Global-E Online Q1 2023 Earnings Call Transcript

Quartr
Provided by Quartr
May 22, 2023

There are 13 speakers on the call.

Operator

Greetings, and welcome to the Globally First Quarter 2023 Earnings Call. This call is being simultaneously webcast on the company's website in the Investors section under News and Events. For opening remarks and introductions. I'll now turn the call over to Erica Mannion at Sapphire Investor Relations. Please go ahead.

Speaker 1

Recorded. Thank you and good morning. With me today from Global E are Amir Shloket, Co Founder and Chief Executive Officer Ofer Khorin, Chief Financial Officer and Nir Debi, Co Founder and President. Amir will begin with a review of the business results for the Q1 of 2023. Ofer will then review the financial results for the Q1 of 2023, followed by the company's outlook for the Q2 and full year of 2023.

Speaker 2

Recorded. We will then open the call for questions.

Speaker 1

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 recorded and the Safe Harbor provisions of the U. S. Private Securities Litigation Reform Act of 1995 that relate to our current expectations in views of future events. These forward looking statements are subject to risks and uncertainties and assumptions, some of which are beyond our control. Recorded.

Speaker 1

In addition, these forward looking statements reflect our current views with respect to future events and are not a guarantee of future performance. Recorded. 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 recorded in our prospectus filed with the SEC on September 13, 2021, and other documents filed with or furnished to the SEC. Recorded. These statements reflect management's current expectations regarding future events and operating performance and speak only as of

Operator

the date of this call. Recorded.

Speaker 1

You should not put undue reliance on any forward looking statements. Although we believe that the expectations and the forward looking statements are reasonable. We cannot guarantee that future results, levels of activity, performance recorded and events and circumstances reflected in the forward looking statements will be achieved or will occur. Except as required by made by law. We make no obligation to update or revise publicly any forward looking statements, whether as a result of new information, recorded in the Q4 of 2019.

Speaker 1

We will

Speaker 2

now begin the call to discuss future events or otherwise after the date

Speaker 1

on which the statements are made or to reflect the occurrence of unanticipated events. Recorded. Please refer to our press release dated May 22, 2023 for additional information. In addition, being recorded. Certain metrics we will discuss today are non GAAP metrics.

Speaker 1

The presentation of this financial information is not intended to considered in isolation or as a substitute for or superior to the financial information prepared and presented in accordance with GAAP. Recorded. We use these non GAAP financial measures for financial and operating decision making and as a means to evaluate period to period comparisons. Recorded. We believe that these measures provide useful information about operating results, enhance the overall understanding of past financial performance and future recorded and allow for greater transparency with respect to key metrics used by management in its financial and operating operational decision making.

Speaker 1

Recorded. For more information on the non GAAP financial measures, please see the reconciliation tables provided in our press release dated May 22, 2023. Recorded. Throughout this call, we will provide a number of key performance indicators used by our management and often used by competitors in our industry.

Operator

Being recorded. These and

Speaker 1

other key performance indicators are discussed in more detail in our press release dated May 22, 2023. Recorded. I will now turn the call over to Amir, Co Founder and CEO.

Speaker 3

Thank you, Erica, and welcome everyone. With the financial results of Q1, which we are releasing today, we are off to a great start for the year recorded with 55% year over year growth in GMV, which totaled $704,000,000 Revenues for the quarter recorded. We're $117,600,000 growing by 54% compared to the same quarter last year. And adjusted gross profit margin was 41.4% for the quarter, up from 39.1% last year. Our adjusted EBITDA recorded.

Speaker 3

Came in at $14,500,000 compared to $23,300,000 in Q1 of last year. These strong results, which came in above our guidance, manifest our continued strong execution across the business, our effectiveness in controlling costs and the fact that macro conditions during the quarter recorded. Our first question today will be from the line of David. Thank you, operator.

Speaker 2

Thank you, operator. Thank you, operator. Thank you, operator. Thank you, operator. Thank you, operator.

Speaker 2

Thank you, operator. Thank you, operator.

Speaker 4

Thank you, operator.

Speaker 2

Thank you, operator.

Speaker 3

Thank you, operator.

Speaker 2

Thank you, operator. Thank you, operator. Thank you, operator.

