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No. of Recommendations: 42
Global-E Online (GLBE) is a platform designed to enable and accelerate global, direct-to-consumer (“D2C”) cross-border e-commerce. Rubenslash provided a nice write up last month when the company came public - Since then, the stock has done pretty much nothing but go up and has nearly doubled in the month since its IPO. Here is a bit more info on this business along with their Q1 results which were announced earlier this month.

Global-e’s mission is to make global e-commerce “border-agnostic”. The company is based out of Israel and was founded by three people in 2013. I believe all are still with the company today serving as the CEO, COO and Chief Marketing Officer.

You might be thinking, what do they do? Well essentially, they help businesses to sell their merchandise online to different international markets seamlessly by catering to the local language, currency, payment methods, shipping and returns, etc. Here is an example that was provided in the MF Industry Focus: Tech podcast (

"If you want to see this in action, I don't know 100% what's going on under the hood with the tech. But I imagine what you're seeing here if you Google Etam, gives you a decent sense of what things look like for localized content. So as a U.S. user, I searched Etam. They are underwear, swimwear, and fashion brand. What comes up first for me is a URL, That is an English language version of their website. Now, their core website, is the second results, and it's entirely in french. I did take middle-school and early high school french, but I am not qualified to buy anything on a website. It's too specific, the vocabulary. You can see just in searching this, the value that it brings to people for you to be able to immediately understand, OK, these are the categories. You hear about a brand from someone else, and you can go to the site in a way that makes sense to you. I think it's helpful to illustrate that. But I think it is illustrative of what they are able to offer to the user experience."

All in all, I believe they offer a pretty innovative solution. I can only imagine the problems that arise when trying to set up an e-commerce site to sell internationally are quite common. Global-e makes this process easy. The question is, how much e-commerce business is going to be done on a global scale? I don't know the answer to this but my guess is the market is only going to grow as the world continues to go global thanks to the rise of the internet/social media. I personally do not buy many products from international sellers (the U.S. market has more than I will ever need), but I imagine there are many people out there that do.

As for competition, here is what Feroldi had to say on the podcast - "They basically said their No. 1 competitor is companies doing this thing themselves; just choosing to take all of these processes in-house and launch it on their own e-commerce site. They did mention that they do have some smaller competitors, but they were so small they weren't actually named in the prospectus, but Global-E thinks that it is the largest provider of its solutions."

There is some concentration risk with Global-E. They had 442 customers at the end of 2020, up 56% from 283 at the end of 2019. Their biggest customer accounted for 18% of revenue in 2020, down from 25% the year prior. In addition to this, the company also has significant supplier concentration. DHL processed 59% of all fulfillment orders for Global-E in 2020. Over 50% of Global-E's revenue comes from fulfillment currently so this would be a big problem if things went awry with DHL. Thankfully, DHL owns over 5% of Global-E's ordinary shares so their interest are aligned for now.

Let's get into the numbers.

The company generates revenue through service fees and fulfillment services. Service fees revenue is generated as a percentage of the GMV that flows through the platform. Fulfillment services revenue is generated through the offerings of shipping and handling services.

GMV in the first quarter of 2021 was $267 million, an increase of 133% year over year

Revenue in the first quarter of 2021 was $46.2 million, an increase of 134% year over year

Service fees revenue was $17.1 million, an increase of 146%

Fulfillment services revenue was $29.1 million, an increase of 128%

Gross margin in the first quarter of 2021 was 33.3%, an increase of 390 basis points from 29.4% in the first quarter of 2020

Adjusted EBITDA in the first quarter of 2021 improved to $5.2 million compared to ($0.4) million in the first quarter of 2020

So here we see the company is growing rapidly while on the cusp of profitability. However, COVID served as a huge tailwind to this business and this was their final quarter of lapping the COVID-less quarters. This means revenue growth is going to drop significantly next quarter. The guidance for Q2 would amount to 60% YoY growth at the mid-point. Assuming a 10% beat, revenue growth would come in at 77%. It is tough to predict how big their beat will be seeing as this was only their first ever report as a public company but I would assume they have baked in a solid amount of wiggle room. Regardless, a business growing 60-80% is nowhere near as attractive as a 130%+ grower, especially off a base this small.

Now that the stock has doubled since the IPO, its valuation has reached $7B. I think the opportunity was pretty attractive at $3.5B but now it seems to be pretty fully valued. It is trading at roughly 32x 2021 estimated sales, which feels to be at the high end for a ~70% grower with 33% gross margins.

Lastly, here are a few interesting tidbits. Their net retention rate is right up there with Snowflake. GLBE has reported a Net Dollar Retention Rate of 134% and 172% in the years ended December 2019 and 2020, respectively, and the Gross Dollar Retention Rate has consistently been over 98% since 2018. Clearly, their customers are getting quite a bit of value out of their platform.

Global-E also has an exclusive Services and Partnership Agreement with Shopify to cooperate in offering its e-commerce cross-border solutions to Shopify merchants. Additionally, Shopify bought 7.75 million shares of the company, good for a ~5% stake in the business. They also acquired warrants that entitle it to an additional 11.85 million shares over the coming two years. I would not be surprised to one day see Shopify buy this business.

I think this is a very interesting company, but I am hesitant to purchase it after the recent run up from the IPO price. If they were going to continue to grow at 130%, it would be a different story. All told, while they do offer a very impressive service, I am not sure how desired it is in the market. Is global e-commerce going to explode in the coming years or will most of the e-commerce business be driven by local/national players? I am not sure. What do you say?

Rex - No position in GLBE
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