new countries in our multi-local offering, integrations into new platforms such as Wix.com, and much more.

Between these positive early signs and the exciting roadmap of new features and capabilities. We are working on together with shopify.

We believe that the innovative Shelby find markets for offering has the potential to grow significantly over the next few years.

In summary, we are extremely pleased with our achievements and results for 2023.

And we are equally excited towards the many opportunities for growth that await us in 2024 onwards.

Across all our strategic growth pillars.

As Ofer will elaborate on when he presents our guidance for 2024, we expect our strong growth momentum to continue this year with around 32% of annual growth expected in both <unk> and revenues.

Amir Shloket: Alongside these, we continue to work towards the launch of our Enhanced Demand Generation Offer, based on the assets and capabilities we acquired as part of the Voter Free Transaction, and expect the first major parts of this exciting new offering to be released in the second half of the year. Over, as we have discussed in earlier quarters, during 2023, we also invested considerable resources in harnessing the new and transformative technology of generative AI to enhance the quality and efficiency of various aspects of our business. The most recent example of such a successful implementation comes in the form of our shopper-facing customer service. After several months of beta testing, and before the recent peak trading season, we introduced into production our new automated customer service chatbot, based on OpenAI's ChatGPT technology, which is securely connected to our systems and databases. Therefore enabling many of our shoppers to receive highly accurate answers to their support queries in real time, without the need for human intervention.

And with that I will hand, it over to ofer to dive deeper into our quarterly and annual financial results as well as our outlook for Q1 and for the full year of 2024.

Thank you Amir and thanks to everyone for joining us today for our earnings call.

As <unk> stated we are indeed, very pleased with our Q4 and full year of 2023 results Q4 was a strong quarter of fast growth and robust cash generation as we continue to execute and push forward, both topline growth and scale efficiencies.

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 I mentioned at the beginning of the <unk> of this call we've experienced rapid growth of <unk> in Q4, as we generated 1.19 billion of <unk>, an increase of 42% year over year, we benefit from the secular trend of growth in E Commerce, which continues to take share.

From brick and mortar retail and from the increased focus of merchants on the direct to consumer channels. However, it is important to note that due to the continued recessionary concerns and the sensitive macroeconomic and geopolitical situation in many of the world's largest.

Amir Shloket: We believe this is a manifestation of the tremendous business value such technologies can unlock over the next few years. Another area in which we have made great progress during 2023 was our strategic relationship with Shopee, the agreement for which was renewed for another year during Q4. On the enterprise side, we have all but finalized the migration of all our legacy install base onto the new native integration. In addition, our support for Shopify's new Checkout Extensibility feature has gone into general availability since January 2021, with a significant number of merchants already running on this new and improved checkout with Global-E's cross-border capabilities seamlessly embedded within it, on the Shopify Markets Pro site, which went into general availability in the U.S. in September, we continue to see an encouraging adoption rate, with more and more merchants every week effortlessly switching it on and going global.

Economies in the short term there is still relatively high uncertainty regarding consumer demand, which remains volatile.

In Q4, we generated total revenues of $185 $4 million up 33% year over year service fee revenues were $89 $9 million up 43% and fulfillment services revenue were up 24% to $95 5 million.

Yeah.

The higher growth of service fee revenue compared to fulfillment services revenue was mainly driven by the higher share of our multi local service with high performance of the largest multi local merchant in Q4.

Throughout 2023, our existing merchant base continued to stay and to grow with us as reflected in our annual NPR rate of 127% and <unk> rate of over 97% note that our NDA or in 2023 excludes border feet volumes as BARDA free.

Merchants traded with us only for part of 2020.

Amir Shloket: Between these positive early signs and the exciting roadmap of new features and capabilities we are working on together with Shopify, we believe that the innovative Shopify Markets Pro offering has the potential to grow significantly over the next few years. In summary, we are extremely pleased with our achievements and results for 2022, and we are equally excited about the many opportunities for growth that await us from 2024 onward, across all our strategic growth areas. As Ofer will elaborate on when he presents our guidance for 2024, we expect our strong growth momentum to continue this year, with around 32% of annual growth expected in both GMV and revenue. And with that, I will hand it over to Ofer to dive deeper into our quarterly and annual financial results, as well as our outlook for Q1 and for the full year of 2025. Thank you, Amir, and thanks, everyone, for joining us today for our earnings call.

Moving down the P&L growth in non-GAAP gross profit continues to outpace revenue growth in Q4, non-GAAP gross profit was $79 $1 million up 37% year over year, representing a gross margin of 42, 7% compared to <unk>.

One 3% in the same period last year drill.

Driven by the higher share of service fee revenue.

GAAP gross profit was $76 $3 million, representing a margin of 41, 2%.

Moving on to operational expenses, we continue to invest in the development.

<unk> of our platform to further strengthen our offering R&D expense in Q4, excluding stock based compensation was $18 2 million or nine 8% of revenue compared to $17 8 million or 12, 8% in the same period last year.

Total R&D spend in Q4 was $25 $2 million.

We also continue to invest in sales and marketing to enhance our pipeline, while maintaining efficiencies sales and marketing expense, excluding shopify related amortization expenses stock based compensation and acquisition related intangibles amortization was $17 8 million or nine.

Ofer Karin: As Amir stated, we are indeed very pleased with our Q4 and full year 2023 results. Q4 was a strong quarter of fast growth and robust cash generation as we continue to execute and push forward both top-line growth and scale efficiency. 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.

6% of revenue compared to $9 $9 million or seven 1% of revenue in the same period last year.

<unk> warrant related amortization expense was $37 $4 million total sales and marketing expenses for the quarter was 58 $8 million.

General and administrative expenses, excluding stock based compensation acquisition related expenses and acquisition related contingent consideration was $8 6 million or four 6% of revenue.

<unk> to $8 $9 million of six 4% of revenue in the same period last year total G&A spend in Q4 was $15 $5 million.

Ofer Karin: As Amir mentioned at the beginning of this call, we experienced rapid growth of GMV in Q4, as we generated 1.19 billion of GMV, an increase of 42% year-over-year. We benefit from the secular trend of growth in e-commerce, which continues to take share from brick-and-mortar retail and from the increased focus of merchants on their direct-to-consumer channels. However, it is important to note that due to the continued recessionary concerns and the sensitive macroeconomic and geopolitical situation in many of the world's largest economies, in the short term, there is still relatively high uncertainty regarding consumer demand, which remains volatile. In Q4, we generated total revenues of $185.4 million, up 33% year-over-year. Service feed revenues were $89.9 million, up 43%, and fulfillment services revenues were up 24% to $95.5 million.

Adjusted EBITDA totaled $35 2 million, representing a 19% adjusted EBITDA margin, increasing from $21 8 million or 15, 6% margin in the same period last year.

Net loss was $22 $1 million compared to a net loss of $28 $5 million.

In the year ago period, driven mainly by the amortization expenses related to the shopify warrants ample transaction related intangibles.

Switching gears and turning to the balance sheet and cash flow statements. We ended 2023 with 370 $17 million in cash and cash equivalents, including short term deposits and marketable securities.

Cash generation has accelerated with operating cash flow in the quarter at $93 5 million.

Compared to an operating cash flow of $57 $3 million a year ago.

Driven mainly by adjusted EBITDA growth and working capital dynamics.

Moving to our financial outlook and guidance for 2024, despite the prevailing macro related uncertainties. We expect 2024 to be another year of fast growth and improved adjusted EBITDA for globally.

Ofer Karin: The higher growth of service fee revenues compared to fulfillment services revenue was mainly driven by the higher share of our multi-local service, with the high performance of the largest multi-local merchants in Q4. Throughout 2023, our existing merchant base continued to stay and to grow with us, as reflected in our annual NDR rate of 127% and GDR rate of over 97%. Note that our NDR in 2023 excludes border-free volumes as border-free merchants traded with us only for part of 2022. Moving down the P&L, growth in non-GAAP gross profit continues to outpace revenue growth. In Q4, non-GAAP gross profit was $79.1 million, up 37% year-over-year, representing a gross margin of 42.7%, compared to 41.3% in the same period last year, driven by a higher share of service fee revenue. Gap gross profit was $76.3 million, representing a margin of 41.2%. Moving on to Operational Expenses, we continue to invest in the development and enhancement of our platform to further strengthen our offering. R&D expense in Q4, excluding stock-based compensation, was $18.2 million, or 9.8% of revenue, compared to $17.8 million, or 12.8% in the same period last year.

For Q1, 2024, we're expecting <unk> to be in the range of $875 million to $915 million at the midpoint of the range. This represents a growth rate of 27% versus Q1 of 2023.

We expect Q1 revenue to be in the range of 138 five $145 million.

At the midpoint of the range. This represents a growth rate of 21% versus Q1 of 2023.

For adjusted EBITDA, we're expecting a profit in the range of $16 million to $20 million.

For the full year of 2024, we anticipate <unk> to be in the range of $4 $5 nine to $4 $83 billion, representing over 32% annual growth at the midpoint of the range revenue is expected to be in the range of 731% to 771.

<unk>.

Representing a growth rate of nearly 32% at the midpoint of the range.

As we expect overall take rates to stabilize throughout the year.

For adjusted EBITDA, we're expecting a profit of 121 $137 million representing over 39% growth at the midpoint of the range, thanks to increased efficiencies and economies of scale.

As reflected in the guidance, we expect our fast growth to continue in 2024 with around 32% top line growth alongside improved adjusted EBITDA margin.

The slower top line growth, we expect in Q1 as a result of a number of factors first is the lower contribution for new merchant is large merchants. We have signed are expected to launch only in the second half of the year.

Second is the fact that we expect the trading that still exist in the legacy border free platform to weigh on our growth in the first half of 2024 is a high share of its remaining <unk> generated by traditional retailers, especially department stores, which are facing challenges.

Ofer Karin: Total R&D spend in Q4 was $25.2 million. We also continue to invest in sales and marketing to enhance our pipeline while maintaining efficiency. Citizen marketing expense, excluding Shopify-related amortization expenses, stock-based compensation, and acquisition-related intangibles amortization, was $17.8 million, or 9.6% of revenue, compared to $9.9 million, or 7.1% of revenue, in the same period last year. Shopify Warrant Related Amortization Expense was $37.4 million. Total sales and marketing expenses for the quarter were $58.8 million.

With many even experiencing declining sales trends.

We believe we will see improvement once we migrate many of these merchants to the globally platform.

Third is the continued volatility in consumer demand in the short term in light of weakness in some of the largest economies as well as some softness we observed in trading volumes of consumers around the globe during February.

We expect our overall growth to accelerate in the remaining of the year driven by a ramp in shopify markets Pro planned launches of large merchants in the second half of the year and a lower impact from border free on a year on year comparison.

Ofer Karin: General and administrative expenses, excluding stock-based compensation, acquisition-related expenses, and acquisition-related contingent consideration, were $8.6 million, or 4.6% of revenue, compared to $8.9 million, or 6.4% of revenue, in the same period last year. Total G&A spend in Q4 was $15.5 million. Adjusted EBITDA totaled $35.2 million, representing a 19% adjusted EBITDA margin, increasing from $21.8 million of 15.6% margin in the same period last year. Net loss was $22.1 million compared to a net loss of $28.5 million in the year-ago period, driven mainly by the amortization expenses related to the Shopify warrants and to transactions-related intangibles.

In conclusion, we continue to enhance our capabilities to support merchants worldwide in their direct to consumer journey.

<unk> in front of US is immense and we are well positioned to capture it. We believe this will enable us to combine durable top line growth and cash generation in the coming years.

And with that EMEA, Nir and I are happy to take any of your questions operator.

Thank you we will now be conducting a question and answer session.

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Ofer Karin: Switching gears and turning to the balance sheet and cash flow statements, we ended 2023 with $317 million in cash and cash equivalents, including short-term deposits and marketable securities. Cash generation has accelerated, with operating cash flow in the quarter at $93.5 million compared to an operating cash flow of $57.3 million a year ago, driven mainly by adjusted EBITDA growth and working capital dynamics. Moving to our Financial Outlook and Guidance for 2024 Despite the prevailing macro-related uncertainties, we expect 2024 to be another year of fast growth and improved adjusted EBITDA for Global-E. For Q1 2024, we're expecting GMV to be in the range of $875 to $915 million. At the midpoint of the range, this represents a growth rate of 27% versus Q1 2024. We expect Q1 revenue to be in the range of $138.5 to $145 million. At the midpoint of the range, this represents a growth rate of 21% versus Q1 2022. For Adjusted EBITDA, we are expecting a profit in the range of $16 to $20 million.

Our first question comes from Brian Peterson from Raymond James. Please proceed.

Alright, guys. Thanks for taking questions.

In early December.

December.

Strong.

Okay.

Would love to understand maybe how Facebook Tim.

Timber for January and February.

Yeah.

Thank you.

Yeah.

So Brian. Thank you for the question its offer I think as we mentioned we have seen increased volatility in.

Consumer demand.

In the past year, and especially in the in the last few months.

And as we already communicated in the previous quarter.

We saw a drop in September and October a relatively steep drop in same store sales and a very nice recovery towards the end of October with a very very strong.

Peak.

An excellent results around Black Friday, cyber Monday weekend.

And then <unk>.

December.

This continued with the lighter end to the year.

And as I just.

Mentioned.

Things continue to be volatile and we do see a lot of shifts in consumer demand and since the beginning of February we have seen some softness in consumer sentiment again around the globe and weakness in some of the large economies.

So this has been with us only for the last.

Two or three weeks, but important to note.

I appreciate your perspective there.

Markets for <unk>.

Is there any way.

Ofer Karin: For the full year of 2024, we anticipate GMV to be in the range of $4.59 to $4.83 billion, representing over 32% annual growth at the midpoint of the range. Revenue is expected to be in the range of $731 to $771 million, representing a growth rate of nearly 32% at the midpoint of the range, as we expect overall take rates to stabilize throughout the year. For Adjusted EBITDA, we're expecting a profit of $121 to $137 million, representing over 39% growth at the midpoint of the range, thanks to increased efficiencies and economies of scale. As reflected in the guidance, we expect our fast growth to continue in 2024 with around 32% top-line growth alongside improved adjusted EBITDA margins. The slower top-line growth we expect in Q1 is the result of a number of factors.