Speaker 3

Thank you, operator. Thank you, operator. Our first question comes from our Q1 results. Andy will provide you with our guidance for Q2 as well as our updated guidance for the full year of 2023, which we are raising today. Recorded.

Speaker 3

But before we do that, I would like to share with you some of the exciting developments we have seen across the business during the past quarter. Recorded. 1st and foremost, we continue to see great interest in our services coming from brands all around the globe as more and more merchants turned to the direct to consumer channel as their key focus growth channel. To name just a few, in Q1 we saw renowned brands like Carbon 38, recorded. Joanne, Psycho Bunny, Maui and Sons, Lulus, Jigsaw and Rebecca Minkoff go live, recorded as well as the merchandise store of the Mercedes AMG Petronas Formula 1 team.

Speaker 3

We continued our push into APAC with brands such as Charles and Keith, Porcelain Skin and Buying Vitaly going live in Singapore, Unreal Fur going live in Australia, OBJET. Io going live in Japan and more. Recorded. In parallel, we launched our first Portuguese merchant called Islo and continued to onboard celebrity brands and social first brands recorded in the Q1 of 2019, such as Kylie Cosmetics by Kylie Jenner or Maison Francis Croujean, part of the LVMH Group, whose Baccarat Rouge perfume with the number one perfume shared by influencers on TikTok in 2022. During the quarter, we also continued our efforts to expand our business recorded with existing merchants.

Speaker 3

Notable examples would be numerous expansions of our engagement within the LVMH Group, being recorded with 2 additional brands, Reposi and Pucci joining the platform, Kenzo going live and Bulgari turning on an additional batch of close to 30 markets, recorded by globally. Another notable example would be Disney Europe, which now utilizes globally to support sales to the United Kingdom, one of its top global markets. Regarding our partnership with Shopify, on the direct integration side, we continue our work on adding new features to our native integration as well as providing support for Shopify's new checkout extensibility. In parallel, we continue to migrate merchants from our legacy third party integration into the new native one and add newly signed merchants directly onto the native plug in recorded as we go. On the white label solution front, we continue to work in close collaboration with Shopify's teams towards the rollout of Shopify Markets Pro, a fully integrated merchant of record solution intended for merchants looking to scale to new markets quickly and easily.

Speaker 3

Recorded. Markets Pro is currently in early access mode in the U. S. And we are seeing a high level of interest from merchants and encouraging initial results recorded from those early access merchants that have been going live since September of last year. Along with Shopify, we believe Markets Pro remains on track to general availability in the U.

Speaker 3

S. In the summer to be followed by the U. K. Later in the year. Finally, I would like to mention a different and exciting aspect of our activity, which is the potential of using AI to improve our service levels recorded and potentially increase the efficiency of our operations.

Speaker 3

We have already been using machine learning and AI models for several years now, helping our teams to automate large scale recurring tasks, such as the classification of large product catalogs for duties and taxes, for example. Recorded. More recently, our internal AI task force has conducted several proof of concept exercises in various functions of the company, demonstrating some of their potential. We believe that the amazing advancements made in the field of AI lately, resulting in the proliferation of highly sophisticated, It's easy to use large scale models, should present over the coming quarters and years many opportunities to incorporate AI powered tools and capabilities recorded across different parts of the organization. These in turn could enable us to drive significant cost efficiencies over the coming years, recorded while further improving the level of service and insights we can give to both merchants and end consumers.

Speaker 3

There are countless other exciting developments to share from all corners of the business, all contributing to our belief that we can continue to exhibit high growth rates recorded as we capture more and more of the vast greenfield opportunity that lies ahead of us and do it in a sustainable way, maintained by maintaining cost controls and best in class efficiency. But in the interest of time and in order to leave ample time for any questions you may have, I will now hand it over to Ofer, our CFO, to take us through the quarterly numbers in more depth as well as present our updated guidance.

Speaker 5

Thank you, Amir, and thanks again everyone for joining us this morning for our quarterly earnings call. We are pleased to begin 2023 with a very being. Q1 was another strong quarter of solid growth and healthy margins as we continue to execute well on all fronts. I'd like to point out again that in addition to our GAAP results, I'll also be discussing certain non GAAP results. Our GAAP financial results along with the reconciliation between GAAP and non GAAP results can be found in our earnings release.

