Global-E Online Ltd.

Welcome to the GlobalE fourth quarter and full year 2024 earnings announcement conference call. This call is being simultaneously webcast on the company's website in the investor relations section under news and events. For opening remarks and introductions, 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 GlobalE are Amir Shloket, co-founder and chief executive officer of 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 full year of 2024. 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. 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 statement as a result of a number of factors, including those set forth in the risk section titled, Risk Factors and Our Perspectives, filed with the SEC on September 13, 2021, and other documents filed 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 make no obligation to update or revise publicly any forward-looking statement, 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 19, 2025 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 operating decision-making and as a means to evaluate period-to-period comparison. 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 19, 2025. 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.

Thank you, Erica, and welcome everyone to our fourth quarter and four-year 2024 Earnings School. 2024 was yet another record-breaking year for us here at Globally, as we continued to diligently execute on our strategy and further solidify Globally's leadership position in the global e-commerce space. 2024 was brought to a great close by a fourth quarter, which was our strongest quarter ever, and came in well above our guidance on all metrics. We finished Q4 with a record $1.71 billion in GMV, up 44% year-on-year. and with record revenues of $263 million, up 42% year-on-year, supported by the strong performance of our merchants over the holiday sales period, including the Black Friday and Cyber Monday weekend. The adjusted gross profit margin for Q4 was nearly 46%, up almost 330 basis points from the same quarter of last year. Gross margin expansion, coupled with our continued focus on operational excellence and execution, enabled us to reach a key milestone in our journey in Q4. For the first time ever, our quarterly adjusted EBITDA margin crossed the 20% mark, which was the long-term profitability target we set for ourselves at the IPO less than four years ago, landing at 21.7% or $57.1 million, reflecting more than 62% growth compared to the same quarter last year. Such increased profitability coupled with the usual seasonality effect, yields an accelerated cash generation, with the business generating nearly $130 million in operational cash flows in Q4. Not only that, but in Q4, we reached gap profitability for the first time since the IPO, another incredible milestone for us. We expect 2025 as a full year to exhibit, for the first time in our history as a public company, a strong gap profitability as well, on top of the continuation of a multi-year strong free cash flow generation. As we report to you today the results for 2024, we are quickly approaching our fourth anniversary as a public company. 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. GMV for the full year of 2024 came in at close to $4.86 billion, and revenues for the full year came in at almost $753 million. This is more than six times the GMB and five and a half times the revenues we had in 2020, the last full year prior to our IPO, just four years ago. Our annual adjusted gross profit reached nearly $350 million in 2024, more than eight times what we had in 2020, as our top-line growth was coupled with a robust expansion of our adjusted gross profit margin from just 32% at IPO to 46.5% in 2024, an increase of 14.5 percentage points, or more than 45% during this four-year period. Moreover, adjusted EBITDA for 2024 was roughly $141 million, growing even faster at almost 11 times compared to 2020. 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. 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. As such, We believe that our consistent growth trajectory, together with our strong cash generation ability, will provide the necessary fuel to support our growth plans in the future as well, both organic and inorganic. Looking back at the last four years, I feel enormous pride in what our global team of remarkably dedicated globally professionals, now more than a thousand people strong around the globe, has managed to accomplish. achieving and surpassing the key financial and strategic goals we had set for ourselves. We managed to beat our start of the year annual GMV guidance in every single year since going public, despite occasional intra-year macro headwinds and challenges we had to push through. Also setting a new record in GMV bookings each year, with 2024 being no exception to that. But such growth did not come at the expense of profitability. As I already noted, Our relentless focus on efficiencies and cost control enabled us to beat the aspirational long-term profitability target we set for ourselves at the time of the IPO. We crossed the 40% adjusted gross profit margin mark already several quarters ago, and now we crossed the 20% adjusted EBITDA margin milestone as well. 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. 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 e-commerce, and sharpened our data capabilities and insights, all aimed at further growing our merchant business. In parallel, we significantly expanded our total addressable market, or TAM, in recent years, by extending our global geographical footprint from just nine outbound markets operated in 2020 to the 39 outbound markets we currently support, 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. We also launched our SMB and demand generation offerings based on the flow and border free acquisitions, respectively. 