There is some help in how to think about it.

Contribution in 2024.

Sure there thank you.

Brian It's a little choppy or your line is a little choppy could you repeat the contribution of what were you asking about exactly yes, sorry, hopefully this is better now the rash and Shopify <unk> pro.

So far east Ernie.

In terms of expectations for 2024.

Yes.

As we mentioned, we're very happy with the progress that we've made in shopify markets grow both from a technical perspective, the developments, we've deployed and that we're working on together with Shopify and also the the rate of adoption.

It is still in early days, but.

But we believe that.

Over the next quarters and years it can grow into a significant business.

Yes, Sir.

Thanks, Brian.

Our next question comes from will Nance from Goldman Sachs. Please proceed.

Hey, guys I appreciate you taking the questions.

Just I guess another question on I think you mentioned volatile consumer trends over the past several months and maybe more recently.

In February I guess could you maybe talk about.

The approach that you took the guidance I mean, obviously the color on <unk> is very helpful. It sounds like there is a ramp based baked into the guidance for the remainder of the year. Some of that Shopify, just kind of color on what you're assuming for the remainder of the year as it relates to the macro and then if we.

Ofer Karin: First, is the lower contribution for new merchants, as large merchants we have signed are expected to launch only in the second half of the year. Second, is the fact that we expect the trading that still exists on the legacy border-free platform to weigh on our growth in the first half of 2024, as a high share of its remaining GMV is generated by traditional retailers, especially department stores, which are facing challenges, with many even experiencing declining sales trends. We believe we will see improvement once we migrate many of these merchants to the Global-E platform. Third, the continued volatility in consumer demand in the short term, in light of weakness in some of the largest economies, as well as some softness we observed in trading volumes of consumers around the globe during February.

We look back over the last couple of years.

There has been several kind of exogenous events that have impacted the numbers.

It resulted in kind of <unk> outperformance than maybe you guys would've hope just wondering if you can contextualize. This guidance in terms of just how much kind of macro weakness over the course of the year the guidance can absorb given the continued levels of uncertainty.

Sure well thank you for that question.

So.

Since there is.

A high level of uncertainty we have not assumed.

An improvement in macro conditions throughout the year.

However, we also haven't looked at the lowest point as I mentioned, we saw some weakness.

Ofer Karin: We expect our overall growth to accelerate in the remaining of the year, driven by a ramp in Shopify Markets Pro, planned launches of large merchants in the second half of the year, and a lower impact from Border-Free on a year-on-year comparison. In conclusion, we continue to enhance our capabilities to support merchants worldwide in their direct-to-consumer journey. The opportunity in front of us is immense, and we are well positioned to capture it. We believe this will enable us to combine durable top-line growth with cash generation in the coming years. And with that, Amir, Nir, and I are happy to take any of your questions. Operator, Thank you. We will now be conducting a question and answer session. To provide enough time to address requests, we ask participants to limit themselves to one question with one follow-up. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question area. You may press star 2 if you would like to remove your question. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start button.

Since the beginning of February.

So.

We sort of look at the average since the beginning of the year not taking into account the lowest point, but also not taking into account.

Any improvement in macro conditions as again the level of uncertainty is still high and we have no control of that.

Got it makes sense and then I think you called out border free just wondering if you could just maybe help us size in terms of whats the contribution in the numbers today.

And maybe roughly what are you kind of baking in for the remainder of the year for that business.

Yeah. So.

In terms of volumes today call volume.

Border free sorry.

Approximately 5% of the volumes.

High level number.

It is decreasing in share over time, one because we are not onboarding and new merchants onto border free.

And two as we mentioned.

The type of merchants that we see on on border free legacy mainly U S legacy.

Merchants, a lot of department stores and since they are sort of facing their own challenges.

With their business model.

It has an impact on their sales as well. So this is.

Operator: One moment, please, while we poll for questions. Our first question comes from Brian Peterson from Raymond James. Please proceed. Hi, guys. Thanks for taking the questions. Oprah, put them in the link.

Decreasing over time.

Okay.

Got it that's helpful. Sorry, just a clarification on the expectations for the remainder of the year are you guys assuming that the same store sales there remain negative for the remainder of the year.

Okay.

Yes, yes, we do however, I think we.

We do think that.

Mainly in the second half as we migrate those clients we will see.

Brian Peterson: I appreciate the commentary that December and October were pretty strong. You mentioned that you had a big talk in February. We'd love to understand, maybe how things progress from December to January, or any regional brands that you can think of. Yeah, so Brian, thank you for the question; it's all fair. I think that, you know, as we mentioned, we have seen increased volatility in consumer demand in the past year and especially in the last few months, and, as we already communicated in the previous quarter, we saw a drop in September and October, a relatively steep drop in same-store sales, and a very nice recovery towards the end of October, with a very, very strong peak and excellent results around the Black Friday and Cyber Monday weekend. Then during December, this continued with a lighter end to the year.

One off increase that will stay with us but.

Due to the higher conversion rates that we typically see on the globally platform. So we do foresee an improvement however, it will be gradual as they would migrate one by one and since those are large legacy merchant takes some time so we.

We do expect to see some improvement, but it will be gradual.

Got it thanks for taking the questions guys.

Thank you.

Our next question comes from Samad Samana from Jefferies. Please proceed.

Hey, good morning, Thanks for taking my questions maybe first just.

Just on the on what's embedded in the guidance around the net dollar retention.

<unk> hundred 27 was a strong year for 'twenty three.

I think about the low <unk> growth guidance, what are you thinking net dollar retention will look like in 2024.

So.

We think that net dollar retention in 24 will be slightly lower compared to.

23.

Ofer Karin: And, as I just mentioned, things continue to be volatile, and we do see a lot of shifts in consumer demand. And since the beginning of February, we have seen some softness in consumer sentiment around the globe and weakness in some of the large economies. So, you know, this has been with us only for the last two or three weeks, but it is still important to know. I appreciate the perspective there.

As we mentioned.

We do see sort of uncertainty around macro conditions consumer sentiment.

Is very volatile.

<unk>.

And on top of that also board of free will come in.

And sort of weigh a bit on our MBR. So we.

We do expect we do expect it to be slightly lower than what we have seen.

In 2023.

Understood and then maybe just.

Brian Peterson: Obviously, the market's growth has been impressive. Is there any way to get investors some help in how to think about the contribution in 2024? Thank you. It's Brian. It's a little choppy, or your line is a little choppy.

On Shopify markets Pro.

Might be more for them year on year, but what are you seeing as far as in the initial customers that are using it now it has been let's call. It four five months, maybe average annual gmg of the typical shopify market merchants that youre seeing and then related a fair should we think about that being like at 200 or $300 million GDP.

Brian Peterson: Could you repeat the contribution of exactly what were you asking about? Sorry, hopefully this is better. No, the reference to Shopify is probably from so far. Is there any perspective that you can give in terms of... Expect Issues in 0.4? Yeah, so as we mentioned, we're very happy with the progress that we've made in Shopify Markets Pro, both from a technical perspective, the developments that we've deployed and that we're working on together with Shopify, and also the rate of adoption. It is still in the early days, but we believe that over the next quarters and years, it can grow into a significant business. Thank you. Thanks, Mike.

Contribution in 'twenty four is anything that we can get it kind of pegging again.

Okay.

Hi, <unk>, it's Neal.

Thanks for the questions.

We have seen initial positive signs for adoption for adoption post.

<unk> general availability in the U S.

Coupled with continued development of the solution capabilities that is still ongoing.

Expect the adoption rate to grow gradually throughout the year.

At this stage.

Don't guide specifically.

For Shopify markets Pro although I don't think Youll numbers <unk> Paul.

Okay.

Great. Thanks again.

<unk>.

Thanks, a lot.

Our next question comes from Andrew Bosch from Wells Fargo. Please proceed.

Hey, Thanks for taking the question.

Will Nance: Our next question comes from Will Nance from Goldman Sachs. Please proceed. Hey guys, I appreciate you taking the questions. So just, I guess another question on, you know, I think you mentioned volatile consumer trends over the past several months and maybe more recently in February. Could you maybe talk about the approach that you took to guidance? I mean, obviously, the color on 1Q is very helpful.

Just wanted to get a sense of your expectations for the gross margins as we progress through 'twenty.

2024.

Film and dynamics in the fourth quarter, it seems reasonable that that gross profit could outpace revenue so any thoughts around that would be helpful.

Okay.

So we are.

Very very pleased with our gross margin improvement over time, as we surpassed our 40% target earlier than we expected.

Ofer Karin: It sounds like there is a ramp-based ramp baked into the guidance for the remainder of the year. You know, some of that Shopify stuff, just kind of color on what you're assuming for the remainder of the year as it relates to the macro. And then, you know, if we look back over the last couple of years, there have been several kinds of exogenous events that have impacted the numbers and, you know, resulted in kind of less outperformance than maybe you guys would have hoped. Just wondering if you could contextualize this guidance in terms of just how much kind of macro weakness over the course of the year the guidance can absorb given, you know, the continued levels of uncertainty. Sure. Well, thank you for the question. Um, so... Since there is a high level of uncertainty, we have not assumed an improvement in macro conditions throughout the year. However, we also haven't looked at the lowest point.

And moving forward, we expect relatively stable gross margins as we continue to prioritize growth.

Over profitability. However, we do we.

We do see operational leverage potential that will enable us to improve our adjusted EBITDA margin.

Got it thanks, and then just looking back at the fourth quarter. I mean, you had a really strong black Friday, cyber Monday press release of 53% versus the <unk>.

44 for the full quarter. So maybe you could just give us a sense of what was was about your platform that drove that outside strength and maybe a better sense of the shape of trends throughout the quarter. So we can understand it.

Sure so.

Yes, as you mentioned we did.

<unk> experienced a strong quarter generally and a very strong peak trading.

Season, with the highest growth around.

Black Friday, and cyber Monday weekend.

Will Nance: As I mentioned, we saw some weakness since the beginning of February. So we sort of look at the average since the beginning of the year, not taking into account the lowest point, but also not taking into account any improvement in macro conditions as, again, the level of uncertainty is still high, and we have no control of that.

Some of it may be attributed to consumers' preference to discount chopping. So this may have been an impact.

And I think that on top of that.

There were there was.

Very strong results for some of our large merchants so that also.

Contributed.

For them first but for us.

The derivative as well.

Got it thank you.

Our next question comes from Kunal <unk> from UBS. Please proceed.

Will Nance: And then I think, you know, you called out Border Free. I was wondering if you could just maybe help us size it in terms of, you know, what's the contribution in numbers today? And maybe roughly what are you kind of baking in for the remainder of the year for that business? Yeah, so in terms of volumes, today Border-Free is approximately 5% of the volumes. It's sort of a high-level number.

Hi, Thank you for taking the questions.

One on the on the revenue guide to your revenue guidance for <unk> implies a decrease decline.

But then when we look at the full year guide for 2020 for that kind of suggest that.

The take rate should improve in the back half.

So how much.

The improvement in the decay are you baking in <unk>.

Ofer Karin: It is decreasing in share over time, one, because we are not onboarding any new merchants onto Border-Free. And two, as we mentioned, the type of merchants that we see on Border-Free, legacy, mainly U.S. legacy merchants, a lot of department stores, and since they are sort of facing their own challenges with their business models, it has an impact on their sales as well, so this is decreasing over time. Got it, that

<unk> from <unk>.

Growth from shop, Submarkets probe, which is probably has a higher take rate.

Yes, So I think you can now for the question.

I think the answer then.

Main part of the answer relies that showed in 2023.

Because we started 2023 with a much higher fulfillment take rate.

The overall take rate in Q1 last year was 16 point.

7% and over the year as the share of multi local and mainly our large multi local merchants grew because we have launched a few.

Will Nance: Sorry, just clarification on the expectations for the remainder of the year. Are you guys assuming that the same-store sales there will remain negative for the remainder of the year? Yes, yes, we do.

Ofer Karin: However, I think we do think that, mainly in the second half, as we migrate those clients, we will see a one-off increase that will stay with us, but due to the higher conversion rates that we typically see on the Global-E platform. So we do foresee an improvement. However, it will be gradual as they migrate one by one, and since those are large legacy merchants, it takes some time. So we do expect to see some improvement, but it will be gradual. I got it.

<unk> expanded our activities with others.

We've seen a reduction in overall take rate, mainly not mainly just out of the fulfillment.

Take rate and basically as we mentioned in the previous quarter, we expect that to balance next year. So we expect to see.

More balanced year, we expect it to stabilize at around the overall take rate around 16% as we do not expect the share of those merchant to go significantly because the merchant that we see currently in our pipeline the large ones are.

Samad Samana: Thanks for taking the questions, guys. Thank you. Our next question comes from Samad Samana from Jeffreys. Please proceed. Hey, good morning.

Multi local.

Merch and so.

We expect to strike a balance.

Thank you and then.

You mentioned weakness in February can you can you talk about trends kind of like maybe vertical and geography like you did last time in terms of what's largely doing versus what <unk> doing and then lastly, you talked about weakness in Europe.

Ofer Karin: And thanks for taking my questions. Maybe first, just on what's embedded in the guidance around the net dollar retention, 127 was a strong year for 23. You know, just as I think about the low-30s growth guidance, what are you thinking net dollar retention will look like in 2024? So, we think that net dollar retention in 2024 will be slightly lower compared to 2023. As we mentioned, we do see sort of uncertainty around macro conditions; consumer sentiment is very volatile. And on top of that, also border-free will come in and sort of weigh a bit on our NDR. So we do expect it to be slightly lower than what we have seen in 2020. And maybe just on Shopify Markets Pro, this might be more for Amir or Nir, but what are you seeing as far as initial customers that are using it now? Now it's been, you know, let's call it four or five months, maybe average annual GMV of the typical Shopify Market Pro merchant that you're seeing, and then related au fair, you know, should we think about that being like a $200 or $300 million GMV contribution It's Neil.

Inbound so.

Can you talk a bit about that please.

Yes. Thank you for your question Neil.

On this.

I'd say that in February we don't see a specific vertical that is down however on geographies.

Do see slowdown their own different parts of the world.

