Q1 2024 Global-E Online Ltd Earnings Call

Operator: Welcome to Global-E's First Quarter 2024 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 Erica Mannion at Sapphire Investor Relations. Please go ahead.

Welcome to global your first quarter 'twenty 'twenty four 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.

Turn the call over to Erica Mannion at Sapphire Investor Relations. Please go ahead.

Erica L. Mannion: Thank you and good morning. With me today from Global-E is Amir Schlachet, co-founder and chief executive officer. Ofer Koren, Chief Financial Officer, and Nir Debbi, Co-Founder and President. Amir will begin with a review of the business results for the first quarter of 2024. Ofer will then review the financial results for the first quarter of 2024, followed by the company's outlook for the second quarter and full year of 2024. We will then open the call to questions.

Speaker Change: Thank you and good morning with me today from globally are a mere socket co founder and Chief Executive Officer.

Speaker Change: Ofer Koren, Chief Financial Officer, and near Debbie Co founder and President EMEA will begin with a review of the business results for the first quarter of 2020 for Ofer will then review the financial results for the first quarter of 2024, followed by the company's outlook for the second quarter and full year of 2024.

Speaker Change: We will then open the call for questions.

Erica L. Mannion: 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 our current expectations and views of future events. These forward-looking statements are subject to risk, uncertainties, and assumptions, some of which are beyond our control.

Speaker Change: Certain statements we make today may constitute forward looking statements and information within the meaning of section 27, a of the Securities Act of 1933 section 21 E of the Securities Exchange Act of 1934, and the Safe Harbor provisions of the U S. Private Securities Litigation Reform Act of 1995.

Erica L. Mannion: 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 of 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.

Erica L. Mannion: You should not put undue reliance on any forward-looking statement. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance, and events and circumstances reflected in the forward-looking statements will be achieved or will occur. Except as required by applicable law, we make no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. Please refer to our press release dated May 20, 2024, for additional information.

Erica L. Mannion: 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. We use these non-GAAP financial measures for financial and operating 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.

Speaker Change: Relate to our current expectations and views of future events.

Erica L. Mannion: For more information on the non-GAAP financial measures, please see the reconciliation tables provided in our press release dated May 20, 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 May 20, 2024. I will now turn the call over to Amir, co-founder and CEO.

These forward looking statements are subject to risks uncertainties and assumptions some of which are beyond our control.

Speaker Change: In addition, these forward looking statements reflect our current views with respect to future events and not a guarantee of future performance.

Speaker Change: 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 of our prospectus filed with the SEC on September 13, 2021, and other documents filed with or furnished to the SEC.

Speaker Change: 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.

Speaker Change: 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.

Speaker Change: 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.

Speaker Change: Please refer to our press release dated May 22024 for additional information.

Speaker Change: Uh huh.

Speaker Change: 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 or superior to financial information prepared and presented in accordance with GAAP.

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

Speaker Change: We believe that these measures provide useful information about operating results enhance the overall 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.

Speaker Change: For more information on the GAAP side excuse me for more information on the non-GAAP financial measures. Please see the reconciliation tables provided in our test in our press release dated May 22024.

Speaker Change: 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 May 22024.

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

Speaker Change: Yeah.

Speaker Change: Okay.

Amir Schlachet: Thank you, Erica, and welcome, everyone. With the financial results of Q1, which we are releasing today, we are off to a great start of what we believe will be yet another pivotal year of growth for Global-E. GMV, revenues, and Adjusted EBITDA all beat the top of our forecasted range for the quarter, with GMV growing 32% year-on-year, revenues growing 24%, and adjusted EBITDA growing These strong results manifest our team's continued execution across all elements of the business, coupled with our effectiveness in controlling costs and the fact that macro conditions during the quarter were slightly more favorable than what we initially anticipated back in February.

Speaker Change: Thank you Erica and welcome everyone.

Amir Schlachet: Moreover, we remain confident in our ability to uphold our plans for the remainder of the year, as reflected in our updated guidance for the full year of 2024. Most notably, the large client launches planned for the second half of the year are on track, and Shopify Markets Pro continues to attract merchants at the planned pace. Among other things, we believe both these factors will contribute to our ability to accelerate growth in the second half of the year. Later in this call, Ofer will review our Q1 results in more detail, and he will provide you with our guidance for Q2 and our RAISE guidance for the full year of 2024.

Amir: The financial results of Q1, which we are releasing today.

Amir: We're off to a great start with what we believe will be yet another pivotal year of growth for globally.

Amir: <unk> revenues and adjusted EBITDA will be the top of our forecasted range for the quarter.

Amir: With Jim be growing 32% year on year revenues growing 24% and adjusted EBITDA growing 47%.

Amir: These strong results manifest our team's continued execution across all elements of the business.

Amir: With our effectiveness in controlling costs and the fact that macro conditions during the quarter were slightly more favorable than what we initially anticipated back in February.

Amir: Moreover, we remain confident in our ability to uphold our plans for the remainder of the year.

Amir: As reflected in our updated guidance for the full year of 2024.

Amir: Most notably.

Amir: The large client launches planned for the second half of the year are on track.

Amir: And shopify market's growth continue through a mass merchants and the planned piece.

Amir: Among other things we believe both of these factors will contribute to our ability to accelerate growth in the second half of the year.

Speaker Change: Later in the school offer will review our Q1 results in more detail and he will provide you with our guidance for Q2 and our raised guidance for the full year of 2024.

Amir Schlachet: But before we do that, I would like to share with you some of the exciting business developments we have seen recently. During Q1, we continued to experience strong demand for our services across all markets we operate in. KeyOne, so many renowned brands went live with Global-E services. In the U.S., designer brands Donna Karan and DKNY, footwear brand Hey Dude by Crocs, and sports fashion brand Golf Wang all went live, as did Imperial Workshop, our first U.S. merchant on the Wix platform.

Speaker Change: But before we do that I would like to share with you some of the exciting business development, we have seen recently.

Speaker Change: During Q1, we continued to experience strong demand for our services across all markets we operate in.

Speaker Change: Q1, so many renowned brands go library globally services.

Speaker Change: In the U S designer brands, Donna Karan and DKNY footwear brand hated by Crocs and sports fashion brand Gulf Wang who went live.

Speaker Change: As did Imperial workshop, our first U S merchant on the weeks platform.

Amir Schlachet: Thanks to the combination of Wix and Global-E, all aspiring Jedi Knights can now do their essential lightsaber shopping online on the Imperial Workshop website, regardless of where they live. Of course, as long as it's not in a galaxy far, far away.

Speaker Change: Thanks to the combination of weeks and globally oldest barring Jedi Knights can now do their essential lightsaber shopping online on the Imperial workshop website, regardless of where they live.

Speaker Change: Of course as long as it's not in the galaxy far far away.

Amir Schlachet: During the quarter, we also launched lingerie brand La Senza in Canada, as well as high street fashion brands Hobbs and T.M. Lewin, luggage brand Antler, and homeware brand So Home in the UK. In Europe, we launched with the French vintage-style fashion brand Louise Michaux, with fashion brands Gerard, Dorel, Seurat, and Carreau, and with the renowned luxury lifestyle brand Repertoire, which, thanks to Global-E, can now sell its iconic ballerina shoes worldwide as seamlessly and effectively as it does so in France.

Speaker Change: During the quarter, we also launch with luxury brand Lufthansa in Canada, as well as high Street fashion brands hubs, and Tim Louie luggage brand antler and Homeward brand so home in the U K.

Speaker Change: In Europe, we launched with the French vintage style fashion brand Louise Michelle with fashion brands Gerardo L zero in coal and we are doing now in luxury lifestyle brand rapidly.

Speaker Change: Thanks to globally can now sell its iconic body arena shows worldwide as seamlessly and effectively as it does so in France.

Amir Schlachet: The quarter also saw the launches of innovative fashion brand Markein and the online store of workwear and protective gear retailer Engelbert Staus, both in Germany. Moreover, we launched the leisure brand Pacha in Spain with its famous cherries logo. Women's Luxury Fashion Brand Costello was launched in Greece, and the fashion brand Roboto in Sweden, among many others.

Speaker Change: The quarter also saw the launches of innovative fashion brand marketing and the online store of workwear and protective gear retailer angle, but staff both in Germany.

Speaker Change: Moreover, we launched with the leisure brand powertrain, Spain with its famous cherries logo.

Speaker Change: Women's luxury fashion brand Costello with increase.

Speaker Change: And the fashion brands Roberto in Sweden, among many others.

Amir Schlachet: Our business in AIPAC continues to expand all the time as well, with examples of recent launches in the region being Infamous Swim and Carla Zampatti in Australia, Hi MooMobile VEX and CommonSmart in Japan, DIY Watch Club in Hong Kong, and more.

Speaker Change: Our business in APAC continues to expand all the time as well with examples of recent recent launches in the region being infamous women cognizant body in Australia Hi.

Speaker Change: Hi, Manuel by a VIX and common smart in Japan.

Speaker Change: I Watch club in Hong Kong and more.

Amir Schlachet: During Q1, we also continued our efforts to expand our business with existing merchants and with brand groups. As such, we opened new markets for Adidas and Dohan and went live with InfiniMan and additional brands from the KOTI group. We also went live with Tap to Style, a new brand by Moots in Italy, who themselves just went live the previous quarter, and with NNORMAL, a new Spanish brand from Kemper, with dozens of other brands going live, and with robust integration and sales pipeline.

Speaker Change: During Q1, we also continued our efforts to expand our business with existing merchants and with brand groups.

Speaker Change: As such we opened new markets for Adidas and do earn and went live with Infineon and additional brand from the equity group.

Speaker Change: We also went live with SAP to style and your brand by modes in Italy, who themselves just went live the previous quarter.

Speaker Change: And we've abnormal and use Spanish brand from the Kemper group.