Speaker 5

As Amir mentioned, our rapid growth in GMV continued in Q1 as $704,000,000 of GMV was generated recorded on our platforms, an increase of 55% year over year. We continue to experience growth $17,600,000 up 50 4 percent year over year with both revenue streams continuing to grow rapidly. Service fees revenues were $50,400,000 up 58% year over year recorded and fulfillment services revenue were up 52% to $67,300,000 We have continued to experience higher pace growth in our U. S. Outbound revenue as our strong momentum in the U.

Speaker 5

S. Continued, driven also by the U. S. Bias of the Borderfree portfolio. In Q1 2023, U.

Speaker 5

S. Our penetration efforts to APAC and the Middle East remained on track recorded and continuing to bear fruit. While the share of GMV coming out of this new outbound market is still relatively low, Transaction volumes have grown by almost 4x year over year. Non GAAP gross profit outpaced revenue growth recorded as we continue to leverage our scale. In Q1, non GAAP gross profit was $48,700,000 up 63% year over year, representing a gross margin of 41 point recorded in the Q4 compared to 39.1 percent in the same period last year, driven by the higher share of service fees revenue recorded and ongoing efforts to improve efficiencies.

Speaker 5

GAAP gross profit was $45,900,000 representing a margin of 39%. Moving on to operational expenses, we continue to invest in the development and enhancement of our a key contributor to our platform with a significant effort around the development of the Shopify Markets Pro white label solution towards general availability recorded in the U. S, as Amir mentioned. R and D expense in Q1, excluding stock based compensation, recorded for the Q1 of 2019. This call was $16,800,000 or 14.3 percent of revenue compared to 12 point We also continue to invest in sales and marketing to expand our presence and to further build our pipeline, While continuing to be mindful of efficiencies, we have expanded our presence in Europe, including people on the ground in Italy and Scandinavia recorded and continue to enhance our presence in Australia and Japan.

Speaker 5

Sales and marketing expense, excluding Shopify related amortization expenses, Stock based compensation and acquisition related intangibles amortization was $10,500,000 recorded for the Q1 of 2019, compared to $8,200,000 or 10.7 percent of revenue in the same period last year. Shopify warrant related amortization expense was $38,200,000 Total sales and marketing expense recorded for the quarter were $51,800,000 General and administrative expenses, recorded. Excluding stock based compensation, acquisition related expenses and acquisition related contingent consideration recorded with $7,400,000 or 6.3 percent of revenue compared to $6,200,000 or 8.1 percent of revenue recorded in the same period last year. Total G and A spend in Q4 was $13,100,000 being recorded. Adjusted EBITDA totaled $14,500,000 representing a 12.3% adjusted EBITDA margin, increasing from $3,300,000 or 4.3 percent margin in the same period last year, recorded, which was negatively impacted from the flow consolidation.

Speaker 5

Net loss was $43,100,000 compared to a net loss of 50 $3,600,000 in the year ago period, driven mainly by the amortization expenses related to the Shopify warrants and to the recorded in the Q1 of 2019. Switching gears and turning to the balance sheet and cash flow statements, recorded. We ended Q1 2023 with $212,000,000 in cash and cash equivalents, including short term deposits and marketable recorded. Cash flow used by operating expenses was $29,500,000 recorded to $5,300,000 a year ago, driven by typical Q1 post peak working capital dynamics recorded and a $12,200,000 payment of held back acquisition related proceeds. Moving on to our financial outlook and guidance for Q2 2023 and our updated 2023 full year guidance, Reflects the resilience and the continued momentum of the business.

Speaker 5

For Q2 2023, We're expecting GMV to be in the range of $755,000,000 to $785,000,000 recorded. At the midpoint of the range, this represents a growth rate of 44.2% versus Q2 of 2022. We expect Q2 revenue to be in the range of $125,000,000 to $130,000,000 recorded at the midpoint of the range, this represents a growth rate of 46.1% versus Q2 of 2022. Recorded. For adjusted EBITDA, we are expecting a profit in the range of $15,000,000 to $18,000,000 recorded.

Speaker 5

For the full year of 2023, we are raising our guidance and now expect GMV to be in the range of $3,400,000,000 to 3.5 $5,000,000,000 representing nearly 42% annual growth at the midpoint of the range. Revenue is expected to be in the range of $562,000,000 to $590,000,000 representing a growth rate of nearly 41% at the midpoint of the range. For adjusted EBITDA, we are expecting a profit of $70,000,000 to $77,000,000 recorded. In conclusion, we are focusing on disciplined execution to create value for the merchants and tap on the market opportunity in in front of us. We strive to continue our growth journey while exerting ongoing efforts to improve efficiencies, enabling sustainable top line growth and acceleration of cash generation.

