Welcome to the Global-E Third Quarter 2025 Earnings Conference Call. This call is being simultaneously webcast on the company's website in the Investors section under News & Events. For opening remarks and introduction, I will now turn the call over to Alan Katz, Global-E's Head of Investor Relations. Please go ahead.

Thank you, and good morning, everyone. With me on the call today 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 third quarter of 2025. Ofer will then review the financial results for the third quarter, followed by the company's outlook for the remainder 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 the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including, without limitation, statements regarding our future results of operations and financial position, growth strategy and plans and objectives of management for future operations including onboarding new merchants, expanding our offerings and introducing and integrating new solutions are forward-looking statements. 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 annual report on Form 20-F filed with the SEC on March 27, 2025 and other documents filed with or furnished to the SEC. These statements may 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. Except as required by applicable law, we undertake 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 the statements are made or to reflect the occurrence of unanticipated events. Please refer to our press release issued today, November 19, 2025, for additional information. In addition, certain metrics we discuss today are non-GAAP metrics. The presentation of this financial information is not intended to be considered in isolation from 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 operational decision-making. For more information on these non-GAAP financial measures, please see the reconciliation tables provided in our press release today. Throughout this call, we'll 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 issued today. I will now turn the call over to Amir, our Co-Founder and CEO. Amir, please go ahead.