Our inbound into the U S has slowed down a bit.

Same store sales are not growing as fast as they did in January or previous yield.

Same goes into the UK that officially went into recession just earlier this year.

And.

We've seen some slowness in APAC, so it's kind of a global slowdown that we see.

Specific to our self until at Ohio with vertical.

Got it thank you so much.

Our next question comes from Scott Berg from Needham <unk> Company. Please proceed.

Okay.

Hi, everyone nice quarter.

Thanks for taking my questions here.

I just wanted to touch on the guidance for 'twenty for a little bit your.

I think as you all noted in your service fee revenue.

It's been growing meaningfully faster than your.

Yes.

And then the rest of the revenues, but even.

<unk> been growing even faster recently than historical trends do you still see the breakdown of growth between the two revenue segments.

Kind of.

Having that Neil I guess growth difference there or is this just noted a moment ago with some of the larger merchants that you have in the pipeline do you expect that to maybe moderate the growth rate is more balanced between the two lines.

Nir Jebi: Thanks for the questions. We have seen initial positive signs for adoption post-S&P, general availability in the U.S., coupled with continued development of the solution capabilities that is still ongoing. We expect the adoption rate to grow gradually throughout the year. At this stage, we don't have any guidance specifically for Shopify Markets Pro, however, I don't think your numbers generally are far out. Great, thanks again, and talk soon.

Yes.

Sure. Thank you for the question.

We do expect to see a more balanced growth.

In 2024.

As I mentioned 2023 was characterized by strong.

Local growth.

Growth.

Which had an impact on the mix.

Andrew Bosch: Our next question comes from Andrew Bosch from Wells Fargo. Please proceed. Hey, thanks for taking the question. I just want to get a sense of your expectations for gross margins as we progress through 2024. I mean, with the fulfillment dynamics in the fourth quarter, it seems reasonable that gross profit could outpace revenue. So any thoughts on that would be helpful.

Typically don't have any fulfillment revenue or very little fulfillment revenue with multi local and we expect 'twenty to be much more balance that as I mentioned the larger merchants that we seen that have signed all we've seen the pipeline or not.

Multi local merchants and we also have.

A few new initiatives around fulfillment services, but we do expect this year to be much more balanced in terms of.

Revenue pillars growth.

Got it helpful and then from a follow up perspective.

Ofer Karin: So we are very, very pleased with our gross margin improvement over time as we surpassed our 40% target earlier than we expected. And moving forward, we expect relatively stable gross margins as we continue to prioritize growth over profitability. However, we do see operational leverage potential that will enable us to improve our adjusted EBITDA margin.

Congrats on fulfilling into 200 countries by my math that probably means youre only not fulfilling an art Deco right now maybe that's a future goal, but as I think about the investments required for you to expand your distribution capabilities.

Given the number of countries that you and I thought you already and are those investments largely kind of done at this point do you think in the.

Andrew Bosch: And then just looking back at the fourth quarter, I mean, you had a really strong Black Friday, Cyber Monday press release of 53% versus, you know, the 44 for the full course. And maybe you could just give us a sense of, like, what it was about your platform that drove that outside strength and maybe a better sense of the shape of trends throughout the course of the year so we can understand. Sure, so as you mentioned, we did experience a strong quarter generally and a very strong holiday trading season with the highest growth around Black Friday and Cyber Monday weekend. Some of it may be attributed to consumers' preference for discount shopping, so this may have an impact. And I think that on top of that...

I guess the additional needs there are very more incremental based on volumes or will there be any sort of step up invest in investments maybe in the next couple of years to help you.

Penetrate some of those markets.

Yes.

Hi, guys.

It does not have any any any citizens and it's probably not going to ship there anytime soon but who knows maybe.

But do.

To your question.

In terms of the outbound in terms of the inbound markets.

Those doesn't.

Requiring.

Any specific investments from us.

It's the outbound markets that.

Sometimes require.

Some investment in them, but I would say it's by now we've as we mentioned 31 different outbound markets.

Margin on investment that is required from US we are opening an additional market is already quite low we are well trained and well seasoned and doing it in it.

Just a reminder, in any case, we're not talking about any capital investments. This is a very capitalized on it mostly has to do with sometimes we need a local entity requires some local contracts but.

Kunal Barukar: There were very strong results for some of our large merchants, so that also contributed to them first but for us as a derivative as well. Got it, thank you. Our next question comes from Kunal Barukar from UBS. Hi, thank you for taking the questions. One, on the revenue guide, so your revenue guide for 1Q implies a take rate decline, but then when we look at the full year guide for 2024, that kind of suggests that, you know, the take rate should improve in the back half. So how much of the improvement in the take rate are you baking in assumptions for growth from Shopify Markets Pro, which is probably at a higher take rate? Thank you, Kunal, for the question.

It's not a lot more than that so we don't expect any massive investments in terms of.

The additional mark all of our markets that will be opening in the future.

Yeah.

Excellent. Thanks for taking my question.

Thanks, Bob.

Our next question comes from Koji Ikeda from Bank of America. Please proceed.

Hey, guys.

Thanks for taking the questions.

I wanted to ask a question on the.

The first quarter GMB.

In that into that a little bit more.

It's a much heavier sequential growth stepped down assumption this year versus last year. It looks like it's about down 25%.

<unk> was down 21% one for guiding the <unk> 23.

Can you dig into a little bit about what's causing that higher level of Jamie stepped down.

Is that all uncertainty with the macro and the consumer are there any customers that you now have that have outsized.

Ofer Karin: I think that the answer, you know, the main part of the answer relies actually on 2023 because we started 2023 with a much higher fulfillment rate. The overall take rate in Q1 last year was 16.7%, and over the year, as the share of multi-local and, mainly, our large multi-local merchants grew because we launched a few and expanded our activities with others, we've seen a reduction in overall take rate, mainly, not mainly, just out of the fulfillment take rate. And basically, as we mentioned in the previous quarter, we expect that to balance next year, so we expect to see a much more balanced year. We expect it to stabilize at around the overall take rate, around 16%, as we do not expect the share of those merchants to grow significantly because the merchants that we see currently in our pipeline, the large ones, are not multi-local merchants, so we expect to strike a balance. Thank you.

<unk> holiday seasonality that is driving this outlook.

Sort of color there would be fine amazing. Thank you.

Sure. Thank you for the question.

Well I'll start from the top four for the full year of 'twenty 'twenty four we expect to see continued momentum of high growth of over 30% for both <unk> and revenue and that is supported by a strong pipeline of large merchants that are expected to launch.

In the back half of the of the year.

As well as the ramp up of Shopify markets grow over the course of the year specifically for Q1.

The growth we expect.

Lower.

And that is.

There are a few drivers behind the first one is less contribution from new merchants as the large merchants signed or the ones that are towards the end of the pipeline are expected to launch later in the year, mainly in the second half of the year, but we see we are expecting.

Kunal Barukar: And then, you know, you mentioned weakness in February; can you talk about trends by like, maybe vertical and geography like you did last time in terms of, you know, what's luxury doing versus what's apparel doing? And then last time, you talked about weakness in Europe, inbound. So can you talk a bit about that? Yeah, thank you for your question. It's Neil.

<unk> planning very nice launches, but the large ones in the second half of the year.

As we mentioned, we see some adverse effect from some border free legacy retail clients, mainly the department stores and we expect this to gradually.

Improve once we complete the migration of these clients to the globally platform and three is.

Nir Jebi: I would say that in February, we don't see a specific vertical that is down. However, on geographies, we do see slowdowns around different parts of the world. Our inbound into the US has slowed down a bit, with same store sales not growing as fast as they did in January or previous years. The same goes into the UK, which officially went into recession just earlier this year.

We mentioned, we continued to see high volatility in consumer sentiment.

As we've seen between Q2 and Q3 last year, and then Q3 and Q4 and now again in February as we mentioned.

We saw a decline in consumer demand. So this will really impact.

Scott Berg: And same, we've seen some slowness in APAC. So it's kind of a global slowdown that we see, not specific to a certain territorial area. Got it. Thank you so much.

Q1, as well so those those are the main drivers.

Our next question comes from Brent Brislin from Piper Sandler. Please proceed.

Ofer Karin: Our next question comes from Scott Berg from Needham & Company. Please proceed. Hi everyone, nice quarter.

Yes.

Good morning, great to see a strong close to the year Amir 97% gross retention model here suggest the product remains sticky low churn.

That you can't control consumer spending.

That clearly is impacting the growth I've run this year.

Are the growth levers that are in your control that you can kind of lean more into this year outside of the macro.

Yeah.

Hi, Ren.

Absolutely.

As you mentioned the dynamics are remain very positive although as we mentioned it is.

I expect it to be.

And over a year of high uncertainty and higher volatility from a macro perspective.

But we are we continue to push across all the field from growth in the existing.

Territories, where we already operate two opening additional markets and additional territory.

Ofer Karin: We do expect to see more balanced growth in 2024. As I mentioned, 2023 was characterized by strong multi-local growth, which had an impact on the mix. We typically don't have any fulfillment revenue or very little fulfillment revenue with multi-local growth. We expect 2024 to be much more balanced.

Of course short before markets Pro which we have mentioned a few times already on the call.

Is also expected to ramp up along the year and contribute further to our growth.

And we are also.

Working on Val.

Value added services specifically.

Demand generation.

That's going to kick in as we mentioned towards the backend of the year, it's probably not going to be.

Accretive day, one but over the longer period, we expect that to have an additional contribution.

Scott Berg: As I mentioned, the larger merchants that we see that have signed or we see in the pipeline are not multi-local merchants. We also have a few new initiatives around fulfillment services. We do expect this year to be much more balanced in terms of revenue pillar growth. Got it helpful. And then from a follow-up perspective, congrats on fulfilling in 200 countries. By my math, that probably means you're only not fulfilling in Antarctica right now. Maybe that's a future goal.

For accelerating our growth.

Our next question comes from James Fawcett from Morgan Stanley. Please proceed.

Hi, Thanks for the question.

Wanted to ask just in terms of customer acquisition and that kind of thing.

I'm wondering how trends have been evolving with respect.

Inbound interest in conversion for for new merchant adds outside of Shopify.

Just trying to get a sense for how we should be thinking about the percentage of new ads that are shopped related versus those that aren't in the profile of the merchant partners.

Nir Jebi: But as I think about the investments required for you to expand your distribution capabilities, given the number of countries that you're already in, are those investments largely kind of done at this point? Do you think, I guess, the additional needs there are very more incremental based on volumes? Or will there be any sort of step-up in investments maybe in the next couple of years to help you kind of penetrate some of those volumes? Yeah, Antarctica does not have any citizens in it, so we're probably not going to ship there anytime soon, but who knows? Maybe.

Hi, James Thanks for the question.

We have seen record bookings in 2023, and we are excited about the strength of the pipeline is going to support.

Our growth throughout 2024 and into 2025.

Within it we have.

A couple of very large merchants.

Expected to launch with us in the back half of the hill both of them are non shopify.

And we expect the weight of those.

Larger merchants.

And I would say to balance out the.

Rapid growth.

We expect to see.

In a choppy freight markets froze. So overall when we look at 2020 full we expected the mix of merchants to remained quite balanced with what we've seen in 2023.

Nir Jebi: But to your question, in terms of the outbound and inbound markets, those don't require any specific investments from us. It's the outbound markets that sometimes require some investment in them, but I would say there are now, as we mentioned, 31 different outbound markets. The marginal investment that is required from us for opening an additional market is already quite low.

Yeah.

Got it thank you for that and then I wonder.

Our next question comes from Mark <unk>.

From benchmark company. Please proceed.

Excuse me thank you.

Question on luxury specifically.

Just given the sort of mutual interest in discounts that you mentioned.

Nir Jebi: We are well-trained and well-seasoned at doing it. And just as a reminder, in any case, we're not talking about any capital investments. This is very capitalized, and it mostly has to do with sometimes we need a local entity, it requires some local contracts, but it's not a lot more than that.

Curious how luxury performed in fourth quarter relative to the prior year and how that sort of transitioned into <unk>, just given that I think that vertical is roughly 25% of your GMB.

Koji Ikeda: So we don't expect any massive investments in terms of the additional outbound markets that we'll be opening in the future. Our next question comes from Koji Ikeda from Bank of America. Please proceed. Hey guys, thanks for taking the questions. I wanted to ask a question on... the first quarter, just digging into that.

I had a quick follow up.

Yeah.

In terms of luxury.

It hasn't been a great year for luxury however.

There wasn't an improvement towards that.

Last few months of the year, so as improved.

Compared to Q3, which was the lowest point.

Ofer Karin: Blog. It looks like it's about down 25% versus down 21% when first guided. So, can you dig into a little bit about what's causing that higher... Step.

For luxury and I think it's hovering around the same level.

So it's better than it was in the lowest point, it's not doing great, but but.

Ofer Karin: Is that all uncertainty with the macro and the consumer? Are there any customers that you now have that have outsized 4Q holiday seasonality that is driving this outlook? I mean, any sort of color.

Pretty stable.

Our next question comes from Patrick Wahl reasons from citizens JMP. Please proceed.

Oh, great. Thank you Amir.

Ofer Karin: Sure, thank you for the question. Well, I'll start from the top. For the full year of 2024, we expect to see continued momentum of high growth of over 30% for both GMV and revenue. And that is supported by our strong pipeline of large merchants that are expected to launch in the back half of the year, as well as the ramp-up of Shopify Markets Pro over the course of the year. Specifically for Q1, indeed, the growth we expect is lower, and there are a few drivers behind that. The first one is less contribution from new merchants, as the large merchants signed or the ones that are towards the end of the pipeline are expected to launch later in the year, mainly in the second half of the year.

Amir So are you still excited about demand gen over the sort of mid to longer term.

And what's the dream there.

Hi, yes.

<unk>.

I think.

It's going to be.

It's a very unique.

Offering.

It's going to take time.

To build it but we strongly believe in the potential to both benefit our existing merchants.

Also to serve as the.

There is another great benefit for our new merchants that are coming on board and therefore help to accelerate.

Our sales pipeline.

Even servers so definitely.

As <unk>.

Excited if not more.

Then before.

