Q4 2024 Global-E Online Ltd Earnings Call
Welcome to the global esports quarter and full year 2024 earnings announcement conference call.
Speaker Change: This call is being simultaneously webcast on the company's website and the Investor Relations section under news and events for opening remarks, and introductions I will now turn the call over to Erica Mannion of Sapphire Investor Relations. Please go ahead.
Speaker Change: Thank you and good morning with me today from globally are a mere socket co founder and Chief Executive Officer, Ofer, Koren, Chief Financial Officer, and near Debbie Co founder and President Amir I'll begin with a review of the business results for the fourth quarter and full year of 2024.
Speaker Change: Ofer will then review the financial results for the fourth quarter and full year of 2024, followed by the company's outlook for the first quarter and full year of 2025.
Speaker Change: We'll then open the call for questions.
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.
Speaker Change: Really relate to our current expectations and views of future events.
Speaker Change: 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 are not a guarantee of future performance.
Actual outcomes may differ materially from the information contained in the forward looking statements as a result of a number of factors, including those set forth in the risk section titled risk factors in our prospectus filed with the SEC on September 13, 2021, and other documents filed with or furnished to the SEC.
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.
Speaker Change: 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 full 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 these statements are made or to reflect the occurrence of unanticipated events.
Speaker Change: Refer to our press release dated February 19, 2025 for additional information.
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 for or superior to the 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 understanding of past financial performance and future prospects and allow for greater transparency with respect to key metrics used by management and its financial and operating decision making.
Speaker Change: For more information on the non-GAAP financial measures. Please see the reconciliation tables provided in our press release dated February 19 2025.
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 February 19, 2025, I will now turn the call over to Amir co founder and CEO.
Speaker Change: Okay.
Yeah.
Speaker Change: Thank you Erica and welcome everyone to our fourth quarter and full year 2024 earnings call.
Speaker Change: 'twenty 'twenty four with yet another record breaking year for us here at globally as we continue to diligently execute on our strategy and further solidify globally its leadership position in the global ecommerce space.
Speaker Change: 2024 was brought to a Greek close by fourth quarter, which was our strongest quarter ever.
Speaker Change: Came in well above our guidance on all metrics. We finished Q4 with a record $1 $71 billion in <unk> up 44% year on year.
Speaker Change: And we have record revenues of $263 million up 42% year on year.
Speaker Change: Aborted by the strong performance of our merchants over the holiday sales period, including the Black Friday and cyber Monday weekend.
Speaker Change: The adjusted gross profit margin for Q4 was nearly 46% up almost 330 basis points from the same quarter of last year.
Speaker Change: Gross margin expansion, coupled with our continued focus on operational excellence and execution.
Speaker Change: Build us to reach a key milestone in our journey in Q4.
Speaker Change: For the first time ever our quarterly adjusted EBITDA margin crossed the 20% Mark which was the long term profitability targets, we set for ourselves at the IPO less than four years ago.
Speaker Change: You got 21, 7% or $57 $1 million received more than 62% growth compared to the same quarter last year.
Such increase profitability, coupled with the usual seasonality effects, you had accelerated cash generation with the business generating nearly $130 million in operational cash flows in Q4.
Speaker Change: Not only that but in Q4, we reached GAAP profitability for the first time since the IPO and number of incredible milestone for us.
Speaker Change: We expect 2025 is a full year to exhibit for the first time in our history as a public company.
Speaker Change: Strong GAAP profitability as well on top of the continuation of a multiyear strong free cash flow generation.
Speaker Change: As we report to you today the results for 2024, we are quickly approaching our fourth anniversary as a public company.
Speaker Change: As such it is an opportunity to pause and reflect on our growth journey over the last few years and what an incredible journey it has been.
Speaker Change: G N V for the full year of 2024 came in at close to $4 $86 billion in revenues for the full year came in at almost $753 million.
Speaker Change: This is more than six times the G M B and five five times. The revenue we had in 2020 the last full year prior to our IPO just four years ago.
Speaker Change: Our annual adjusted gross profit reached nearly $350 million in 2020 for more than eight times, what we had in 2020 as our topline growth was coupled with a robust expansion of our adjusted gross profit margin from just 32% at IPO to 46, 5% in 2024.
Speaker Change: An increase of 14, five percentage points or more than 45%. During this four year period.
Speaker Change: Moreover, our adjusted EBITDA for 2024 was roughly $141 million growing even faster at almost 11 times compared to 2020 and.
Speaker Change: And representing a staggering compounded annual growth rate of over 80% driven primarily by our operational leverage and commitment to cost control coupled with our track record of delivering fast and durable growth.
Speaker Change: Accordingly, net operating cash flows grew to nearly $170 million for the year, yielding a cash and cash equivalents balance of nearly half a billion dollars at the end of 2024.
Speaker Change: As such we believe that our consistent growth trajectory together with our strong cash generation ability, we will provide the necessary fuel to support our growth plans in the future as well both organic and inorganic.
Speaker Change: Looking back at the last four years I feel enormous pride in what our global team of remarkably dedicated globally professionals no more than 1000 people strong around the globe has managed to accomplish.
Speaker Change: Cheating and surpassing the key financial and strategic goals, we had set for ourselves.
Speaker Change: We managed to beat our start of the year annual GMP guidance in every single year since going public despite occasional intra year macro headwinds and challenges we had to push through it.
Speaker Change: Also setting a new record in <unk> bookings each year with 2024 being no exception to that.
Speaker Change: But such growth did not come at the expense of profitability.
Speaker Change: As I already noted our relentless focus on efficiencies and cost control enabled us to beat the aspirational long term profitability targets, we set for ourselves at the time of the IPO.
Speaker Change: We crossed the 40% adjusted gross profit margin more.
Speaker Change: Already several quarters ago now.
Speaker Change: Now we crossed the 20% adjusted EBITDA margin milestone as well.