Thanks, Alan, and welcome, everyone, to our third quarter earnings call. We had another quarter of very strong results, surpassing the midpoint of our guidance for revenue and adjusted EBITDA, and even exceeding the top end of our guidance for GMV. This strong performance is attributed to the entire Global-E team globally, who executed relentlessly throughout the quarter, developing and providing top-tier solutions and services to our merchants and their customers. Before we get into the details of the quarter, I want to share our forward-looking outlook. Given what we observe in the current market and the robust trading volumes we've seen in Q3 and Q4 so far, we are raising our midpoint outlook for all our guidance metrics for the remainder of the year. For the full year of 2025, we now expect GMV to be approximately $6.46 billion at the midpoint, indicating over a 33% annual growth rate. We are also increasing our revenue and adjusted EBITDA guidance for the year to $952.1 million and $192.8 million at their respective midpoints, reflecting 26.5% and 37% growth for the year. Like previous years, we expect to exceed the full year guidance ranges we shared at the beginning of the year, demonstrating the resilience of our growth model. We believe this strong performance in 2025 positions us to achieve the multi-year growth and profitability targets we presented during our Investor Day earlier this year. Now, regarding our quarterly results, we concluded Q3 with GMV of $1.51 billion, a 33% increase year-over-year, and revenue of $221 million, up 25.5% year-over-year. Our adjusted gross profit for Q3 was $102 million, a 24% increase from the previous year, while quarterly adjusted EBITDA was $41.3 million, up 33% year-over-year, resulting in an 18.7% margin, marking a 100 basis point improvement compared to Q3 of 2024. Our GAAP net profit for the quarter was $13.2 million, and we generated $73.6 million in free cash flow, nearly a 250% increase from last year. Before discussing the current trading patterns and our new merchant launches in Q3, I want to provide a few broader business updates. First, we have previously mentioned our duty drawback service, which allows merchants in certain non-U.S. markets to potentially reclaim import duties on exported goods and returned items. With the recent suspension of the de minimis exemption, interest in this offering has increased, including for U.S. merchants. This complements other services designed to assist brands in navigating the complexities of international B2C trade. Recently, we received authorization to offer import duty drawback services to our U.S.-based merchants, further helping them optimize their trade costs. Second, we are making good progress on our managed market solution in collaboration with Shopify. Over the past six months, we have completed most of the development for a rollout in 2026 and are currently beta testing the new flow. New merchants applying now to managed markets are already going through this new process. We still need to refine it based on feedback from initial merchants, but we remain on track for advancing to full commercialization. Third, we are enhancing our borderfree.com offering. During Q3, we introduced a buy-now capability and advanced search features, improving the shopping experience and increasing sales conversions. We've also seen growth in shopper sign-ups and an increasing share of merchant sales linked to the borderfree.com channel, now at over 4.5%, representing a valuable demand generation channel for participating merchants. Lastly, during the quarter, our Board authorized a $200 million share repurchase program. Global-E generates substantial cash, and given our strong balance sheet and track record of sustainable cash flows, a share buyback plan seems a sensible use of cash, especially at the current market valuation. Due to blackout periods in Q3, we haven’t initiated any buybacks yet, but we expect to start in the coming days with a careful strategy to take advantage of any disparity between our performance and market valuation. I’d also like to take a moment to discuss our strategic focus on AI and agentic e-commerce, and how we are positioning ourselves to harness this upcoming market opportunity. This year, we have begun seeing traffic to our merchant sites originating from ChatGPT, leading to successful transactions handled by Global-E, including in-chat checkout transactions. Although these still represent a small portion of sales for our merchants, we view them as promising new sales channels. As brands increasingly aim to sell through third-party channels, we will continue to offer the same high-quality support and services across all sales channels. Regardless of the sales platform, the value of our expertise remains constant. We assist our brands wherever they operate online and facilitate their international transactions regardless of traffic sources. We are also deploying AI-powered solutions throughout the buying journey, from demand generation to post-purchase