Speaker Change: With dozens of other brands going live and we have robust integration and sales pipelines. We believe we can continue on a growth path into the future as more and more merchants with emphasis on global direct to consumer sales.

Amir Schlachet: We believe we can continue on our growth path into the future, as more and more merchants put an emphasis on global direct-to-consumer sales. Switching gears, I would like to update you regarding the various components of our strategic partnership with Shopify. On the 3P, or direct integration side, the migration of our historical merchant base onto the new native integration is nearing completion. And the team's focus has now turned towards the continued, gradual transition of all Shopify merchants onto checkout extensibility.

Switching gears I would like to update you regarding the various components of our strategic partnership with Shopify.

Speaker Change: On the <unk> or direct integration side, the migration of our historical merchant base onto the new native integration is nearing completion.

And the team's focus has turned now towards the continued gradual transition of all show up if I merchants onto checkout extensibility.

Amir Schlachet: On the 1P, or Shopify Markets Pro side, merchants continue to sign up and go live, gradually amassing GMV at the planned rate. In parallel, the teams on both sides continue to work on developing additional features and capabilities, further enhancing the solutions. Given the large market potential on the Shopify platform and as adoption of the Innovative Markets Pro solution continues to rise, we remain highly convinced in our ability to capture a meaningful part of this massive market opportunity over the course of the next few years.

Speaker Change: On the <unk> or Shopify market's pro side merchants continue to sign up and go live gradually amassing GMB at the planned rate.

Speaker Change: In parallel the teams on both sides continue to work on developing additional features and capabilities further enhancing the solutions reach given.

Speaker Change: Given the large market potential on the shopify platform.

Speaker Change: And as adoption of the innovative markets CRO solution continues to rise.

Speaker Change: We remain highly convinced in our ability to capture a meaningful part of this massive market opportunity over the course over the next few years.

Amir Schlachet: With all these exciting developments, and with many others across the entire business, we continue to believe, more than ever, in our ability to exhibit long-term and durable growth as we capture more and more of the vast greenfield opportunity that lies ahead of us. I will now hand it to Ofer, our CFO, to take us through the quarterly numbers in more depth, as well as present our updated guidance going forward. Thank you, Amir.

Speaker Change: We've already have exciting developments and with many others across the entire business. We continue to believe more than ever in our ability to exhibit long term and durable growth as we capture more and more of the vast greenfield opportunity that lies ahead of us.

Speaker Change: I will now hand, it all for our CFO to take us through the quarterly numbers in more depth.

Speaker Change: As well as presents our updated guidance going forward.

Ofer Koren: Thank you, Amir, and thanks, everyone, for joining us today for our earnings call. We are off to a strong start in 2024.

Speaker Change: Thank you Amir and thanks, everyone for joining us today for our earnings.

Amir: We are off to a strong start in 2024 Q.

Ofer Koren: Q1 was another quarter of fast-growth and robust-adjusted EBITDA as we continue to drive progress on all fronts and remain committed to delivering value to merchants in their international investment. 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... As Amir mentioned, we have experienced rapid growth of GMV in Q1, as we generated $930 million of GMV, an increase of 32% year-over-year, 3.9% over the midpoint of our guidance for... We continue to benefit from the growth of global e-commerce, which is back to its pre-COVID long-term pattern, taking share from brick-and-mortar retailers, and The Continued Focus of Merchants on Direct-to-Consumer, while there is still uncertainty regarding consumer demand, which remains volatile.

Amir: Q1 was another quarter of fast growth and robust adjusted EBITDA as we continue to drive progress on all fronts and remain committed to delivering value to merchants in the international initiatives.

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.

Speaker Change: As Emil mentioned, we have experienced rapid growth of <unk> in Q1, as we generated $930 million of DMV and increase of 32% year over year, three 9% over the midpoint of our guidance for Q1.

Speaker Change: We continue to benefit from the growth of global ecommerce, which is back to its greet cope with long term, Patrick taking share from brick and mortar retail and the continued focus of merchants of direct to consumer while there is still uncertainty regarding consumer demand, which remains volatile.

Ofer Koren: In Q1, we generated total revenue of $145.9 million, up 24% year-over-year. Service fee revenue was $68.3 million, up 36%, and fulfillment services revenue was up 15% to $77.6 million. The higher growth of service fee revenue compared to fulfillment services revenue was mainly driven by a higher share of our multi-local offering.

Speaker Change: In Q1, we generated total revenue of $145 $9 million up 24% year over year service fee revenue were $68 3 million up 36% and fulfillment services revenue were up 15% to 77 6 million.

Speaker Change: The higher growth of service fee revenue compared to fulfillment services revenue was mainly driven by the higher share of our multi local offering as reflected in our guidance. We expect take rates to stabilize at close to 16% driven by elevated levels of fulfillment services adoption.

Ofer Koren: As reflected in our guidance, we expect take rates to stabilize at close to 16% driven by elevated levels of fulfillment services adoption. Non-gap gross profit, however, continues to outpace revenue growth. The Q1 non-gap gross profit was $66.1 million, up 36% year-over-year, representing a gross margin of 45.3% compared to 41.4% in the same period last year. Driven by a higher share of service fee revenue and our continuous efficiency efforts

Speaker Change: non-GAAP gross profit continued to outpace revenue growth in Q1, non-GAAP gross profit was $66 $1 million up 36% year over year, representing a gross margin of 45, 3% compared to 41, 4% in the same period last year driven by.

Speaker Change: The higher share of service fee revenue and our continuous efficiency effort.

Ofer Koren: Gap gross profit was $63.3 million, representing a margin of 43.4%. Moving on to operational expenses, we continue to invest in the development of our platform to further enhance and expand our offering. R&D expense in Q4, excluding stock-based compensation, was $20.1 million, or 13.8% of revenue, compared to $16.9 million, or 14.3% in the same period last year. Total R&D spend in Q4 was $23.5 million. We also continue to invest in sales and marketing to expand our pipeline while maintaining efficiency.

Speaker Change: GAAP gross profit was $63 $3 million, representing a margin of 43, 4%.

Speaker Change: Moving on to operational expenses, we continue to invest in the development of our platform to further enhance and expand our offering R&D expense in Q4, excluding stock based compensation was 21.

Speaker Change: <unk> <unk> or 13, 8% of revenue compared to $16 9 million or 14, 3% in the same period last year.

Speaker Change: Total R&D spend in Q4 was $23 $5 million.

Speaker Change: We also continue to invest in sales and marketing to expand our pipeline, while maintaining efficiencies sales and marketing expense, excluding shopify related amortization expenses stock based compensation acquisition related intangible amortization was $17 $2 million or 11, 8% of revenue.

Ofer Koren: Sales and marketing expense, excluding Shopify-related amortization expenses, stock-based compensation, and acquisition-related intangibles amortization, was $17.2 million, or 11.8% of revenue, compared to $10.5 million, or 8.9% of revenue in the same period last year. Shopify warned related amortization expense was $36.3 million.

Speaker Change: Compared to $10 5 million or eight 9% of revenue in the same period last year.

Speaker Change: Shopify warrant related amortization expense was $36 $3 million total sales and marketing expenses for the quarter were $57 million.

Ofer Koren: Total sales and marketing expenses for the quarter were $57 million. General and administrative expenses, excluding stock-based compensation, acquisition-related expenses, and acquisition-related contingent consideration, were $8.3 million, or 5.7 percent of revenue, compared to $7.4 million, or 6.3 percent of revenue, in the same period last year. Total G&A spend in Q1 was $12.1 million. Adjusted EBITDA continues to grow rapidly and total $21.3 million, representing a 14.6% adjusted EBITDA margin and increasing by 47% from $14.5 million or 12.3% margin in the same period last year.

Speaker Change: General and administrative expenses, excluding stock based compensation acquisition related expenses and acquisition related contingent consideration was $8 $3 million or five 7% of revenue compared to $7 4 million or six 3% of revenue in the same period last year.

Speaker Change: Total G&A spend in Q1 was $12 1 million.

Speaker Change: Adjusted EBITDA continued to grow rapidly in total $21 $3 million, representing a 14, 6% adjusted EBITDA margin and increasing by 47% from $14 $5 million or 12, 3% margin in the same period last year.

Speaker Change: Net loss was $32 $1 million compared to a net loss of $43 $1 million in the year ago period, driven mainly by the amortization expenses related to the shopify warranted by the transaction related intangibles.

Ofer Koren: The net loss was $32.1 million compared to a net loss of $43.1 million in the year-ago period. Switching gears and turning to the balance sheet and cash flow statements, we ended the quarter with $298 million in cash equivalents, including short-term deposits and marketable securities. Cash flow used by operating activities was $54.3 million, compared to $29.5 million used a year ago, driven by typical first-quarter post-peak working capital dynamics and a $12.2 million payment of held-back acquisition-related proceeds to the flow founders.

Speaker Change: Switching gears and turning to the balance sheet and cash flow statement, we ended the quarter with $298 million in cash cash equivalents, including short term deposits and marketable securities cash flow used by operating activities was $54 $3 million compared to $29 5 million.

Speaker Change: Used a year ago, driven by typical first quarter post peak working capital dynamics and $12 2 million payment of held back acquisition related proceeds through the flow founders.

Ofer Koren: Moving on to our financial outlook and guidance for Q2 and our updated 2024 full year guidance. For Q2, 2024, we're expecting GMV to be in the range of 1.025 to 1.065. At the midpoint of the range, this represents a growth rate of 27% versus Q2 of 2021. We expect Q2 revenue to be in the range of $162.5 to $168.5 million. At the midpoint of the range, this represents a growth rate of 24% versus Q2 of 2021.

Speaker Change: Moving on to our financial outlook and guidance for Q2, and our updated 2020 for full year guidance.

Speaker Change: For Q2, 2024, we are expecting <unk> to be in the range of one point or two five to 1.65.