Speaker Change: Beyond the massive growth in all our financial metrics over the past four years. We also managed to achieve the ambitious strategic goals, we set out to conquer when we IPO.
Speaker Change: On the platform side, we continue to expand the suite of capabilities and solutions, we offer to our merchants added multiple capabilities across all areas of global ecommerce and sharpened our data capabilities and insights all aimed at further growing our merchant businesses.
Speaker Change: In parallel we significantly expanded our total addressable market for <unk> in recent years by extending our global geographical footprint from just nine outbound markets operated in 2020.
Speaker Change: To the 39 outbound markets, we currently support as.
As well as by broadening our platform scope to enable more multi local offerings to serve the needs of large global merchants as well as consumer electronic brands.
Speaker Change: We also launched our F&B and demand generation offerings based on the flow and border free acquisitions, respectively.
Speaker Change: From a merchant perspective post IPO, we have made strategic investments in cultivating several new verticals, including sports clubs and consumer electronics investments, which have been paying off as we continue to onboard more and more said France.
Speaker Change: As an example, the latest consumer electronics brand, which recently went live in globally with Logitech, one of the world's largest and most innovative providers of computer peripherals input devices gaming accessories audio and video gear and smart home devices.
Speaker Change: We are grateful for the opportunity to support the amazing team at Logitech into evergreen focus on direct to consumer sales worldwide.
Speaker Change: More broadly as we prepare to enter our fifth year as a public company. We are in high gear with our engine is firing on all cylinders as our global team pushes forward along all of our strategic pillars.
Speaker Change: On the new GMP front looking back at Q4 2024, we saw many new brands, joining the platform and going live across all geographies.
Speaker Change: In the U S. The successful Shaper brand Spanx went live as the Thursday boots, the upcoming jewelry brand case are and the web store a famous luxury fashion designer Tom Ford.
Speaker Change: Europe, So many new brands go live as well, including Spanish Brent Tus Italian fashion brands slower UK footwear brand Phebe silo.
Speaker Change: Brian I view.
Speaker Change: Swiss running gear brand corporate support.
Speaker Change: Famous Austrian Lunger Redburn trials fringe brands up by Molly.
Speaker Change: And the successful finish bed brand hooter, so now all European dogs can enjoy their unique pet gear and clothing.
Speaker Change: The APAC region. So its fair share of go lives as well.
Speaker Change: In Japan, we went live with <unk>, one of Japan's largest retailers of secondhand goods with.
Speaker Change: With Kyoto based watch brand cool with novelty brand tighter and with the Japanese tailored shirt brand come of course shirts.
Speaker Change: We also went live with the renowned Korean cosmetics brand topology, and with the Australia and fashion brands, Zoe Craftsman and second left to name a few.
Besides adding new merchants, we also continue to expand the scope of our business with existing merchants and merchant groups.
Speaker Change: During Q4, we added Romania, and Croatia to list of markets. We operate for Adidas went live with a new outlet side for our longstanding merchant John Smedley and added Sturluson. The third brand to go live with us out of the Swiss wholly fashion group.
Speaker Change: Okay.
Speaker Change: As we strive to fulfill our mission of powering better global ecommerce, we continue to invest in adding new services and new functionality to support a diverse needs and aspirations of merchants of all sizes and across all geographies.
Speaker Change: During Q4, our product and engineering teams concentrated on deploying several key new capabilities.
Speaker Change: Those included among other things and you revamped returns portal and returns process improvements, including new consolidated return options and keely.
Speaker Change: Support for beta be imports for relevant merchants known as <unk>.
Speaker Change: And enhanced lie view as part of our merchant portal and several enhancements for our border free Dot com demand generation platform.
Speaker Change: As we remain the leader of global ecommerce as a service. We believe we are uniquely positioned to continue harnessing our unparalleled and fast growing data asset our accumulated knowhow and our unique expertise building and perfecting more and more services and capabilities for the benefit of new and existing.
Speaker Change: Merchant.
Speaker Change: Our robust product development pipeline as well as our continued investment in R&D are aimed at achieving just that.
Speaker Change: That is true also with regards to Shopify managed markets, where we continue to work hand in hand, with our partners at Shopify and investing adding new features and functionalities to the managed markets offering aimed at making it applicable to a wider range of merchants on the shopify platform.
Speaker Change: Another key area, we continue to invest in technological innovation with emphasis on harnessing the power of artificial intelligence to improve both the customer and merchant experiences as well as drive productivity and efficiency within our internal operations.
Speaker Change: One such innovation, which we have already discussed in the past is our successful customer services jetblue.
Speaker Change: Utilizing especially trained version of the chat GPT large language model. The chatbot is already handling a large percentage of customer tickets almost half of which are sold by the bought in real time to the full satisfaction of the customer.
Speaker Change: And we are constantly broadening the scope of issues. The bulk can handle for example, now when customers approach customer services wanting to return a product instead of being redirected to our returns portal. They can finish the entire process right. There vis vis the boat and get a return label older relevant communications and clear instructions on how.
Speaker Change: To proceed.
Speaker Change: Another example of a proprietary tool we are starting to experiment with these automatic AI assisted localization of merchant site text and visual content gain.
Speaker Change: Aimed at transforming the way merchants manage multi lingual content on their site.
Speaker Change: Once operational to the service we plan to offer merchants instant high quality translations tailored to the specific context of their brand with minimal effort.
Speaker Change: Maintaining the merchants control over the final result to our resource management system, enabling edits and updates by human translators when needed.
Speaker Change: We are also continuing to develop and deploy internal automated systems aimed at increasing operational efficiencies.
Speaker Change: A recent example is an automated system developed by our innovations team designed to streamline the handling of payment disputes and potentially lower unforced charge backs.
Speaker Change: Other examples include AI powered tools that could enable internal users and software developers to interact more easily with our data our knowledge basis, and our code base using natural language as well as AI based tools like copilot and others that are designed to accelerate coding as well as testing and quality assurance.
