Global-E Online Ltd.

Greetings and welcome to the Global E fourth quarter and year-end 2022 earnings conference call. This call is being simultaneously webcast on the company's website in the Investors section under News and Events. For opening remarks and introduction, I will now turn the call over to Erica Mannion at Sapphire Investor Relations. Please go ahead.

Thank you and good morning. With me today from Global E is are Amir Shloket, co-founder and chief executive officer, Ofer Koren, chief financial officer, and Nir Devi, co-founder and president. Amir will begin with a review of the business results for the fourth quarter and year-ended December 31, 2022. Ofer will then review the financial results for the fourth quarter and year-ended December 31, 2022, followed by the company's outlook for the first quarter and full year of 2023. 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, Section 21E of the Securities Exchange Act of 1934, and the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 that relate to our current expectations and views of future events. These forward-looking statements are subject to 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 filed 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 our forward-looking statements will be achieved or will occur. Except as required by applicable law, we make no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise, after the date on which these statements are made or to reflect the occurrence of unanticipated events. Please refer to our press release dated February 22, 2023 for additional information. 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. 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 operating decision-making. For more information on the non-GAAP financial measures please see the reconciliation tables provided in our press release dated February 22, 2023. 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 22, 2023. I will now turn the call over to Amir, co-founder and CEO.

