Global-E Online Ltd. Q2 FY2023 Earnings Call

Welcome to the Global-e Second Quarter 2023 Earnings Call. This call is being simultaneously broadcast on the company's website in the Investors section under News & 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 Global-e are Amir Schlachet, Co-Founder and Chief Executive Officer; Ofer Koren, Chief Financial Officer; and Nir Debbi, Co-Founder and President. Amir will begin with a review of the business results for the second quarter of 2023. Ofer will review the financial results for the second quarter of 2023 followed by the company's outlook for the third 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 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 statement. Although we believe that 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 obligations 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 the statements are made or to reflect the occurrence of unanticipated events. Please refer to our press release dated August 8, 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 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 8, 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 August 8, 2023. I will now turn the call over to Amir, Co-Founder and CEO.

Thank you, Erica, and welcome everyone to our Q2 earnings call. Our second quarter financial results, all of them exceeding our guidance, depict a continuation of a very strong business momentum and growth trajectory. Our quarterly GMV amounted to $825 million, or 54% year-on-year growth, and our revenues grew by 53%, reaching $133 million in the quarter. Our adjusted gross profit margin continued to expand from 41.9% in Q2 of last year to 43.3% in Q2 of this year, thanks to our growing economies of scale and improved efficiencies. Finally, our adjusted EBITDA for the quarter came in at $21 million, nearly doubling that of the same period last year. As usual, Ofer will describe in more detail our quarterly financial results, as well as our updated guidance for the next quarter and for the full 2023 fiscal year. However, before I hand the call over to Ofer, I would like to walk you through some key updates regarding our business. On the merchants' front, we continue to onboard many new merchants located all around the globe and trading in various different verticals. Just to name a few examples, we recently went live with renowned fashion brands such as LK Bennett and Club L London in the UK, Monday Swimwear and Pepper in the US, and the iconic denim and fashion brand Diesel in Italy. We also went live with the UK-based recycled gold and silver jewelry brand Missoma, with the innovative protective cases brand Moose, and many others in various product verticals. From a geographical standpoint, in parallel to our continued growth in our established markets across North America, the UK and Continental Europe, we continued our rapid expansion in the APAC region as well, with several Australian brands going live, including Venroy, Rollie Nation, and Lahana, with numerous Japanese brands going live, including HINOYA, 45R, Nubian, and Ana Sui, and with the go-live of our first-ever Korean brand. Moreover, during Q2, we went live with our first-ever Swedish brand, the vegan cosmetics brand Swati, bringing the count of our active outbound markets up to 29. Equally important, we continued our expansion efforts within existing merchant groups, with notable examples this quarter being Orveda, which is another brand from the large beauty and fragrance group Coty, and Givenchy Beauty, which is part of the LVMH group of brands. Moving on to some additional elements on our strategic roadmap, we continue to consolidate and streamline our platform stack post our two acquisitions of Flow and Borderfree. In parallel, we are also continuing the migration process of all our legacy Shopify-based enterprise merchants onto the new native app. On the SMB platform side, we continued our joint work with Shopify on the necessary preparations for the release of Shopify Markets Pro into general availability in the US, which is expected to happen later in the year. Based on the results and feedback from the first live batches of early access merchants, we continue to be optimistic regarding the potential future impact of this innovative new offering once it is released and scales up. Given all these developments, as well as many product features being constantly developed and rolled out, we continue to expand both our technological teams and our commercial teams around the globe. But at the same time, we remain as committed as ever to doing so in a responsible and sustainable way, as is evident from the healthy growth in our adjusted EBITDA, a good proxy for our free cash flow, which is outpacing the growth in revenues. And with that, I will now hand it over to Ofer to take you through the quarterly figures in more depth, as well as present our updated guidance.