Ofer Karin: So we see, we are expecting and planning very nice launches, but large ones in the second half of the year. As we mentioned, we see some adverse effects from some border-free legacy retail clients, mainly department stores, and we expect this to gradually improve once we complete the migration of these clients to the Global-E platform. And three, as we mentioned, we continue to see high volatility in consumer sentiment, as we saw between Q2 and Q3 last year and then Q3 and Q4, and now again in February, as we mentioned, we saw a decline in consumer demand, so this will impact Q1 as well. So those are the main drivers.

In terms of the dream.

<unk> is basically to be able to offer.

Our platform a unique platform for demand generation, which is unlike.

Any other offering to these merchants can can have from digital agencies or ever outside.

Providers, but something that is fully aligned with their growth interest and fully integrated.

The globally offering with.

With each part of it strengthening.

<unk>.

We think it's it's something that can be.

A game changer for for some of these brands.

Yeah.

Our next question comes from Matthew <unk> from Keybanc capital markets. Please proceed.

Hey, guys and thanks for taking my question I was just wondering if you could talk about if there's any differences in the size of merchants coming on to the platform. There is obviously you know shopify markets pro coming in and obviously you guys mentioned this last quarter too, but we also saw weeks announced.

Brent Braceland: Our next question comes from Brent Braceland on behalf of Piper Sandler. Please proceed. Good morning.

Amir Shloket: Great to see a strong close to the year. Amir, the 97% gross retention model here suggests the product remains sticky, and low churn. I get you can't control consumer spending, that clearly is impacting the growth I've run this year. What are the growth levers that are in your control that you can kind of lean more into this year outside of the macro? Hi, Brent.

The partnerships I'm, just wondering if you're expecting maybe some of the.

Smaller merchants to come onto the platform versus previous years. Thanks.

Yes, so I think that.

As you mentioned on the one hand, we continue our growth without.

With our enterprise clients and we continue to onboard them.

As we did in previous years in parallel.

Amir Shloket: So, absolutely, as you mentioned, the dynamics remain very positive, although, as we mentioned, it is expected to be another year of high uncertainty and high volatility from a macro perspective. But we continue to push across all fields, from growth in the existing territories where we already operate to opening additional markets and additional territories. Of course, Shopify Markets Pro, which we have mentioned a few times already on the call, is also expected to ramp up over the year and contribute further to our growth. And we are also working on value-added services, specifically demand generation that's going to kick in, as we mentioned, towards the back end of the year. It's probably not going to be a creative day one, but over the longer period, we expect that to have an additional contribution to accelerate our growth. Our next question comes from James Fawcett from Morgan Stanley. Please proceed. Hi, thanks for the question. I want to ask you something...

We have seen a greater adoption of shopify markets pro.

With thousands of merchants launching on the platform. However.

Significantly smaller size.

Our average enterprise client.

We've seen initial traction.

Launching.

Weeks merchants on the platform as well.

With an average size also smaller than our regular enterprise. However, both from weeks and from Shopify, we expect to see a large.

Large numbers of <unk>.

Clients that would actually.

It will give us another edge to our growth with with a different portfolio of merchants between between those smaller merchants that all enterprise.

Personal clients.

Okay.

Our next question comes from Matt O'neill from Ft Partners. Please proceed.

Yeah, Hi, thanks, everybody for taking my question.

James Fawcett: Customer Act. I'm wondering how trends have been evolving. Inbound. Outside of shop, www.globaloneline.com, Shop Related. Hi James, it's Neil.

Much has been asked and answered here, but maybe just digging a little bit on the cost.

Revenue quickly.

Give me a little bit higher than expected was just curious if you could remind us the more volatile components of the cost of revenue I imagine the payment side, a little bit more predictable but.

Nir Jebi: Thanks for the question. We have seen record bookings in 2023, and we are excited about the strength of the pipeline that is going to support our growth throughout 2024 and into 2025. Within it, we have a couple of very large merchants that are expected to launch within the back half of the year. Both of them are non-Shopify, and we expect the weight of those larger merchants, and at 2024, we expect the mix of merchants to remain quite balanced with what we've seen in 2020. www.globaloneline.com. Our next question comes from Mark. Goat Wix from Benchmark Company, please proceed. Excuse me, thank you.

Are there instances, where you'll have certain fulfillment costs agreed with our merchant and then underlying spot prices will increase and squeeze our margin a little bit here and there and can you just remind us like what you guys are looking at with respect to things like container prices oil prices et cetera that may drive them more volatile components. There. Thanks, so much.

Yeah sure. Thank you for the question.

We don't have.

Well most of our.

Cost of goods sold are obviously variable, but at the same time.

The margin or the cost margin is pretty stable.

Mark Goat Wix: Just a question on luxury specifically, and just given the sort of habitual interest in discounts that you mentioned. Here is how Luxury performed in the fourth quarter relative to the prior year and how that sort of transitioned into 1Q. Just given that, you know, I think that vertical is roughly 25% of your GMV. And then I had a quick follow-up. In terms of luxury, it hasn't been a great year for luxury, but there was an improvement in the last few months of the year, so it has improved compared to Q3, which was the lowest point for luxury, and I think it's hovering around the same level since. So it's better than it was at the lowest point; it's not doing great, but... Pretty stable for now. Our next question comes from Patrick Walravens from Citizens JMC. Please press.

We don't have a lot of volatility.

The main volatility is.

Arrive from merchant mix.

So.

For example in Q4 as we mentioned.

We had a relatively high share over few large merchant and those typically have.

Pricing that.

Reflect their size.

<unk>.

This this is just an example, but this is a mix impact that may have.

A certain.

Impact on.

On gross margins.

But generally speaking we are pricing with the carriers.

As a relatively stable they do change from time to time, but typically we can pass.

Ofer Karin: Oh, great. Thank you. Amir, so are you still excited about demand gen over the sort of mid to longer term? And what's the dream there?

Through the cost and it is not volatile over the year. It changes one in a long while in a relatively long wide.

Our final question comes from Matt Coad from Autonomous Research. Please proceed.

Patrick D. Walravens: Hi, yes, I'm absolutely excited. I think it's going to be a very unique offering, and it's going to take time to build it, but we strongly believe in the potential to both benefit our existing merchants and also to serve as another great benefit for new merchants that are coming on board and therefore help to accelerate our sales pipeline even further. So definitely as excited, if not more so than before.

Hey, good afternoon, guys. Thanks for taking the question just wanted to ask one clarifying question you talked about Shopify markets Pro contribution earlier in the call is that included.

In your guidance.

Yes. It is.

Yes part of it is part of the business and it is included in the guidance.

Amir Shloket: In terms of the dream, it's basically to be able to offer a platform, a unique platform for demand generation, which is unlike any other offering that these merchants can have from digital agencies or other outside providers, but something that is fully aligned with their growth interests and fully integrated with the Global-E offering, with each part of it strengthening the other. We think it's something that could be a game changer for some of these brands. Our next question comes from Maddy Schrage. Bank Capital Market

Yeah.

This concludes our question and answer session I would like to turn the floor back over to Amir market for closing comments.

Okay.

As we concluded another successful year here at globally I would like to thank all of you for joining us today for your interest and for your questions and for your ongoing support on our exciting journey to transform the world of global direct to consumer E Commerce.

Maddy Schrage: Hey guys, and thanks for taking my question. I was just wondering if you could talk about whether there are any differences in the size of merchants coming onto the platform. There's obviously, you know, Shopify Markets Pro coming in, and obviously, you guys mentioned this last quarter too, but we also saw Wix announce the partnership. So just wondering if you're expecting maybe some of the smaller merchants to come onto the platform versus previous years. Thanks.

We're incredibly eager and excited as we continue on our path to take advantage of the countless opportunities that lie ahead of us and we invite you to continue taking an active part in this quest together with us.

As such we very much look forward to seeing all of you again on our future earnings calls until then goodbye and take care.

This.

Todays teleconference. You may disconnect your lines at this time, thank you for your participation.

Mhm.

[music].

Nir Jebi: Yes, so I think that, as you mentioned, on the one hand, we continue our growth with our enterprise clients, and we continue to onboard them as we did in previous years. In parallel to that, we have seen a great adoption of Shopify Markets Pro with thousands of merchants launching on the platform, however, at a significantly smaller size than our average enterprise client. We've seen initial traction launching Wix merchants on the platform as well, with an average size also smaller than our regular enterprise, however, both from Wix and from Shopify, we expect to see large numbers of clients that will actually give another edge to our growth with a different profile of merchants between those smaller merchants and our enterprise platform clients. Our next question comes from Matt O'Neill from FT Partners. Yeah, hi.

Mhm.

Hum.

[music].

Oh.

[music].

Hum.

Matt O'Neill: Thanks everybody for taking my question. A lot has been asked and answered here, but maybe I'll just dig in a little bit on the cost of revenue quickly. It came in a little bit higher than expected. I was just curious if you could remind us of the more volatile components of the cost of revenue. I imagine the payment side is a little bit more predictable, but are there instances where you'll have certain fulfillment costs agreed with a merchant and then underlying spot prices will increase and that'll squeeze that margin a little bit here and there? If you could just remind us what you guys are looking at with respect to things like container prices, oil prices, etc. That may drive the more volatile components there.

Hum.

Sure.

Ofer Karin: Thanks so much. Sure, thank you for the question. We don't have, well, most of our cost of goods sold is obviously variable, but at the same time, the margin or the cost margin is pretty stable; we don't have a lot of volatility. The main volatility is derived from merchant mix.

Ofer Karin: So, for example, in Q4, as we mentioned, we had a relatively high share of a few large merchants, and those typically have pricing that reflects their size. So this is just an example, but this is a mixed impact that may have a certain impact on gross margins. But generally speaking, our pricing with the carriers is relatively stable; they do change from time to time, but typically, we can pass through the cost, and it's not volatile over the year. It changes once in a long while, once in a relatively long while. Our final question comes from Matt Code from Autonomous Research. Please press star number 1.

Matt Code: Hey, good afternoon guys. Thanks for taking the question. I just wanted to ask one clarifying question. You talked about Shopify MarketsPro contribution earlier in the call. Is that included in your guidance? Yes, it is.

Ofer Karin: Yeah, it's part of the business, and it is included in the guide. This concludes our question and answer session. I would like to turn the floor back over to Amir Schlackett for closing comments.

Amir Shloket: As we conclude another successful year here at Global-E, I would like to thank all of you for joining us today, for your interest and for your questions, and for your ongoing support on our exciting journey to transform the world of global direct-to-consumer e-commerce. We are incredibly eager and excited as we continue on our path to take advantage of the countless opportunities that lie ahead of us, and we invite you to continue taking an active part in this quest together with us. As such, we very much look forward to seeing all of you again at our future earning schools. Until then, goodbye, and take care.

Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation, www.globalonenessproject.org www.globalonelife.org www.globalonelinessproject.org www.globalonenessproject.org www.globalonelife.org www.globalonenessproject.org www.globalonelife.org www.globalonenessproject.org www.globalonelife.org www.globalonenessproject.org www.globalonelife.org www.globalonenessproject.org www.globalonelife.org www.globalonelinessproject.org www.globalonelinessproject.org www.globalonelinessproject.org [inaudible] www.globalonelinessproject.org www.globalonelinessproject.org www.globalonelinessproject.org www.google.com www.google.com www.google.com www.google.com www.google.com www.google.com [inaudible] www.google.com www.globalonenessproject.org www.globalonenessproject.org [inaudible] www.globalonelife.org, Welcome to the Global-E 4th Quarter and Full Year 2023 Earnings Announcement Conference Call. This call is being simultaneously webcast on the company's website in the Investor Relations section under News & Events. For opening remarks and introductions, I will now turn the call over to Ericka Mannion at Sapphire Investor Alliance, please go ahead. Thank you and good morning.

[music].

Ericka Mannion: With me today from Global-E are Amir Shloket, Co-Founder and Chief Executive Officer, Ofer Karin, Chief Financial Officer, and Nir Devi, Co-Founder and President. Amir will begin with a review of the business results for the fourth quarter and full year of 2023. The CEO will then review the financial results for the fourth quarter and full year of 2023, followed by the company's outlook for the first quarter and full year of 2024. 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 27A of the Securities Act of 1933, Section 21E 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 expectations and views of future events.

Ericka Mannion: We use these on-gap 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 operating decision-making. For more information on the non-GAAP financial measures, please see the reconciliation table provided in our press release dated February 21, 2024. 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 21, 2024. I will now turn the call over to Amir, co-founder and CEO.

[music].

Ericka Mannion: Thank you, Erika, and welcome everyone to our fourth quarter and full year 2023 earnings. 2023 was a record-breaking year for us here at Global-E, and it was brought to a great close by a fourth quarter that was our strongest quarter ever, crossing for the first time a milestone of over $1 billion of GMV within a single quarter. We finished Q4 with a record $1.19 billion in GMV, up 42% year-on-year, and record revenues of over $185 million, up 33% year-on-year. This was supported by the strong performance of our merchants over the holiday sales period, including Black Friday and Cyber Monday. The adjusted gross profit margin for Q4 was 42.7%, up 140 basis points from the same quarter last year.

Company's website in the Investor Relations section under news and events for opening remarks, and introductions I will now turn the call over to Erica Mannion at Sapphire Investor Relations. Please go ahead.

Thank you and good morning with me today from Global E. R. Amir socket co founder and Chief Executive Officer, Ofer, Koren, Chief Financial Officer, and near Debbie Co founder and President Amir will begin with a review of the business results for the fourth quarter and full year of 2023.

Oh.

We will then review the financial results for the fourth quarter and full year of 2023, followed by the company's outlook for the first quarter and full year of 2024, we will then open the call for questions.

Amir Shloket: And our adjusted EBITDA margin was 19%, or $35.2 million, our highest ever in a single quarter, reflecting nearly 62% growth compared to the same quarter last year. Such increased profitability yielded an accelerated cash generation, with the business generating $93.5 million in operational cash flows in Q4. Looking at the full year of 2023, GMV came in at close to $3.56 billion, an increase of over 45% year-on-year, and revenue for the full year came in at $570 million, an increase of over 39% year-on-year. Annual Adjusted Gross Profit increased even faster, growing by almost 46% from 2022, reaching roughly $245 million, and representing an adjusted gross profit margin of 42.9% for the full year, an increase of nearly 190 basis points year on year.