support. Additionally, we have an internal team ensuring that our solutions will integrate seamlessly with agentic commerce platforms for Instant Checkout when they enter the market. As our partners explore agentic technologies to offer instant checkout, we will provide a smooth, effective, and compliant international experience. This is just the beginning, but we are committed to staying at the cutting edge of Global-E commerce, leveraging our scale, expertise, and sophistication to grow our market share. By focusing on this early and engaging with key players in the field, we aim to maintain a strong position for enabling seamless cross-border commerce within AI-enhanced transactions moving forward. Now, let’s transition to the broader business performance in Q3 and what we currently observe in Q4. As I mentioned, we have seen consumer discretionary spending performing well in Q3 and into Q4 so far. We continue to experience strong market traction with our largest merchants across various destination markets. The trading patterns observed in Q3 and the early part of Q4 give us confidence that we will finish the year strongly. Regarding new merchant launches in Q3, we saw growth in various geographies and among our merchant cohort. Strong demand for our services persisted as numerous brands went live with Global-E during the quarter. We welcomed multiple new merchants in the U.S., including Everlane, a well-known online clothing retailer that recently transitioned to Shopify and chose Global-E for its international expansion, and Ashford, a luxury watch brand. In Canada, we partnered with Drakes' fashion brand, October's Very Own, and Aritzia, a rapidly growing clothing brand that quickly ramped up conversion rates and international sales after launching with us, as indicated in their recent quarterly earnings call. In the U.K., we began working with the luxury brand Coach, part of Tapestry's family of brands, Browns Fashion, previously associated with Farfetch, and Regal Rose, a jewelry brand. I’m also happy to report that Marks & Spencer has resumed operations in the U.K. as of October, and their trading has returned to normal. In France, we launched with the luxury brand Chloe, expanding our partnership with other renowned brands, and initiated partnerships with the classic French sportswear brand and the fashion house Hartford. Across other European markets, we welcomed the Sleeper brand and CLOUD7, a dog wear brand in Germany, as well as D1 Milano watches in Italy, among others. In the Asia Pacific region, we launched Bandai Spirits, a leading Japanese toy and collectible manufacturer, along with the fashion label Mihara Yasuhiro and the high-end Australian fashion brand Posse. We also partnered with Beauty of Joseon, a Korean skincare brand, and Paper Shoot, a Taiwanese consumer electronics brand, marking the first collaboration with a Taiwanese company. A notable addition in the Philippines was Blackbough Swimwear. In the sporting goods vertical, golfers around the world can now purchase products from Tacoma Grove, a Finnish D2C golf brand that went live in Q3. We also collaborated with Live Sports, a U.K. sports equipment brand, and with a Scandinavian fly-fishing gear company, integrating our services through a headless setup. During Q3, we also expanded our business footprint with many existing merchants, including FIGS, which extended into South Korea and several Latin American markets. Helmut Lang, a New York fashion brand, and JYP Entertainment's merchandise division, which both expanded into Japan. Bang & Olufsen and Tom Ford launched new European markets with us this quarter. The Australian fashion brand Zimmerman also partnered with us for its operations in the APAC region, and Theory added support for several Gulf Cooperation Council countries. Both Burberry and Eyewear expanded their reach into Mexico, while Bach ventured into Norway, and another brand introduced over ten new countries, including Japan, Italy, Spain, and several Nordic countries. Furthermore, as previously mentioned, we are observing greater interest in our 3 B2C and multi-local solutions, as well as our duty drawback services, in light of higher tariffs and the suspension of the de minimis exemption in the U.S. More merchants, both new and existing, are shifting towards utilizing these advanced capabilities to mitigate the impacts of the new duty regulations on their businesses. The launch of new merchants, along with further growth with existing ones, and our strong pipeline provide confidence in our short and long-term targets. We have good visibility for ongoing, profitable growth, as well as robust cash flow prospects moving forward. Our results thus far would be commendable in any context, but given the uncertainty in the global e-commerce market at the beginning of 2025, these results truly highlight the resilience of our business model and the value we offer to our merchants. I will now turn it over to Ofer to delve deeper into the quarterly numbers and our updated guidance for 2025 in Q4.