Speaker Change: Billion dollars at the midpoint of the range. This represents a growth rate of 27% versus Q2 of 2023.

Speaker Change: We expect Q2 revenue to be in the range of 162, five to $168 $5 million at the midpoint of the range. This represents a growth rate of 24% versus Q2 of 2023 for adjusted EBITDA, We're expecting a profit in the range of 24, 5% to $28 five.

<unk>.

Ofer Koren: For Adjusted EBITDA, we are expecting a profit in the range of $24.5 to $28.5 million. For the full year of 2024, we are raising our guidance and now anticipate GMV to be in the range of $4.625 billion to $4.865 billion, representing a 33.4% annual growth rate at the midpoint of the range. Revenue is now expected to be in the range of $733 million to $773 million, representing a growth rate of 32.1% at the midpoint of the range.

Speaker Change: For the full year of 2024, we are raising our guidance and now anticipate <unk> to be in the range of four six to $5 $4.865 billion, representing a 33.4 annual growth rate.

Speaker Change: Mid point of the range.

Speaker Change: Revenue is now expected to be in the range of 733 million to $773 million, representing a growth rate of 32, 1% at the midpoint of the range for adjusted EBITDA, We are expecting a profit of $124 million to $140 million.

Ofer Koren: For AdjustedDB DAO, we're now expecting a profit of $124 to $140 million. We continue to believe growth will accelerate in the second half of the year, driven by large merchant launches planned for H2, which are on track, anticipated elevated volume contribution from Shopify Markets Pro, which is growing as expected, and a lower impact from Border Free on a year-on-year comparison. In conclusion, the opportunity in front of us remains massive, and we continue our journey to support merchants worldwide in expanding their direct-to-consumer business. We focus on execution and believe we can continue to grow rapidly while further expanding cash generation in the coming years. And with that, Amir and I are happy to answer any questions you may have. Operator.

Speaker Change: We continue to believe growth will accelerate in the second half of the year driven by large merchant launches planned for <unk>, two which are which are on track anticipated elevate volume contribution from shopify market, Pearl, which is growing as expected and a lower impact from border free on Europe.

Speaker Change: Year on year comparison.

Speaker Change: In conclusion, the opportunity in front of US remains massive and we continue our journey to support merchants worldwide and expanding their direct to consumer business. We focus on execution and believe we can continue to grow rapidly while further expanding cash generation in the coming years.

Speaker Change: And with that Amanda and I are happy to answer questions you may have operator.

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number one on your touchtone phone. You will hear a three-tone prompt acknowledging your request. Should you wish to decline from the polling process, please press star followed by the number two. If you are using a speakerphone, please lift your hands up before pressing any. Our first question comes from the line Will Nance from Golden Sacks. Go ahead.

Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session.

Speaker Change: Do you have a question. Please press star followed by the number one on your Touchtone Fine you will USB Teng PON acknowledging your request.

Speaker Change: <unk> with Citi clients on the polling process. Please press star followed by the number Q.

Speaker Change: If you are using a speaker phone please lift your handset before pressing any key.

Speaker Change: Our first question comes from the line of will Nance from Goldman Sachs Go ahead. Please.

Amir Schlachet: Hey guys, good morning. I appreciate you taking the question. I know you had a comment in your prepared remarks that the macro environment ended up being a little bit better than expected in the first quarter. And I'm just wondering if you could kind of speak to what you're seeing so far in QQ just given some of the negative data points around luxury spending and, you know, has any of you guys noticed any change in spending patterns over the last month and a half?

Speaker Change: Hey, guys. Good morning appreciate you taking the question.

Speaker Change: And then you had a comment in the.

William Alfred Nance: Our remarks that the macro environment ended up being a little bit better than the expectations in the first quarter and I'm. Just wondering if you could kind of speak to what youre seeing so far in <unk>, just given some of the negative data points around.

William Alfred Nance: Around luxury spending in <unk>.

Speaker Change: <unk> have you guys noticed any change in spending patterns over the last month and a half.

Speaker Change: Okay.

Amir Schlachet: Hey Will, thanks for the question. Basically, we haven't seen any material changes in Q2 so far. Things continue to be volatile in terms of macro conditions. We see it basically in the trading patterns. But our anticipation and what we've seen so far in Q2, and our assumption for the remainder of Q2, is that the volatility and hence the macro environment, in general, will remain similar to what we've seen in Q1.

Speaker Change: Thanks.

Speaker Change: So the question.

Speaker Change: Basically we havent seen any material changes in Q2, so far things continued to be volatile in terms of macro conditions.

Speaker Change: We see it.

Speaker Change: Basically in the in the trading patterns, but our anticipation and what we've seen so far in Q2 and our assumption for the remainder of Q2 is that.

Speaker Change: Volatility enhance the the macro environment in general will remain similar to what we've seen in Q1.

Nir Debbi: That's super helpful. And then can you just talk about the pipeline of product enhancements on the MarketsPro side, things like fulfillment, and just what the rollout schedule for things like that would be?

Speaker Change: That's super helpful. And then can you just talk about the pipeline.

Speaker Change: Product enhancements on the marketing side of.

Speaker Change: Things like that.

Speaker Change: And just what the rollout schedule for things for things like that would be.

Nir Debbi: Hey Will, it's Nir. We continue to work according to our roadmap, developing enhancements and features for Shopify Markets Pro, and we continue to roll those out. I think over the next few quarters, we will see a gradual rollout of all the key elements we are working towards, and we expect it to work, continue, and accelerate the growth in the coming quarters of the solution adoption.

Neal: Hey will it's Neal.

Speaker Change: We continue to work according to our roadmap developing enhancements and features towards Shopify markets Pro.

Speaker Change: And we continue to all those out I think.

Speaker Change: Over the next few quarters, we will see a gradual rollout of all the key elements, we are working toward and we expect it to.

Speaker Change: Continue and accelerate the growth.

Speaker Change: In the coming quarters of the solutions adoption.

Speaker Change: Yes.

Nir Debbi: Got it. I appreciate you taking the question.

Speaker Change: Got it I appreciate you taking the questions.

Speaker Change: Thank you.

Operator: Thank you. Our next question comes from the line of Samad Samana from Jeffrey. Go ahead, please.

Speaker Change: Our next question comes from the line of some lines from liner from Jefferies Go ahead. Please.

Speaker Change: Hi.

Ofer Koren: Hi, good morning. Thanks for taking my questions. So maybe first, you guys mentioned multiple times that MarketsPro, the merchant ramp, is tracking the plan. Can you just remind us what the plan target is, whether that's in terms of the number of merchants or GMB that you're targeting for 2024, and what you have assumed in guidance for the rest of the year?

Speaker Change: Good morning, Thanks for taking my questions.

Speaker Change: So maybe first you guys mentioned multiple times that market's growing merchant ramp is tracking to plan can you just remind us what the planned target is whether that's in terms of number of merchants or GMB that you're targeting for 2024 and what have you assumed in.

Speaker Change: And guidance for the rest of the year.

Ofer Koren: Hi Samad. We haven't guided for specific numbers of what we expect this year on MarketsPro. In the future, as we indicated before, once it becomes a large enough business client, we will look at more clarity specifically on MarketsPro. However, the market expectations as reflected in different market reports are in line with what we see today. So we are trading within the numbers that are outside.

Speaker Change: Hi, some odd we haven't guided for specific numbers.

Speaker Change: Fourth we expect D C L a on markets grow.

Speaker Change: Yeah.

Speaker Change: In the future as we as we are as we indicated before once it becomes a large enough piece of science, we will look at the more clarity specifically on markets Paul.

Speaker Change: However, the market expectations as reflected.

Speaker Change: Between the different a different end market reports is in line with what we see today so.

Speaker Change: We all that we are trading within that within the number that are outside in the market.

Ofer Koren: And then maybe just, Ofer, as I think about the, I know you mentioned what drove the quarter, but I didn't catch NRR. Could you maybe help us understand how NRR tracks through the quarter and what you've observed, maybe post-quarter, and if that's tracking the kind of historical assumptions that you've seen over the last few years?

Speaker Change: Understood and then maybe just.

Speaker Change: And as I think about the I know you mentioned went during the quarter, but.

Speaker Change: I didn't catch an IRR could you maybe help us understand how NR track through the quarter and what you've observed maybe post quarter end, if thats tracking to kind of historical assumptions that you've seen over the last few years.

Ofer Koren: So, hey Samad, thanks for the question. So, you know, as you know, we provide the annual NDR and NRR numbers. However, generally speaking, we can say that while, as Amir mentioned, there is volatility in consumer behavior, all in all, except for the lower two weeks in February, it has been around or just slightly below the numbers we usually see or the numbers we've expected for this year. So it's not at its peak, and it is below average, but it's more or less in line with what we've expected for 2021. Great, thanks again, and congratulations.

Speaker Change: So.

Sam: Hey, Sam.

Speaker Change: Thanks for the question.

Speaker Change: No.

Speaker Change: As you know we.

Speaker Change: We provide the annual.

Speaker Change: And <unk> in our numbers.

Speaker Change: However, generally speaking we can say that.

Speaker Change: While as Amir mentioned there is.

Speaker Change: Volatility in consumer behavior all in all.

Speaker Change: Except for the lower two weeks in February it has been.

Speaker Change: Around.

Speaker Change: Just slightly below that the numbers, we usually see all the numbers we've expected for this year.

Speaker Change: So it is not.

It's not at its peak and its.

Speaker Change: It is.

Speaker Change: Below average, but it's more or less in line with what we've expected for 2024.

Ofer Koren: Great, thanks again, and congrats on a strong quarter. Thank you. Our next question...

Speaker Change: Great. Thanks, again, and congrats on the strong quarter.

Philip: Thank you Philip.