Speaker 5

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

Operator

In the interest of time, we ask that you each keep to one question and one follow-up. Thank you. Our first question comes from the line of Will Nance with Goldman Sachs.

Speaker 4

Recorded. Hey guys, good morning.

Speaker 6

I wanted to ask about what you're seeing in the APAC market. Have you seen any notable shifts being recorded. And consumer spending, we've seen a lot of talk around the shift away from goods and towards services. Just wondering if you're seeing any impact and maybe one for being If you could just remind us how large APAC consumer inbound revenues is as a percentage of total revenue, that would be helpful. Thank you.

Speaker 4

Yes.

Speaker 5

So we haven't seen any significant change in APAC consumption. Being APAC is a significant market for us, but not one of the largest Europe and the U. S. Are larger in And we haven't seen it has been relatively stable at least for us. We haven't seen any shift being Consumer preferences from our side.

Speaker 6

Got it. That's helpful. And if I could just follow-up on, you mentioned being The macro ended up being a little bit better than what you'd expected at the beginning of the year. I know you talked about taking a conservative posture heading into being recorded. The current environment on the last quarter's call, just if you could maybe just remind us what you're building in for macro, has anything changed in terms of what you're for the rest of the year and how are you thinking about the outperformance in the Q1 relative to the remainder of the year?

Speaker 5

Yes. So as you mentioned and as we highlighted, the macro environment in Q1 being recorded. Was a bit better than we expected coming into the year. We saw solid demand from consumers being recorded. And that was translated into a nice growth of existing clients.

Speaker 5

However, the uncertainty still remains. Macro is still not very stable. There are Some negative drivers. So, we haven't changed our view towards the 2nd or the next three quarters regarding the year, we still stayed with the same assumptions and we remain fairly conservative due to that.

Speaker 6

Understood. Appreciate taking my questions.

Speaker 3

Being answered. Thanks Will.

Speaker 2

Thank you.

Operator

Our next question comes from the line of Cody Ikeda with Bank of America. Please proceed with your

Speaker 2

question. Being recorded.

Speaker 4

Yes. Hey, guys. Good morning and thanks for taking the questions. I wanted to ask you a question, maybe in the likes of New merchant growth versus GMV per merchant, assumptions in the guidance. It sure sounds like you guys are adding new merchants at a very healthy being So maybe help us understand as you think about the guidance, what are you guys baking in from a new merchant growth or GMV being expansion per merchant for their guidance this year.

Speaker 7

Hi, Koji. It's Neil, Debbie. Thank you for the question. So basically, we are optimistic for the rest of the year as what we've seen year to date. Being recorded.

Speaker 7

We had a record year in signing new merchants into the platform, being recorded. And we hope to maintain that going forward for the rest of the year. So all in all, a good trajectory. We haven't seen, I would say, any delays in merchants' decision making due to macroeconomics being recorded in order to decide to put the budgets and integrate globally into the solution. So far, Yes.

Speaker 7

The pipeline looks robust. And this we look forward to maintain for the rest of the year. And as well we look forward for some contribution mainly in Q4 coming out of Markets Pro once it goes into general availability. Being

Speaker 4

Got it. That's super helpful. And Amir, my follow-up here is on AI and you mentioned it in your prepared remarks. And I wanted to dig into that a little bit more, thinking about how you are thinking about the AI benefits for customers and maybe Breaking it out into 2 buckets, maybe how customers might use it, using the AI to drive faster ROI, either from fast Onboarding onto the Global Eat platform or even expansion of some of those big brands that you have that have many brands in many different geographies, being. That's number 1 or is it more for driving enhanced monetization levers of the end market from the overall shopping experience?

Speaker 4

Thanks guys. Thanks for taking the questions.

Speaker 3

Sure, I think. So first of all, Yaron, there are 2 main buckets That at least for now we look at. 1 is kind of along the same lines that you've mentioned, which is being increasing or using these models to greatly enhance the level of insights that we can generate for based on our data, based on our accumulated proprietary data. So This is obviously something as you know that we've been doing for Iwona what we believe there is great potential in using AI based tools to dramatically enhance the kind of the quality, the granularity and the time to market for us being recorded and make it even more actionable for our merchants and therefore drive better performance overall for them on our platform. So that's definitely one big bucket.

