Global-E Online Ltd.

Greetings and welcome to the Global E second quarter 2022 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.

Thank you and good day. With me today from Global E are Nir Devi, co-founder and president of and Ofer Karan, Chief Financial Officer. NIR will begin with a brief review of the business results for the second quarter end of June 30, 2022. Ofer will then review the financial results for the second quarter end of June 30, 2022, followed by the company's outlook for the third quarter and full year of 2022. We will then open the call for questions. Certain statements we make today may constitute forward-looking statements and information within the meaning of Section 27A of the Securities Act of 1933, Sections 21E of the Securities Exchange Act of 1934, and the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 that relate to our current expectations and views of future events. These forward-looking statements are subject to risks, uncertainties, and assumptions, some of which are beyond our control. In addition, these forward-looking statements reflect our current views with respect to future events and are not a guarantee of future performance. Actual outcomes may differ materially from the information contained in the forward-looking statements as a result of a number of factors, including those set forth in the section titled Risk Factors in our prospectus filed with the SEC on September 13, 2021, and other documents with or furnished to the SEC. These statements reflect management's current expectations regarding future events and operating performance and speak only as of the date of this call. You should not put undue reliance on any forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events, and circumstances reflected in the forward-looking statements will be achieved or will occur. Except as required by applicable law, we undertake 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. Please refer to our press release dated August 16, 2022 for additional information. In addition, certain metrics will be discussed today are non-GAAP metrics. The presentation of this financial information is not intended to be considered in isolation or as a substitute for or superior to financial information prepared and presented in accordance with GAAP. We use these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. We believe that these measures provide useful information about operating results, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making. For more information on the non-GAAP financial measures, please see the reconciliation tables provided in our press release dated August 16, 2022. 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 August 16, 2022. I will now turn the call over to Nir, co-founder and president.