Speaker Change: In summary, we are extremely pleased with our achievements and results for the past few years since the IPO as well as with the results of 2024 in particular.
Speaker Change: We are even more excited about the many growth opportunities that lie ahead of us in 2025 and beyond across all of our strategic pillars.
Speaker Change: From a financial perspective.
Speaker Change: Besides the continuation of our solid growth trajectory 2025 fifth year as a public company is set to bring with it two significant milestones.
Speaker Change: First as mentioned already 2025 is expected to be globally as first GAAP profitable year as a public company.
Speaker Change: We exhibited positive and improving adjusted EBITDA and free cash flow figures every single year. Since we went public with this year. We also expect to be GAAP profitable for the full year and hit our 20% adjusted EBITDA long term IPO target for the full year, which are both very significant milestones for us.
Speaker Change: The second important milestone for us is that in the back half of 2025, we are expected to cross for the first time ever and annual run rate of $1 billion in revenues.
Speaker Change: And likely finished 2025, just shy of the $1 billion Mark for the full year.
Speaker Change: The journey from zero to $1 billion in revenues over the past 12 years has been an amazing one.
Speaker Change: And we're only getting started.
Speaker Change: And with that I will hand, it over to offer to dive deeper into our quarterly and annual financial results as well as our outlook for Q1 and for the full year 2025.
Speaker Change: Thank you Amir and thanks to everyone for being with US today for our earnings call.
Speaker Change: As I mentioned, we are truly excited about our Q4 and fully result for 2024.
Speaker Change: I'd like to point out again that in addition to our GAAP results I'll also be discussing certain non-GAAP results.
Speaker Change: Our GAAP financial results along with the reconciliation between GAAP and non-GAAP results can be found in our earnings release.
Speaker Change: Looking at the full year of 2024. It was another year of strong growth for us with the business firing on all cylinders.
Speaker Change: <unk> revenue grew 37% and 32% year on year, respectively.
Speaker Change: Adjusted gross profit grew even faster at 43%, reflecting an adjusted gross margin of 46, 4% for the year.
Speaker Change: 350 basis points from 2023.
Speaker Change: Adjusted EBITDA grew a staggering 52% to slightly more than $140 million, reaching an adjusted EBITDA margin of 18, 7% on an annual level.
Speaker Change: Furthermore, 2024 with another record year of free cash flow generation, which amounted to $167 million, reflecting a free cash flow margin of 22, 2%.
Speaker Change: Throughout 2024, our existing merchant base continued to stay and grow with us as reflected in our annual NPL rate of 119% and <unk> rate of 93, 5%.
Speaker Change: It is important to note that GDR endear were negatively impacted by the out of the ordinary bankruptcy of Ted Baker and by several border free merchants that chose not to re platform to the globally platform NDA.
Speaker Change: <unk>, excluding the out of the ordinary churn for 2024 is it close to 123% and 97% respectively.
Speaker Change: Zooming into Q4, the quarter exhibited strong rapid growth and robust cash generation as we continue to execute and tap into the global direct to consumer E Commerce opportunity.
Speaker Change: We have experienced accelerated growth of <unk> in Q4, as we generated $1 71 billion of GMP.
Speaker Change: An increase of 44% year over year. The rapid growth was driven by strong consumer demand, which remains volatile and significant contribution from new merchants, such as <unk> and Victoria's secret that upon board it successfully to our platform in recent months.
Speaker Change: In Q4, we generated total revenue of $262 $9 million up 42% year over year.
Speaker Change: Service fee revenue were $117 3 million up 30% and fulfillment services revenue were up 53% to $145 6 million.
Speaker Change: The faster growth of fulfillment revenue compared to service fee revenue was mainly driven by the bankruptcy of Ted Baker to which we provide the demand generation services with a high service fee take rate fulfillment services revenue growth was also positively impacted by the <unk> mix.
Speaker Change: Moving down the P&L growth in non-GAAP gross profit continues to outpace revenue growth in Q4, non-GAAP gross profit was $129 million up.
Speaker Change: 53% year over year, representing a gross margin of 46% compared to 42, 7% in the same period last year.
Speaker Change: The gross margin has slightly decreased compared to Q3, mainly due to the higher share of fulfillment revenue and.
Speaker Change: GAAP gross profit was $118 $7 million, representing a margin of 45, 1%.
Speaker Change: Moving on to operational expenses, we remain committed to investing in the growth and improvement of our platform to further enhance our offerings.
Speaker Change: R&D expense in Q4, excluding stock based compensation was $24 1 million or nine 2% of revenue compared to $18 2 million or nine 8% of revenue in the same.
<unk> last year total R&D spend in Q4 was $28 3 million.
Speaker Change: We also continued to invest in sales and marketing to solidify our pipeline while maintaining efficiencies.
Speaker Change: Marketing expense, excluding shopify related amortization expenses stock based compensation and acquisition related intangible amortization was $29 $8 million or 11, 3% of revenue compared to $17 8 million or nine 6% of revenue in the same period.
Speaker Change: Dear Shopify warrants related amortization expense was $37 $4 million total sales and marketing expenses for the quarter were $79 million.
Speaker Change: General and administrative expenses, excluding stock based compensation and acquisition related contingent consideration was $10 $7 million or four 1% of revenue compared to $8 6 million or four 6% of revenue in the same period last year total <unk>.
<unk> spend in Q4 was $14 3 million.
Speaker Change: Adjusted EBITDA for the quarter totaled $57 $1 million, representing a 21, 7% adjusted EBITDA margin, increasing by 62% from $35 $2 million or 19% margin in the same period last year.
Speaker Change: As Amir mentioned this marks another key milestone in our journey as we have been able to hit our adjusted EBITDA long term targets that prior to our IPO.