Thank you, Amir, and thanks again, everyone, for joining us today for our quarterly earnings call. We are very pleased with our business performance and progress in the first half of 2023. Q2 was another strong quarter of fast growth, coupled with improved margins, as we continue to support merchants with the direct-to-consumer cross-border growth journey, and exploit the massive market opportunity. I'd like to point out again that in addition to our GAAP results, I'll also be discussing certain non-GAAP results. Our GAAP financial results, along with the reconciliation between GAAP and non-GAAP results can be found in our earnings release. As Amir mentioned, our rapid growth in GMV continued in Q2, with $825 million of GMV generated on our platforms, an increase of 54% year-over-year. The growth was supported by the continued growth of the direct-to-consumer cross-border segment, despite the ongoing macro uncertainty. We also still benefited this quarter from inorganic growth from Borderfree. In Q2, we generated total revenues of $133.3 million, up 53% year-over-year, with both revenue streams continuing to grow rapidly. Service fees revenue were $59.5 million, up 51% year-over-year, and fulfillment services revenue were up 54% to $73.8 million. Fulfillment take rate has decreased compared to Q1, mainly driven by higher average order value, resulting in less shipments per dollar of GMV, and also from the continued growth of our multi-local services. We have continued to experience higher-paced growth in our U.S. outbound revenue, as our momentum in the U.S. continued, driven also by the U.S. bias of the Borderfree portfolio. In Q2 2023, U.S. outbound revenue was up 99% year-over-year. As Amir mentioned, we also continue our penetration into APAC and the Middle East. While the GMV share of this new outbound market is still only 3%, revenue has grown over three times year-on-year. Non-GAAP gross profit continued to outpace revenue growth, as we continue to leverage our scale and improve efficiencies. In Q2, non-GAAP gross profit was $57.7 million, up 58% year-over-year, representing a gross margin of 43.3% compared to 41.9% in the same period last year. The improved non-GAAP gross profit margin compared to Q1 was driven also by the higher share of service fee revenue in Q2. GAAP gross profit was $54.9 million, representing a margin of 41.2%. Moving on to operational expenses, we continue to invest in the development of our platform to enhance our offering with a significant effort around the development of the Shopify Markets Pro white label solution towards general availability in the U.S.. R&D expense in Q2, excluding stock-based compensation was $18 million, or 13.5% of revenue, compared to $12.3 million, or 14.1% in the same period last year. Total R&D spend in Q2 was $24.6 million. We also continue to invest in sales and marketing to enhance our market presence and to build our pipeline while maintaining efficiencies. Sales and marketing expense, excluding Shopify-related amortization expenses, stock-based compensation, acquisition-related intangibles amortization was $12 million or 9% of our revenue, compared to $8 million or 9.2% of revenue in the same period last year. Shopify warrants related amortization expense was $37.4 million. Total sales and marketing expenses for the quarter was $52.8 million. General and administrative expenses, excluding stock-based compensation, acquisition-related contingent consideration was $7.3 million or 5.5% of revenue, compared to $5.5 million or 6.3% of revenue in the same period last year. Total G&A spend in Q2 was $13.9 million. Adjusted EBITDA totaled $21 million, growing 90% year-over-year, representing a 15.7% adjusted EBITDA margin, compared to $11.1 million or 12.7% margin in the same period last year. Net loss was $35.5 million, compared to a net loss of $48.8 million in the year-ago period, driven mainly by the amortization expenses related to the Shopify warrants and to transaction related intangibles. Switching gears and turning to the balance sheet and cash flow statements, we ended Q2 2023 with $224 million in cash and cash equivalents, including short-term deposits and marketable securities. Cash flow generated by operating activities was $17.6 million, compared to $37.8 million a year ago. Moving on to our financial outlook and guidance for Q3 2023 and our updated 2023 full-year guidance, which reflects the resilience and the continued momentum of the business. For Q3 2023, we're expecting GMV to be in the range of $840 million to $880 million. At the midpoint of the range, this represents a growth rate of 38% compared to Q3 of 2022. We expect Q3 revenue to be in the range of $136 million to $142 million. At the midpoint of the range, this represents a growth rate of 32% compared to Q3 of 2022. Borderfree is weighing on top-line growth in H2, but we expect Borderfree to contribute positively once our enhanced traffic generation offering is in place. For adjusted EBITDA, we're expecting a profit in the range of $17 million to $21 million. For the full year of 2023, we are raising our guidance. We anticipate GMV to be in the range of $3.48 billion to $3.64 billion, representing 45% annual growth at the midpoint of the range. Revenue is expected to be in the range of $570 million to $596 million, representing a growth rate of nearly 43% at the midpoint of the range. For adjusted EBITDA, we're expecting a profit of $85 million to $93 million, a significant increase of 21% compared to our previous guidance at the midpoint of the range, reflecting our continued focus on operational efficiencies. In conclusion, we continue to focus on strong execution with emphasis on enhancing our platform and expanding our offering to create value for the merchants in their direct-to-consumer cross-border expansion. We aim to continue our rapid growth while improving efficiencies and generating cash. And with that, Amir, Nir, and I are happy to take any of your questions.