Operator: Our next question comes from Brian Peterson from Raymond James. Go ahead. Thanks, gentlemen. Congratulations on the quarter. So I know you mentioned some commentary on the macro. I'm curious how that relates to the top of the funnel. What are you seeing in terms of

Speaker Change: Our next question comes from the line of Brian Peterson from Raymond James Go ahead. Please.

Speaker Change: Thanks, gentlemen, and congrats on the quarter. So I know you mentioned some commentary on the macro I am curious how that relates to the top of the funnel. What are you seeing in terms of pipeline creation in deal timing, thus far in 2024.

Nir Debbi: Hey, hi, it's Nir. Thank you for the question. For now, what we see as of today is that our pipelines remain strong or even stronger than what we've seen ever in the past. We are looking towards the second part of the year, where we expect the launch of several large merchants that are currently in the project state, as well as the signing of at least another one. So we're quite optimistic. I don't think that we ever had a pipeline in terms of sheer dollars that was as strong as this one. That's great to hear. And Ofer, maybe just to follow up, you had a

Neil: Hey, Hi, it's Neil Thank you for the question.

Speaker Change: For now what we see here today is that our pipelines remained strong, but we have been stronger than what we've seen ever in the past.

Speaker Change: We are looking towards the second part of the year, Although we expect the launch of several large merchants.

Speaker Change: That are currently in project state as well as the signing of.

Speaker Change: At least additional one.

Speaker Change: So we're quite optimistic I don't think that we ever had the pipeline.

Speaker Change: In terms of <unk>.

Speaker Change: <unk> that is that as strong as this one.

Speaker Change: Okay.

Speaker Change: That's great to hear and I've heard you, maybe just a follow up.

Speaker Change: Had a nice beat in gross margins this quarter I know the mix is maybe a little bit different but want to understand what drove that and how we should be thinking about modeling gross margins going forward. Thanks guys.

Ofer Koren: So, yeah, gross margins have been high this quarter, and that is due to two factors. The first one is actually the mix of revenues, so the service fee share was higher compared to last year and the parallel quarter.

Speaker Change: That.

Speaker Change: So yes gross margins.

Speaker Change: Hi.

Speaker Change: This quarter and that is due to two factors the first one.

Speaker Change: Is actually the mix of revenue.

Speaker Change: Service fees share was <unk> <unk>.

Speaker Change: Higher.

Speaker Change: Compared to last year to the prior quarter.

Speaker Change: And in addition, we are continuously working on efficiencies improving processes and so on and so forth.

Ofer Koren: In addition, we are continuously working on efficiencies, improving processes, and so on and so forth, so this has contributed as well. Going forward, as we previously stated, we don't expect any significant expansion this year. We are happy with the level of gross margins we currently have. So, going forward, we do not expect...

Speaker Change: So this contributed as well.

Speaker Change: Going forward, we don't expect as we previously stated we don't expect.

Speaker Change: Any significant expansion this year.

Speaker Change: We are happy with the level of gross margins. We currently have.

Speaker Change: So.

Speaker Change: Going forward, we do not we do not expect a significant increase.

Speaker Change: Yeah.

Operator: Thank you. Our next question comes from the line of Koji Ikeda from Bank of America. Go ahead.

Speaker Change: Thank you. Our next question comes from the line of Koji Ikeda from Bank of America go ahead. Please.

Ofer Koren: Yeah, hey guys, thanks so much for taking the questions. I wanted to ask... On the guidance here, you're thinking about the GMB guide specifically, and when I look at the second quarter guide and the full quarter guide and a little bit of the historical seasonal pattern in GMB, it looks like a pretty heavy ramp into the fourth quarter here, so just trying to understand, or maybe a bit more qualitative color in the way you're thinking about linearity and the GMB ramp for the rest of the year.

Speaker Change: Yeah, Hey, guys. Thanks, so much for taking the questions I wanted to ask.

Koji Ikeda: On the guidance here, just thinking about the GMB guide, specifically and when I look at the second quarter guide in the fourth quarter guide and a little bit of the historical seasonal pattern and GMB. It looks like a pretty pretty heavy ramp into the fourth quarter. Here. So just trying to understand or maybe a bit more qualitative color in the way youre thinking about linearity.

Koji Ikeda: And GMB ramp for the rest of the year. Thank you.

Speaker Change: Yes so.

Ofer Koren: You're right, this year is not our typical year, and we've discussed that in the previous quarter as well. H2 Growth takes into account a few drivers.

Speaker Change: You're right this year is not.

Speaker Change: Our typical year and we've discussed that in the previous quarter as well.

Ofer Koren: The first one is the large client launches that we expect and, currently, are on track and on time. This is one main contributor. In previous years, we had large client launches, but they were not all in the second half of the year. The second driver is obviously Shopify Markets Pro, which is ramping up, so we expect it to contribute more in H2. It is currently, as we mentioned, on target, so we feel quite confident with the way it's progressing.

Speaker Change: H two growth.

Speaker Change: <unk> takes into account a few drivers.

Speaker Change: First one is the large client launches that we expect and currently are on track on time so.

Speaker Change: This is one main contributor.

Speaker Change: In previous years.

Speaker Change: Had large client.

Speaker Change: Large client launches, but they were not all in the second half of the year.

Speaker Change: The second driver is obviously shopify market's bra, which is ramping up so we expected.

Speaker Change: To contribute more in H two and it is currently as we mentioned it's on target.

Speaker Change: We feel quite confident with the way it's progressing the third one.

Ofer Koren: The third one is we do expect to see a reduced effect of Borderfree. Borderfree is weighing on our growth a bit due to the nature of the merchants trading on Borderfree, a lot of large department stores and so on. As we go forward, one, its share of our volume is decreasing because the other business is growing, and we are migrating those merchants globally, and we expect to see uplifts once those migrations are done. Those are the main drivers behind H2 Growth.

Speaker Change: We do expect to see reduce defect of border free BARDA free is weighing on our growth.

Speaker Change: Due to the nature of the merchant trading on our border free a lot of.

Speaker Change: Large department stores and so on and.

Speaker Change: As we go forward one its share of our volume is decreasing because the other businesses.

Speaker Change: <unk> is growing and we are migrating those merchants.

Speaker Change: Globally, and we expect to see uplift once those migrations are done.

Speaker Change: So those are the main drivers behind <unk> to growth.

Ofer Koren: Got it. Thank you.

Speaker Change: Got it thank you and just a follow up here on the large merchants that you had mentioned that you're expecting to come on in the second half.

Nir Debbi: Just a follow-up here on the large merchants that you've mentioned that you're expecting to come on in the second half. It definitely sounds like it's a positive step in the progression here to get them to go live. But it also sounds like it's a pretty big risk to guidance if they don't go live. So maybe you could speak to what is giving you that confidence that these guys will be able to get the Global-E platform live later this year. Thanks.

Speaker Change: Definitely sounds like it's a positive and on.

Speaker Change: The progression here to get them to go live but it also sounds like it's a pretty big risk to guidance. If they don't go live. So maybe you could speak to what is giving you that confidence that these guys will be able to get the globally platform. Later this year. Thanks guys.

Yeah.

Nir Debbi: Hi Koji, it's Neil. The large projects are currently on track. It's projects that are already deep into the project phase of it in order to launch in Q3 and early Q4, because no one launches in November and December; usually, everybody does it pre-peak. So in the next four months, in order to launch, large merchants are already deep into the integration and the testing cycle. So we do have high confidence that it is happening.

Neal: Hi, Koji it's Neal.

Neal: The large projects are currently on track its projects that are already deep into the project phase of it in order to launch.

Neal: In Q3, and early Q4, because no one launches in November or December usually.

Neal: Everybody is doing it pre peak so.

Nir Debbi: While there is always a risk of delay, we do have a high level of confidence based on the current status of the project that it's actually going to go as planned. So as we do take some, I would say, some level of conservatism into our guidance, of course, we do have and have factored in certain delays, a few weeks here, a few weeks there, in order to absorb minor changes in the launch. Thank you for taking the time to answer the question.

Neal: In the next 12 months in order to launch large merchants are already deep into the integration.

Neal: And then the testing cycle. So we do have high confidence that it is happening.

Neal: While there is always a risk of delay.

Neal: We do we do have high level of confidence based on the current status of the projects that it's actually going to go as planned.

Neal: So.

Neal: As we do take some I would say.

Neal: Some level of.

Neal: Conservatism into our guys in our guidance of course.

Neal: We do have we did factor allowed certain delays a few weeks here a few weeks out in order to absorb the minor changes.

Neal: In the launches.

Operator: Thank you. Thank you for taking the question.

Neal: Yeah.

Speaker Change: Thank you. Thank you for taking the question.

Koji Ikeda: Thanks Koji.

Operator: Our next question comes from the line of Scott Berg from Needham. Go ahead, please.

Speaker Change: Our next question comes from the line of Scott Berg from Needham Go ahead. Please.

Nir Debbi: Hi, everyone. Thanks for taking my questions. Nir, I think it was you that responded to the pipeline question in the second half and I was pleased.

Scott Randolph Berg: Hi, everyone nice quarter, thanks for taking my questions.

Scott Randolph Berg: I think it was you that responded to the pipeline question and the second half and pleased that actually I think it was dollar wise might be an all time high here.

Nir Debbi: Actually, I think it might be an all-time high dollar-wise here. As you look back at your Q1 business, what do the sales cycles look like? Are you able to continue to close deals at similar rates, or is there anything in the back row that might be accelerating or delaying some of those sales?

Speaker Change: As you look back at your Q1 business. How are what are sales cycles look like are you able to continue to close deals at similar rates or is there anything in the back or that might be accelerating or delaying some of those sales cycles.

Nir Debbi: Yeah, so to be honest, I think after, I would say, a slight delay sometime in mid-half last year, as of, I would say, late last year, this Q1, we are more optimistic that merchants are, I would say, starting to see a light at the end of the tunnel, and we see them willing to make commitments faster. The main change we see is on the larger project side, where we see more RFPs coming in, and more interest from large merchants, and if that continues, we do expect it to affect our 2025 launches very positively. So it's a pipeline that is being built now, a very strong one, and we believe that if this continues throughout the year, we will see a very positive effect on our 2025.