Speaker Change: Despite the impact of the Shopify warrants related amortization expense Q4, 'twenty four marks our first quarter of GAAP profitability as a public company and net profit for the quarter was $1 $5 million compared to a net loss of $22 $1 million last year.
Speaker Change: Switching gears and turning to the balance sheet and cash flow statements. We ended 2024 with $474 million in cash and cash equivalents, including short term deposits and marketable securities cash generation has accelerated with operating cash flow in the quarter at $129 3 million.
Speaker Change: Compared to an operating cash flow of $93 5 million a year ago, driven mainly by adjusted EBITDA growth and working capital dynamics.
Speaker Change: Moving to our financial outlook and guidance for 2025.
Speaker Change: Despite the prevailing macro related uncertainties, we expect 2025 to be another year of fast growth and improved adjusted EBITDA for globally for.
Speaker Change: For Q1, 2025, we are expecting <unk> to be in the range of $1 21 to $1 $25 billion.
Speaker Change: At the midpoint of the range. This represents a growth rate of 32% versus Q1 of 2024, we.
Speaker Change: We expect Q1 revenue to be in the range of 184, five to $191 $5 million at the midpoint of the range. This represents a growth rate of 29% versus Q1 of 2024.
Speaker Change: For adjusted EBITDA.
Speaker Change: We are expecting a profit in the range of 2029, 5% to $33 5 million.
Speaker Change: For the full year of 2025, we anticipate <unk> to be in the range of $6, one 9% to 649 billion.
Speaker Change: Representing over 31% of annual growth at the midpoint of the range.
Speaker Change: In other words, we expect GMB growth to remain strong although growth rates are expected to be lower compared to 82, 2024, driven mainly by normalizing consumer demand, which has been on the higher side in the last few months of 2024.
Speaker Change: Revenue for the year is expected to be at the range of $917 million to $967 million, representing a growth rate of 25% at the midpoint of the range revenue growth is expected to be somewhat slower compared to DMV growth as we expect the overall take rate to decline during.
Speaker Change: <unk> 2025, the lower take rate expected is driven mainly by our estimates that large merchants will increasingly increasingly adopt more multi local or three b to C strategies as a means to manage the risk of rise increased cross border tariff.
Speaker Change: Which are being put in place by the U S and some of its trading partners worldwide.
Speaker Change: Even with that as Amir mentioned earlier, we believe we can potentially reached another significant milestone in 2025 is in the second half of the year. Our revenue annual run rate is expected to cross the $1 billion Mark for the first time.
Speaker Change: We expect adjusted EBITDA to continue to perform well and adjusted EBITDA margins to expand thanks to our increased efficiencies and economies of scale.
Speaker Change: For adjusted EBITDA, we're expecting a profit of $179 million to $199 million.
Speaker Change: Ending over 34% growth at the midpoint of the range, allowing us to reach our long term goal of 20% adjusted EBITDA margin in 2025.
Moreover, 2025 is expected to be <unk>.
Speaker Change: First full year of GAAP profitability as a public company as the shopify warrant related amortization exits.
Speaker Change: Is expected to decrease significantly in Q2 of 2025 and to be gone in the beginning of 2026.
Speaker Change: In conclusion, we have reached and surpassed the long term targets that we've set prior to our IPO in 2021, and we believe there is still a long runway in front of US. We believe now is the right time to share our thoughts about next phases of growth for globally.
Speaker Change: And we will share our strategy business initiatives and financial targets for the future during our upcoming.
Speaker Change: Inaugural Investor Day on March 11 in New York City.
Speaker Change: Hope to see you there.
Speaker Change: And with that EMEA, Neil and I are happy to take any of your questions operator.
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 the star followed by the one on it that stockpiling.
Speaker Change: Should you wish to cancel your request. Please press the star followed by the team.
Speaker Change: If you are using a speakerphone please lift the.
Speaker Change: Handset before pressing Andy keys.
Speaker Change: In consideration of time Oscar to please ask only one question and one follow up.
Speaker Change: Once again that is one question and one follow up.
Speaker Change: Your first question is from Andrew Bock from Wells Fargo. Your line is now open.
Andrew Bock: Hey, guys. Thanks for taking my question and congratulations on a fantastic year I'll ask both of my questions upfront I mean, the first quarter guide just unpacking that implies a pretty meaningful deceleration from the momentum that you showed in the fourth quarter and despite the easier comp from first quarter 'twenty four.
Andrew Bock: So maybe if you could just kind of help us understand the conservatism that's baked in there and then my follow up would be on the managed market solution by our estimates you delivered north of 250.
Andrew Bock: <unk> <unk> and 'twenty 'twenty, four basically off of off of.
Andrew Bock: Essentially zero in 2003, so is it fair to assume that you can add.
Andrew Bock: A similar amount of <unk> dollars in 2025 as you did the 'twenty 'twenty four thanks, Ken.
Andrew Bock: Andrew Thanks.
Speaker Change: So I'll start just in terms of the growth rates for.
Andrew Bock: The first quarter.
Andrew Bock: In general over the first of all for 2025 are in general we are.
Andrew Bock: Happy with what we are looking at and we use so we believe the <unk> is going to continue to grow fast over over 30% as is reflected in our guidance.
Andrew Bock: There is.
Andrew Bock: I would say.
Andrew Bock: And somewhat slower growth expected in revenues and the main reason.
Andrew Bock: For that.
Andrew Bock: The what we expect would be the the effect of the.
Andrew Bock: The tariffs that are being imposed by the U S.
Andrew Bock: Most some of its trading partners.
Andrew Bock: We believe it will.
Andrew Bock: Drive more merchants to adopt over three b to C or even multi local strategy.
Andrew Bock: As a means to manage the risks of these growing tariffs and that will inherently.
Andrew Bock: Lower the take rates on that and Thats, what we baked into our.
Andrew Bock: Into our guidance going forward.