Thank you, Amir, and thanks, everyone, for joining us today for our earnings call. As Amir just highlighted, we achieved another strong quarter of growth globally. We delivered results at or above the top end of our guidance ranges for GMV, revenue and adjusted EBITDA, generated strong free cash flow and had another quarter that landed well above the Rule of 40. Before I go into the details of the quarter, I'd like to remind everyone 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 issued today. GMV in Q3 was $1.512 billion, up 33% year-over-year, 3% above the midpoint of our range for Q3. Trading volumes remained resilient in the third quarter despite some uncertainty due to ongoing changes in tariffs. As Amir discussed, we have also seen solid trading volumes through the first half of Q4, including significant contributions from some of the newly launched brands. The holiday shopping season is just getting underway, and we have seen initial sales volumes in line with expectations so far. In Q3, we generated total revenue of $220.8 million, up 25% year-over-year and 2% above the midpoint of our guidance range. Service fee revenue for the quarter was $103.5 million, and fulfillment services revenue for the quarter was $117.3 million. Service fee take rate was slightly lower than Q2 and in line with the first quarter, driven by mix, while fulfillment take rate was similar to last quarter and, as expected, lower compared to the first quarter given the planned shift of certain volumes to multi-local and our growth within verticals that are multi-local by nature. Progressing through the income statement, non-GAAP gross profit was $102.1 million, up 24% year-over-year representing a gross margin of 46.3% compared to 46.7% in the same period last year. GAAP gross profit was $99.6 million, representing a margin of 45.1%. Moving on to operational expenses. In Q3, we continued to invest in the enhancement of our platform to further expand our offerings and add value for our merchants while leveraging our scale and AI tools and agents to gain efficiencies. R&D expense in Q3, excluding stock-based compensation, was $26.1 million or 11.8% of revenue compared to $22.8 million or 13% of revenue in the same period last year. Total R&D spend in Q3 was $30.8 million. We also continued to invest for growth within our sales and marketing organization, while remaining focused on cost and efficiency including by the growing use of AI-powered tools across our sales and marketing activities, such as demand generation, lead qualification and outreach. Sales and marketing expense, excluding Shopify-related amortization expenses, stock-based compensation and acquisition-related intangibles amortization, was $26.4 million or 12% of revenue compared to $21.5 million or 12.2% of revenue in the same period last year. Shopify warrant-related amortization expense was $8 million in the quarter, down from $37.4 million in Q3 '24. As I've discussed in the past several quarters, we expect this expense to remain at the same level for the remainder of the year and to be completely gone at the beginning of 2026. Total sales and marketing spend for the quarter was $38.4 million, down from $62.7 million in the same quarter last year. General and administrative expenses, excluding stock-based compensation, acquisition-related expenses and acquisition-related contingent consideration were $9.2 million or 4.2% of revenue compared to $7.7 million or 4.4% of revenue in Q3 of last year. Total G&A spend in the quarter was $13.4 million. Adjusted EBITDA was $41.3 million, up 33% from Q3 2024 and 5% above the midpoint of our guidance range. Adjusted EBITDA margin was 18.7% versus a 17.7% margin in Q3 2024, driven by lower operating expenses as a percent of revenue leveraging our scale and cost efficiencies. In Q3, our GAAP net profit was $13.2 million compared to a net loss of $22.6 million in the year ago period. The positive net profit was driven mainly by the reduced amortization expenses related to the Shopify warrants as well as our continued business growth and our growing efficiencies. Moving on to the balance sheet and cash flow statements. We ended the quarter with $552 million in cash and cash equivalents, including short-term deposits and marketable securities. Q3 was a strong quarter of cash generation with free cash flow of $73.6 million in the quarter, an increase of 245% compared with Q3 of 2024. We believe that our free cash flow margin, adjusted for seasonality, will continue to be strong in the coming quarters. As Amir highlighted, we expect to begin utilizing a portion of this cash to repurchase outstanding shares in the coming quarters in accordance with the Board authorization. We plan to start executing upon our buyback program in Q4, subject to market conditions and other applicable factors. We have a strong track record of cash generation and see an opportunity to return capital to shareholders to drive long-term value creation. We will also continue to look for opportunistic tuck-in acquisition opportunities to enhance our platform or offerings. Now let's go through our guidance for the remainder of the year. For Q4 2025, we're expecting GMV to be in the range of $2.195 billion to $2.315 billion. At the midpoint of the range, this represents a growth rate of 32% versus Q4 of 2024. We expect Q4 revenue to be in the range of $318.5 million to $334.5 million, representing a year-over-year growth rate of 24% at the midpoint. For adjusted EBITDA, we're expecting profit to be in the range of $74.3 million to $88.7 million or a margin of 25% at the midpoint. For the full year of 2025, this implies GMV to be in the range of $6.404 billion to $6.524 billion, representing a 33% annual growth rate at the midpoint of the range, an increase of 2% from our guidance at the start of the year. Revenue is expected to be in the range of $944.1 million to $960.1 million, representing a growth rate of 26.5% in the midpoint of the range, an increase of 1% from our initial guidance. And for adjusted EBITDA, we are expecting a range of $185.6 million to $200 million, an increase of 37% versus 2024 at the midpoint and up 2% versus our initial guidance. We are excited by our guidance for Q4 and the full year of 2025, which reflects a strengthened outlook across all parameters. Furthermore, 2025 is expected to be our first GAAP profitable year as a public company. Our upward revised full-year 2025 numbers demonstrate and reinforce our path to meet the medium-term targets that we provided at our Investor Day in March. To summarize, we believe the current environment represents exciting opportunities for Global-E to create value for our merchants by growing their sales while optimizing their costs and to continue growing at a fast pace for the foreseeable future. Given the increasingly complicated global e-commerce environment, we believe our services are becoming more and more integral to merchants every day.