Speaker Change: Yes, so to be honest I think are still on say a slight delay some time in mid to half last deal.

Speaker Change: I would say late last year. This Q1, we are more optimistic.

Speaker Change: That merchants.

Speaker Change: I would say starting to see light at the end of the tunnel and we see it.

Speaker Change: Willing to make commitments pasta.

Speaker Change: The main change we see is on the larger project side, where we see more rfps coming in and more interest from large merchants then if set continues.

Speaker Change: We do expect it to affect very positively our 2025.

Launches with pipeline that is being built now very strong one and we believe that if this continues along the year, we will see a very positive effect on our 2025 business.

Amir Schlachet: Scott, this is very helpful, thank you. And then, as you all look at six months into the MarketsPro opportunity with Shopify, you seem pleased with current traction, at least year-to-date, in what the second half looks like, but are there additional levers that you believe that you can pull? Maybe they don't impact this year, maybe it's more impacting next year in fiscal 25, but are there additional levers that you can pull to maybe accelerate some of the merchant adoption of that platform?

Speaker Change: Got it very helpful. Thank you and then as you all look at six months into the market's pro opportunity with Shopify.

Speaker Change: I am pleased with current traction at least year to date in the second half looks like but are there additional levers that you believe that you can pull.

Speaker Change: Maybe they don't impact this year, maybe it's more impacting next year in fiscal 'twenty five but are there additional levers that you can pull to maybe accelerate some of the merchant adoption of that platform.

Amir Schlachet: Yeah, thanks, Scott. It's Amir.

Scott Randolph Berg: Yes, Thanks Scott.

Speaker Change: So as you said and as we noted we are indeed pleased with the pace.

Which our merchants our on boarding and <unk> domestic.

Amir Schlachet: So, as you said, and as we noted, we're indeed pleased with the pace at which merchants are onboarding and the number of merchants that GMB is amassing. And, yes, there is a joint pipeline and roadmap between us and Shopify, which is aimed at constantly adding more features and enhancing the solution, which by itself should enlarge the applicability of the solution for additional merchants and accelerate down the line the pace in which it is adopted into next year and beyond.

Speaker Change: Yes, there is.

Speaker Change: Joints.

Speaker Change: Pipeline and roadmap between us.

Shelby Fox: And Shelby Fox.

Speaker Change: Which is aimed at constantly adding more features and enhancing the.

Speaker Change: The solution, which by itself should.

Speaker Change: In large D. The applicability of the solution for additional merchants and accelerate down the line into indicated into into next year and beyond.

Amir Schlachet: In addition, as a reminder, this MarketsPro is currently available just for U.S.-based merchants. Again, as part of our roadmap into the future, we do also plan, together with Shopify, down the line to open the MarketsPro offering for merchants from additional markets, like the U.K. and others. There's no date yet set. It's still in the future, but when that goes online, it will further accelerate the adoption rate.

The pace in which it says it is adopted.

Speaker Change: In addition.

Speaker Change: The reminder of this market is probably is currently available just for U S based merchants again as part of our roadmap.

Speaker Change: Into the future we do also plan together with Shopify.

Speaker Change: On the line to open the <unk>.

Speaker Change: Markets for offering for merchants from additional.

Speaker Change: Markets like the U K and others.

Speaker Change: Bill.

Speaker Change: There is no date, yet set it's still in the future, but when that goes online it will.

Speaker Change: Further accelerate the adoption rate.

Operator: understood. Very helpful. Thanks and congrats again on a good quarter.

Speaker Change: Understood very helpful. Thanks, and congrats again on a good quarter.

Scott Randolph Berg: Thanks Scott.

Operator: Our next question comes from the line of James Faucette from Morgan Stanley. Go ahead.

Speaker Change: Our next question comes from the line of James Faucette from Morgan Stanley Go ahead. Please.

Ofer Koren: Great, thank you. I wanted to ask just a couple of follow-up questions. First, in terms of your existing customers, I know you said that the NRR was kind of moving around and wasn't quite as strong as it has been historically, but can you give us a little color on how the same store sales component of that is tracking and if you've made any adjustments to how that's being incorporated into your outlook for this year?

James Eugene Faucette: Great. Thank you I wanted to ask just a couple of follow up questions.

James Eugene Faucette: First in terms of your existing customers I know you said that.

James Eugene Faucette: <unk> was kind of moving around it wasn't quite as strong as it has been historically, but can you give us a little color on how the same store sales component of that is tracking and if you've made any adjustments to how that's being incorporated into your outlook for this year.

Speaker Change: Sure. Thank you for that James itself.

Ofer Koren: Thank you for that, James. It's Ofer.

Speaker Change: So I was referring previously mainly to debt component.

Ofer Koren: So, I was referring previously mainly to that component. The SafeStore sales have been lower than the historical average, and it has been volatile. However, we see it sort of stabilizing around the levels that we've assumed or used for our budget. You know, there was a drop in mid-February that we talked about in the previous quarter, then it came back, and since then, it has been sort of hovering around the same levels with some volatility.

Speaker Change: The same store sales.

Speaker Change: Has been.

Speaker Change: Lower than they historically average and it has been volatile however, we see.

Speaker Change: Sort of.

Speaker Change: Stabilizing around the levels that we've assumed are used for our for.

Speaker Change: For our budget.

Speaker Change: So you know.

There was a drop in mid February that.

Speaker Change: We talked about in the previous quarter, then it came back and since then it is sort of hovering around the same levels with some volatility.

Ofer Koren: Great, great. I appreciate that. And then when we go back to, you know, Shopify, Shopify, MarketsPro, can you please tell us a little more insight into how that develops sequentially, and then, you know, clearly you're doing a lot to add incremental functionality, is, I guess, with the comment that that'll increase the applicability, is that built into the acceleration you're expecting in the latter part of this year, or should we think about there Thanks. Yeah, thanks.

Speaker Change #100: Great Great I appreciate that and then one back on on shelf flash offline market is broken.

Speaker Change #101: It sounds like that that's continuing to track well, if you could give us a little more insight into.

Speaker Change #102: I'll bet develop sequentially and then.

Speaker Change #103: Clearly you're doing a lot to add incremental functionality.

Speaker Change #104: I guess with the comment that that will increase the applicability is that built into the acceleration you're expecting in the latter part of this year or two.

Speaker Change #105: Should we think about there being more of a lag in there being more of an impact and trajectory in 'twenty five.

Speaker Change #104: Thanks.

Amir Schlachet: Yeah, thanks, James. So in terms of the adoption rate, we see a constant stream of merchants that are joining. And we're constantly working not just on features that have to do with the offering itself but also the onboarding process, which is not less important and makes it even more seamless and even faster for merchants to onboard and start trading. So this, together with the larger appeal, as we roll out more features, should gradually enhance that kind of daily or weekly pace of merchants joining the platform.

James Eugene Faucette: Yeah. Thanks, James So in terms of the.

Adoption rate we see.

James Eugene Faucette: Constant.

James Eugene Faucette: Stream of.

James Eugene Faucette: Merchants that is that is joining.

James Eugene Faucette: <unk>.

James Eugene Faucette: We're constantly working not just on features that have to do with the <unk>.

James Eugene Faucette: <unk> itself, but also the on boarding process, which is not less important and making it even more seamless and even faster for our merchants to.

James Eugene Faucette: To onboard and start trading.

This together with the <unk>.

James Eugene Faucette: Larger appeal as we roll down roll out more features.

Should gradually enhanced at kind of daily or weekly pace of.

James Eugene Faucette: Of merchants joining the platform so.

James Eugene Faucette: We do bake into our.

James Eugene Faucette: Into our assumptions going forward.

James Eugene Faucette: Kind of a gradual.

Amir Schlachet: So we do bake into our assumptions going forward the kind of gradual increase in that pace when we look at the longer term, but also take into account that these are all new merchants, so as the year progresses, it should get increasingly meaningful because we get more and more of these merchants to trade in parallel on the platform.

James Eugene Faucette: Increasing debt.

James Eugene Faucette: Our pace when we look.

James Eugene Faucette: On a longer term, but also take into account that these are all new merchant so as the as the year progresses.

James Eugene Faucette: We should get it should get increasingly meaningful because we get.

James Eugene Faucette: More and more of these merchants.

James Eugene Faucette: Trade in parallel on the platform.

James Eugene Faucette: Okay.

Operator: Thank you. Our next question comes from the line of Brent Bracelin from Piper Sandler. Go ahead.

Speaker Change #106: Thank you. Our next question comes from the line of Bank Mcmillan from Piper Sandler go ahead. Please.

Nir Debbi: Sounds like the large merchants here are helping drive this second half acceleration. It sounds like you're getting more interest from large merchants in the pipeline. I just wanted to double-click on why now. Could you talk about why these large merchants are now turning to Global-E? The tough macro out there, there's certainly challenges. So, I'd love to better explain kind of why you're seeing the large markets turn to Global-E now.

Speaker Change #107: Thank you so it.

Speaker Change #108: It sounds like the large bird <unk> merchants here are helping drive the second half acceleration it sounds like youre getting more interest from large merchants in the pipeline I just wanted to double click into why now could you talk about why these large merchants are are now turning to global E.

Speaker Change #109: Tough macro out there, there's certainly challenges so love to better explain kind of why youre seeing the large brokerage turned out globally now thanks.

Speaker Change #108: Okay.

Nir Debbi: Hi Brent, it's Nir. Then overall, we have seen a movement toward larger merchants start in COVID. COVID pushed much larger retailers towards accelerating the direct-to-consumer approach, especially on a global level, as most of them had it in the home market. And we do see this being accelerated now with more RFPs coming out as domestic markets, I assume, are more challenging or more saturated for many of them. And they do want to have further growth and further profitability that can be provided by direct-to-consumer and not through wholesale or middlemen in different countries around the world.

