Global-e Online Q2 2024 Earnings Analysis
Dive into $GLBE Global-e’s Q2 2024 earnings with review of financial performance, key metrics, operating expenses, dilution, customer growth, future outlook
Financial Results:
↗️$168.0M rev (+26.0% YoY, +24.0% LQ) beat est by 1.3%
↗️GM* (47.8%, +4.5 PPs YoY)
↗️adj EBITDA Margin (18.7%, +2.9 PPs YoY)
↗️Net Margin (-13.4%, +13.3 PPs YoY)
↗️EPS -$0.13 beat est by 13.3%🟢
*non-GAAP
Revenue by Category
↗️Service fees $82.2M rev (+38.1% YoY, 48.9% of Rev)🟢
➡️Fulfillment services $85.8M rev (+16.3% YoY, 51.1% of Rev)🟡
Key Metrics
↗️GMV $1,082.04B (+31.2% YoY)
Revenue by region
↗️United States $87.6M rev (+29.8% YoY, 52.2% of Rev)🟢
➡️United Kingdom $44.4M rev (+11.0% YoY, 26.4% of Rev)🟡
↗️European Union $26.8M rev (+27.0% YoY, 15.9% of Rev)🟢
↘️Israel $0.3M rev (-41.1% YoY, 0.2% of Rev)🟡
↗️Other $8.9M rev (+113.1% YoY, 5.3% of Rev)
Operating expenses
↘️S&M*/Revenue 34.9% (-3.9 PPs YoY)
↘️R&D*/Revenue 12.6% (-0.9 PPs YoY)
↘️G&A*/Revenue 5.6% (-2.1 PPs YoY)
Dilution
↗️SBC/rev 7%, +0.7 PPs QoQ
↘️Share count up 1.7% YoY, -0.5 PPs QoQ
Guidance
↘️Q3'24 $165.7 - $171.7M guide (+20.0% YoY) missed est by -5.2%🔴
➡️$710.0 - $750.0M FY guide (+28.1% YoY) lowered by -3.0% in line with est🔴
Key points from Global-e’s Second Quarter 2024 Earnings Call:
Financial Performance:
Global East reported strong financial results for Q2 2024, with significant growth in Gross Merchandise Value (GMV) and revenue. GMV reached $1.08 billion, marking a 31% year-on-year growth, and revenue grew by 26% to $168 million.
Market Expansion:
Global East is expanding its presence in the Asia-Pacific region, establishing a new office in Korea and growing its activities in Japan and Australia. The company launched with several brands in these regions, such as Gentle Monster in Korea and various Japanese brands, indicating strong growth potential and market acceptance.
The company completed an integration onto the Singapore-based e-commerce platform, Shopline, expanding its operational reach and market capabilities.
Merchant Relationships:
Significant new launches include major brands such as Victoria's Secret and expansions with existing merchant relationships in North America, the UK, and other regions.
The ongoing strategic partnership with Shopify and the near completion of major migration initiatives are expected to enhance merchant experiences and platform capabilities. Over 75% of Shopify-based merchants are now using Global East's checkout extensibility.
Macro Environment:
Recent trends indicate a general softness in consumer sentiment across multiple markets, which the company is monitoring closely. This softness affects same-store sales growth and is considered in the revised guidance for the second half of the year.
Challenges and Guidance Cut:
The unexpected bankruptcy of Ted Baker, a major UK and Europe franchisee, led to a significant cut in revenue projections for the second half of the year. Ted Baker accounted for over 3% of Global East's revenue and offered high take rates due to additional demand generation services.
There has been a slight softness in consumer sentiment detected in late July and early August, influencing the company's projections and leading to a cautious lowering of the full-year revenue guidance.
High Average Order Values (AOV) increases are generally positive, they have a mixed impact by reducing fulfillment revenue, as higher order values often mean fewer shipments and thus lower fulfillment take rates.
Future Outlook:
The company continues to invest in R&D and sales and marketing while maintaining strong control over operational expenses. Despite a cautious reduction in top-line guidance due to specific challenges like the Ted Baker bankruptcy, the company expects higher gross margins due to operational efficiencies and a favorable mix of services.
Management comments on the earnings call.
Partnerships
Nir Debbi, Co-Founder and President: "Given the large market potential on the Shopify platform and the adoption of this innovative managed market solution continues to steadily rise, we continue to believe in our ability in close partnership with Shopify to capture a meaningful part of this massive market opportunity over the coming years."
Merchants
Amir Schlachet, Co-Founder and CEO: "This strong expected growth is especially noteworthy as it comes despite some mixed macro signs in the form of slight softness in consumer sentiment we encountered during late July early August as well as the unfortunate and unexpected churn of one of our largest merchants, Ted Baker's U.K. and Europe franchisee, which went bankrupt and took its online store off the air earlier this month."
Nir Debbi, Co-Founder and President: "We also added several merchants to our growing list of celebrity brands with SJP by Sarah Jessica Parker and House Labs by Lady Gaga being the latest to go live on the Global East platform."
Market Expansion
Nir Debbi, Co-Founder and President: "Our growing presence in APAC received a big boost during the last quarter, with many Japanese brands going live, including the Japanese pop culture merch stores Geekjack and Nagano Market, curated fashion site Fascinate, Saiko Epson's watch brand Orientstar and Matcha Tea Provider Matcha Direct."
Macro Environment
Amir Schlachet, Co-Founder and CEO: "Looking ahead at the rest of the year and beyond, we remain confident in the reacceleration of the business. This strong expected growth is especially noteworthy as it comes despite some mixed macro signs in the form of slight softness in consumer sentiment we encountered during late July early August."
Challenges
Ofer Koren, CFO: "As recently experienced an out of the ordinary churn as the Ted Baker's UK and Europe franchisees, which we serve, went bankrupt and went off the air earlier in August. Ted Baker represented over 3% of our revenue and the loss of its business will impact our H2 results."
Future Outlook
Amir Schlachet, Co-Founder and CEO: "Given our clear market leadership position and with the immense market opportunity that continues to lie ahead of us, we are confident in our ability to continue our strong momentum of growth in both the volume and the variety of brands using the Globally platform in the coming years."
Ofer Koren, CFO: "Despite the negative impact expected on H2 revenues we've mentioned, we continue to believe growth will accelerate going into Q4 and that the pace of growth will continue into 2025, driven by large merchant launches, which are on track, anticipated elevated volume contribution from managed markets on Shopify, which is growing as expected and a lower impact from Borderfree on a year on year comparison."