Your first question comes from Will Nance with Goldman Sachs.

I wanted to discuss the commentary around the product. It seems that you have consistently highlighted the market function. Could you elaborate on the opportunity for your services and any changes in your long-term outlook for additional products?

Thank you for your question, Will. I'm really excited about the progress we've made in expanding our permission to offer duties or drawback in more jurisdictions for our clients. As the market becomes increasingly complex for merchants, the global duty burden is rising. We've already seen changes with U.S. imports and some Canadian regulations. Additionally, we're aware of the upcoming removal of de minimis for the EU, expected in the latter half of 2026 for the entire European community. The significance of duty drawback is clearly increasing; typically in e-commerce, out of 100% of sales, around 10% to 15% returns occur. Without duty drawback, that results in a loss of duties on those sales, usually accounting for 2% to 4%. This is an opportunity for us to recover funds for our merchants, improving cost-effectiveness, which is crucial in the current and foreseeable trading environment.

That's great. It makes a lot of sense. Separately, I was wondering if you could speak about pipelines. I realize we're done with implementation for this year as we head into the holiday season. Could you provide some additional insight into how pipelines are looking for next year compared to this year, particularly regarding the size and geography of merchants and how you are seeing the situation?

Sure, Will. We continue to see high demand for new services supporting merchants doing 3 B2C, multi-local and other value-added services we deployed. Furthermore, there are multiple opportunities that we are seeing in global e-commerce as it becomes more complex. It's driven by what we spoke about just now from the extra complexity on duties, it's driven by other factors of complexity and cost structure aligning shipping, wanting to do a multi-local efficiently across geos, et cetera. So all in all, we are quite optimistic. We see development across the different stages of our funnel. We've seen it deployed into our Q4, which is part of the confidence we have in the guidance we gave. So all in all, we're quite optimistic going into 2026.

And the next question comes from James Faucette with Morgan Stanley.

It's Michael Fontan on for James. I wanted to ask on service fee take rates. How much of that sequential take rate decline is just due to the fact that you're continuing to win with larger merchants? And as you think about the path forward with some of the renewal impacts beginning to show up in Q4, how are you thinking about the path for service fee take rates from here if there are case-by-case pricing concessions that are made with those concessions presumably being absorbed in the P&L via some of those improvements in unit economics that you referred to in the past?

Yes. So thank you for that, Michael. Regarding the first 9 months of the year, it has been slightly volatile, and it's mainly due to mix. So there are some mix shifts between quarters. In addition to that, as you mentioned, we see a higher share of larger enterprise merchants, which also have a certain impact. So when you look at Q3, similar levels to Q1, lower levels compared to Q2. And as we mentioned in Q2, we had some positive mix impact, that's on the service fee side. Going forward, as we mentioned in the past, we don't see any significant wide change; we do see occasionally, we might reprice on specifications. But we do not expect a significant change to service fee take rate. On the overall take rate picture, what we have been doing for the last few years and in the last quarter as well is expanding our TAM by developing new business models that allow us to further serve new and existing merchants. Our main financial focus in these efforts has been driving profit, both from a margin and reported dollar perspective, and some of these models by nature, have lower take rates. For example, as you know, multi-local is a good example of that. But important for us to note that they all meet our long-term profitability and support our long-term profitability goals. So on the fulfillment take rate side, we have seen some decrease over time. For the near future, we expect it to be around the levels that you've seen this quarter.

Very helpful. And then just secondly, on managed markets. I know you've spoken in the past about harmonizing the domestic and international experiences. But can you just talk about what mechanically has sort of changed versus the prior implementation and what you expect to learn in the beta, and perhaps how you're thinking about a little bit more of a material merchant push into next year post that beta testing?

Sure. Thanks, Michael. So as we mentioned already, we've been making great progress on the rollout of the new managed markets, the new flow. The main change there, there are a few updates to the service, but I think the main cornerstone is that we've shifted the flows to work through Shopify payments, moving away from the dedicated payment infrastructure that we had in the previous iteration. What that is expected to allow us is for, as you mentioned, a much more streamlined experience for the merchants in minimal change, if any, from how they're used to managing their store today. So that should be the, I would say, the great benefit of this new build. And together with Shopify, we've done most of the development. It's pretty much ready for rollout in 2026. And we are already the new merchants that we mentioned, now live merchants because every new merchant that signed up for a managed market is actually going through this new flow. So we are getting an increased volume of merchants and transactions. This is serving as the kind of the better testing for this new flow. We use the learning from that to make some final refinements, and we'll be ready for a full rollout next year.

And the next question comes from Brian Peterson with Raymond James.

So maybe high level, can we talk about post some of the changes in tariffs and everything else? Like what are you seeing in terms of the top of the funnel in kind of that white space or new merchants? Any update there in terms of the top of the funnel in terms of that progress?