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 $19 34, and the Safe Harbor provisions of the U S. Private Securities Litigation Reform Act of 1000.

95 debt related expectations and views of future events.

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.

Amir Shloket: Finally, Adjusted EBITDA for the full year was $92.7 million, up more than 90% compared to $48.7 million last year, representing our continued commitment to delivering durable yet profitable growth thanks to high efficiencies and tight cost control. Last but not least, we finished the year with more than 300 million dollars of cash and cash equivalents on our balance sheet, providing a solid foundation for the continuation of our fast and profitable growth trajectory and for the realization of our strategic plans going forward. As we reflect on these strong annual financial results and the substantial growth we managed to generate, it is important to remember that these were achieved while we faced a challenging and at times volatile macroeconomic environment, further exacerbated by the challenges presented by the ongoing war in Ukraine, as well as the aftermath of the horrific Hamas terrorist attack on October 7. Our hearts go out to all those who were affected by these events, and we continue to provide all possible support to our team members and their families in both Israel and Ukraine.

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.

Please refer to our press release dated February 21, 2024 for additional information.

Amir Shloket: As such, we could not be more proud of our incredible team members across all our offices and locations worldwide for having navigated all these challenges so successfully, and we could not be more thankful to the thousands of merchants who entrust us with their business every hour of every day. Beyond the strong financial growth and figures, 2023 was also another pivotal year for us in terms of the substantial leaps we took forward along all our long-term strategic pillars as we continue to enrich and develop our various offerings. First and foremost, we continue to onboard and add many new brands across the globe to the large portfolio of enterprise brands we work with, as global direct-to-consumer online trading continues to be a strategic priority for brands worldwide. We are not just the leader in global direct-to-consumer e-commerce. We are also the only true global player in the market. We already support 31 different outbound markets. And last year alone, we shipped packages to 224 distinct destination countries and territories around the world.

We use these non-GAAP financial measures for financial and operational decision, making and as a means to evaluate period to period comparisons.

For more information on the non-GAAP financial measures. Please see the reconciliation table provided in our press release dated February 21 2024.

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 21 2024.

I will now turn the call over to Amir co founder and CEO.

Okay.

Thank you Erica and welcome everyone to our fourth quarter and full year 2023 earnings call.

2023 was a record breaking year for us here at globally.

It was brought to a great close by fourth quarter, which was our strongest quarter ever crossing for the first time, a milestone milestone of over $1 billion of GMB within a single quarter.

Amir Shloket: We quite literally enable our merchants to sell to anyone in nearly every place on earth. As an example of this continued expansion, just this last quarter, we launched with Glossier, 11 by Venus Williams, and Perfect Moment in the US, with Phantom Wallet in Canada, with Whistles and the Harry Potter store by Warner Brothers in the UK, with Moogler, a L'Oreal brand, Jean-Paul Gaultier, and Ledger, a leading crypto wallet brand all in France, with Etoile and Mote in Italy, with Luavis in the Netherlands, with Jetset in Germany, with Ideal in Belgium, with Zenerobe in Australia, with Salt Murphy and Avecamore in Hong Kong, and with Retouch in Japan, just to name a few of the many brands that went live with us in the last quarter of 2020.

We finished Q4 with a record $1 19 billion and GMB up 42% year on year and record revenue of over $185 million up 33% year on year supported by the strong performance of our merchants over the holiday sales period, including Black Friday and cyber Monday.

The adjusted adjusted gross profit margin for Q4 was 42, 7% up 140 basis points from the same quarter of last year and our <unk>.

Adjusted EBITDA margin was 19% or $35 2 million or.

Highest ever in a single quarter, reflecting nearly 62% growth compared to the same quarter of last year.

Such increase profitability yielded an accelerated cash generation with the business generating $93 $5 million in operational cash flows in Q4.

Looking at the full year of 2023.

<unk> came in at close to $3 56 billion.

Amir Shloket: During Q4, we also ended live with stellar equipment out of Sweden, as well as God Save Queen, our first Polish merchant, further extending our geographic audience. Besides adding new merchants, we also continue to expand the scope of our business with existing merchants and merchant groups. Just this last quarter, Adidas, Nobu, and the Koopas all extended the list of markets operated through Global-E. Triangle Swimwear went live with an additional brand called Caso del Mar, and Kylie Jenner went live with another of her brands, the fashion brand KHY.

An increase of over 45% year on year.

And revenue for the full year came in at $570 million, an increase of over 39% year on year.

Finally, adjusted EBITDA for the full year was $92 7 million.

Up more than 90% compared to $48 $7 million last year, representing our continued commitment to delivering durable profitable growth. Thanks to the high efficiencies and tight cost controls.

Last but not least we finished the year with more than $300 million of cash and cash equivalents on our balance sheet, providing a solid foundation for the continuation of our fast and profitable growth trajectory and for the realization of our strategic plans going forward.

<unk> by the challenges presented by the ongoing war in Ukraine, as well as the aftermath of the horrific Hamas terrorist attack on October seven.

Hearts go out to all those who are affected by these events and we continue to provide all possible support to our team members and their families in both Israel and Ukraine.

As such we could not be more proud of our incredible team members across all of our offices in locations worldwide for having navigated all these challenges so successfully.

Amir Shloket: Alongside these, we continue to work towards the launch of our Enhanced Demand Generation Offer, based on the assets and capabilities we acquired as part of the Voter Free Transaction, and expect the first major parts of this exciting new offering to be released in the second half of the year. Moreover... As we have discussed in earlier quarters, during 2023, we also invested considerable resources in harnessing the new and transformative technology of generative AI to enhance the quality and efficiency of various aspects of our business. The most recent example of such a successful implementation comes in the form of our shopper-facing customer service. After several months of beta testing, and before the recent peak trading season, we introduced into production our new automated customer service chatbot, based on OpenAI's ChatGPT technology, which has been securely connected to our systems and databases, thereby enabling many of our shoppers to receive highly accurate answers to their support queries in real time, without the need for human intervention.

And could not be more thankful to the thousands of merchants, who entrust us with their business every hour of every day.

Beyond the strong financial growth and vigorous 200 to 2023 I'm sorry. It was also another pivotal year for us in terms of the substantial Leafs. We took forward along all our long term strategic pillars, as we continue to enrich and develop our various offerings.

First and foremost we continue to onboard and add many new brands across the globe to the large portfolio of enterprise brands, we work with.

As global direct to consumer online trading continues to be a strategic priority for our brands worldwide.

We are not just the leader in global direct to consumer E. Commerce. We're also the only true global player in the market.

We already support 31 different outbound markets and last year alone, we actively ship packages to 224 distinct destination countries and territories around the world.

We quite literally enable our merchants to sell to anyone in nearly every place on earth.

As an example of this continued expansion just this last quarter, we launched <unk> last year 11 by Venus Williams and perfect moment in the U S with FEMSA Malton, Canada.

We're still in the Harry Potter store by Warner Brothers in the UK.

Our brand <unk> in ledger, a leading creeped, a wallet branded falling fronts, we've add to a moat in Italy, we flew obviously in the Netherlands with jet set in Germany.

Ideally in Belgium, with <unk> in Australia.

Australia.

We've sold Murphy in the Vaca <unk> in Hong Kong, and we've retouch in Japan, just to name a few of the many brands that went live with us in the last quarter of 2023.

During Q4, we also went live with stellar equipment out of Sweden, as well as we've got to a Queen our first Polish merchant further extending our geographic outreach.

Besides adding new merchants, we also continued to expand the scope of our business with existing merchants and merchant groups.

Just this last quarter Adidas noble and the coupons all extended the list of markets operated through globally.

Triangles Swimwear went live with an additional brand called Casa del Mar.

And Kylie Jenner went live with a number of our brands the fashion brand <unk>.

From a product perspective looking back at 2023, we introduced many new features and key developments into our enterprise platform.

Amir Shloket: In addition, our support for Shopify's new Checkout Extensibility feature has gone into general availability since January 2024, with a significant number of merchants already running on this new and improved checkout with Global-E's cross-border capabilities seamlessly embedded within it. On the Shopify Markets Pro site, which went into general availability in the U.S. in September, we continue to see an encouraging adoption rate, with more and more merchants every week effortless Between these positive early signs and the exciting roadmap of new features and capabilities we are working on together with Shopify, We believe that the innovative Shopify Markets Pro offering has the potential to grow significantly over the next few years. In summary, we are extremely pleased with our achievements and results for 2022, and we are equally excited about the many opportunities for growth that await us from 2024 onwards across all our strategic growth areas.

Those included improved support for Preorders via took innovation support for crypto currency payments via our new integration of crypto Dot Com Supportable orders, which include items fulfilled from different countries as part of a single order.

Support for several new countries in a multi local offering integrations into new platforms, such as <unk> dot com and much more.

Alongside we continue to work towards the launch of our enhanced demand generation offering based on the assets and capabilities, we acquired as part of the border fee transaction.

And except expect the first major parts of this exciting new offering to be released towards the second half of the year.

Moreover.

The most recent example of such a successful implementation comes in the form of our shopper facing customer services.

After several months of beta testing and before the recent peak trading season, we introduced into production, our new automated customer service Chatbot based on open AI chat GPT technology, which has been security connected to our systems and databases, thereby enabling many of our shoppers to receive highly accurate answers to their support.

Amir Shloket: As Ofer will elaborate on when he presents our guidance for 2024, we expect our strong growth momentum to continue this year, with around 32% annual growth expected in both GMV and revenue. And with that, I will hand it over to Ofer to dive deeper into our quarterly and annual financial results, as well as our outlook for Q1 and for the full year of 2024. Thank you, Amir, and thanks, everyone, for joining us today for our earnings call. As Amir stated, we are indeed very pleased with our Q4 and full year 2023 results. Q4 was a strong quarter of fast growth and robust cash generation as we continue to execute and push forward both top-line growth and scale efficiency. 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.

<unk> in real time without a need for human intervention.

We believe this is a manifestation of the tremendous business value such technologies can unlock over the next few years.

Another area in which we have made great progress during 2023 was our strategic relationship with Shopify.

The agreement for which was renewed for another year during Q4.

While the enterprise side, we are all by finalized the migration of all our legacy installed base onto the new native integration.

In addition, our support for Shopify is new checkout Extensibility feature has gone into general availability since January 2024, we've.

We have a significant number of merchants already running on this new and improved checkout with globally is cross border capabilities seamlessly embedded within it.

Between these positive early signs and the exciting roadmap of new features and capabilities. We are working on together with shopify.

We believe that the innovative Shelby fund markets pro offering has the potential to grow significantly over the next few years.

In summary, we are extremely pleased with our achievements and results for 2023.

Ofer Karin: As Amir mentioned at the beginning of this call, we experienced rapid growth of GMV in Q4, as we generated 1.19 billion of GMV, an increase of 42% year-over-year. We benefit from the secular trend of growth in e-commerce, which continues to take share from brick-and-mortar retail and from the increased focus of merchants on their direct-to-consumer channels. However, it is important to note that due to the continued recessionary concerns and the sensitive macroeconomic and geopolitical situation in many of the world's largest economies, in the short term, there is still relatively high uncertainty regarding consumer demand, which remains volatile. In Q4, we generated total revenues of $185.4 million, up 33% year-over-year. Service fee revenues were $89.9 million, up 43%, and fulfillment services revenues were up 24% to $95.5 million.

And we are equally excited towards the many opportunities for growth that await us in 2024 onwards.

Across all of our strategic growth pillars.

As also offer will elaborate on when he presents our guidance for 2024, we expect our strong growth momentum to continue this year with around 32% of annual growth expected in both <unk> and revenues.

And with that I will hand, it over to offer to dive deeper into our quarterly and annual financial results as well as our outlook for Q1 and for the full year of 2024.

Thank you Amir and thanks, everyone for joining us today for our earnings quarter.

As <unk> stated we are indeed, very pleased with our Q4 and full year of 2023 results Q.

Q4 was a strong quarter of fast growth and robust cash generation as we continue to execute and push forward both top line growth.

Scale efficiencies.

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.

I mean, you mentioned at the beginning of the of this call. We have experienced rapid growth of <unk> in Q4, as we generated 119 billion of GMP and increase of 42% year over year, we benefit from the secular trend of growth in E Commerce, which continues to take share from.

Ofer Karin: The higher growth of service fee revenues compared to fulfillment services revenue was mainly driven by the higher share of our multi-local service, with the high performance of the largest multi-local merchants in Q4. Throughout 2023, our existing merchant base continued to stay and to grow with us, as reflected in our annual NDR rate of 127% and GDR rate of over 97%. Note that our NDR in 2023 excludes border-free volumes as border-free merchants traded with us only for part of 2022. Moving down the P&L, growth in non-GAAP gross profit continues to outpace revenue growth. In Q4, non-GAAP gross profit was $79.1 million, up 37% year-over-year, representing a gross margin of 42.7%, compared to 41.3% in the same period last year, driven by a higher share of service fee revenue. Gap gross profit was $76.3 million, representing a margin of 41.2%. Moving on to operational expenses, we continue to invest in the development and enhancement of our platform to further strengthen our offering. R&D expense in Q4, excluding stock-based compensation, was $18.2 million, or 9.8% of revenue, compared to $17.8 million, or 12.8% in the same period last year.

Brick and mortar retail and from the increased focus of merchants on the direct to consumer channels. However, it is important to note that due to the continued recessionary concerns and the sensitive macroeconomic and geopolitical situation in many of the world's largest.

In the short term there is still relatively high uncertainty regarding consumer demand, which remains volatile.

In Q4, we generated total revenues of $185 4 million up 33% year over year service fee revenues were $89 $9 million up 43% and fulfillment services revenue were up 24% to $95 5 million.

Throughout 2023, our existing merchant base continued to stay and to grow with us as reflected in our annual NPL rate of 127% and <unk> rate of over 97% note that our NDA or in 2023 excludes border feet volumes as BARDA free.

Merchants traded with us only for part of 2020.

Moving down the P&L growth in non-GAAP gross profit continues to outpace revenue growth in Q4, non-GAAP gross profit was $79 1 million up 37% year over year, representing a gross margin of 42, 7% compared to 40.