Thank you, sir. Your first question will be from Brian Peterson at Raymond James. Please go ahead.

Thank you and congrats on the strong quarter. So first, I just wanted to hit on any trends that you'd call out in terms of GMV linearity, either by month or by region that was really strong. And anything through July that would call out that's maybe different versus the second quarter?

Yes. So we did see a strong second half of the second quarter. It was driven by some large merchants' product launches and product promotions. And we did continue also to see relative strength in Europe on the back of a weak euro in 2022. So we have seen growth in Europe. The U.S. is more or less stable. We've seen some of the APAC markets not performing as well, but Europe has been a very strong contributor to growth.

Great. I appreciate the color. And maybe just on margins. I know we're coming at 15% EBITDA margins for the year. I'd love to understand as those have ramped up, how are you guys thinking about investing back in the platform, investing in the growth versus driving further margin expansion? Thanks, guys.

Hi, Brian. It's Amir. Thanks. So we are continuing to reinvest all the time into the platform. We believe that we are truly at the early stages of capturing this immense market opportunity, both in what we're already doing so far and in additional offerings, additional avenues that we can continue to develop on the back of it. So, with that kind of early innings approach and multiple avenues for it, we are continuing to reinvest all the time, and we remain committed to continuing to expand the EBITDA margin in the long term. But in terms of the shorter term and the midterm, we do make these investments wherever we believe that they are accretive to the long-term value of our business.

Thanks, Amir.

Thank you. Next question will be from Brent Bracelin at Piper Sandler. Please go ahead.

Thank you, and good morning. I wanted to delve into Markets Pro, Amir, and see what you have learned so far. I know we are still in the early stages, but you have conducted some trials. What insights have you gained? How is that progressing? Are there any key takeaways that could help us understand how this might look heading into next year? Thanks.

Yes. Thank you, Brent. Indeed, we've learned a lot through our early outreach efforts with Shopify to batches of merchants. As a result, we've gathered insights and made collective improvements, enhancing our approach from one batch to the next. Some improvements relate to our offerings and products, which were performing well even before. However, the primary focus has been on refining the onboarding processes, enhancing the onboarding experience for merchants, and automating various aspects of both onboarding and daily management on the platform. Our goal is to create a zero-touch, highly productized offering as we anticipate onboarding a large number of merchants once we reach general availability and ramp up. This focus has led to significant advancements during the early access period, which we intend to implement once we transition to general availability.

Encouraging to hear that things are progressing well. I guess my follow-up here for Ofer is, really around fulfillment margins upticked a little bit this quarter. I don't know if there was some seasonality in play there? And how should we think about fulfillment margins going forward? Is there a structural improvement or should we think about that as some operational improvement that might not be sustainable? Thanks.

Yes. Thank you for that, Brent. Generally speaking, gross margin has improved this quarter due to operational efficiencies and a higher share of service fee revenue. We expect this to remain relatively stable. We anticipate staying around the same figures for the remainder of this year, with some gradual upside potential in the longer term related to service fee revenue and fulfillment revenue as well.

Helpful color. Thank you.

Thank you. Next question will be from Samad Samana at Jefferies. Please go ahead.

Hi. Good morning. Good to see the strong results. Maybe first question, just thinking through Borderfree, now that you're lapping it, you’re a year past the acquisition how should we think about how conversions of those customers are doing? And could you maybe speak to what the NRR trends look like inside of that cohort of customers? And maybe do you think they'll eventually get to where your overall NRR looks like for your regular customer base?