Speaker 3

The other bucket I would say is more internal, which is kind of driving efficiencies all across different functions in the organization and enabling our teams to do much recorded more accurately with the same level of resources and drive kind of the next wave if you want of efficiency on the back of our scale and our know how. So these are, I would say, recorded in the 2 main buckets. 1 is more outbound that kind of our merchants will enjoy directly. The other one is more internal where we as a company will enjoy internally. But that's currently the way we view the 2 main being recorded in buckets that we'll pursue.

Speaker 4

Thank you. Thank you, Amir. Super helpful. Thanks so much.

Speaker 3

Thanks, Cody.

Operator

Thank you. Our next question comes from the line of James Faucette with Morgan Stanley. Please proceed with your question.

Speaker 8

Yes, good morning and thanks this morning everybody. I wanted to To touch on quickly the U. S, obviously, you highlighted that it's growing very quickly and it certainly is bright spotted around 100% year over year growth. Can you help us disaggregate that growth generally on an organic basis versus what came from the recorded in the quarter and provide some commentary with respect to how you are thinking about that region and how it what your assumptions are within your

Speaker 5

outlook. Yes. So thanks James for that Itaufer. Most of the growth is organic. Borderfree has contributed, but the lion's share of the growth organic and it's driven by our the ongoing strong momentum that we have in the U.

Speaker 5

S, which are growing faster than average. And also, I would say the stabilization Of the environment in Europe, because the largest market for U. S. Merchant is obviously Europe And that has contributed to a certain extent as well.

Speaker 8

Got it, got it. And then I wanted to ask about being recorded. The interaction with Shopify and just get a better sense of what controls the pace of penetration and recorded and on boarding with Shopify merchants. How we think about it, it looks like a very sizable outstanding GMV opportunity. Is that something where you can kind of push the accelerator or is it more of an being Dan at Cadence and how should we think about that into 2023 or into the rest of 2023 and into 2024?

Speaker 7

Hi, James, it's Neil. So basically, I would break it into 2 separate buckets. When you look at globally, I would say, 3rd party solution provided in the Shopify Checkout, which is our regular solution. This will continue to grow and will continue to grow fast. We have been growing very nicely Since we gained exclusivity on Shopify a year and a half ago, and it continues to grow nicely to date.

Speaker 7

In parallel to it, we expect to see acceleration on the Markets Pro, being recorded in the Q4, which is Shopify owned solution powered by globally. And this will Start to take effect as of Q4 as we expect following the general availability in the U. S. In the summertime. And we expect to see much more of the effect coming into 2024 on this solution.

Speaker 7

So the combination of both, we do expect to see An acceleration into 2024 in realizing potential on Shopify.

Speaker 8

Got it. Got it. Thank you.

Speaker 3

Thanks, Nate.

Operator

Thank you. Our next question comes from the line of Samad Samana with Jefferies. Please proceed with your question.

Speaker 9

Good morning. Thanks for taking my questions. Being Ofer, maybe a follow-up for you on the guidance. Just kind of reconciling the strong 1Q and maybe what the revision implies for the rest of the year, Any changes in what you're assuming for NRR for the rest of the year or what you're assuming in terms being The timing of go lives or the ramp of partnerships, just trying to understand maybe the moving parts within the guidance and what your updated assumptions are?

Speaker 5

Thanks so much for that. Basically, we haven't changed our view. And as I mentioned, we due to the uncertainty, we remained a bit on the conservative We did see some positive signs in Q1. As we said, demand from consumers It was relatively positive or at least more positive than we initially expected. However, again, as there is still a lot of macro uncertainty, We remain a bit conservative.

Speaker 5

Regarding new merchants, we haven't seen any notable delays. Projects are running on time, general some usual delays, some we are able regarding the remaining of the year, but again in terms of putting in a guidance due to the macro uncertainty, being recorded. We prefer to be just a bit on the conservative side. Great. And then maybe just a follow-up on the product side.

