Global-E Online Ltd.

Greetings and welcome to the Global E second quarter 2021 earnings call. This call is being simultaneously webcast on the company's website in the investor 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.

Thank you and good afternoon. With me today from Global E are Amir Shluket, co-founder and chief executive officer of Ofer Karin, Chief Financial Officer, and Amir Debbie, Co-Founder and President. Amir will begin with a brief review of the business results for the second quarter ended June 30, 2021, and an overview of GlobalE. Ofer will then review the financial results for the second quarter, followed by the company's outlook for the third quarter and full year of 2021. We will then open the call for questions. Please note that this call will include forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from management's current expectations. We encourage you to review the Safe Harbor statements contained in the press release from today for more complete description. Any forward-looking statements that management will make on this call are based on assumptions as of today, and the company undertakes no obligation to update these statements as a result of new information or future events. All material contained in the webcast is the sole property and copyright of GlobalE with all rights reserved. Please note, this presentation describes certain non-GAAP measures, including adjusted EBITDA and gross merchandise value, which are not measures prepared in accordance with U.S. GAAP. The non-GAAP measures are presented in this presentation as we believe that they provide investors with a means of evaluating and understanding how the company's management evaluates the company's operating performance. These non-GAAP measures should not be considered in isolation from, as substitutes for, or superior to financial measures prepared in accordance with U.S. GAAP. A reconciliation of GAAP to non-GAAP measures is included in our earnings press release from today. Listeners who do not have a copy of the quarter-ended June 30, 2021 press release may obtain a copy by visiting the investor relations section of the company's website. Now, I would like to turn the call over to Amir.

Thank you, Erica, and welcome, everyone. Thank you all for joining us on our first earnings call as a public company. We are proud and excited to have listed publicly mid-May on NASDAQ under the ticker GLBE. As such, I would like to start by thanking our incredible and growing team of employees, already more than 400 around the globe, with dozens who have joined us just this quarter. This team's hard work and unequivocal dedication has brought us to where we are and will drive our continued growth and success going forward. I would also like to thank our growing community of investors, both those who supported us in the past as a private company and those who have joined us more recently at and post the IPO. We are honored by the trust you have put in us and are excited to deliver on our mission to make global e-commerce border-agnostic. And last, but certainly not least, I would like to express our deep gratitude to our loyal merchant partners, already more than 500 of them across North America, the UK, Europe, and Asia, who have put their trust in us to handle their cross-border online sales and deliver a seamless, localized experience to their shoppers, regardless of where they are around the globe. Turning to the results, I am pleased to report that Q2 was another record quarter for us. GMV grew to $326 million, representing 95% growth year-on-year. Revenues amounted to $57 million, or 92% year-on-year growth. Our gross profit grew even faster, by 113% year-on-year to $20.6 million, driven by gross profitability margin expansion to 36% in Q2, up from 32.4% in the same quarter last year, thanks to our growing economies of scale and increased efficiencies. We continue to operate on the basis of a very efficient operating model, yielding an adjusted EBITDA for the quarter of $7.6 million, representing 145% growth year on year. During today's call, We will provide details on our Q2 results, as well as Q3 and 2021 full-year guidance. But given that this is our first Earnings School post the IPO, we will begin by spending a bit more time than we will in the future Earnings Schools covering the business, our strategy, and the opportunities ahead for the benefit of many of you who may be new to the Globally story. Here at Globally, we have purpose-built a global end-to-end e-commerce platform and service that enables merchants to transact with shoppers from anywhere in the world by localizing both merchants' and shoppers' experiences and seamlessly overcoming the many barriers of cross-border trade, making global e-commerce border-agnostic. We operate within a huge market opportunity presented by cross-border business-to-consumer, or B2C, e-commerce. For the past decade, the retail world has experienced an accelerated shift towards e-commerce, with growth in online sales outpacing that of traditional retail. This shift has seen great acceleration during the recent COVID-19 pandemic, but the trend has been strong well before the pandemic hit. Concurrently, the rise in social media, which is global by nature, has dramatically changed the way consumers discover brands worldwide. Together, these two strong secular trends result in an ever-increasing growth in the share of direct-to-consumer, or D2C sales, as merchants put more and more strategic focus on this channel. D2C enables merchants to strengthen their relationships with