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 such brands. As an example, the latest consumer electronics brand that recently went live on Globally is 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. We are grateful for the opportunity to support the amazing team at Logitech in their ever-growing focus on direct-to-consumer sales worldwide. More broadly, as we prepare to enter our fifth year as a public company, we are in high gear with our engines firing on all cylinders as our global team pushes forward along all our strategic pillars. On the new GMV front, Looking back at Q4 of 2024, we saw many new brands joining the platform and going live across all geographies. In the U.S., the successful shaper brand Spanx went live, as did Thursday Boots, the upcoming jewelry brand Kesar, and the web store of famous luxury fashion designer Tom Ford. Europe saw many new brands go live as well, including Spanish brand Toost, Italian fashion brand Slower, UK footwear brand Phoebe Philo, German brand Ivy Oak, Swiss running gear brand Compressport, famous Austrian lingerie brand Triumph, French brands Zappa and Molly, and the successful Finnish pet brand Huuta. So now all European dogs can enjoy their unique pet gear and clothing. The APAC region saw its fair share of go-lives as well. In Japan, We went live with Komeu, one of Japan's largest retailers of secondhand goods, with Kyoto-based watch brand Kuo, with novelty brand Taito, and with the Japanese tailored shirt brand Kamakura Shirt. We also went live with the renowned Korean cosmetics brand Depology, and with the Australian fashion brands Zoe Kratzmann 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. During Q4, we added Romania and Croatia to the list of markets we operate for Adidas, went live with a new outlet site for our long-standing merchant, John Smedley, and added Sterlson, the third brand to go live with us, out of the Swiss holy fashion group. As we strive to fulfill our mission of powering better global e-commerce, we continue to invest in adding new services and new functionality to support the diverse needs and aspirations of merchants of all sizes and across all geographies. During Q4, our product and engineering teams concentrated on deploying several key new capabilities. Those included, among other things, a new revamped returns portal and returns process improvement, including new consolidated return options in Keylane, support for B2B imports for relevant merchants, known as 3B2C, an enhanced live view as part of our merchant portal, and several enhancements for our borderfree.com demand generation platform. As we remain the leader of global e-commerce as a service, we believe we are uniquely positioned to continue harnessing our unparalleled and fast-growing data assets, our accumulated know-how, and our unique expertise, building and perfecting more and more services and capabilities for the benefit of new and existing merchants. our robust product development pipeline, as well as our continued investment in R&D, are aimed at achieving just that. That is true also with regards to Shopify managed markets, where we continue to work hand-in-hand with our partners at Shopify and invest in 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. Another key area we continue to invest in is technological innovation, with emphasis on harnessing the power of artificial intelligence to improve both customer and merchant experience, as well as drive productivity and efficiency within our internal operations. One such innovation, which we have already discussed in the past, is our successful customer services chatbot. Utilizing a specially trained version of the ChatGPT large language model, the chatbot is already handling a large percentage of customer tickets. almost half of which are solved by the bot in real time to the full satisfaction of the customer. And we are constantly broadening the scope of issues the bot can handle. For example, now when customers approach customer services wanting to return a product, instead of being redirected to a returns portal, they can finish the entire process right there, vis-a-vis the bot, and get a return label, all the relevant documentation, and clear instructions on how to proceed. Another example of a proprietary tool we are starting to experiment with is automatic AI-assisted localization of merchant site text and visual content aimed at transforming the way merchants manage multilingual content on their site. Once operational, through this service, we plan to offer merchants instant, high-quality translation tailored to the specific context of their brand with minimal effort while maintaining the merchant's control over the final result to a resource management system, enabling edits and updates by human translators when needed. We are also continuing to develop and deploy internal automated systems aimed at increasing operational efficiency. A recent example is an automated system developed by our innovation team designed to streamline the handling of payment disputes and potentially lower unforced chargebacks. Other examples include AI-powered tools It could enable internal users and software developers to interact more easily with our data, our knowledge bases, 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. 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. We are even more excited about the many growth opportunities that lie ahead of us in 2025 and beyond, across all our strategic pillars. From a financial perspective, besides the continuation of our solid growth trajectory, 2025, our fifth year as a public company, is set to bring with it two significant milestones. First, as mentioned already, 2025 is expected to be globally's first GAAP-profitable year as a public company. We exhibited positive and improving adjusted EBITDA and free cash flow figures every single year since we went public. But 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. The second important milestone for us is that in the back half of 2025, we are expected to cross, for the first time ever, an annual run rate of $1 billion in revenues. and likely finish 2025 just shy of the $1 billion mark for the full year. The journey from zero to a billion dollars in revenues over the past 12 years has been an amazing one, and we're only getting started. And with that, I will hand it over to Ofer to dive deeper into our quarterly and annual financial results, as well as our outlook for Q1 and for the full year of 2025.