Brian, it's Nir. So all in all, I think that in line with our expectation, we have seen some effect on same-store sales, especially on the inbound U.S. corridor, where we've seen some weakness and also on the corridors between U.S. and Canada. However, on a global perspective, trading holds strong and resilient. So we're quite optimistic there. Taking it into what we forecasted in our pipeline and the future midterm onwards, we start to see it materializing as global trading becomes more complex, our funnel is actually being built up quicker than before, and we are quite optimistic that the extra complexities with the solutions and capability we built around duty drawback, import duty drawback, 3 B2C, multi-local split shipments, et cetera, would create a sustainable business growth of new business in the coming quarters.

Good to hear. And maybe just following up. For the ReturnGo acquisition, anything we should be thinking about in terms of contributions to revenue or expenses in the fourth quarter?

Yes. So for now, ReturnGo doesn't have a significant impact. It will contribute up to $1 million of revenue in Q4. It will have a slight negative impact on adjusted EBITDA, nothing worth mentioning. We are very optimistic about ReturnGo because since we acquired the company, we have been started to implement the ReturnGo solution into Global-E. It's early days, but we see good interest and traction from merchants. We see some upside potential as it is still insignificant as I mentioned, but the run rate of revenue since we acquired the company has significantly grown, and we are quite optimistic going into 2026.

And the next question comes from Mark Zgutowicz with Benchmark.

Nir, I was just hoping maybe you can round out the commentary around same-store sales in terms of second half NDR trends sort of year-over-year and how you're thinking about first half next year and maybe also balancing that with just new deal pipeline growth?

Thanks for the question. Same-store sales growth has remained stable throughout the year, continuing despite the changes in global tariffs and their impact on key corridors. There has been some slight weakness in imports into the U.S. compared to other lanes, as well as between Canada and the U.S. However, overall stability is present, and we started to notice some adjustments in consumer behavior and merchant pricing beginning in late Q3 due to the new environment. We expect stability in those corridors as we approach 2026. Regarding our sales pipeline, we remain optimistic. Although we didn't see major clients launching in the latter half of this year, we anticipate that the multiple smaller merchant launches, which are performing very well, will compensate for that. This is reflected in our numbers, reinforcing our confidence in the expected growth from new merchants.

Got it. That's helpful. And on Borderfree, just curious, it sounds like things are progressing there quite nicely. If you can maybe talk about trajectory into next year in terms of monetization? Is that perhaps more of a first half or a second half type modest inflection there on the monetization front, that would be helpful?

We are very excited about the opportunity with borderfree.com. When we acquired Borderfree 2.5 years ago and developed the platform, our aim was to enable our merchants to achieve effective brand awareness with a guaranteed return on investment. We noticed that changes in the Google Cookie Policy and Apple iOS made it harder to attribute media spending, making it increasingly costly to drive new traffic to our site. This challenge has been exacerbated by the shift of attention to platforms like ChatGPT and Gemini, which further complicates the attribution of paid media. This reinforces the value proposition of Borderfree. We are witnessing a growing number of new merchants and an increasing number of returning customers using borderfree.com. With our current investments in a direct-to-checkout solution, optimizing traffic journeys, and the recent launch of a new cart feature that allows customers to buy multiple products from borderfree.com, we anticipate much higher conversion rates. Its share of demand generation for brands is already increasing, and we expect it to keep accelerating into 2026. While I don't foresee a significant impact on direct revenue, particularly in the first half of 2026, I believe that if we fulfill our plans, it will create stronger, more enduring relationships with our clients and lead to faster growth in their same-store sales over time.

And the next question comes from Samad Samana with Jefferies.

This is Jeremy on for Samad. Congrats on the strong results. I guess, first, can you please give the FX impact on 3Q GMV and total revenue? And what FX impact are you baking into the 4Q guidance?

So FX was much more stable in Q3 compared to Q2. We haven't seen any significant impact or on the top line and on the bottom line. At least for now, it seems pretty stable in Q4 as well. So no big shifts, and we don't expect any significant or material impact in this quarter.