Speaker Change: Yes, hi.
Andrew Bock: Second question Android snail.
Andrew Bock: We do expect minutes markets to remain around 5%.
Andrew Bock: Overall.
GSV.
We in Shopify are currently focused on enhancing the merchant's experience.
Speaker Change: Simplicity in order to support reaching.
Speaker Change: In the longer term a larger addressable market. So we do expect that to grow this year.
Speaker Change: At a pace, which is which would keep it.
Speaker Change: As it was last year the sale of <unk> activity.
Speaker Change: But going forward I think in future is with the build we are doing now we do have I hopes for the significant.
Speaker Change: <unk> contribution.
Speaker Change: And just to add that in terms of the deceleration from Q4 to Q1 in the second half of 'twenty three as you know we.
Speaker Change: We've on boarded many merchants, including some large ones.
Speaker Change: And those large ones that performed very well.
Speaker Change: In Q4, and they are actually skewed.
Speaker Change: More than others towards Q4.
Speaker Change: So that will have an impact.
Speaker Change: On a following quarters in addition to that.
Speaker Change: We saw very strong consumer demand.
Speaker Change: Just a few months.
Speaker Change: Of 28, four and we assume a certain normalization going into 2025.
Speaker Change: Thank you.
Speaker Change: Our next question is from Samad Samana from Jefferies. Your line is now open.
Samad Samana: Hi, good morning, and congrats on a strong close to 2024.
Speaker Change: Maybe just a follow up on that okay great.
Speaker Change: And the impact of tariffs I guess are you already seeing merchants come into you and Jay.
Speaker Change: Thank you either that fulfillment strategy, which impacts.
Speaker Change: Some of them are multiple alcohol or that theyre going to start making operational changes in advance of cats being applied or is this just you anticipating that maybe give us a little bit more clarity on the feedback that merchants have given you and then I have a follow up.
Sam: Hi, Sam.
Sam: Yes, we do see already from existing merchants.
Sam: In.
Sam: A growing interest in.
Sam: Is it changes at our upcoming trading into the U S.
Sam: And the feel of I would say.
Sam: And ongoing.
Sam: Probably fall.
Sam: As part of it we did see merchants, reaching to us to ask our advice and guidance as to.
Sam: What would be a <unk>.
Good solution for them that will not.
Sam: Implications I mean high operational lens.
Sam: And Capex and actually most of them are looking at either using our <unk> b to C option at all.
Sam: I'll actually going multi local.
Sam: Completely.
Sam: So by nature will have effect down the yield.
Sam: One on the take rates as reflected in the guidance on the other hand.
Sam: We do see greater interest from prospects that are not currently with US globally that are looking for solutions as well and understand that with a partner like globally. They can expedite and make much more.
Sam: <unk>.
Sam: They will set up towards towards the new changes and ever changing environment. It's not only the changes himself I'd say its ability to adapt.
Sam: Our fall air for frequent changes that.
Sam: The retailers and the brands are facing hard thing to do within the internal tech stack. So overall I believe that into the long term it might yield the complexity might yield.
Sam: Positive effect for globally as we've seen in the past when.
When Brexit occurred so it had a short term I would say impact on now in take rates on consumption, but over time it created a lot of.
Sam: Push to additional merchants, who joined the global it platform.
Sam: Great. That's helpful and then maybe.
Sam: As I think about that.
Speaker Change: Congrats on the 2025 I'm sorry in the <unk> guidance.
Speaker Change: Can you help us understand what you're assuming from may have pushed.
Perspective.
Speaker Change: Do you think that maybe there's any intense opinion large merchant go lives like you've experienced in the last couple of years, we should be aware of as we're setting our models for the year.
Speaker Change: Sure Sam.
Speaker Change: So regarding.
Speaker Change: I'll start from the end.
Speaker Change: New merge since we came in today, we had a very very strong year in terms of sales in 2024, and we started the year with a very nice backlog of merchants that are expected to go live within 2025, none of them. None no no single medicine that is <unk>.
Speaker Change: Large as we saw in.
Speaker Change: In the last few months.
Speaker Change: 24, but the aggregated number is very is very solid so we expect.
Speaker Change: Those merchants to contribute gradually into.
Speaker Change: Into the numbers of two.
Speaker Change: <unk> 2025.
Speaker Change: Remind me what was the first part of the question.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Hello.
Speaker Change: Can you guys hear me.
Speaker Change: What are you assuming for net revenue retention.
Speaker Change: Yes, thank you for that.
Speaker Change: Sorry.
Speaker Change: For not remembering that so.
Speaker Change: For our net revenue retention, we expect.
Speaker Change: Similar.
Speaker Change: Numbers to what we have seen in 24 may be slightly lower.
Speaker Change: The larger scale that we are Ed it is becoming.
Speaker Change: Gradually more challenging to maintain the same numbers, but.
Speaker Change: We expect it to come close to what we have seen in 2024.
Speaker Change: Okay.
Speaker Change: Thank you. Our next question is from James Faucette from Morgan Stanley. Your line is now open.
James Faucette: Great. Thank you very much.
Speaker Change: I wanted to.
Speaker Change: I'll just quickly touch on the another element will be.
Speaker Change: And all of our etc.
Speaker Change: As it relates to border free merchants, who chose not to re platform globally.
Speaker Change: Just give us a little insight as to.
Speaker Change: What those discussions where like or why those decisions were made and how you feel about some of those customers.
Speaker Change: Plumbing globally customers in the future.
Speaker Change: Yes.
Speaker Change: Hi, Thanks, it's Neal.
Speaker Change: So.
Speaker Change: Basically just to start with with overall most of the <unk>.
Speaker Change: Most of the <unk>.
Speaker Change: <unk> out of the border free platform, either already migrated or churn. So we see.
Less impact going forward than what we've seen.
Speaker Change: On 2024 numbers.