Neal: Hi, Brent it's Neal.

Speaker Change #110: Then overall, we have seen a movement toward larger merchants has started in COVID-19.

Speaker Change #111: <unk> pushed much more larger retailers towards accelerating direct to consumer approach, especially on a global level as most of them had it in the home markets.

Speaker Change #111: We do see this being a.

Speaker Change #111: Being accelerate that now with more rfps coming out.

Domestic markets.

Speaker Change #111: Hume, our more challenging or more saturated for many of them and they do want to.

Speaker Change #111: And to have further growth and further profitability that can be provided by a direct to consumer and not up to a wholesale a middleman.

Speaker Change #111: In different countries around the world. So we do expect it to continue to grow.

Nir Debbi: So we do expect it to continue to grow. And I think it also relates to global positioning, which over time builds much more expertise and brand position as a market leader in supporting those large brands, generating great results and making the operations much more seamless and simple trading around the world. And we continue to see this growing and accelerating over time as we are able to build more capabilities, be much more localized in more markets around the world, and gain and generate more data out of this growth.

Speaker Change #111: And I think it also relates to globally positioning that overtime build much more expertise and brand position as market leader in supporting those large brands generating great results and making the operations much more seamless and simple trading.

Speaker Change #111: Around the world and we continue.

We continue to see this a growing and accelerating over time as we are as we are able to build more capabilities being much more localized in more markets around the world and gain and generate more data.

Speaker Change #111: Out of this growth was the combination of it all I think Cree.

Speaker Change #111: Create a flywheel effect that would continue to attract larger business into the company as we see it.

Okay.

Ofer Koren: Aplikar, thanks for that. And then Ofer, if I think about the GMV growth guy at the midpoint versus the revenue guy at the midpoint, can you just talk a little bit about take rate and expectations for take rate and what's driving the improvement here in Q2?

Speaker Change #112: Helpful color, Thanks for that and I know for you if I think about the GMB growth guide at the midpoint versus the revenue guide at the midpoint can you just talk a little about take rate.

Speaker Change #113: <unk> expectations on take rate and what's driving the improvement here in Q2.

Speaker Change #113: Yes.

Ofer Koren: So basically, as we mentioned previously, we expect, well, we do expect some volatility in the intake rate, depending on... We expect it to be much more stable if you look at the entire year compared to previous years. So we expect it to be close to 16% over the year with less volatility between quarters. As we mentioned, we do see multi-local growth normalizing, not because those merchants are not growing; they're growing very nicely, but last year, the larger of those either expanded their business with us or launched their business with us, so it was a unique year in that perspective. So we see more normalized take rates. There aren't many changes, it's mainly sort of marginal movement depending on the GMV mix, but we do expect it to stabilize below 16%. Next chance. Thank you.

Speaker Change #114: Basically as we mentioned previously we expect while we do expect some volatility in take rate depending on specific GMP mix.

Speaker Change #114: Expect it to be much more.

Speaker Change #114: Stable.

Speaker Change #114: If you look at the entire year compared to previous years, we expect it to be close to 16% over the year with less volatility.

Speaker Change #114: Clean quarters.

Speaker Change #114: As we've mentioned.

Speaker Change #114: We do see multi local growth normalizing not because there are those merchants are not.

Growing they're growing very nicely, but last year, they either the larger of those either expanded their business with us launched the business with us. So it was a unique year in that perspective.

Speaker Change #114: So we see more normalized.

Speaker Change #114: Our take rate there arent.

Speaker Change #114: Many changes, it's mainly sort of margin.

Speaker Change #115: Uh huh.

Speaker Change #115: Movement, depending on the GMP mix, but we do expect it to stabilize below 16%.

Ofer Koren: That makes sense. Thank you so much.

Speaker Change #116: Makes sense. Thank you so much.

Brian Christopher Peterson: Thanks, Brian.

Operator: Our next question comes from the line of Andrew Buck from Wells Fargo. Go ahead, please.

Speaker Change #118: Our next question comes from the line of Andrew Baum from Wells Fargo Go ahead. Please.

Nir Debbi: Hey, good morning. Thanks for taking the question. I just wanted to get a product update on the demand generation solution that you were planning to launch in the second half, maybe an update on the early receptiveness you heard from clients and whether that can meaningfully move the needle on revenues or margins as we get into the back half of the year.

Speaker Change #119: Hey, good morning, Thanks for taking the question.

Andrew Thomas Bauch: Just wanted to get a progress update on the demand Gen solutions that you are planning to launch in the second half maybe an update on <unk>.

Andrew Thomas Bauch: Early receptiveness, you've heard from clients and whether that can.

Andrew Thomas Bauch: Meaningfully move the needle on revenues or margins as we get in the back half of the year.

Nir Debbi: Hi, thank you for the question; it's Neil. We continue to invest in building our demand generation capabilities. We did, over the last few quarters, build expertise in an in-house specialized agency to support our brand in growing demand generation. In the second part of the year, we are going to launch it based on the border-free acquisition, a unique proposition that would support us in driving our brand's growth. We are now in the early stages of introducing this solution to our merchants. It's not live for them yet; it's just being introduced to them now in order to get a buy-in, in order to get them live on it in the second half of the year.

Speaker Change #121: Hi, Thank you for the question of scale and we continue to invest in building our demand Gen capabilities.

Speaker Change #122: We did over the last few quarters built expertise and an in house specialized agency.

Speaker Change #122: To support our brands in growing the demand generation.

Speaker Change #122: In the second part of the year, we are going to launch it.

Speaker Change #122: To support it.

Speaker Change #122: Based on the border free acquisition of unique.

Speaker Change #122: <unk> proposition that would support us.

Speaker Change #122: In driving our branded growth.

Speaker Change #122: We are now in the early stages of introducing this solution to our merchants, we it's not a it's not life for them yet, it's just being introduced to them now.

Speaker Change #122: And in order to to get their buy in in order to get them live on it in the second part of the year.

Nir Debbi: We do see a very great interest in it, and we do expect high adoption. We do believe it will accelerate growth, and we will start seeing positive effects as of the last quarter of the year, but much more when we're looking to 2025 onward. This is going to, as we see it, accelerate our growth and our clients' growth based on actually increasing NDR. We expect that trading merchants today and merchants that will launch with us in the future will be able to penetrate new markets and increase their footfall in current markets with these services. So we do have high hopes for it, and most of it will not materialize, of course, in 2024. But we do see it as a contribution that's going to grow as of 2025 onward. There's definitely some...

Speaker Change #122: We do see a very a great interest in it and we do expect higher adoption.

Speaker Change #122: We do believe it will sales accelerate growth and we will start seeing positive effect.

Speaker Change #122: As of.

Speaker Change #122: As of the last quarter of the year, but much more.

Speaker Change #122: We're looking to 2025 onward.

Speaker Change #122: It does.

Speaker Change #123: Im going to add as we see it accelerate.

Speaker Change #123: Our growth and.

Speaker Change #123: And our clients growth based on actually increasing NPL we have.

Speaker Change #123: Fix it trading merchants today and merchants that will launch with us in the future would be able to penetrate new markets and increase the footfall.

Speaker Change #123: In current markets and with the services. So we do have I Hope Street and most of it will not materialize of course in 2024, we do see it as a as a contribution that's going to grow.

Speaker Change #123: As of 2025.

Speaker Change #123: Onwards.

Ofer Koren: It's definitely something to look forward to. Touching on adjusted EBITDA, you know, another nice quarter of stability there, just thinking about the back half ramp with MarketsPro and with the two large merchants, how do you feel from an investment perspective that you're positioned today, and how do you think that that can translate into margins as we get in the back half of this year and then into 2025, just trying to better understand the modeling here?

Speaker Change #123: But it's definitely something to look forward to.

Speaker Change #123: Just touching on adjusted EBITDA, another nice quarter of stability, there just thinking about the back half ramp with markets grow and with the two large merchants.

Speaker Change #124: How do you feel from an investment perspective that you are positioned today and how do you think that that can translate and margins as we get in the back half of this year and then into 2025, just trying to better understand the modeling here.

Speaker Change #124: Oh.

Amir Schlachet: EBITDA, you know, as reflected in our guidance, we expect the margin to grow, to continue to grow in 2024, and to be around 18%. The economics of, you know, new merchants coming in or the Shopify market's pro-offering on, obviously, if those are large merchants, the economics are a bit different. But on the same level, we launched many smaller merchants in the first half of the year. So there is a balance there. We don't expect any significant changes. Instead, we expect to see an improvement over time, as reflected in our guidance for the entire year. And it's Amir, I'll just add.

Speaker Change #124: EBITDA.

Speaker Change #125: As reflected in our guidance we expect.

Speaker Change #125: The margin to grow to continue to grow in.

Speaker Change #126: In 2024.

Speaker Change #126: And to be around.

Speaker Change #126: 18%.

Speaker Change #126: The.

Speaker Change #126: Economics of new merchants coming in are the shopify markets.

Speaker Change #126: Pro offering on obviously, if those are large merch and the economics are.

Speaker Change #126: A bit different but on the same the.

Speaker Change #126: Same level.

Speaker Change #126: Launched many smaller merchants in the first half of the year. So there is a balance there we don't expect any any significant changes we expect to see.

Speaker Change #127: Uh huh.

Speaker Change #127: An improvement over time as reflected in our guidance for the for the entire year as well.