Speaker 5

I know we've talked about some

Speaker 9

of being I know we talked about some of maybe the kind of newer products that you could roll out to get the service revenue take rate higher, being Including something like multi local, just maybe any updates there on your year on the quarter and how maybe progress there looks and how we should think about that maybe being a source of further monetization as the year progresses.

Speaker 7

Sure. Basically, we have seen progress recorded. In multiple arenas, for example, we have seen a higher adoption of our new capabilities around duty drawback In different parts of the world, for European merchants, for our U. S. Merchants selling into Canada, etcetera.

Speaker 7

Being So we do see new capabilities that bring with them an add on to the take rate. We do expect Even in Q4, but much more into 2024, an additional contribution coming out of demand generation and our Ability to drive traffic into sites that we are currently working on. So we do believe that there will be levers, I would say to continue and see a gradual increase in the take rates over time.

Speaker 4

Great. Thanks again for taking my questions.

Speaker 3

Thanks, Samal.

Operator

Thank you. Our next question comes from the line of Brian Peterson with Raymond James. Being recorded.

Speaker 10

Hi, thanks for taking the question. So just one for me. So it's interesting to see being recorded. With customers like Disney Europe, like the expansion so early on, but also with LVMH, who's been a customer for a while. So I'd love to understand Kind of the land and expand dynamics as we progress through 2023.

Speaker 10

Are customers looking to kind of go multi region to start or how

Speaker 7

I think we have started in that especially with the larger merchants Well, they scale up or that they have presence physical presence around the world, either direct presence or franchisees. Those brands would typically do opt over time to go into being More multi local mode of work and this we support. So we do see that over time. In some of the larger brands, you also see regional decision making. So once you land entered into a certain region, which is very successful.

Speaker 7

Then over time, you will be able to win additional regions based on the success story and the drive from the region you already entered. Same goes for groups of brands such as LVMH where you have Multiple success stories that just created gravity centers for others to follow because they do share best practices, they do give Corporate advice and on the back of it, we do see a significant growth within groups. In terms of spend and expense, we hope and we believe there is still a lot of runway as we continue to lend large merchants. Being recorded. Over time, we do see a trajectory of growing within the brand or within the group.

Speaker 7

So we do have a runway Also going forward, so no change on that.

Speaker 3

Thanks, being

Operator

recorded. Thank you. Our next question comes from the line of Josh Beck with KeyBanc Capital Markets. Please proceed with your question.

Speaker 11

Being recorded. Thank you for taking the question. I wanted to ask a little bit about Borderfree. Obviously, it's becoming more integrated into The platform and I imagine there's some opportunity particularly on the fulfillment side. Maybe just where you are with respect to The phasing of synergies and kind of how we should be thinking about that as we progress through the year.

Speaker 7

So in terms of hi Josh, it's Neil. In terms of Border Free, I think we see the realization of the goals that we aim for in the acquisition. The first one would be related to the demand generation capabilities and marketing assets where we started to build on the infrastructure we acquired from being recorded. Borderfree in order to launch a more sophisticated demand generation services for the entire Global Group brand, being recorded. We hope to roll it out, I would say, sometime between Q4 and Q1 next year, but This is already a work in motion in order to utilize it as we expected.

Speaker 7

In terms of the logistics part, we have realized, I would say, the first synergy, which is actually utilizing being The premium standard services of Pitney Bowes into Canada, giving access to our U. S.-based brands being recorded into a standard solution that has a great SLA and great reporting attached to it. And all in all, we did see also the ability to leverage the professional team As well as the services and some of the services we acquired from Borderfree in order to being Accelerate the development of globally on roadmap. So we actually shifted significant amount of the team to support, I would say, is a build towards the world globally. So all in all, we do see progress in line with what we expected out of the acquisition and we expect it to all materialize by the end of 2024.

Speaker 11

Super helpful. And then maybe just a follow-up on Markets Pro. Obviously, this is a segment generally SMB, self-service that you've spent less time in historically just looking at the company's history. So What are you really hoping to, I guess, learn during the early access or really refine? Is it really the onboarding components?

Speaker 11

Is it really being The integration with the Shopify admin and really how merchants become aware of it. What are some of, I guess, the key being Objectives that you really need to overcome during this kind of early access part of the process so that you're really well positioned as you go into

Speaker 7

And Shopify to fine tune, I would say, the model, to make sure that we give as much as benefit Globally can give, but at a very light touch mode. That's on one hand. And the other thing is that It allows us to fine tune, as you mentioned, also the onboarding process to see that we don't have leakage or things that are, I would say, although complicated for an SMB is onboarding steps towards being activated on Markets Pro. So we do them both. We fine tune what are the benefits and how do we give the most benefit as part of working with this subset.