One 3% in the same period last year.

Ofer Karin: Total R&D spend in Q4 was $25.2 million. We also continue to invest in sales and marketing to enhance our pipeline while maintaining efficiency. Sales and marketing expense, excluding Shopify-related amortization expenses, stock-based compensation, and acquisition-related intangibles amortization, was $17.8 million, or 9.6% of revenue, compared to $9.9 million, or 7.1% of revenue, in the same period last year. Shopify Warrant Related Amortization Expense was $37.4 million. Total sales and marketing expenses for the quarter were $58.8 million.

Driven by the higher share of service fee revenue.

GAAP gross profit was $76 3 million, representing a margin of 41, 2%.

Moving on to operational expenses, we continue to invest in the development in Manhattan.

Total R&D spend in Q4 was $25 2 million.

Ofer Karin: General and administrative expenses, excluding stock-based compensation, acquisition-related expenses, and acquisition-related contingent consideration, were $8.6 million, or 4.6% of revenue, compared to $8.9 million, or 6.4% of revenue, in the same period last year. Total G&A spend in Q4 was $15.5 million. Adjusted EBITDA totaled $35.2 million dollars, representing a 19% adjusted EBITDA margin, increasing from $21.8 million dollars of 15.6% margin in the same period last year. Net loss was $22.1 million compared to a net loss of $28.5 million in the year-ago period, driven mainly by the amortization expenses related to the Shopify warrants and to transactions-related intangibles.

6% of revenue compared to $9 $9 million or seven 1% of revenue in the same period last year.

<unk> warrant related amortization expense was $37 4 million total sales and marketing expenses for the quarter was 58 $8 million.

General and administrative expenses, excluding stock based compensation acquisition related expenses and acquisition related contingent consideration was $8 $6 million or <unk> <unk>.

6% of revenue compared to $8 $9 million of six 4% of revenue in the same period last year total G&A spend in Q4 was $15 5 million.

Adjusted EBITDA totaled $35 2 million, representing a 19% adjusted EBITDA margin, increasing from $21 8 million or 15, 6% margin in the same period last year.

Net loss was $22 $1 million compared to a net loss of $28 $5 million.

In the year ago period, driven mainly by the amortization expenses related to the shopify warrants ample transaction related intangibles.

Ofer Karin: Switching gears and turning to the balance sheet and cash flow statements, we ended 2023 with $317 million in cash and cash equivalents, including short-term deposits and marketable securities. Cash generation has accelerated, with operating cash flow in the quarter at $93.5 million compared to an operating cash flow of $57.3 million a year ago, driven mainly by adjusted EBITDA growth and working capital dynamics. Moving to our financial outlook and guidance for 2024, despite the prevailing macro-related uncertainties, we expect 2024 to be another year of fast growth and improved adjusted EBITDA for Global-E. For Q1 2024, we are expecting GMV to be in the range of $875 to $915 million. At the midpoint of the range, this represents a growth rate of 27% versus Q1 2024. We expect Q1 revenue to be in the range of $138.5 to $145 million. At the midpoint of the range, this represents a growth rate of 21% versus Q1 2022. For Adjusted EBITDA, we are expecting a profit in the range of $16 to $20 million.

Switching gears and turning to the balance sheet and cash flow statements. We ended 2023 with 370 $17 million in cash and cash equivalents, including short term deposits and marketable securities.

Cash generation has accelerated with operating cash flow in the quarter at $93 5 million compared to an operating cash flow of $57 3 million a year ago, driven mainly by adjusted EBITDA growth and working capital dynamics.

Moving to our financial outlook and guidance for 2024, despite the prevailing macro related uncertainties. We expect 2024 to be another year of SaaS growth and improved adjusted EBITDA for globally.

For Q1, 2024, we are expecting <unk> to be in the range of $875 million to $915 million at the midpoint of the range. This represents a growth rate of 27% versus Q1 of 2023.

We expect Q1 revenue to be in the range of 138 five $145 million.

At the midpoint of the range. This represents a growth rate of 21% versus Q1 of 2023.

For adjusted EBITDA, we're expecting a profit in the range of $16 million to $20 million.

Ofer Karin: For the full year of 2024, we anticipate GMV to be in the range of $4.59 to $4.83 billion, representing over 32% annual growth at the midpoint of the range. Revenue is expected to be in the range of $731 to $771 million, representing a growth rate of nearly 32% at the midpoint of the range, as we expect overall take rates to stabilize throughout the year. For Adjusted EBITDA, we're expecting a profit of $121 to $137 million, representing over 39% growth at the midpoint of the range, thanks to increased efficiencies and economies of scale. As reflected in the guidance, we expect our fast growth to continue in 2024 with around 32% top-line growth alongside improved adjusted EBITDA margin. The slower top-line growth we expect in Q1 is the result of a number of factors.

$1 million, representing a growth rate of nearly 32% at the midpoint of the range.

As we expect overall take rates to stabilize throughout the year.

For adjusted EBITDA, we're expecting a profit of 121 $137 million.

Representing over 39% growth at the midpoint of the range, thanks to increased efficiencies and economies of scale.

As reflected in the guidance, we expect our fast growth to continue in 2024 with around 32% top line growth alongside the improved adjusted EBITDA margin.

Slower topline growth, we expect in Q1 as a result of a number of factors.

Ofer Karin: The first is the lower contribution for new merchants, as large merchants we have signed are expected to launch only in the second half of the year. Second, is the fact that we expect the trading that still exists on the legacy border-free platform to weigh on our growth in the first half of 2024, as a high share of its remaining GMV is generated by traditional retailers, especially department stores, which are facing challenges, with many even experiencing declining field strength. We believe we will see improvement once we migrate many of these merchants to the Global-E platform. Third, the continued volatility in consumer demand in the short term in light of weakness in some of the largest economies, as well as some softness we observed in trading volumes of consumers around the globe during February.

First is the lower contribution for new merchant is large merchants. We have signed are expected to launch only in the second half of the year.

Second is the fact that we expect the trading that still exist on the legacy border free platform to weigh on our growth in the first half of 2024 is a high share of its remaining <unk> generated by traditional retailers, especially department stores, which are facing challenges.

With many even experiencing declining said screens.

We believe we will see improvement once we migrate many of these merchants to the globally platform.

In conclusion, we continue to enhance our capabilities to support merchants worldwide in their direct to consumer journey.

The opportunity in front of US is immense and we are well positioned to capture it. We believe this will enable us to combine durable top line growth and cash generation in the coming years.

And with that Amir near and I are happy to take any of your questions operator.

Thank you we will now be conducting a question and answer session should provide enough time to address requests we ask participants to limit themselves to one question with one follow up.

Ofer Karin: We ask participants to limit themselves to one question with one follow-up. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question area. You may press star 2 if you would like to remove your question. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start button.

If you would like to ask a question. Please press star one on your telephone keypad.

Information tone will indicate your line is in the question queue. You May Press Star T Wuxi, we'd like to remove your question from the queue.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.

Operator: One moment, please, while we poll for questions. Our first question comes from Brian Peterson from Raymond James. Please proceed. Hi guys, thanks for taking the questions. You know, Oprah, put them in the link.

Our first question comes from Brian Peterson from Raymond James. Please proceed.

Oh, Hey, guys. Thanks for taking questions.

And really in earnest I appreciate the commentary.

Brian Peterson: I appreciate the commentary that December and October were pretty strong, and you mentioned President Trump in February. We'd love to understand maybe how things progress from December to January, or any regional brands that you've got. Yeah. So, Brian, thank you for the question. It's all fair.

Pretty strong.

And in February we'd love to understand maybe how Facebook.

Remember in the January and February and any regional trends.

Sure.

Yeah.

So Brian. Thank you for the question its offer I think.

Ofer Karin: I think that, you know, as we mentioned, we have seen increased volatility in consumer demand in the past year and especially in the last few months. And, as we already communicated in the previous quarter, we saw a drop in September and October, a relatively steep drop in same-store sales, and a very nice recovery towards the end of October with a very, very strong peak and excellent results around the Black Friday and Cyber Monday weekend. Then during December, this continued with a lighter end to the year.

As we mentioned we have seen increased volatility in consumer demand.

In the past year, and especially in the in the last few months.

And as we already communicated in the previous quarter, we saw a drop in September and October relatively steep drop in same store sales and a very nice recovery towards the end of October with a very very strong.

Peak.

An excellent result around Black Friday, Cyber Monday weekend then.

During December.

This continued with the lighter end to the year.

Brian Peterson: And as I just mentioned, things continue to be volatile, and we do see a lot of shifts in consumer demand. And since the beginning of February, we have seen some softness in consumer sentiment again around the globe and weakness in some of the large economies. So, you know, this has been with us only for the last two or three weeks, but it's still important to know. I appreciate the perspective there. Now that we're talking about markets closing, is there any way to get investors some help on how to think about the contribution in 2024? Have a great day. Bye. It's a little choppy, Brian, or your line is a little choppy.

And as I just.

Mentioned.

Things continue to be volatile.

And we do see a lot of shifts in consumer demand and since the beginning of February we have seen some softness in consumer sentiment again around the globe and weakness in some of the large economies.

So this has been with us only for the last.

Two or three weeks, but important to note.

I appreciate your perspective there.

Markets.

Is there any way.

There is some help in how to think about it.

Contribution in 2024.

Sure there thank you.

Brian It's a little choppy or your line is a little choppy could you repeat the contribution of what were you asking about exactly.

Brian Peterson: Could you repeat the contribution of exactly what were you asking about? Yes, sorry, but hopefully this is better. No, the rest of the Shopify market is probably, so far, is there any perspective that, you know, expectations in 1.0? Yeah, so, as we mentioned, we're very happy with the progress that we've made in Shopify Markets Pro, both from a technical perspective, the developments that we've deployed and that we're working on together with Shopify, and also the rate of adoption. It is still in the early days, but we believe that over the next quarters and years, it can grow into a significant bit. www.tinyurl.com. Thanks, Mike.

Hopefully this is better now.

Nebraska, Shopify Marcos <unk> from <unk>.

So far east Ernie.

In terms of expectations to work.

Yes.

As we mentioned, we're very happy with the progress that we've made in shopify markets grow both from a technical perspective. The developments we've deployed that we're working on together with Shopify and also the the rate of adoption.

It is still in early days, but.

But we believe that.

Over the next quarters and years.

ROE into a significant business.

Yes, Sir.

Thanks, Brian.

Our next question comes from will Nance from Goldman Sachs. Please proceed.

Hey, guys I appreciate you taking the questions.

I guess another question on I think you mentioned volatile consumer trends over the past several months and maybe more recently.

In February.

Could you maybe talk about.

The approach that you took the guidance I mean, obviously the color on <unk> is very helpful. It sounds like there is a ramp based baked into the guidance for the remainder of the year some of that shopify kind of color on what you're assuming for the remainder of the year as it relates to the macro and then if we look back over the last couple of years.

Ofer Karin: It sounds like there is a ramp-based ramp baked into the guidance for the remainder of the year. You know, some of that Shopify stuff, just kind of color on what you're assuming for the remainder of the year as it relates to the macro. And then, you know, if we look back over the last couple of years, there have been several kinds of exogenous events that have impacted the numbers and, you know, resulted in kind of less outperformance than maybe you guys would have hoped. Just wondering if you could contextualize this guidance in terms of just how much kind of macro weakness over the course of the year the guidance can absorb given, you know, the continued levels of uncertainty. Thank you. Sure Will, thank you for the question. Since there is a high level of uncertainty, we have not assumed an improvement in macro conditions throughout the year.

<unk>.

There has been several kind of exogenous events that have impacted the numbers in <unk>.

And then kind of last outperformance than maybe you guys would hope just wondering if you can contextualize the guidance in terms of just how much kind of macro weakness over the course of the year the guidance can absorb given the continued levels of uncertainty.

Sure well thank you for the question.

So.

Since there is.

A high level of uncertainty we have not assumed.

An improvement in macro conditions throughout the year.

Will Nance: However, we also haven't looked at the lowest point, as I mentioned, we saw some weakness since the beginning of February, so we sort of look at the average since the beginning of the year, not taking into account the lowest point, but also not taking into account any improvement in macro conditions, as again, the level of uncertainty is still high, and we have no control of that. Okay. It makes sense. And then I think, you know, you called out Border Free. I was just wondering if you could maybe help us size things in terms of, you know, what's the contribution in numbers today? And maybe roughly what are you kind of baking in for the remainder of the year for that business? So, in terms of volumes, today Border-Free is approximately 5% of the volumes; it's sort of a high-level number.

We also haven't looked at the lowest point as I mentioned, we saw some weakness.

Since the beginning of February so.

We sort of look at the average since the beginning of the year not taking into account the lowest point, but also not taking into account.

Any improvement in macro conditions as again the level of uncertainty is still high and we have no control of that.

Got it makes sense and then I think you called out border free just wondering if you could just maybe help us size in terms of.

What's the contribution of the numbers today.

And maybe roughly what are you kind of baking in for the remainder of the year for that business.

Yeah. So.

In terms of volumes.

<unk> border.

Florida <unk> is approximately 5% of the volumes.

11 number.

Will Nance: It is decreasing in share over time, one, because we are not onboarding any new merchants onto Border-Free, and two, as we mentioned, the type of merchants that we see on Border-Free, legacy, mainly U.S. legacy merchants, a lot of department stores, and since they are sort of facing their own challenges with their business models, it has an impact on their sales as well, so this is decreasing over time. Got it, that

It is decreasing in share over time, one because we are not onboarding any new merchants onto border free.

And two.

As we mentioned.

The type of merchants that we see on on border free legacy mainly U S legacy.

Merchants, a lot of department stores and since they are sort of facing their own challenges.

With their business model it.

It has an impact on their sales as well. So this is.

Decreasing over time.

Ofer Karin: Sorry, just clarification on the expectations for the remainder of the year. Are you guys assuming that the same sort of sales there will remain negative for the remainder of the year? Yes, yes, we do.

Yes.

Yes, yes, we do however, I think we.