Amir Schlachet: Yeah, and it's Amir, I'll just add maybe that we do or we've... We've spoken a couple of times in the past, and also on this call, we strongly believe that there's a huge greenfield opportunity still ahead of us, so we do, it's important to note that we do still prioritize growth over profitability, so whenever we see, and we continue to see all the time, opportunities to reinvest in the business, of course, always watching our operational expenses growth, and making sure that we continue to gradually improve on margins, but still we continue to invest in adding more resources, both on the R&D side, and across the rest of the business, to make sure that we continue to be well-positioned to capture this opportunity. Thank you. Our next question comes from the line of Pat Walraven from JMP. Please go ahead. Oh, great. Thank you. So, Amir...

Speaker Change #127: And it's.

Speaker Change #128: Ill just add maybe that we do.

We have spoken.

Speaker Change #128: A couple of times in the past and also on this call. We strongly believe that there is a huge greenfield opportunity still ahead of us. So we do it's important to note that we do still prioritize growth over.

Speaker Change #129: Profitability, so whenever we see and we continue to see you all the time opportunities to reinvest in the business of course always watching.

Speaker Change #129: Watching our or operational.

Speaker Change #129: Expenses growth and making sure that we.

Speaker Change #129: We continue to gradually improve on margins, but still we continue to.

Speaker Change #129: Invest in adding more resources.

Speaker Change #129: Both on the R&D side.

Speaker Change #129: And across the rest of the business to make sure that we continue to be well positioned to capture this opportunity.

Speaker Change #129: Yes.

Operator: Thank you. Our next question comes from the line of Pat Walraven from JMP.

Speaker Change #130: Thank you.

Speaker Change #131: Next question comes from the line of Pat Walraven from JMP. Please go ahead.

Operator: Please go ahead. Oh, great. Thank you.

Speaker Change #132: Oh, great. Thank you so on near.

Speaker Change #131: Picture.

Speaker Change #133: You have all these growth drivers you've got Shopify you can go more in the USA go internationally, just launched mix youre, adding more bigger brands you have the demand Gen solution coming out.

Speaker Change #134: So the question is what are the constraints on the ability of this company the scale Youre going to do a 1 billion next year why can't it grow to $10 billion.

Amir Schlachet: I don't think we can't; I think we can, Pat. I think the opportunity is there; I think our product-market fit is there. I think we also have in the pipeline additional complementary services that we can add. So, all of that together, I think we're on the right path to continue growing. We are also constantly working on enlarging our already significant ecosystem of great partners around us where they can contribute to our growth, and we can contribute to their growth. So I think the main constraints are time and, of course, as always.

Speaker Change #135: I I.

Speaker Change #136: Don't think we can I think I think we can bet I think it's.

Speaker Change #136: The opportunity is there I think our product market fit is there I think we have.

Speaker Change #136: In the pipeline.

Speaker Change #136: Also additional complementary services that we can add.

Speaker Change #136: So all of that together I think we're on the right path.

Speaker Change #136: To continue growing.

Speaker Change #136: We are also constantly working on enlarging our already significant ecosystem of great partners around us where they can contribute to our growth and we can contribute to their growth. So I think.

Speaker Change #136: The main the main constraints are time and of course as always execution.

Operator: And we continue to focus on execution. We continue to make sure that we do the best job possible for the growth of our merchants. And we believe that as we continue to do so, growth will continue to come, and we can continue to materialize that opportunity ahead of us. All right. And I'm looking forward to seeing you guys on Wednesday in Tel Aviv. Congratulations. It's the same here. Thanks, Pat. Our next question comes from the line of Maddy Schwage from KeyBank Capital Markets. Please go ahead.

Speaker Change #136: We continue to focus on execution, we continue to.

Speaker Change #136: To make sure that we do.

Speaker Change #136: The best deal possible for the growth of our merchants and we believe that as we continue to do so.

Speaker Change #136: To continue to.

Speaker Change #136: To come and we can continue to materialize that.

Speaker Change #136: <unk> opportunity ahead of us.

Speaker Change #137: Awesome, Alright, and I'm looking forward to seeing you guys on Wednesday television so congratulations.

Patrick D. Walravens: Same here thanks Pat.

Pat Walraven: Yes.

Operator: Our next question comes from Maddy Schrage from KeyBank Capital Markets. Please go ahead. Hey guys, and thank you for taking my question. I was just wondering if you could give an update on border-free migration.

Speaker Change #140: Our next question comes from the line of Matt switch from Keybanc capital markets. Please go ahead.

Nir Debbi: Oh, we do continue to work with the clients toward migration to end by the end of this year or, latest, if we see there is a need for it early a key one next year. The clients that have migrated, we have seen great results in uplifting the sales conversion rates, driving better performance, and better sales. Based on, I would say, a larger suite of solutions and services on our platform.

Matthew Robert Coad: Hey, guys and thank you for taking my question I was just wondering if you can give an update on third quarter free migration, just kind of wondering maybe what percentage of customers have minimum don't forget the globally platform and kind of any early learnings on that uplift that you could potentially see there. Thanks.

Speaker Change #142: So we do continue to work.

Matthew Robert Coad: With our with our clients toward migration.

Speaker Change #143: To end by the end of <unk>.

Speaker Change #144: Our latest if.

Speaker Change #145: If we see there is a need for it earlier.

Speaker Change #145: Q1 next year.

Speaker Change #145:

Speaker Change #145: The clients that have migrated we have seen great results in.

Speaker Change #146: In uplifting the sales conversion rates and driving.

Speaker Change #146: Better performance better sales.

Speaker Change #146: Based on the I would say larger.

Speaker Change #146: Larger suite of solutions and services on our platform.

Nir Debbi: And we do expect that once the vast majority of border-free clients migrate, we will see better trading with them in the following quarter and in the following quarters. So we are optimistic about it. It is, as we have indicated in the past, going slower than initially expected. So we do believe that some of it will roll out into Q1 of next year. However, we are happy with the results that we have seen on migrated clients. Great And then just a quick follow-up. Do you have any call-outs from, maybe, a GL perspective? Are there any standouts in terms of inbound markets, either headwinds or tailwinds? Thanks.

Speaker Change #146: We do expect that once there's a vast majority of border free and clients would migrate and we will see a better trading with them in the following quarter and the following quarters. So.

Speaker Change #147: We're optimistic about it is as we and as we indicated in the past going slower than initially expected.

Speaker Change #147: So we do believe that some of it will roll out into Q1 off of <unk> of next year. However, we are happy with the results that we've seen on migrated clients.

Speaker Change #148: Great and then just a quick follow up do you have any callouts from maybe a geo perspective are there any standout in terms of inbound markets either headwind or tailwind.

Nir Debbi: I think that we constantly see different changes in different markets around the world in terms of inbound volumes, as some countries face more challenging macroeconomic conditions, and you see their growth declining. Some of the markets are affected by geopolitics. If you look at the inbound into Israel or Ukraine, where you see the markets actually shrinking by a heavy two-digit percentage base, but because of our global nature and the amount of corridors we sell into, then actually, as Ofer indicated, we do see some stability.

Speaker Change #149: I think that we constantly see different changes in different markets around the world in terms of inbound volumes as some countries face a more challenging macro.

Speaker Change #149: These are growth declining some of the some of the markets are affected.

Speaker Change #149: By Geopolitics, if you look at the inbound into azrael or Ukraine.

Speaker Change #149: Youll see the market is actually shrinking.

Speaker Change #149: Two digits percentage pace the heavily <unk>.

Speaker Change #150: But because of our global nature and the amount of core those we sell into is and actually I think that all in all as offer indicated and we do see some stability. So where is the overall numbers are slightly below.

Nir Debbi: The overall numbers are slightly below historical averages, but they are in line with what we expected for this year, which was, I would say, a bit softer macro in general than previous years. Despite the fact that, yes, there is volatility, some weeks look better or less, but overall, I think that we do now have a stable, relatively okay macro, not as great as previous years.

Speaker Change #150: Historical averages, but in line with what we expected for this year, which was I would say a bit softer macro in general.

Speaker Change #150: As in previous years. Despite the fact that yes, there is volatility summer weeks looks better or less but overall I think that the.

Speaker Change #150: We do see in our stable.

Speaker Change #150: Relatively okay macro not as great as his previous deals, but I would say an okay macro.

Speaker Change #150: And generally reflected in same store sales across different quality deals.

Operator: Thank you. Our next question comes from the line of Mark Zgutowicz from the Benchmark Company.

Speaker Change #151: Thank you. Our next question comes from the line of Mark.

Speaker Change #152: <unk> from the benchmark company go ahead. Please.

Operator: Thank you. Hi guys.

Speaker Change #153: Thank you hi, guys.

Nir Debbi: Just a question around the onboarding process for MarketsPro merchants. I know there's been some progress made there, and just curious in terms of, you know, lifting the friction there. Are those capabilities now in place? Are there still more enhancements that may accelerate the onboarding of U.S. merchants? And then is this the key variable in terms of moving MarketsPro outside the U.S.? with Shopify.

Speaker Change #154: Just a question around the onboarding process for markets Pro merchants.

Speaker Change #155: I know theres been.

Speaker Change #155: Some progress made there and just curious in terms of lifting the friction there.

Speaker Change #155: Are those.

Speaker Change #155: Capabilities now in place or Theres still more enhancements that may accelerate the onboarding.

Speaker Change #155: Of U S merchants and then is this the key variable.

Speaker Change #155: In terms of moving markets pro outside the U S.

Speaker Change #156: With shopify.

Nir Debbi: Yeah, thank you for the question. My name is Neil. We do continue to roll out features and process alignments in order to make the onboarding quicker, more seamless, and to gain great, even better results out of the gate. [inaudible] Completion, of course, we would go into a much wider rollout, but this is, of course, dependent on Shopify and its decisions, but we are fully aligned on the roadmap ahead and what we need to achieve in the coming quarters in order to

Neal: Yes. Thank you for the question it's Neal.

Speaker Change #157: We do continue to rollout.

Speaker Change #157: Features.

Speaker Change #158: And process alignment in order to make the Onboarding.