Thank you, Erica, and welcome, everyone. Today's earnings call is an extra special one for us. Yesterday, on February 21st, we celebrated exactly 10 years since Nir, Shachar, and myself started Globally. Three entrepreneurs armed with nothing but a deck of 25 PowerPoint slides and a very big dream about transforming the world of cross-border e-commerce. Fast forward a decade, and we are doing exactly what we set out to do, leading the path towards making e-commerce truly global by making both shoppers and merchants border agnostic. Moving forward to our earnings, we are extremely proud to report that the final quarter of 2022, the result of which we are reporting to you today, was our strongest quarter ever and a fantastic finish to the fiscal year, bringing in a record $839 million in GMV, up 66% year-on-year, and generating revenues of close to $140 million, up 69% year-on-year. Both GMV and revenues came in close to the top of the forecasted range, representing our continued strong growth momentum and impeccable execution throughout the business, despite the prevailing elevated levels of macro headwinds and economic uncertainty in the market. The adjusted gross profit margin for Q4 remained stable at 41.3%, up 180 basis points from the 39.5% in the same quarter of last year. On the operational side, we continue to exert strict cost control, ensuring our fast growth is also a sustainable one. Adjusted sales and marketing expenses for the quarter totaled only $8 million, or 5.7% of revenues, and adjusted general and administrative expenses were only $8.9 million, or 6.4% of revenues. This, coupled with our continued efforts to realize operational cost synergies with flow and border free, resulted in an adjusted EBITDA margin of 15.6% or $21.8 million in Q4, well over the top of the outlook range, and up from 14.3% or $11.8 million in the same quarter of last year. As will be evident later in the call, when the offer presents our guidance for Q1 and for 2023 as a whole, we remain committed to continuing this path of strong yet profitable growth into the future. Looking at the full year of 2022, GMV was $2.45 billion, an increase of 69% year-on-year, and revenue for the full year came in at $409 million, an increase of 67% year-on-year. Annual adjusted gross profit increased even faster, growing by 84% from 2021 and reaching $167.9 million. This represents an adjusted gross profit margin of 41.1% for the full year, a steep increase of 380 basis points from 2021. Finally, adjusted EBITDA for the full year was $48.7 million compared to $32.4 million last year. significantly over the top range of our outlook and representative of our ability to generate profitable growth with strong free cash flows. Now, before I hand it over to Ofer to discuss our financial results in more detail, I would like to spend a few minutes to review some of the noteworthy developments across our business that took place during Q4 of last year. First, we continued our strong momentum in adding new brands across the various markets we are active in. as well as in the new territories we have only recently entered, as direct-to-consumer continues to gain share as a strategic priority for consumer brands worldwide. Examples of such merchant launches are the leading UK-based luxury fashion brand Bull Saints, French brand Bash, the celebrity-led footwear brand of the singer Katy Perry, and the fast-growing US apparel brands Dollskill and Cuts Clothing, among others. We went live with our first-ever Greek merchant, called Ancient Greek Sandals, and continued our expansion in the APAC region with Pure Hair and H2 Hub, going live in Australia and Singapore, respectively. We also went live with three new LVMH maisons during the quarter, Bulgari, Chaumet, and Moyna, with several additional maisons already signed up during Q4 and in active integration. Last but not least, I'm happy to report that we recently went live with Disney EU after its launch was unfortunately delayed from Q4, representing a major expansion of our relationship with Disney. Our bookings pipeline continues to be extremely strong, driven by a combination of our outbound sales teams, growing inbound interest, and close collaboration with our ever-growing ecosystem of regional and global partners. A notable example is our long-term global strategic partnership agreement with DHL, which was recently renewed for another period of three years, a testament to the great synergetic value it creates for both companies. Another is our second joint client summit in Japan, in partnership with Transcosmos, which Nir attended just last week in Tokyo. as well as an initial rollout of our newly formed logistics partnership with Pitney Bowes, which was forged as part of the border-free acquisition. Another one of our key strategic partnerships is the one with Shopify, which also remains well on track. On the direct integration side, in parallel to work on completing the build for the native integration and adding support for Shopify's new Checkout One, we continue adding many new signed and live merchants, which turned to us as the exclusive end-to-end merchant on record cross-border e-commerce provider on Shopify. On the white label solution front, our joint work with Shopify continues, gearing up towards general availability of the Shopify Markets Pro solution in the first market, the US, which is planned for Q2 this year. Additional geographies are already on our joint roadmap. which down the line will allow Shopify-based SMB merchants based outside of the U.S. to also benefit from seamless global sales. In the meantime, we continue to gain highly valuable insights from the growing adoption among those U.S.-based merchants which were granted early access to MarketsPro, with close to 75 live SMB merchants in Q4, and with promising results in terms of the international conversion uplift. On our other major corporate development effort, that of enhancing our demand generation capabilities and offering, we continue to make good progress as well. With the border-free post-merger integration in advanced stages, our efforts are mainly concentrated now on making the necessary adaptations to border-free.com and the other parts of our technological platform in order to enable the extension of this offering to a broader list of merchants. In parallel, we are continuing both commercial and technological work on creating several additional demand generation capabilities aimed at offering our merchants a complete and well-rounded suite of unique cross-border demand generation services. As is evident from the great advancements we have made during the past year on all our business fronts, we are extremely pleased with our results for 2022. which we managed to obtain in the face of several distinct macroeconomic headwinds. We managed to do so thanks to the trust and loyalty of more than a thousand merchants, which are already live on our platform, combined with the relentless efforts of our highly capable and super dedicated team of globally professionals, which is already more than 750 people strong, spread across 17 main locations around the globe. I would like to take this opportunity and send our sincere and deep gratitude to both our clients and our team members, and share with you how excited we are as we look towards the many business opportunities that await us in 2023 and beyond, supporting our long-term vision of becoming the number one go-to place for everything that is global e-commerce, for any merchant, anywhere. We continue to see a large and mostly greenfield opportunity ahead of us, both in the territories we are already established in and in new markets which we intend to expand to over the course of the next few quarters, coupled with our growing suite of value-added services. As Ofo will elaborate on in just a few minutes' time, our guidance for 2023 represents this continued strong growth momentum, with roughly 40% annual growth expected in both GMV and revenues, well above the growth rates of the e-commerce market itself. So circling back to what I opened with, this is now one exciting decade down and many more exciting decades to come. We really are just getting started. And with that, I will hand it over to Ofer, our CFO, to dive deeper into our quarterly financial results and provide some additional color regarding our outlook for Q1 and for the full year of 2023.