Will Nance: However, I think we do think that, mainly in the second half, as we migrate those clients, we will see a one-off increase that will stay with us, but due to the higher conversion rates that we typically see on the Global-E platform. So, we do foresee an improvement. However, it will be gradual as they migrate one by one, and since those are large legacy merchants, it takes some time. So, we do expect to see some improvement, but it will be gradual. I got it.

We do think that.

Mainly in the second half as we migrate those clients we wouldn't see it.

One off increase that will stay with us but.

We do expect to see some improvement, but it will be gradual.

Samad Samana: Thanks for taking the questions, guys. Thank you. Our next question comes from Samad Samana from Jeffreys. Please proceed. Hey, good morning.

Got it thanks for taking the questions guys.

Thank you.

Our next question comes from Samad Samana from Jefferies. Please proceed.

Hey, good morning, Thanks for taking my questions, maybe first yes.

Just on the on what's embedded in the guidance around the net dollar retention.

<unk> hundred 27 was a strong year for 'twenty three.

I think about the low thirty's growth guidance, what are you thinking net dollar retention will look like in 2024.

So.

We think that net dollar retention in 24 will be slightly lower compared to.

23.

As we mentioned.

We do see sort of uncertainty around macro conditions consumer sentiment.

It's very volatile.

<unk>.

And on top of that also board of free will come in.

And sort of weigh a bit on our MBR. So we.

Nir Jebi: So we do expect it to be slightly lower than what we have seen in 2020. And then maybe just on Shopify Markets Pro, this might be more for Amir or Nir, but what are you seeing as far as the initial customers that are using it now that it's been, you know, let's call it four or five months, maybe the average annual GMV of the typical Shopify Market Pro merchant that you're seeing? And then, related to that, should we think about that being like a 200 or $300 million GMV contribution Just anything that we can kind of kind of peg against. Hi Samar. It's Leo.

We do expect we do expect it to be slightly lower than what we have seen in.

In 2023.

Understood and then maybe just.

On Shopify markets Pro.

Feed more from year on year, but what are you seeing as far as in the initial customers that are using it now it has been.

Four five months, maybe average annual gmg of the typical shopify market merchants that youre seeing and then related a fair should we think about that being like at 200 or $300 million G&P contribution in 'twenty. Four is anything that we can kind of kind of pegging again.

<unk> Neal.

Samad Samana: Thanks for the questions. We have seen initial positive signs for adoption post-S&P and general availability in the U.S. at the Google IoT Space. Great, thanks again, and talk soon. Thanks a lot.

Thanks for the questions.

We have seen initial positive signs for adoption for adoption post.

<unk> general availability.

In the U S.

Coupled with continued development of the solution capabilities that is still ongoing.

Expect the adoption rate to grow gradually throughout the year.

At this stage.

Don't guide specifically for <unk>.

Shopify markets Pro although I don't think Youll numbers in early fall.

Great. Thanks again.

In.

Thanks, a lot.

Our next question comes from Andrew Bosch from Wells Fargo. Please proceed.

Hey, Thanks for taking the question.

Just wanted to get a sense of your expectations for the gross margins as we progress through 'twenty.

<unk> 2024.

The fulfillment dynamics in the fourth quarter, it seems reasonable that that gross profit could outpace revenue so any thoughts around that would be helpful.

Okay.

So we are.

Very very pleased with our gross margin improvement over time, as we surpassed our 40% target earlier than we expected.

And moving forward, we expect relatively stable gross margins as we continue to prioritize growth.

Over profitability. However, we do we do see operational leverage potential that will enable us to improve our.

Adjusted EBITDA margins.

Got it thanks, and then just looking back at the fourth quarter. I mean, you had a really strong black Friday, cyber Monday press release of 53% versus the fourth.

Andrew Bosch: And then just looking back at the fourth quarter, I mean, you had a really strong Black Friday, Cyber Monday press release of 53% versus, you know, the 44 for the full quarter. So maybe you could just give us a sense of, like, what was about your platform that drove that outside strength and maybe a better sense of the shape of trends throughout the course of the year. Sure, so as you mentioned, we did experience a strong quarter generally and a very strong holiday trading season with the highest growth around Black Friday and Cyber Monday weekend. Some of it may be attributed to consumers' preference for discount shopping, so this may have had an impact. And I think that, uh, on top of that... There were very strong results for some of our large merchants, so that also contributed to them first, but for us as a derivative as well. I got it.

44 for the full quarter. So maybe you could just give us a sense of like what was was about your platform that drove that outsized strength and maybe a better sense of the shape of trends throughout the quarter. So we can understand it.

Sure so.

Yes, as you mentioned we did.

<unk> experienced a strong quarter generally and a very strong peak trading.

Season, with the highest growth around.

Black Friday, and cyber Monday weekend.

Some of it may be attributed to consumers' preference to discount chopping. So this may have been an impact.

And I think that on top of that.

There were there was.

Very strong results for some of our large merchants so that also.

Contributed.

For them first about for us.

The derivative as well.

Kunal Barukar: Thank you. The next question comes from Kunal Barukar from UBS. Hi, thank you for taking the questions. One on the revenue guide, so your revenue guide for 1Q implies a take rate decline, but then when we look at the full year guide for 2024, that kind of suggests that, you know, the take rate should improve in the back half. So how much of the improvement in the take rate are you baking in assumptions for growth from Shopify Markets Pro, which is probably at a higher take rate? Thank you, Kunal, for the question.

Got it thank you.

Our next question comes from Kunal <unk> from UBS. Please proceed.

Hi, Thank you for taking the questions.

One on the on the revenue guide to your revenue guidance for <unk> implies a decrease decline.

But then when we look at the full year guide for 2020 for that kind of suggest that.

The take rate should improve in the back half.

So how much.

The improvement in the decay are you baking in.

<unk>.

Growth from shop from markets probe, which is probably at the higher take rate.

Yes, So I think you can now for the question.

I think the answer then.

Main part of the answer relies actually in 2023.

Because we started 2023 with a much higher fulfillment they create.

The overall take rate in Q1 last year was 16.

7% and over the year as the shale.

B Lowe and mainly our large multi local merchants through because we have launched a few.

And expanded our activities with others.

We've seen a reduction in overall take rate, mainly not mainly just out of the fulfillment.

Take rate and basically as we mentioned in the previous quarter, we expect that to balance next year. So we expect to see.

Much more balanced year, we expect it to stabilize at around the overall take rate around 16% as we do not expect the shale of those merchant to go significantly because the merchant that we see currently in our pipeline the large ones are.

Not.

Multi local.

Merch and so.

We expect to strike a balance.

Thank you.

You mentioned weakness in February can you can you talk about trends by like maybe vertical and geography like you did last time in terms of.

Kunal Barukar: Can you talk about trends by like maybe vertical and geography like you did last time in terms of, you know, what's luxury doing versus what's apparel doing? And then last time you talked about weakness in Europe, inbound. So can you talk a bit about that? Yeah, thank you for your question. It's Neil.

Largely doing versus what <unk> doing and then lastly, you talked about weakness in Europe.

Inbound so can you talk a bit about that please.

Thank you for your question Neil.

Nir Jebi: I would say that in February, we don't see a specific vertical that is down. However, on geographies, we do see slowdowns around different parts of the world. For example, our inbound into the U.S. has slowed down a bit, with same-store sales not growing as fast as they did in January or previous years. The same goes into the U.K., which officially went into recession just earlier this year.

This.

I would say that in February we don't see a specific vertical that is down however on geographies.

Do see slowdown their own different part of the world.

However, inbound into the U S has slowed down a bit.

Same store sales are not growing as fast as they did in January or previous yield.

It goes into the UK that officially went into recession just earlier this year.

Scott Berg: And same, we've seen some slowness in APAC. So it's kind of a global slowdown that we see, not specific to a certain territory or a virtue. Got it.

And we've seen some slowness in APAC, so it's kind of a global slowdown that we see.

Not specific to a certain until it <unk>.

Ofer Karin: Thank you so much. Our next question comes from Scott Berg from Needham & Company. Please proceed. Hi everyone, nice quarter.

Got it thank you so much.

Our next question comes from Scott Berg from Needham <unk> Company. Please proceed.

Okay.

Hi, everyone nice quarter.

Scott Berg: Thanks for taking my questions here. I just wanted to touch on the guidance for 24 a little bit. Your, I think, as you all noted, your service fee revenue has been growing meaningfully faster than your..., than the rest of the revenues, but it's been growing even faster recently than historical trends. Do you still see the breakdown in growth between the two revenue segments? Kind of having that, you know, I guess growth difference there or, as was just noted a moment ago with some of the larger merchants that you have in the pipelines, do you expect that to maybe moderate the growth rates more balanced? Thank you for the question. We do expect to see more balanced growth in 2024. As I mentioned, 2023 was characterized by strong multi-local growth, which had an impact on the mix. We typically don't have any fulfillment revenue or very little fulfillment revenue with multi-local. We expect 2024 to be much more balanced.

Thanks for taking my questions here.

I just wanted to touch on the guidance for 'twenty for a little bit your.

I think as you all noted your service fee revenue.

Been growing meaningfully faster than yours.

Yes.

And then.

The rest of the revenues, but even.

<unk> been growing even faster recently than historical trends.

Do you still see the breakdown in growth between the two revenue segments.

Kind of.

Yes.

Sure. Thank you for the question.

We do expect to see a more balanced growth.

In 2024.

As I mentioned 2023 was characterized by strong.

Multi local.

<unk>.

Which had an impact the mix.

We typically don't have any fulfillment revenue or very little fulfillment revenue and <unk>.

LTE local.

And we expect the 24 to be much more balanced as I mentioned, the larger merchants that we seen that have signed all we've seen the pipeline or not.

Ofer Karin: As I mentioned, the larger merchants that we see that have signed or we see in the pipeline are not multi-local merchants. We also have a few new initiatives around fulfillment services. We do expect this year to be much more balanced in terms of revenue pillar growth. Got it helpful. And then from a follow-up perspective, congrats on reaching 200 countries. By my math, that probably means you're only not fulfilling your potential in Antarctica right now. Maybe that's a future goal.

Multi local merchants and we also have.

A few new initiatives around fulfillment services, but we do expect this year to be much more balanced in terms of.

Revenue pillars growth.

Got it helpful and then from a follow up perspective.

Congrats on fulfilling into 200 countries.

That probably means you are only not fulfilling an art Deco right now maybe that's a future goal, but as I think about the investments required for you to expand your distribution capabilities.

Scott Berg: But as I think about the investments required for you to expand your distribution capabilities, given the number of countries that you're already in, are those investments largely kind of done at this point? Do you think, I guess, the additional needs there are very more incremental based on volumes? Or will there be any sort of step-up in investments maybe in the next couple of years to help you kind of penetrate some of those markets? Yeah, Antarctica does not have any citizens in it, so we're probably not going to ship there anytime soon, but who knows? Maybe.

Given the number of countries that you and I thought you already and are those investments largely kind of done at this point do you think.

I guess the additional needs there are very more incremental based on volumes or will there be any sort of step up invest in investments maybe in the next couple of years to.

To help you kind of penetrate some of those markets.

Hi, I'm trying to go is not does.

<unk> does not have any any any citizens and it's probably not going to ship there anytime soon but who knows maybe.

But do.

Koji Ikeda: But to your question, in terms of the outbound and inbound markets, those don't require any specific investments from us. It's the outbound markets that sometimes require some investment in them, but I would say there are now, as we mentioned, 31 different outbound markets. The marginal investment that is required from us for opening an additional market is already quite low. We are well-trained and well-seasoned at doing it, and just as a reminder, in any case, we're not talking about any capital investments. This is very capitalized, and it mostly has to do with sometimes we need a local entity; it requires some local contracts, but it's not a lot more than that.

To your question.

In terms of the outbound in terms of the inbound markets.

Those doesn't.

Requiring.

Any specific investments from us.

It's the outbound markets that sometimes require.

Some investment in them, but I would say it's by now we've as we mentioned 31 different outbound markets.

Margin on investment that is required from US we are opening an additional market.

Is already quite low we are well trained and well seasoned in doing it.

Just as a reminder.

Any case, we're not talking about any capital investments. This is a very kept alive and it mostly has to do with sometimes we need a local entity requires some local contracts.

It's not a lot more than that so we don't expect any massive investments in terms of.

Ofer Karin: So we don't expect any massive investments in terms of the additional outbound markets that we'll be opening in the future. Our next question comes from Koji Ikeda from Bank of America. Please proceed. Hey guys, thanks for taking the questions. I wanted to ask a question on... the first quarter, just digging into that.

The additional mark all of our markets that will be opening in the future.

Yeah.

Excellent. Thanks for taking my question.

Thanks, Bob.

Our next question comes from Koji Ikeda from Bank of America. Please proceed.

Hey, guys.

Thanks for taking the questions.

I wanted to ask a question on the.

The FERC quarter Dnb.

Ofer Karin: Walrams, Global-E Online, Watch. It looks like it's about down 25% versus down 21% when first guided. So, can you dig into a little bit about what's causing that higher low? Is that all uncertainty with the macro and the consumer? Are there any customers that you now have that have outsized 4Q holiday seasonality that is driving this outlook? I mean, any sort of color.

In that into that a little bit more.

It's a much heavier sequential growth stepped down assumption this year versus last year. It looks like it's about down 25%.

<unk> was down 21% one for guiding the <unk> 23.

Can you dig into a little bit about what's causing that higher level of Jamie stepped down.

Is that all uncertainty with the macro and the consumer are there any customers that you now have that have outsized.

<unk> holiday seasonality that is driving this outlook.

Sort of color there would be fine Tom amazing. Thank you.

Sure. Thank you for the question.

Well I'll start from the top four for the full year of plenty 'twenty four we expect to see continued momentum of high growth of over 30% for both <unk> and revenue and it is supported by our strong pipeline of large merchants that are expected to launch.

In the back half of the of the year.

As well as the ramp up of Shopify markets grow over the course of the year specifically for Q1.

The growth we expect.

Lower.

That is.