Speaker Change: But those merchants that were that were mentioned that did not migrate to.
Speaker Change: Globally.
Speaker Change: Actually.
Speaker Change: The vast majority had other priorities and to invest.
Speaker Change: And an integration with globally.
Speaker Change: So typical merchant is much more traditional merchant from department stores.
Speaker Change: In traditional retail in the U S.
Speaker Change: The one priority due to the current situation in many of them decided not to.
Speaker Change: Unfortunately of those that did not move decided.
Either not to invest in integration currently and with some of them. However, we are still in discussion so I do assume.
Speaker Change: There is an opportunity that over time once sale urgent priorities.
Speaker Change: All done we will see some of it actually coming back as a new merchant into.
Speaker Change: Into our into the global it platform.
Speaker Change: However, along those that actually migrated to globally, we are very happy with our results we have seen.
Speaker Change: Rate traction we've seen those sales going up we've seen much better conversion out of the current traffic. So all in all what we.
Speaker Change: We wanted to achieve with them, we did see it becoming a reality so we're quite optimistic.
Speaker Change: On the growth projects with them and as I said going forward set Tony it on our <unk>.
Speaker Change: He is going to always going to be much much lower.
Speaker Change: Okay.
Speaker Change: Thank you. Your next question is from Chris Zhang from UBS. Your line is now open.
Chris Zhang: Hi, Thanks for taking our question first question is about your revamped water three operated a demand gen.
Chris Zhang: Service can you maybe talk about your progress.
Chris Zhang: On that in terms of the merchant onboard it.
Chris Zhang: The progress towards monetization and how.
Chris Zhang: How much the impact is being baked into your.
Chris Zhang: Take rates for 2025, and then my second question was about.
Chris Zhang: The free cash flow conversion and placement and especially with the <unk>.
Chris Zhang: Sure absolutely.
Chris Zhang: In 2025, thank you.
Chris Zhang: Hi, great. Thank you for your question it's Neal.
So yes, we have launched border free dot com and all which is all our demand generation.
Chris Zhang: Initiative.
Chris Zhang: I would say some time in Q4. It wasn't early October it was late October, but we launched it.
Chris Zhang: And we are very happy with the initial traction we've seen so far.
Chris Zhang: Both with the equivalent merchant adoption out of the out of the board out of the global it platform as well as the shorter usage.
Chris Zhang: We do believe is that it will be a strategic pillar in the coming years.
Chris Zhang: To drive more traffic to our merchants.
Chris Zhang: <unk> is a business with a significant and growing shale of demand coming from.
Chris Zhang: Globally.
Chris Zhang: As well as our.
Chris Zhang: Setting us another competitive edge to us.
Chris Zhang: The market in order to bring in additional <unk> to globally. So we're very we're very we're very happy with the initial traction.
Chris Zhang: Best of all cell phones et cetera.
Chris Zhang: Hi, Chris.
Chris Zhang: Thank you for the question regarding free cash flow as in previous years, we expect it to be.
Chris Zhang: Slightly above our adjusted EBITDA.
Chris Zhang: So thats the short end.
Chris Zhang: Sir.
Chris Zhang: Okay.
Speaker Change: Thank you. Our next question is from Brian Peterson from Raymond James Your line is now open.
Speaker Change: Thanks, gentlemen, and congrats on a strong close to 2024, so I'd love to hear what you guys have seen so far starting 2025 I know you mentioned the very strong demand through the holiday season, but anything you'd call out in terms of GMB trends as we start 2025 and any color by region.
Neal: Yes, Brian it's Neal.
Speaker Change: We have seen.
Neal: We have seen after a very strong.
Peak period, and also before that slightly before that in the second part of Q3, where we've seen a strong consumer demand.
Neal: We did see some normalization coming into a 25 than we expected.
Neal: To go into something that is much more closer to.
Neal: Normal trend of multi year trends that we've seen in consumer demand driving same store sales.
Neal: Most countries.
Neal: Behaves the same I think that we have seen some slight weakening.
Neal: In the U K in the.
Neal: Consumer demand into the U K, but outside of that.
Neal: We are currently seeing better.
Neal: Back to normalization and slightly lower than what we've seen but it is already embedded into our into our guidance.
Speaker Change: Got it and maybe just a follow up as we're thinking about take rates I'm just curious.
Speaker Change: One of our newer merchants to the platform thinking about multi local I don't know theres, some mixed dynamics with enterprise, but I'd love to understand as we think about the expectations for 2025 guidance, what should we be assuming about take rates longer term as we think about the mix of multi local versus non multi local thanks guys.
Speaker Change: Well I will start and I'll pass it also in terms of the new merchants I think that's a multi local.
Speaker Change: Enabled globally to address new Tom.
Speaker Change: It opened in addressable markets that globally could not reach before we should look Justin.
Speaker Change: In January Neil mentioned it.
Speaker Change: Late January early February we launched Logitech Logitech is our strongest consumer electronics brand to date.
Speaker Change: This was not in our Tom if you just take it back two to three years ago. When we didn't have the capability to do to do multi local so yes by nature.
Speaker Change: In a lower take rate because a multi local I, though you don't have a fulfillment.
Speaker Change: Take rates at all or that you have.
Speaker Change: At a very low take rate versus cross border. However, it does open a new addressable market for us in terms of how we see it playing over time I would let also give more clarity.
Speaker Change: I think that the.
Overtime.
Speaker Change: We should see multi local.
Speaker Change: Beyond what <unk> just mentioned regarding 2025.
Speaker Change: Growing gradually in shell.
Speaker Change: And this is one because.
Speaker Change: As Neil just mentioned there is an opportunity there and we are pursuing that opportunity so consumer electronics and other <unk>.
Speaker Change: Merchant.
Speaker Change: That have local inventory as well and on top of that we see over time.