Thank you, Erika, and welcome everyone. Unfortunately, Amir could not join the call today due to the passing of his father, and I would like to start by sending deepest condolences to Amir and his family on behalf of the entire globally team. Back in mid-May, when we discussed our Q1 results and forward outlook, we mentioned the heightened uncertainty towards Q2, resulting from macro-induced factors and the war in Ukraine. However, today... I'm happy to report to you that the initial signs of improvement we saw in early May turned out to be indeed the precursors to further improvement in the second half of the quarter. The Russian, Ukrainian, and Belarusian markets, which in total represent less than 2% of our activity, remained closed for the time being given the unfortunate continuation of the war in the region. However, activity in other regions in Europe moderately picked up back from May onwards, despite macro concerns. Coupled with our team's continued strong execution, this resulted in our strongest quarter ever. Quarterly GMV amounted to $534 million, and quarterly revenues amounted to $87.3 million, both above the top of our outlook range. Furthermore, As also we'll elaborate on later in the call, while there remains somewhat heightened uncertainty in the conditions of the global macro environment, we are increasing our previously stated guidance for the remainder of the year to reflect the stronger performance in Q2 and the border-free acquisition. But first, going back to our Q2 results, we continue to experience fast growth during the second quarter of the year with GMV growing 64% year on year and revenues growing 52% year on year. Our adjusted gross profitability continued to strongly improve, coming in at 41.8%. Our adjusted gross profit amounted to $36.5 million, growing at 77% year on year again outpacing our strong top-line growth. This was a result of our growing efficiencies of scale average, the continued realization of COG synergies with flow, and a more favorable mix of revenues. In terms of our operational expenses, we continued to reinvest in growing the business and building the infrastructure required to seize the huge market opportunity that lies ahead of us. However, at the same time, and given the various macro headwinds we foresaw at the beginning of the year, we continue to exert strict cost control throughout the quarter to ensure our ability to continue delivering healthy and sustainable growth while remaining cash positive. In addition, we have been able to realize synergies from our recent acquisition of low commerce faster than expected, thereby lowering the drag on our bottom line. These factors, coupled with our faster than planned top line growth, resulted in a very strong adjusted EBITDA of 11.1 million, well above our outlook range, representing an adjusted EBITDA margin of 12.7%. Switching gears, I would like to update you on some of the many positive developments in our business over the past quarter. On the merchant activity front, demand for our services continues to remain strong as more and more brands around the world put direct-to-consumer and cross-border sales at the cross-chairs of their growth strategy. As such, during the quarter, we continued launching with many new brands and expanding our activity with existing ones. Q2 saw the launches of many new brands on our platform, including leading fashion brands Rag & Bone and Zadig & Volgeo, the Spanish cosmetics brand Freshly Cosmetics, the official tennis merchandise store of Wimbledon, and the luxury watches brand Zenith, which is part of the LVMH group. We also continue to add celebrity brands and other fast-growing digitally native brands, such as Justin Bieber's fashion brand, Drew House, the highly successful training apparel brand, Noble, as well as Skin, another brand by Kim Kardashian, augmenting our successful partnership with Kim's clothing brand, Skims. Furthermore, our entry into the APAC region continues to gain strong momentum. with the launches of Triangle Swimwear out of Hong Kong and Riderwear, our first live Australian merchant, as well as the signing of our first ever Japanese merchant. During Q2, we also expanded our activity with brands such as Adidas and Suunto, all of which added additional lanes to be operated by Globally. Last but not least, I am proud to announce that during Q2, we went live with one of the world's most well-known and respected consumer brands, Disney. As part of the push to expand the direct-to-consumer sales, Disney chose globally to power its cross-border sales across several markets in the APAC region, leveraging both our extensive capabilities and expertise, as well as our unique multi-local infrastructure. As before, we remain highly optimistic regarding our ability to continue growing this portfolio of brands, as our new booking forward-looking pipeline of brands is stronger than ever. On the strategic partnership front, we have continued to deepen our collaboration with our growing ecosystem of partners around the world, including, for example, our first and highly attended client event in Tokyo, Japan. held in partnership with our local partner, Transcosmos. Our partnership with Shopify continues to develop on track. On the direct solution side, dozens of merchants of different sizes are already live on our new native integration into the Shopify platform. And dozens more are in various stages of planning and integration. In addition, and as planned, during the quarter, we have already booked our first live order as part of the beta trials of the new white label merchant of record solution on Shopify built upon the flow commerce technology. Work on this innovative solution for SMBs continues full steam ahead towards a phased rollout later in the year. Corporate work, on the full post-merger integration of flow commerce into globally is now all but complete. And as I have already mentioned, we have been able to realize many of the planned synergies earlier than expected. Our corporate development team is now focused primarily on the integration of border-free, which we acquired out of Pitney Bowes. This was our second acquisition that was closed at the beginning of Q3. with a talented team of software engineers and other professionals from Borderfree, all highly passionate about cross-border, now becoming part of the respective teams at Globally around the globe. Besides the list of marquee US brands who work with Borderfree and will now have access to Globally advanced localization platform, we expect the merger of Borderfree into Globally to provide several key benefits and synergetic values. First, we expect it will enable us to expedite our planned expansion of both range and the quality of online marketing and demand generation services we provide to our merchants. Over the years, Borderfree has developed a set of unique capabilities and assets in the field of cross-border demand generation, which we expect we will be able to offer to the much broader audience merchants on our platform. Second, as part of this acquisition, we were also able to strike a strategic mutually beneficial partnership with Pitney Bowes, providing us with access to some of Pitney's advanced logistical solution, as well as providing Pitney's clients with access to globally best-in-class cross-border enablement solution. And finally, Some of the proprietary cross-border software components and architectural elements built by the highly skilled engineering team at Borderfree will be combined over the coming quarters into the globally code base, yielding a best-of-breed set of services and considerably shortening the time to market of various elements which were on our technical roadmap. As Ofer will elaborate on later, we do expect the border-free acquisition to somewhat weigh on our margin during the next few quarters, given the differences in financial profiles and efficiencies. But as with the flow acquisition, we should be able to utilize both our scale and our expertise in order to gradually realize relevant synergies and potentially improve the financial margins over the coming quarters. There are many more exciting developments happening across the business. While we continue to leverage our position as the world's leading cross-border enabler to capture more and more of the immense and growing market opportunities that lies ahead of us, and to help our fast-growing list of merchants to realize their international sales potential. But in the interest of time, I will pause here and just say in summary that we are very pleased with our strong results in the second quarter of 2022 and remain very much on track, both strategically and financially, to achieve our 2022 and long-term goals. And with that, I will hand it over to Ophel, our CFO, to go over the financial results in more detail and provide some additional color regarding our outlook for Q3 and the full year of 2022.