Okay. And then on the enterprise integration with Shopify, have you seen any change to the competitive dynamics or any key learnings or takeaways from shifting to the new partnership? And then maybe can you help us size the uplift transitioning to preferred economics that you're expecting going forward?

In general, we haven't seen any significant changes in the competitive landscape. Over the last few quarters, we continue to lead the market in the strength, capabilities, and offerings of our platform and services. Specifically regarding Shopify, there have not been any notable changes since we signed a new agreement and achieved preferred status. On the enterprise side, we do not see any meaningful competition. There is another provider that supports enterprise brands, but its traction outside Shopify is low, and we anticipate it will be even lower within Shopify. The smaller players working on Shopify have been offering basic solutions or point solutions even before the recent changes, and they have not managed to attract any enterprise merchants, with very limited traction in the smaller segment as well. Therefore, we haven't observed any significant change in the dynamics.

In terms of the Shopify rev share, it has the improved economics from the new contract began towards the end of Q3 and the full impact is reflected in the Q4 guidance.

The next question comes from Patrick Walravens with Citizens Bank.

Great. At a high level, can you guys just explain how the duty drawback works like very simply for people who don't quite get it? And then also what you need to do in order to roll it out in a new country?

Yes. So let's take an example, a sale of a U.S. merchant to a Canadian shopper. Let's assume that the goods that were bought were USD 200. Once they hit the Canadian borders duty and tax applied; whether if they were paid in advance, paid at the border, duty and tax applies. The average duty rate, let's put it at 15%, would be another $30 that are paid on that $200 parcel and another 5% for sales tax, and you get $40 that are levied on this parcel. Overall, these $40 are paid by the merchant or by the shopper, but they are part of what the merchant built into his pricing when he sold the goods. However, if I stated that 10% of the goods are coming back or 15% even, it means that out of those $40 fees, on average, $4 to $6 are represented by returned goods. Without duty drawback, those dollars are lost today. With Global-E, for example, in Canada, where we have a CBSA approved credit program for our brands, we are actually able to reclaim those $4 to $6 for our brands, optimizing the cost structure selling into Canada around 2% for each transaction.

All right. That's great. Okay. So you shouldn't have to pay on the things you return. Got it. And then Ofer a follow-up for you. As I look at your four-year plan versus where you are now, everything seems to make a lot of sense, except maybe the non-GAAP gross margins, your fiscal '25 to '28 guidance is high 40s, and you are at 46 this quarter, right? So I don't think that's high. So can we just address that a little bit?

We previously indicated during Investor Day that we did not anticipate gross margins to surpass our current levels. Our primary focus is on cash generation and adjusted EBITDA, which are closely linked. Over time, we have developed various models with different profiles that affect our results in diverse ways. From our perspective, we are on track to achieve our targets and expect to maintain gross margins in the high 40s, which is where we are currently. We believe that over the duration of our plan, we can sustain similar levels, and potentially see improvements.

The next question comes from Koji Ikeda with Bank of America.

I wanted to ask about agentic commerce. And can you talk a little bit about how Global-E will help with the data flow to power agentic commerce? I mean, do you envision globally plugging directly into the ChatGPT type agentic commerce experiences? And how, if at all, is agentic commerce changing sales cycles right now?

Sure, Koji. It's Amir. Thanks for your question. Again, I touched upon it a bit in the prepared remarks. We do believe that agentic commerce is going to affect the entire value chain of e-commerce. We're already starting to see signs of that today. As I mentioned, mean starting from the top of the funnel, kind of demand generation is being done today more with AI-enabled technologies, including marketing campaigns, even campaigns that we ourselves are doing for B2C. They are using the Meta Advantage Plus tools that are AI-driven, and we're building custom generative AI-based tools to streamline many functions across the funnel from consumer support and outreach to merchants. We think that especially the high growth kind of D2C brands are probably the best positioned to leverage AI integrations and remove barriers that currently exist in marketing, selling, advertising, and creating traffic from markets where it was previously very complex for them to create brand awareness with manual processes. We're constantly looking at the new developments in the field. We're very impressed by what AI-supported platforms have been able to achieve in the relatively short time. We're already seeing some transactions, not directly through instant checkout, but transactions that are already initiated from ChatGPT and from agent-assisted in-chat checkout. We believe this will grow in the future. In any case, given our expertise, given our unique know-how and our scale of data and capabilities, we believe we are best positioned to provide the kind of international and the cross-border layers that are required to enable these AI-powered transactions in the future.