Speaker Change: A gradual shift with very large merchant and it makes sense for them to open another inventory center, let's say if the U S merchants in Europe or the other way around if European merchants in the U S.
Speaker Change: So we see that also over time, so we do expect.
Speaker Change: Sure.
Speaker Change: A gradual increase in in multi local overtime.
Speaker Change: Yeah.
Thank you and the interest of time I may ask could you. Please only ask one question.
Speaker Change: Your next question is from branch Brinkman from Piper Jaffray. Your line is now open.
Speaker Change: Okay. Thank you good afternoon.
Amir Gear: Amir gear.
Speaker Change: The early feedback on tariffs a lot of questions that we have there it sounds like that's adding a new layer of complexity and while it may impact volumes could also drive more merchants you're way. My question is related it's on this potential.
Speaker Change: Potential suspension of the de Minimis exception drill here in the U S for duty free goods under $800.
Speaker Change: The suspension of that rule impact the business. It is would that add another layer of complexity and potentially impact volumes, but drive more merchants to the platform walk through.
Speaker Change: Specifically, what youre seeing merchants discussed with you around the administers expansion rule.
Speaker Change: Yeah.
Hi, Brian Hi, Brent it's Neal.
Speaker Change: So.
Speaker Change: Indeed, we do expect the suspension of the minimus to have to have an effect both on the consumer demand with the affected Hs codes that would see an increase that can be north of 10% that we're actually levied on the products that can be.
Speaker Change: Anything between 25% to 35% because they are ongoing duties.
Speaker Change: Today don't kick in because they are over.
Speaker Change: The order is below the dominion of the 800 so.
Speaker Change: This chain would have an effect that not only the 10% will kick in but the entire 30% on average it might kick in making them.
Speaker Change: Older format <unk> into the U S for those specific ages and.
Speaker Change: <unk> expenses as this is what the merchants are facing that's why three b to C model, where the merchant with actually imported on a wholesale basis to avoid paying high tavis on duties on the retail value of Baidu. It on the wholesale and then sell it domestically.
Speaker Change: We will see it coming more.
Speaker Change: As well as an increasing demand for solutions to duty reclaim because if duties are kicking in now in the U S and 15% on average of goods are actually going back into the origin country.
Speaker Change: Then duty reclaim would become a much more critical because it can save 2% to 3% on the trading costs. So we do see a lot of interest coming around it for merchants in order to kill those cells to have an optimized.
Speaker Change: I would say cost structure and profitability, while not bumping up.
Speaker Change: Prices to Zale U S consumer at least not that.
Speaker Change: At tens of percent so.
Speaker Change: We do believe this will create a lot of interest in our services globally is geared to give.
Speaker Change: Our comprehensive comprehensive suite of services on duty reclaimed for their returns into into supporting flu B to C. Does that fall merchants to do by itself is super complex to do if at all so.
Speaker Change: We do believe that there will be uncertainty it might affect short term.
Speaker Change: Consumption, but overall in the longer term, we do expect it will behave the same as we've seen in Brexit well overall it created much more demand for our services.
Brent: Just add to that Brent.
Brent: What is near alluded to earlier, it's not just a magnitude.
Brent: When the impact of either the tariffs or the change in de minimus. Its also the velocity reached each these changes are coming.
And we've seen that over the last few weeks.
Brent: And.
Brent: It's probably not going to endear theyre going to be retaliatory actions back and forth. So it's not just need the tariffs themselves, it's the ability to handle and keep on training and streamlined way.
Brent: In the face of all these rapid changes in the market and Thats as we said that that's part of the value that globally brings to the merchant.
Speaker Change: Thank you. Your next question is from Koji Ikeda from Bank of America. Your line is now open.
Koji Ikeda: Yeah, Hey, everybody. Thanks for taking the question I wanted to ask another question on take rates and so when I look at the original 2024 guide right at the midpoint I think the take rate assumption there was 416% for 2024, but the year ended up a little bit below that at 15 and a half.
Koji Ikeda: So when I look at the 2025 guide right smack at the midpoint, that's that's 14, 9%.
Koji Ikeda: And I do appreciate the multi local in the tariff dynamic there.
Koji Ikeda: But I wanted to really understand how conservative the take rate assumptions are this year versus last year and what are some of the factors maybe outside of multi local and tariffs.
Koji Ikeda: That could drive a higher or lower overall take rate versus the guide. Thank you.
Koji Ikeda: Yeah.
Koji Ikeda: Sure Koji.
Koji Ikeda: So Phil.
Koji Ikeda: Think that looking at it.
Koji Ikeda: <unk>.
Koji Ikeda: As we always do when we got into this year, we learned from.
Koji Ikeda: Periods, we obviously looked at last year guidance versus actual execution as an input.
Koji Ikeda: For the 2025.
Koji Ikeda: Budget and guidance.
Koji Ikeda: I would say that the 2025 guidance.
Koji Ikeda: Is thoughtful.
Koji Ikeda: And it's based on.
Koji Ikeda: Our best.
Koji Ikeda: Estimation.
Koji Ikeda: Point in time, as we mentioned we expect.
Koji Ikeda: Great.
Koji Ikeda: <unk> decreased mainly on the back of higher multi.
Koji Ikeda: Multi local.
Koji Ikeda: Sure that is pushed bye bye.
Koji Ikeda: The tariffs.
Koji Ikeda: In consideration of merchants.
Koji Ikeda: And we hope that we will.
Koji Ikeda: Hit the number in order to.
Koji Ikeda: What can drive this.
Koji Ikeda: Upwards is a faster penetration of value added services. This could definitely support the take rates and what good impacted negatively is if we see a higher share of multi local compared to what we expect to see.
Koji Ikeda: Yeah.
Speaker Change: Thank you. Your next question is from Patrick Walraven from JMP. Your line is now open.
Patrick Walraven: Oh, great. Thank you.
Speaker Change: I wanted to go back to.