Ofer Karin: The first one is less contribution from new merchants, as the large merchants signed or the ones that are towards the end of the pipeline are expected to launch later in the year, mainly in the second half of the year. So we see, we are expecting and planning very nice launches, but the large ones in the second half of the year. As we mentioned, we see some adverse effects from some border-free legacy retail clients, mainly department stores, and we expect this to gradually improve once we complete the migration of these clients to the Global-E platform. And three, as we mentioned, we continue to see high volatility in consumer sentiment, as we saw between Q2 and Q3 last year, and then Q3 and Q4, and now again in February, as we mentioned, we saw a decline in consumer demand, So those are the main drivers.

<unk> and planning very nice launches, but the large ones in the second half of the year.

As we mentioned, we see some adverse effect from some border free legacy retail clients, mainly the department stores and we expect this to gradually.

Improve once we complete the migration of these clients to the globally platform and three as we mentioned we continued to see high volatility in consumer sentiment.

As we've seen between Q2 and Q3 last year, and then Q3 and Q4 and now again in February as we mentioned.

We saw a decline in consumer demand. So this will really impact.

Q1, as well so those those are the main drivers.

Brent Braceland: Our next question comes from Brent Braceland on behalf of Piper Sandler. Please proceed. Good morning.

Our next question comes from Brent <unk> from Piper Sandler. Please proceed.

Amir Shloket: Great to see a strong close to the year. Amir, the 97% gross retention model here suggests the product remains sticky, and low churn. I get you can't control consumer spending, which clearly is impacting the growth I've run this year. What are the growth levers that are in your control that you can kind of lean more into this year outside of the macro?

Good morning, great to see a strong close to the year Amir 97% gross retention model here suggest the product remains sticky low churn.

Yet you can't control consumer spending.

That clearly is impacting the growth I've run this year what are the growth levers that are in your control that you can kind of lean more into this year outside of the macro.

Amir Shloket: So, absolutely, as you mentioned, the dynamics remain very positive, although, as we mentioned, it is expected to be another year of high uncertainty and high volatility from a macro perspective. But we continue to push across all fields, from growth in the existing territories where we already operate to opening additional markets and additional territories. Of course, Shopify Markets Pro, which we have mentioned a few times already on the call, is also expected to ramp up over the year and contribute further to our growth. And we are also working on value-added services, specifically demand generation. That's going to kick in, as we mentioned, towards the back end of the year.

Hi, Ren.

Absolutely.

As you mentioned the dynamics are remain very positive although as we mentioned it is.

I expect it to be.

And over a year of high uncertainty and higher volatility from a macro perspective.

But we continue to push across all the field from growth in the existing.

Territories, where we already operate two opening additional markets and additional territory.

Of course she'll be front markets Pro which we have mentioned a few times already on the call.

We also expect it to ramp up along the year and contribute further to our growth.

And we are also.

<unk> working on.

Value added services specifically.

Demand generation.

That's going to kick in as we mentioned towards the backend of the year, it's probably not going to be accrete.

James Fawcett: It's probably not going to be a creative day one, but over the longer period, we expect that to have an additional contribution to accelerating our growth. Our next question comes from James Fawcett from Morgan Stanley; please proceed. Hi, thanks for the question. What an ass.

Accretive day, one but over the longer period, we expect that to have an additional contribution.

We're accelerating our growth.

Our next question comes from James Fawcett from Morgan Stanley. Please proceed.

Hi, Thanks for the question.

Nir Jebi: Customer Act. I'm wondering how trends have been evolving. Inbound. Outside of the shop, I'm just trying to get a, Shop Related. Hi, James, it's Neil.

Wanted to ask just in terms of customer acquisition and that kind of thing.

I'm wondering how trends have been evolving with respect to inbound interest in conversion for for new merchant adds outside of Shopify.

Just trying to get a sense for how we should be thinking about the percentage of new adds that her shop related versus those that aren't.

Profile of the merchant partners.

Hi, James It's Neal.

James Fawcett: Thanks for the question. We have seen record bookings in 2023. And we are excited about the strength of the pipeline that is going to support our growth throughout 2024 and into 2025. Within it, we have a couple of very large merchants that are expected to launch within the back half of the year. Both of them are non-Shopify, and we expect the weight of those larger merchants. I would say, to balance out the rapid growth we expect to see in Shopify Markets Pro. So overall, when we look..., at 2024, we expect the mix of merchants to remain quite balanced with what we've seen in 2020. Webinar

Thanks for the question.

We have seen record bookings in 2023, and we are excited about the strength of the pipeline is going to support.

Our growth throughout 2024 and into 2025.

Within it we have.

A couple of very large merchants.

Expected to launch with us in the back half of the Hill both of them are non shopify and we expect the weight of those.

Larger merchants.

And I would say to balance out.

Rapid growth.

We expect to see.

In sharpie slate markets froze. So overall when we look at 2020 full we expected the mix of merchants to remained quite balanced with what we've seen in 2023.

Mark Goat Wix: Thank you. Thank you. I appreciate it. Thank you for that. And then I want to... 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1, Our next question comes from Mark.

Got it thank you for that and then.

Our next question comes from Mark <unk>.

<unk> from benchmark company. Please proceed.

Ofer Karin: Goat Wix from Benchmark Company, please proceed. Excuse me, thank you. Just a question on luxury specifically, and just given the sort of habitual interest in discounts that you mentioned. Here is how Luxury performed in the fourth quarter relative to the prior year and how that sort of transitioned into 1Q. Just given that, you know, I think that vertical is roughly 25% of your GMV. And then I had a quick follow-up. In terms of luxury, it hasn't been a great year for luxury, but there was an improvement in the last few months of the year, so it has improved compared to Q3, which was the lowest point for luxury, and I think it's hovering around the same level since.

Excuse me thank you.

Just.

Question on luxury specifically just.

Just given the sort of visual interest in discounts that you mentioned.

Curious how luxury performed in the fourth quarter.

Allative to prior year, and how that sort of transitioned into <unk> just given that.

That vertical is roughly 25% of your GMB and then I had a.

Quick follow up.

Yes.

In terms of luxury.

It hasn't been a great year for luxury.

Yes.

There wasn't improvement towards that.

The last few months of the year, so as improved.

Compared to Q3, which was the lowest point.

For luxury and I think it's hovering around the same level.

Patrick D. Walravens: So it's better than it was at the lowest point; it's not doing great, but... pretty stable for now. Our next question comes from Patrick Walravens from Citizens JMC. Please press star 1.

So it's better than it was the lowest point.

Doing great, but but.

Pretty stable for now.

Our next question comes from Patrick Wahl reasons from citizens JMP. Please proceed.

Amir Shloket: Thank you. Oh, great. Thank you. Amir, so are you still excited about demand gen over the sort of mid to longer term? And what's the dream there?

Oh, great. Thank you.

So are you still.

Cited about.

Demand Gen over the sort of mid to longer term.

<unk>.

Amir Shloket: Hi, yes, I'm absolutely excited. I think it's going to be a very unique offering, and it's going to take time to build it, but we strongly believe in the potential to both benefit our existing merchants and also to serve as another great benefit for new merchants that are coming on board and therefore help to accelerate our sales pipeline even further. So definitely as excited, if not more so than before.

And what's the dream there.

Yes.

<unk>.

Excited.

It's going to be.

It's a very unique.

<unk> and <unk>.

It's going to take time.

To build it but we strongly believe in the potential to both benefit our existing merchants.

Also to serve as the.

As another great benefit for a new merchants that are coming on board and therefore help to accelerate.

Our sales pipeline.

<unk> so definitely.

As <unk>.

Excited if not more.

Then before.

Maddy Schrage: In terms of the dream, it's basically to be able to offer a platform, a unique platform for demand generation, which is unlike any other offering that these merchants can have from digital agencies or other outside providers, but something that is fully aligned with their growth interests and fully integrated with the Global-E offering, with each part of it strengthening the other. We think it's something that could be a game changer for some of these brands. Our next question comes from Maddy Schrage. Bank Capital Market

In terms of the dream.

<unk> is basically to be able to offer.

Our platform a unique platform for demand generation, which is unlike.

Any other offering to these merchants.

Can have from digital agencies or ever outside.

Providers, but something that is fully aligned with their growth interest in fully integrated.

Globally offering with.

With each part of it strengthening.

<unk>.

We think it's it's something that can be.

A game changer for for some of these brands.

Okay.

Our next question comes from Matthew <unk> from Keybanc capital markets. Please proceed.

Nir Jebi: Hey guys, and thanks for taking my question. I was just wondering if you could talk about whether there are any differences in the size of merchants coming onto the platform. There's obviously, you know, Shopify Markets Pro coming in, and obviously, you guys mentioned this last quarter too, but we also saw Wix announce the partnership. So just wondering if you're expecting maybe some of the smaller merchants to come onto the platform versus previous years. Thanks. Yes, so I think that, as you mentioned, on the one hand, we continue our growth with our enterprise clients, and we continue to onboard them as we did in previous years. In parallel to it, we have seen a great adoption of Shopify Markets Pro with thousands of merchants launching on the platform, although at a significantly smaller size than our average enterprise clients.

Hey, guys and thanks for taking my question I was just wondering if you could talk about if there's any differences in the size of merchants coming onto the platform. There is obviously you know shopify markets pro coming in and obviously you guys mentioned this last quarter too, but we also saw weeks announced.

The partnerships I'm, just wondering if you're expecting maybe some.

Smaller merchants to come onto the platform versus previous years. Thanks.

Yes.

All of that.

As you mentioned on the one hand, we continue our growth with our enterprise clients and we continue to onboard them.

As we did in previous years in parallel.

We have seen a greater adoption of shopify markets pro.

With thousands of merchants launching on the platform. However.

Significantly smaller size.

Our average enterprise client.

Nir Jebi: We've seen initial traction launching Wix merchants on the platform as well, with an average size also smaller than our regular enterprise. However, both from Wix and from Shopify, we expect to see large numbers of clients that would actually give another edge to our growth with a different profile of merchants between those smaller merchants and our enterprise platform clients. Our next question comes from Matt O'Neill from FT Partners.

We've seen initial traction.

King.

<unk> merchants on the platform as well.

With an average size also smaller than our regular enterprise however, both from weeks from Shopify.

We'll see.

Large numbers of.

Clients that would actually.

We'll give another edge to our growth.

With a different profile of merchants between between those smaller merchants and all enterprise.

Platform client.

Okay.

Our next question comes from Matt O'neill from Ft Partners. Please proceed.

Matt O'Neill: Yeah, hi, thanks everybody for taking my question. A lot has been asked and answered here, but maybe I'll just dig in a little bit on the cost of revenue quickly. It came in a little bit higher than expected.

Yes, hi, thanks, everybody for taking my question.

Much has been asked and answered here, but maybe I'll just dig in a little bit on the cost.

Revenue quickly.

Ofer Karin: I was just curious if you could remind us the more volatile components of the cost of revenue. I imagine the payment side is a little bit more predictable, but are there instances where you'll have certain fulfillment costs agreed with a merchant and then underlying spot prices will increase and that'll squeeze that margin a little bit here and there? If you could just remind us what you guys are looking at with respect to things like container prices, oil prices, et cetera, that may drive the more volatile components there, that would be great. Thanks so much. Thank you for the question. We don't have, well most of our cost of goods sold is obviously variable, but at the same time, the margin or the cost margin is pretty stable; we don't have a lot of volatility. The main volatility is derived from the merchant mix. So, for example, in Q4, as we mentioned, we had a relatively high share of a few large merchants, and those typically have pricing that reflect their size. So this is just an example, but this is a mixed impact that may have a certain impact on gross margins.

Give me a little bit higher than expected was just curious if you could remind us the more volatile components of the cost of revenue I imagine the payment side, a little bit more predictable but.

Are there instances, where youll have certain fulfillment cost agreed with a merchant and then underlying spot prices will increase and squeeze our margin a little bit here and there and can you just remind us like what you guys are looking at with respect to things like container prices oil prices et cetera that may drive them more volatile components. There. Thanks, so much.

Yeah sure. Thank you for the question.

We don't have.

Well most of our.

Cost of goods sold are obviously variable, but at the same time.

The margin or the cost margin is pretty stable.

We don't have a lot of volatility.

The main volatility.

Derived from merchant mix.

So.

For example in Q4 as we mentioned we.

We had a relatively high share of a few large merchants and those typically have.

Pricing that.

Reflect their size.

<unk>.

This this is just an example, but this is a mix impact that may have.

A certain.

Impact on.

On gross margins.

Matt Code: But generally speaking, our pricing with the carriers is relatively stable; they do change from time to time, but typically, we can pass through the course, and it's not volatile over the year; it changes once in a long while, once in a relatively long while. Our final question comes from Matt Code from Autonomous Research. Please proceed. Hey, good afternoon guys. Thanks for taking the question. I just wanted to ask one clarifying question. You talked about Shopify MarketsPro contribution earlier in the call. Is that included in your guide? Yes, it is. Yeah, it's part of the business, and it is included in the guide.

But generally speaking we.

Our pricing with the carriers.

In a relatively stable they do change from time to time, but typically we can pass.

Through the cost and it is not volatile over the year. It changes one in a long while in a relatively long wide.

Final question comes from Matt Coad from Autonomous Research. Please proceed.

Hey, good afternoon, guys. Thanks for taking the question just wanted to ask one clarifying question you talked about Shopify markets Pro contribution earlier in the call is that included in.

In your guidance.

Yes. It is.

Yes part of it is part of the business and it is included in the guidance.

Ofer Karin: This concludes our question-and-answer session. I would like to turn the floor back over to Amir Schlackett for closing comments. As we conclude another successful year here at Global-E, I would like to thank all of you for joining us today, for your interest, and for your questions, and for your ongoing support on our exciting journey to transform the world of global direct-to-consumer e-commerce. We are incredibly eager and excited as we continue on our path to take advantage of the countless opportunities that lie ahead of us, and we invite you to continue taking an active part in this As such, we very much look forward to seeing all of you again in our future earning schools. Until then, goodbye, and take care. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your...

This concludes our question and answer session I would like to turn the floor back over to Amir <unk> for closing comments as we concluded another successful year here at globally I would like to thank all of you for joining us today for your interest and for your questions and for your ongoing support on our exciting journey to transform the world of global direct to consumer E Commerce.

Such we very much look forward to seeing all of you again on our future earnings calls until then goodbye and take care.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Q4 2023 Global-e Online Ltd Earnings Call

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