Speaker Change #158: The quicker more seamless.

Speaker Change #158: And to gain a great even better results out of the gate.

Speaker Change #158: Also on the ongoing trading and as the market segments and vertical is that the solution is geared for and we do have still.

Speaker Change #158:

Speaker Change #158: All our plan of different features and capabilities that will be rolled out.

Speaker Change #158: As the coming quarters.

Speaker Change #158: On the back of this.

Speaker Change #158: Completion of course, we would go into a much wider.

Speaker Change #158: A much wider.

Speaker Change #158: All out but it is dependent of course on shopify until a decision.

Speaker Change #158: But we are fully aligned on the holding up ahead, and what we need to achieve in the car.

Speaker Change #158: Many quarters in order to add.

To continue with a whole lot.

Ofer Koren: Thanks, Neil. That's helpful. And then one quick one for Ofer, possibly, on luxury. Just curious how that segment is pacing first half versus, or just year over year, first half year over year.

Speaker Change #159: Thanks, Neil that's helpful and then one quick one.

Speaker Change #160: For over possibly on luxury just curious how that segment is.

Speaker Change #161: Is pacing first half versus.

Speaker Change #161: Just year over year first half year over year.

Speaker Change #162: Yeah. So regarding lottery 2023 was what.

Ofer Koren: Yes, so regarding luxury, 2023 was not a good year for luxury, as we discussed several times. And since then, we've seen it sort of stabilizing and coming back to growth, not very strong growth, but after the lows that we saw during some of the quarters, I think it was in Q3 last year, it has stabilized and gone back to growth, maybe not growing as fast as other segments. Bad Positive Growth.

Speaker Change #163: Not a good year for luxury as we discussed several times.

Speaker Change #163: And since then we've seen it.

Speaker Change #163: Sort of <unk> being.

Speaker Change #163: King and coming back to growth not very strong growth but.

Speaker Change #163: Yeah.

Speaker Change #163: After the lows that we've seen during some of the quarters, mainly I think it was engaged Q3 last year.

Speaker Change #163: It has stabilized and gone back to growth, maybe not growing as fast as other segments, but positive growth.

Speaker Change #163: Yes.

Operator: Thank you. Our next question comes from the line of Matt Coad from Autonomous Research. Go ahead, please. Hey guys, thanks for taking the question.

Operator: Thank you. Our next question comes from the line of Matt Coad from Autonomous Research. Go ahead, please. Hey guys, thanks for taking the class.

Speaker Change #164: Thank you. Our next question comes from the line of Matt <unk> from Autonomous Research go ahead. Please.

Speaker Change #165: Hey, guys. Thanks for taking my question.

Speaker Change #166: So if you could unpack the growth in sales and marketing expenses ex the one Amazon amortize amortization, sorry about that.

Speaker Change #167: It's growing at a really fast pace as you noted in your prepared remarks, just curious is a lot of this growth coming mainly from shopify is revenue share.

Speaker Change #167: Or are there changes to your go to market approach that we should be aware of thanks.

Ofer Koren: Sure. So as you mentioned, we do have sort of a variable cost in our sales and marketing, which is the Shopify RevShare component, and it is growing. So I think most of [inaudible] However, nothing special to report, but we are, you know, continuously expanding our sales force. It's a gradual expansion, but you know, as we grow, we are bringing in more people, but not anything out of the ordinary.

Speaker Change #168: Sure so.

Speaker Change #169: As you mentioned, we do have a sort of a variable cost and our sales and marketing with which is the shopify Rev share component than it is.

Speaker Change #169: It is growing.

Speaker Change #169: So I think most of us.

Speaker Change #169: Of the growth in.

Speaker Change #169: In expenses or not most of the growth, but most of the extra growth is due to.

Speaker Change #169: To certify Rev share expenses, however, nothing special to report, but we are.

Speaker Change #169: Continuously.

Speaker Change #169: Expanding our sales force, it's a gradual expansion, but as we grow.

Speaker Change #169: We are bringing in more people, but not anything out of the ordinary.

Speaker Change #169: Yeah.

Speaker Change #170: Thank you.

Operator: Thank you. We will take our last question from the line of Matt O'Neill from FD Partners. Go ahead.

We'll take our last question from the line of Matt O'neill from Ft Partners go ahead. Please.

Operator: Hey, gentlemen, thanks so much for squeezing me in at the end. A lot of good questions asked and answered. Maybe first, Ofer, I know you mentioned a couple of points contributing to the gross take rate and how that'll stabilize close to 16 you mentioned. This quarter, the net take rate actually outperformed by a good amount.

Matthew Robert Coad: Hey, gentlemen, thanks, so much for squeezing me in at the end.

Speaker Change #171: Any questions asked and answered maybe.

Speaker Change #172: Maybe first for I know you mentioned a couple of points contributing to the gross take rate and how that will stabilize close to <unk> you mentioned.

Speaker Change #173: This quarter, the net take rate actually outperformed.

Speaker Change #174: By a good amount and I was just curious if there's any callouts to attribute that to or anything that we should expect to be stickier going forward or if it was maybe more of a mix shift and then I'll just get my follow up in there now I know a bunch of people asked about shopify markets Pro and specifically how the international rollout is that.

Ofer Koren: And I was just curious if there were any call-outs to attribute that to or anything that we should expect to be stickier going forward, or if it was maybe more of a makeshift. I know a bunch of people asked about Shopify Markets Pro and specifically, you know, kind of the international rollout. Is that something just from a timeline perspective? Be conservative, we should think about international markets there, you know, as a 2025 and beyond type of discussion. Thanks a lot.

Speaker Change #175: Something just from a timeline perspective to be conservative we should think about international markets. There is a 2025 and beyond type of a discussion. Thanks a lot.

Nir Debbi: In terms of the international rollout, I think it's also dependent on Shopify's plans, so we can't commit or comment about it without being aligned with Shopify. But I do expect that if in the coming quarters we meet our target, we will see additional markets being rolled out. But I think it's much more a decision for Shopify to make.

Speaker Change #176: In terms of the international rollout I think it's also dependent on Shopify plans. So we cant.

Speaker Change #177: We can to commit or comment about it without being aligned with shopify.

Speaker Change #178: But I do expect expect that if we in the coming quarters, we will meet our targets we will see.

We will see additional markets.

Being rolled in when I think it's much more a decision for Shelby slate.

To make.

Speaker Change #178: Yes.

Ofer Koren: Understandable. And on the net take rate this quarter, anything to think about going forward or maybe some unique mixed elements that were idiosyncratic? Yeah, so, uh, as we previously stated, some of it is due to, uh, GMV.

Speaker Change #179: Understood and on the net take rate this quarter anything to think about going forward or maybe some unique mix elements.

Speaker Change #180: Theyre idiosyncratic.

Speaker Change #180: Yes.

Ofer Koren: Yeah, so, as we previously stated, some of it is due to the GMV mix. However, we do see a clear line of improvement over time due to one efficiency, so, you know, different processes we brought in. We have a team, a very senior team that is going through the organization and mapping it for AI initiatives. I think that we mentioned in the previous call that we have some very nice processes that are implemented that are already contributing, mainly around our service, but also in other areas.

Speaker Change #180: Yeah.

Speaker Change #181: Obviously stated some of it is.

Speaker Change #181: Due to GM makes however, we do see.

Speaker Change #181: A clear line of improvement over time.

Speaker Change #181: Due to one.

Speaker Change #181: Efficiencies different processes, we've brought in.

Speaker Change #181: We have a team.

Speaker Change #182: Very senior team that is going through the organization.

Speaker Change #182: And Matt being at for AI initiatives, I think that we've mentioned in the previous call.

We had some very nice processes that are implemented that are already contributing mainly around.

Speaker Change #182: Our service.

Speaker Change #182: But also in other areas. So this is just an example.

Ofer Koren: So, this is just one example. Another example is classification, duty classifications, and we do have quite a few initiatives, but it's not just AI initiatives, but also other processes and also economies of scale that we're pushing. So, over time, we do expect to see an improvement. However, as I mentioned, the gross margin we had this quarter was high, and some of it was due to the specific revenue and GMV mix.

Speaker Change #182: Another example is classification beauty classifications, and we do have quite a few initiatives, but it's not just AI initiative, but also other <unk>.

Speaker Change #182: Processes and also our economies of scale that we're pushing so overtime, we do expect to see.

Speaker Change #182: An improvement however.

Speaker Change #182: As I mentioned this a gross.

Speaker Change #182: Gross margin we had this quarter.

Speaker Change #182: It was high and some of it was due to the specific revenue and <unk> mix.

Amir Schlachet: Thank you. There are no further questions at this time. I'd now like to turn the call back over to Mr. Amir Schlachet for his final closing comments.

Speaker Change #183: Thank you there are no further questions at this time.

Speaker Change #184: I'd now like to turn the call back over to Mr. <unk> for final closing comments.

Speaker Change #184: Okay.

Amir Schlachet: Thank you very much, and thank you everyone for joining us today. And we very much look forward to seeing you again in our future earnings. Just before we adjourn, I would like to take this opportunity again to say a big thank you to all of our wonderful team members throughout the world. Your hard work and complete dedication to the success of our merchants are and will always be the key driving force behind our continued growth and success. So goodbye to you all, and take care.

Speaker Change #185: Thank you very much and thank you everyone for joining us today.

Speaker Change #186: And we very much look forward to seeing you again on our future earnings calls.

Speaker Change #187: Before we adjourn I would like to take this opportunity again to say a big Thank you to all of our wonderful team members throughout the world through hard work and complete dedication to the success of our merchants are and will always be the key driving force behind our continued growth and success, So goodbye to all and take care.

Speaker Change #186: Okay.

Operator: Thank you, sir. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

Thank you, Sir ladies and gentlemen. This concludes your conference call for today, we thank you for participating and ask that you. Please disconnect your lines.

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