Got it. And maybe a follow-up here. I look at the third quarter GMV growth, looks really strong and the 2025 GMV guide, that's really good, too. Last year on the third quarter call, you did give some early look GMV growth color for 2025 of 30%. The guide today implies that you're going to achieve that. So is there anything you can share today for 2026 GMV growth assumptions?

Yes. We are very happy with the Q3 results and the growth trajectory we are seeing into Q4, and this will also support us going into 2026. As mentioned in the prepared remarks, we have seen very successful merchant launches in recent months, and they're also trading very well. So we believe that this will provide us some tailwind going into '26. Generally speaking, we believe that we are on path to achieve our midterm targets, and I think this is sort of the framework that we are looking at going into '26.

And the next question comes from Rob Wildhack with Autonomous Research.

To start on the repurchase, could you just give us some additional thoughts on your approach to like a timeframe around the $200 million?

So as we mentioned on the call, we have been in a closed window up till now, and we plan to start executing on the plan soon. The pace will depend on the market conditions and other factors. But we do expect to start executing very soon and start to buy some of this plan in the coming months.

Could you provide some insights on how you're connecting adjusted EBITDA to free cash flow in terms of guidance and the long-term target? Can you share any figures regarding free cash generation, particularly between 2026 and that longer-term target with mid- to high 20% margins?

Yes. Generally, when we assess the full year, we observe seasonality in cash flow and free cash flow. However, when considering the entire year, it usually correlates with adjusted EBITDA but tends to be higher. Looking at previous years, we anticipate this trend will continue, remaining somewhat elevated compared to adjusted EBITDA. This is primarily driven by working capital growth, which provides us with some momentum. We expect this to persist in the coming years as well.

I think it is also important to note that, as we set our longer-term targets, we experience efficiencies of scale as we continue to grow. This is evident in the long-term improvement in our EBITDA, and as a result, we are also seeing positive developments in our free cash flow, which is performing even slightly better.

And the next question comes from Chris Zang with UBS.

I have a question about the regional trends you've observed, specifically regarding the merchant outbound region. It appears there's some weakness in the U.S., which was balanced by growth in the U.K. and European Union, even after making the necessary adjustments. Could you provide some insights on the regional trends compared to previous quarters?

I think what you referred to is the fact that the share of the U.S. outbound was slightly lower this quarter. I don't think that it reflects weakness in U.S. trading outbound. It reflects more the mix of our new launches coming from additional origins, such as our great success in APAC, and also some growth in Continental Europe that in share grew faster than the launches we had in the U.K. Additionally, some of the merchants have traded even better. But the combination of both yielded this result. It's not that we expect it to be consistent over time, so I wouldn't use it as a determiner.

And that concludes our question-and-answer session. I'll hand it back to Global-E CEO, Amir for closing remarks.

Thank you. And on behalf of the entire global team, I would like to thank everyone for joining us today and for your ongoing support. Despite the uncertainty that the global commerce markets faced at the start of the year, we've continued to outperform every step of the way. Our outlook and market positioning are as strong as they've ever been, and we're excited to demonstrate continued performance for the remainder of 2025 and for years to come. We see tremendous opportunity within the market for our platform and services. As we grow in both new and existing merchants, our confidence in the value that Global-E is bringing to the e-commerce market remains reinforced. With a long runway of innovation and growth here at Global-E and by leaning into the opportunities ahead of us, we remain confident in our ability to achieve our growth targets across our key metrics for the foreseeable future. We look forward to speaking with many of you during the quarter and updating you on our future earnings calls. Until then, goodbye and take care.

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may now disconnect.