Hi, Samad. Thank you for the question. It's Nir. In general, we are very happy with the progress we're making on the Borderfree acquisition on multiple fronts. On the one hand, on the marketing front, we are building the capabilities and tools we built across registered clients, as well as the international portal in order to launch it across our entire platform. I would say, sometime, I would say, maybe for early access later in the year and general availability in Q1, Q2 next year. In parallel to it we did start to utilize and enjoy the logistics capabilities of standard delivery into Canada using the Borderfree platform. On the client base itself, we do expect to see migrations starting towards the later part of the year, mainly late Q4 and a significant amount of the clients already migrated by mid next year. So once we see them migrating we do expect to see a significant growth coming out of the capabilities we have on the Global-e platform that are not present on the Borderfree platform. So we expect that within 2024, we will already start to see some growth coming out of Borderfree clients. Some of it would only be later in the year or in 2025 because the clients would migrate only midyear. In terms of the profile, it is a different growth profile on the Borderfree platform versus Global-e. We still maintain our regular profile for Global-e clients trading at our historical levels of over 130% NDR. Borderfree has a lower profile. The clients do not grow as much as our clients on that platform. We see it weighing a bit on our results in the coming quarter, but we do expect it to change once we migrate and contribute the same profile as Global-e clients, hopefully by mid-next year.

Super helpful. And maybe just a follow-up for the team. If I think about the Q3 GMV guidance and then what that maybe implies for the fourth quarter, it actually implies a lot of things will get better, and it makes sense with Shopify Market Pro and other initiatives. I'm just curious maybe how much confidence or visibility you have in that fourth quarter ramp as well that that's implied. And is that more due to new customers that you've already booked? Or just the GMV trends you're seeing in the existing basis? Maybe help us understand that kind of implied 4Q strength.

Thank you, Samad. This is Ofer. We have more visibility into Q4 compared to last quarter. As the year progresses, our visibility improves. However, it's peak season, so there could be volatility in either direction. Our guidance is based on clients that have already signed. Any client that hasn't signed by now is unlikely to go live this year, so our plans are centered around live merchants or those scheduled to go live before peak season. Additionally, we anticipate some contribution from Shopify Markets Pro in Q4, which is factored into the full-year guidance you see. Looking ahead to 2024, we expect Shopify Markets Pro to play a significant role.

Great. Thanks guys for taking my questions.

Thank you. Next question will be from James Faucette at Morgan Stanley. Please go ahead.

Thank you very much. Good morning, everybody. Thanks for the time, and things seem to be progressing well here. I wanted to follow up on the Shopify Markets Pro. Can you talk a little bit about like that cycle from a point of view of the merchant? If the merchant already has cross-border activity and operations, would you expect them to move over relatively quickly to Shopify Markets Pro or continue to operate with their current operations, but then perhaps add Markets Pro for new markets? Just can you talk a little bit about what you think the process from the point of view of the merchant is likely to be? And how you're planning for that?

Hi, James. Thanks for your question. It's Nir. Yes, in terms of the client base, we do expect merchants that currently either have some kind of operations cross-border or don't have it at all. If you see the, I would say, Markets Pro is a very appealing way to extend our international reach or to make it better. It has a full suite of end-to-end capabilities that you can actually turn on very simply and we believe that it would be promising for many merchants that are currently trading internationally with bits and bytes, either build themselves or use from Shopify, allowing them a more holistic solution. So we do expect some to actually move towards the solution, yes.

That's great. From what you've mentioned, I'm curious about the factors that influence the pace of onboarding. How much control does Global-e have over this process? It seems like it's designed to be scalable and self-serve. Can merchants initiate this process on their own and potentially all at once in an extreme scenario? I'm trying to grasp the possible limitations on adoption. Thank you very much.

Thank you, James. I believe the limitations on adoption are approaching. First, as you mentioned, it's about the merchants wanting to adopt the product to meet their own needs. However, it largely depends on the rollout. While we are moving toward general availability, we're not quite there yet. Initially, the focus will be on the U.S. merchant base before considering expansion into other regions. Therefore, adoption will be gradual, depending on the products being sold and their sales locations. Ultimately, it will be more reliant on the merchants' decisions.