Speaker 7

And on the other hand, we fine tuned the onboarding process in order to get to general availability without more, I would say, the business benefit we being And bring while making it as easy as possible to switch on.

Speaker 11

Makes sense. Thanks, Sameer.

Speaker 2

Thank

Operator

you. Our next question comes from the line of Brent Bracelin with Piper Sandler. Please proceed with your question.

Speaker 1

Good morning, guys. This is Hannah Rudolf on for Brent this morning. Thanks for taking my question. Just one for me. We've heard from other companies that there being There has been some softening from the luxury consumer.

Speaker 1

It sounds like you've seen better than expected demand there, but just wondering if you could talk about being Specifically, what you've seen in the luxury goods category, especially among your existing customers and existing brands.

Speaker 7

Basically, what we have seen in the luxury I would say quite stability. We don't see, to be honest, a reduction in Luxury. It stays for us. In terms of the same store sales, it looks quite stable. We have seen growth with winning additional luxury brands and gaining more markets from a current luxury client of us.

Speaker 7

However, We have seen more accelerated growth for mass market retailer this year, but I don't think that it actually Slow down. It's just for us, it didn't grow as fast as we have seen with mass markets retailer.

Operator

Being taken. Our next question comes from the line of Matt Coad with Autonomous Research. Please proceed with your question.

Speaker 12

Hey, guys. Good morning. Thanks for taking the question. So another one on Shopify Markets Pro for me. Shopify mentioned on their earnings call that 100,000 of their merchants currently use either Shopify Markets or Shopify Markets Pro today.

Speaker 12

Being So I was hoping you could just remind us of the additional value added services that Markets Pro provides to a merchant. And then bigger picture, if you could give some thoughts on, Say, how many of those 100,000 merchants you believe could ultimately benefit from markets per overtime? Thanks.

Speaker 7

Thank you for the question. It's Neil. Shopify Markets Pro actually adds On top of Shopify market, the ability to enjoy a full suite of services of merchant on record, Which actually takes all the heavy lifting of in country registrations for duty and tax filing and whatever is required from the merchant and move that into Shopify and globally, making it, I would say, virtually seamless for the merchant. So it's much more comprehensive than just having the suite of services taken, but actually The merchant needs to manage a lot of components by himself. In terms of the growth of Market being Pro, as Shopify mentioned and we mentioned earlier, it's still in the early days, it's still early access in the U.

Speaker 7

S. We do expect that post General availability in summertime. For U. S. Merchants, we will see a quick acceleration.

Speaker 7

Being recorded. And over time looking at 2024 2025, we do expect it to reach significant numbers.

Speaker 12

Super helpful. Thank you. And then just as a follow-up, just more broadly, Aside from Shopify, I was hoping you guys could touch on your biggest investment priorities here and then how we should think about the pace of head

Speaker 3

being. Yes, sure. This is being Mircea, we continue to invest, let's say, heavily into growth various growth opening more geographies in terms of outbound markets, so expanding our ability to support merchants from being recorded in the quarter. We are also investing in further developing our offerings around Multilocal and additional services as was mentioned earlier in the call. In addition, we are investing and will continue to invest in areas such as data, recorded both in general and as mentioned also AI driven in order to further enhance The value and the insights that we can bring to both our existing merchant base and enable them to further extract potential from their cross border business and of course to support the addition of new brands onto the platform.

Speaker 3

So definitely lots to do and lots to invest in all around the platform all contributing to our growth trajectory.

Speaker 12

Super helpful. Thanks guys.

Operator

Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Slakett for any final comments.

Speaker 3

Thank you everyone for joining us today and we very much look forward to seeing you again on our future earnings calls. Recorded. Before we adjourn, I would just like to take this opportunity to say once again a big thank you to all our wonderful team members throughout the world whose hard work and total dedication to the success of our merchants remains a true driving force behind our continued growth and success. So until next time, goodbye to you all and take care.

Operator

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

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Earnings Conference Call
Global-E Online Q1 2023
00:00 / 00:00