shoppers worldwide, enhance their brand, attain valuable data, and enjoy higher margins. As a result of a combination of these and other market factors, cross-border e-commerce transactions are expected to continue to grow, outpacing the growth in domestic e-commerce by a factor of two. Forrester expects that by 2023, the cross-border e-commerce market will reach $736 billion. This creates a huge opportunity for brands to sell globally, as they typically see around 30% of e-commerce traffic being international. But this is where the music stops for many of the merchants. When you look at their actual sales figures, Typically, no more than 5 to 10% come from international shoppers. In other words, many merchants are not able to convert this enormous international traffic into actual sales, leaving a lot of money on the floor. This is because of the many structural barriers that stand between them and their international shoppers, who rightfully expect a seamless and localized shopping experience. But localizing the experience for even a single market is painful and difficult. A merchant needs to support the local language, present attractive prices in local currency, support the local payment methods that are prevalent in that market, offer a compelling shipping and delivery experience, guarantee a full landed cost, including all relevant import duties and taxes, and more. Now, multiply these challenges by 50 or 100 markets, it becomes nearly impossible to overcome. There is no one-size-fits-all solution. as shoppers from each market have their own different expectations with regards to the localized shopping experience. Hence, merchants of all sizes find a do-it-yourself cross-border strategy to be complex, expensive, time-intensive, inflexible, and highly difficult to scale and maintain. This is where Globally comes in. Our software seamlessly connects to any e-commerce platform the merchant is using. via plugins and client-side scripts we've built and maintained. Once integrated onto the merchant site, we add a deep and rich level of localization to the e-commerce store experience. For the shoppers, we localize all aspects of the shopping journey right from the moment they enter the website. We support localized marketing messaging in over 25 languages. We use our proprietary built localized pricing engine to present prices in more than 100 currencies and support different pricing structures based on the shopper's location, local market convention, and the merchant's pricing strategy. We enable shoppers to check out in their native language and to choose their favorite means of payment out of over 150 payment methods we already support. We pre-calculate import duties and taxes and can either embed them in the product price or collect them at checkout, thereby simplifying the customs clearance process and allowing for a fully guaranteed landed cost for both the shopper and the merchant. We hone an extensive network of more than 20 shipping carriers, including market-specific methods such as cash-on-delivery or delivery-to-drop-off points, offering multiple shipping modes at attractive rates. And we even provide localized after-sales support and returns management via multilingual shopper services and multiple returns options, including prepaid, and local returns in relevant markets. For the merchants, we make selling internationally as seamless and effective as selling domestically. The greatly improved localized shopper experience increases sales conversion, enabling merchants to better capitalize on their valuable international shopper traffic by generating a considerable uplift in international traffic conversion, often exceeding 60% after they begin to use our platforms. We provide our merchants with the flexibility to rapidly and efficiently expand internationally and grow to new markets where and when they want to, with little to no upfront investment, using their existing storefront and maintaining their own brand experience and direct relationship with their shoppers. Furthermore, we enable our merchants to offload complexities and risks, which are otherwise presented by transacting cross-borders. making the selling and fulfillment process for international orders as simple as that of domestic sales. We provide all of these capabilities by means of our comprehensive end-to-end cloud-delivered technology platform, built on top of a highly scalable multi-layered tech stack, integrated and coupled with a diverse ecosystem of technology and service partners via dozens of open APIs. From leading e-commerce platforms such as Shopify, Salesforce, Magento, BigCommerce, and others, through to payment providers like Adian, WorldPay, Klarna, and others, through to shipping carriers such as DHL, broad management providers such as Porter, and many other partners providing value-added services such as translations, online marketing, and more. With several of these, including Facebook, Shopify, and DHL, we have already struck broader strategic partnerships including mutual client referrals, given the significant value we generate for all players in the ecosystem. But this is only half of the story, which is made whole by our unique data engine, which generates specific, actionable, and data-driven recommendations for our merchants based on the deep, broad, and rapidly growing data assets we have. We refer to these recommendations as smart insights. Our smart insights are country, price point, and vertical specific, and focus on shopper behavior. The value of our massive and fast-growing data set is due to its depth and breadth. Based on this data, and coupled with our operational experience accumulated over the years, we enjoy both economies of scale and economies of skill, which enable us to optimize merchants' cross-border sales on a market-by-market basis. By leveraging our smart insights, merchants can provide optimized experiences for shoppers, resulting in better conversion and more revenue. We win thanks to several things we believe we do best. First, we offer merchants of all sizes, from small emerging brands to the world's largest retailers, the most potent combination of an easy-to-integrate proprietary technology platform and a full end-to-end solution. Second, we are diversified by vertical, merchant sector, and destination markets. Our wide-reaching scale enables us to provide a solution to merchants in any region in the world, as we are the only cross-border enabler with a truly global footprint. Third, our highly differentiated and fast-growing data assets serve as a basis for a powerful flywheel effect. The optics we generate for our merchants drives more sales, which in turn creates more data and even smarter insights, which are fed back into our systems in order to generate even more outlets, attracting even more new merchants to the platform, and so on. Fourth, on top of our highly efficient sales and marketing teams, we enjoy our growing ecosystem of partners and merchants that act as a meaningful source of referrals and lead generation. Fifth, the mission-critical nature of our platform, Coupled with the results and value added, we are able to generate for our merchant partners yield very high customer stickiness, providing a sound base for continued strong GMB expansion. And finally, as a founder-led business, we've built and maintained a very customer-centric culture throughout the ranks of the organization. We put our merchants first in everything we do. Looking forward, and in order to continue capturing the immense market opportunities that lie ahead, we are pursuing multiple key growth levers in parallel. First, we continue to add more merchants onto the platform across our main geographies, namely North America, UK, and continental Europe, with a very strong pipeline to further support our growth. This includes both new merchants and continued land and expand efforts, winning additional operated lanes for existing merchants, as well as onboarding additional merchants within existing brand groups. As an example, during Q2, we launched Tager, Sephora, and Rimowa, which are all part of the LVMH group, of which we have already launched multiple brands in the past. Furthermore, in the months following their launch, Tager added many more destination markets to our platform. Another example is the value lingerie brand La Perla, which went live with us at the beginning of the year, and during Q2, added many more destination markets, and also went live with La Perla Beauty, their sister brand, which specializes in beauty and personal care products. Second, we are making progress on our expansion plans to new geographies, with emphasis on Asia-Pacific. During Q2, we launched our first APAC-based merchant, Theory Hong Kong, which is part of the Fast Retaining Group. Last quarter, we also opened a new office in Tokyo. Third, we continue to build capabilities and broaden our range of value-added services, focusing on highly localized capabilities that further enhance our level of support for large merchants and new verticals, such as consumer electronics. We believe some of these new capabilities could potentially be rolled out faster by buying versus building, and hence, we are gearing up our managerial infrastructure for supporting such future M&A opportunities. As such, Nir, one of my co-founders who is also with us today on this call, has recently transitioned to the role of president, allowing him to devote much more of his attention to corporate and business development efforts, which will be spearheaded by a new corporate development department we are assembling. Nir still retains ultimate responsibility for global sales and customer success which are now overseen by Ron Friedman, who recently joined us as our new Chief Revenue Officer. Last but not least, we continue to focus on expanding our work with the various partners that take part of our large and growing ecosystem. With regards to that, it is worth mentioning that we are on track with the rollout of our newly established exclusive strategic partnership with Shopify. We continue signing up and going live with Shopify-based merchants on an ongoing basis. In parallel, the respective development and product teams from both companies are working together on a new and deeper integration of Globally's offering into the Shopify platform and checkout. This new integration is expected to be finalized later this year. Once operational, this new integration should allow an even more effortless go-live process for new merchants and even more seamless referrals of Shopify-based merchants from various channel partners. In conclusion, We are thrilled to have joined the public market and strongly believe in the tremendous growth opportunity that this new phase of Globally's life presents us with. We will continue to serve our merchants and their shoppers wherever they are around the globe and generate value for them as well as for our large and growing ecosystem of partners, all the while pursuing our ultimate mission to make global e-commerce truly order agnostic. And with that, I will hand it over to Ofer, our CFO, to go over our financial results in more depth.