Great. I appreciate you. Thanks.

Thank you. Next question will be from Scott Berg at Needham. Please go ahead.

Hi, everyone. Good afternoon. Thanks for taking my question this afternoon at least. A couple of things for me. Your growth in the United States is still continuing to be really strong, especially after you've lapped Flow, which brought you a really nice platform here for U.S. outbound. Can you help us understand maybe some of the drivers there? I know it's a smaller base, but is there expectations that we can see similar growth out of that solution of your outbound, U.S. outbound sales over the next maybe 12 to 18 months?

The U.S. is experiencing rapid growth for us, driven both by our focus on U.S. consumers through Borderfree and by many of our U.S. brands that are growing faster than other merchants in different regions. This is largely due to the presence of celebrity brands and D2C-first brands, which tend to have a higher growth profile than legacy brands. These brands are more prevalent in the U.S. compared to other areas, contributing significantly to our growth in this market. Additionally, we are seeing ongoing adoption of our solutions by U.S. merchants, which further supports this trend. We believe this growth will be accelerated with the general availability of Shopify Markets Pro for U.S. merchants.

Got it. Helpful. And then from a follow-up question, Ofer. Your gross margins continue to be above, I think, everyone's expectations, certainly best ever in the quarter here. I know you and I have discussed gross margins at scale, maybe getting to 50% plus or minus. Do you have an updated view on that as the business scales here? Is there some opportunities to maybe outperform that over time? Or is that really kind of the target level we should continue to look for?

Yes. So yes, we are very happy with the gross margin this quarter. As I mentioned, it's driven by the revenue mix, but also by operational efficiency. We continue focusing on leveraging our scale and improving over time. We do see some additional upside potential in the future. As I mentioned previously, for the remaining of this year we expect it to stay at levels similar to what you have seen in Q2. But going forward, yes, there is some additional potential. We expect it to come in gradually. We don't expect gross margins to grow by 200 basis points every quarter, but there is some additional potential upside.

Excellent. Thank you for taking my questions.

Thank you. Next question will be from Maddie Schrage at KeyBanc. Please go ahead.

Hi, guys. Thank you for taking my question. I thought that the comment that you made about higher average order volume was really interesting. And I was wondering if you could give any more commentary on if there's any specific reason for that higher cart size or if you're seeing any maybe tailwinds in certain verticals? Thanks.

Yes. So I think there are two drivers behind that. First of all, I think that it's a consumer trend. We have seen over the last few years, average baskets growing and then there was sort of a pause in Q1, and we've seen higher growth than previously in Q2. So it might have been sort of a blimp in Q1 and how this has rolled to higher average order value growth in Q2. In terms of segments, I think that as Nir mentioned, we see the digital native brands overperforming. We have seen luxury is solid. We have seen slower growth with department stores. I would say those would be the key observations for the last few months.

Great. And just a follow-up for you guys. I think we've been hearing in general that the enterprise IT budgets have been a bit restrained this year versus last year. Are you seeing that play out in any of your demand gen or any changes in sales cycles that you're seeing on the enterprise side? Thanks.

In terms of our new bookings, Q2 was excellent with significant growth, making the first half of the year the strongest we have ever had for booking new GMV. We are continuing to establish new partnerships and are beginning to see new bookings from emerging regions. Late last year and early this year, we expanded into APAC, where demand is strong, particularly in the Nordics, Sweden, and Denmark, where we launched our first client. We are also building a pipeline in Italy and other areas across Continental Europe. Overall, we are optimistic about the pipeline being developed and are pleased with the results from Q1 and the first half of the year regarding our new bookings, which support our midterm growth.

Thank you, guys. And congrats on the quarter.

Thank you. Next question will be from Matt Coad at Autonomous Research.

Hi, guys. Thanks for taking the question. Your service fee take rate declined on a year-over-year basis for the first time, I believe, since you came public. Could you just touch on kind of the driving factors there and how you're thinking about the take rate moving forward?