Speaker Change: At Baker so after.
Speaker Change: I guess it was in August of last year, you guys guided down I think it was like by about $10 million because of the bankruptcy at Ted Baker and at the time here in the U S. When you went to the website. It was offline, but now it's back I guess under U S law.
Speaker Change: Do you get that that business back.
Speaker Change: So the business that actually went bankrupt.
Speaker Change: Was actually resolved. So these are new.
Speaker Change: So there is a new partner.
Anything it.
Speaker Change: Yes.
Speaker Change: As we do with other prospects now.
Speaker Change: Work.
Speaker Change: Order too.
Speaker Change: To be too.
Speaker Change: To be connected but it's a completely different tech stack, it's a completely different one have it's like selling to a new client again, it's part of our pipeline and hopefully we would be able to have to be able to work with them.
Speaker Change: Thank you. Our next question is from Mark Zika times from the Benchmark Company. Your line is now open.
Mark Zika: Thank you and congrats on the GAAP profitability milestone just two quick ones for me over.
Speaker Change: On the.
Speaker Change: 25 guidance just curious what the services take rate assumption is.
Speaker Change: And then.
Speaker Change: As it relates to Shanghai managed markets I was hoping you could confirm the mix there in your 2000 for JMP.
Speaker Change: Yeah.
Speaker Change: Sure so regarding.
Speaker Change: The take rate.
Speaker Change: With respect.
Speaker Change: Our service fee take rate to be.
Speaker Change: Slightly lower compared to 24.
Speaker Change: We mentioned there is that Ted Baker impact than we did at Baker for <unk> almost eight months in.
Speaker Change: In 24 rigs.
Speaker Change: Regarding fulfillment as we already.
Speaker Change: <unk> discussed.
Speaker Change: More than once on this call, we expected to be lower due to higher.
Speaker Change: Multi local share.
Speaker Change: So thats.
Speaker Change: In terms of.
Speaker Change: Of the take rates in terms of.
Speaker Change: Shopify managed markets.
Speaker Change: As we closed out during the year.
Speaker Change: The actual result was.
Speaker Change: Budgeted by Us so we hit the budget.
Speaker Change: And as we mentioned a few times it was around 5% of our volumes.
Speaker Change: Okay.
Speaker Change: Thank you. Our next question is from Rob <unk> with Autonomous Research. Your line is now open.
Speaker Change: Okay.
Speaker Change: Hey, guys one more on managed markets and appreciate all the color there I think in the past you've hinted that.
Speaker Change: Volume has been in line with expectations, but you've added more merchants than expected to that kind of points to fewer large merchants onboarding there.
Speaker Change: I am curious why do you think that is and then what specifically.
Speaker Change: Features of functionality do you think you need to add to make the product more applicable to those large merchants. Thanks.
Neal: Hi, it's Neal.
Speaker Change: Thank you.
Speaker Change: You all correctly on Euro assumption, yes, we did hit our budget.
Speaker Change: Is it skewed towards slightly lower size of merchants versus what we are.
Speaker Change: What we budgeted for however.
However, it did give so far our solution for thousands of merchants that have adopted it and are trading and happy on the on the platform.
Speaker Change: We do believe and we work with Shopify.
Speaker Change: In order to build I would say additional tools as I mentioned earlier and capabilities to make it more simple and streamlined.
Speaker Change: With other shopify.
Speaker Change: Processes and activities.
Speaker Change: And we believe it will also.
Speaker Change: Give a great deal.
Speaker Change: A greater set of capabilities.
Speaker Change: It will allow to go to go further upstream in terms of also the size of the client.
Speaker Change: It will mature over time in the coming quarters, but we have I expectations over the coming years call managed markets.
Speaker Change: Thank you. Our next question is from Matt O'neill from Etsy partner. Your line is now open.
Speaker Change: Yeah, Hi, Thank you guys so much.
Speaker Change: Well, maybe I could ask a little bit about the larger tech win that seems to be.
Speaker Change: A nice diversification and indicative of the electronics channel taking off.
Speaker Change: Im reading into that correctly and.
Speaker Change: How do you guys think about that I know, there's maybe a little bit more scrutiny on electronics going cross border than typical apparel and luxury items and says that.
Speaker Change: The type of product movement improve thanks.
Speaker Change: Yes.
Speaker Change: You're spot on that consumer electronics is indeed.
Speaker Change: More complex.
Speaker Change: Carolyn cosmetics to move cross border is there is almost by nature why consumer electronics brands that we're bringing on our multi local.
Speaker Change: The latest tradition, we spoke about Logitech is a good example, it's completely multi local.
Speaker Change: However, it's a new.
Speaker Change: Total addressable market for globally.
Speaker Change: We do believe that we can.
Speaker Change: Ground within the consumer electronics.
Our segment and we are we think that the larger tech was our sales.
Speaker Change: Size.
Speaker Change: Our case studies, however, we had those before with Chopra with soon to and many others. They joined globally already and are enjoying a well a multi local offering.
Speaker Change: For the last for the last few quarters, and we see the acceleration now and hopefully we can keep them coming.
Speaker Change: Okay.
Amir: Thank you that concludes our question and answer session I will now hand, the call back to Amir for any closing remarks.
Amir Gear: Thank you for that and as we concluded another very strong year at globally I would just like to thank you all for joining us today and for your ongoing support as we continue on our journey to fulfill our mission to enable great better global direct to consumer E. Commerce for brands worldwide. We are.
Incredibly eager and excited as we continue to take advantage of the countless opportunities that lie ahead of us and we would be honored to have you join us as.
Amir Gear: As such we very much look forward to seeing you in New York next month for our Investor day as well as on our future earnings calls until then goodbye and take care.
Amir Gear: Okay.
Speaker Change: Thank you ladies and gentleman. The conference has now ended thank you all for joining you may all disconnect your lines.
Speaker Change: Yeah.