Yes, thank you for that. It's Ofer. I would divide the answer into two parts. Regarding service fees take rate, it has remained relatively stable. There may be some volatility from quarter to quarter, but overall it is stable, and we anticipate it will continue to be stable in the latter half of the year, with potential for growth driven by value-added services. As for fulfillment take rate, it was lower this quarter. We observed a higher average order value, which resulted in fewer shipments on our part, affecting the numbers. Additionally, as mentioned in previous quarters, the share from multi-local is gradually increasing. While it doesn’t have a significant impact, it does affect fulfillment take rates since we typically do not handle fulfillment in multi-local scenarios. These factors contributed to the current situation. Looking ahead, we expect fulfillment take rates to remain relatively consistent in the latter half of the year, with some potential for upside in 2024 still to be determined. Conversely, the increase in service fees positively affects gross margins, meaning that when it comes down to gross profits, the overall impact is less significant.

Thanks, Ofer. That was super helpful. And then just for my follow-up, your free cash flow conversion ratio, so looking at free cash flow as a percentage of adjusted EBITDA, it's been a little bit worse to start this year compared to last. I was just wondering if there's anything to call out in terms of, say, like a working capital build or some other factors?

Yes. The year started slow in that sense due to timing and cutoffs. So we're still lagging from Q1. There weren't any specific dynamics. It's more around timing. We still expect to see over time adjusted EBITDA translating into free cash flow. There will be fluctuations from quarter to quarter or period to period. But over time, we do expect it to more or less converge.

Thank you.

Thank you. The next question will be from Mark Zgutowicz at Benchmark. Please go ahead.

Thank you and good afternoon. I'm interested in understanding the level of conservatism you've factored into the implied fourth quarter for Markets Pro and the visibility you have regarding that. Following up on the previous question, what kind of conservatism do you believe you've included in the fourth quarter? Thank you.

We have not altered our general approach to guidance and aim for consistency. As we near the year's end, we gain clearer visibility for the full year, which is reflected in our revised guidance. Shopify Markets Pro is still in its early stages, and while we see some trends in early access mode, we expect it to grow over time. We have insights on our plans for this product, and we anticipate it will start contributing in Q4, although the impact will not be significant. We expect it to have a larger influence as we move into 2024.

Got it. That's helpful. And then just in terms of your enterprise pipeline, I was hoping you could maybe characterize the growth over the next 12 months coming from direct versus indirect channels. Thanks.

Over the last year, we have seen an increase in indirect sales leads from partners growing their share. We anticipate this trend will continue as we onboard more partners into the Global-e network and ecosystem. However, we still rely significantly on our internal teams, with our demand generation and sales teams continuing to expand alongside the network effect from our ecosystem. We do expect the share coming from indirect sources to maintain a percentage base and continue to grow.

Excellent. Thank you very much.

Thank you. Next question is from Austin Cole at JMP Securities. Please go ahead.

Hi there. Thanks for taking my question. I just wanted to drill in on the growth in the U.S. And I wanted to ask if there's anything you guys are thinking about just with some of the recent economic data that's coming out and what you guys are seeing just in larger trends and adding new merchants there and how you feel about growth there in the out years? Thanks.

Thank you. It's Nir. As stated before, we did see a nice growth trajectory in the U.S., outpacing other regions and growing in its share. Some of it came from the concentration of Flow and Borderfree acquisitions as well, I would say, mainly or virtually almost all U.S.-based merchants; some of it coming out of the higher growth profile of D2C brands or celebrity brands that are growing faster than legacy brands. On top of it, we do see a good pipeline and strong pipeline being built in the U.S. economy. Solid businesses are being opened and are growing, and we see that reflecting in the demand for those brands worldwide. So we do expect it to continue to grow, not at the pace we've seen on the enterprise side for sure that we've seen forward. So we expect it to continue to grow gradually in mix. It will be somewhat accelerated by the general availability in the U.S. first of the Shopify Markets Pro that, I would say, by being released versus U.S. would scale up, I would say, the share of U.S. even further.

Great. Thanks so much.

Thank you. And at this time, I would like to turn it over to Amir for closing remarks.

Thank you, and thank you, everyone, for joining us on this call today. We appreciate your ongoing support and very much look forward to updating you again on our future earnings calls. Until next time, goodbye to you all and take care.

Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines.