Capital Markets Day Transcript - GLBE 2025-03-11

Operator

Good morning, everyone, and welcome to Globally's 2025 Investor Day. Thank you very much all for coming, both in person and virtually. As management's going to be making forward-looking statements during today's presentation, I wanted to take a moment just to pause with our safe harbor statement. Great. So we have a lot of great speakers today. I'll make my way through the agenda very quickly, and then we can move on to the real stuff. Starting off the morning is going to be Mir Shaukat, talking about Globally's vision and roadmap. We're then going to move to Yaheim to talk about product and technology. And then Nir will discuss Global E's go-to-market strategy. After a brief break, we'll have Matt walk through a customer panel with Figs and Keith talking about the partnership with Global E for global growth. After that, Ofer will move on to financial strategy for Global E. At the end of the event, we'll actually open it up for Q&A with management. With that, I'll turn it over to Amir Shlokit for CEO globally.

Yechiam Shinder, CTO

No, I don't need to have that. Thanks, Mike. Yeah, sorry about my last name. Thank you. For everybody who doesn't know me, I just go by Amir. Don't try pronouncing my last name. So thank you all for coming, as Mike said. It's great to see you all on this great weather day here in New York, both in person and on the webcast. And i want to start the day off. We have a lot of materials Prepared for you guys. But i want to start off by Taking you through kind of just high level the global e Story because i know not everyone is fully versed in The story. Some people are a bit newer to It. So i actually want to start top Down. So as you all know, probably our mission at global e is to power better global e-commerce so if you look at the e-commerce market it's actually steadily gaining share out of total retail this is probably no surprise for all of you will feel that probably in your normal lives as more and more consumers over time Move to shopping online. And more and more brands move to Relying on online sales as their main strategies. And you can see that on the graphs for more than a decade Now, e-commerce is steadily gaining share out of total retail. There was an acceleration during covid with store closures. Than normalization in 2022 with the reopenings. But overall, if you look at the graphs, you see that it's a Very clear and secular trend of moving to online. But when you dive one layer deeper and you look at global Direct-to-consumer online, which is kind of the holy grail for Any brand out there, brands immediately face a very Complicated maze of problems and issues and barriers that prevent Them from being able to transact directly with those consumers Worldwide. As soon as they need to sell to someone Outside their domestic market, all of a sudden, everything Becomes complicated. Every aspect of the transaction Becomes a barrier. And the reason why it's so hard for To do that is just look at what it takes in order to localize The consumer experience for a single market. This example, it can be a u.S. Retailer or a u.K. Retailer for that matter trying to sell to the Netherlands, which is a very big and important e-commerce Market in europe. So all of a sudden, they need to Change almost every aspect of the experience on their site. They need to cater to the local language. They can get by with English in the Netherlands, but at least the important bits need to be local, like marketing messaging and the checkout need to also be provided in local language. They need to price everything correctly in euros as a local Dutch consumer would expect. They need to support local payment methods. If you try to sell to dutch consumers and you don't support ideal and clarina, you're basically missing out on more than two-thirds of how dutch consumers are used to paying online. You need a good shipping offering. Oops, sorry. You need a good shipping offering at an attractive price, and You need to support the european and the dutch specific import Regulations, duties, vat, and so on. And that's just for a single market, and even that is a Moving target, because look on the right side on all the Recent and expected changes in import regulations and duties And taxes regimes where we're all kind of focused here in the U.S. about the recent changes in tariffs, but this is not unique to the U.S. Yes, maybe it's making a lot of headlines now, but regulations change on a regular basis. Countries change their VAT rates, their import regime, their low-value goods tax regime all the time. And as a merchant, you need to stay compliant and you need to be up-to-date. And that's just a single market. If you now multiply it, if you want to sell globally, multiply That complexity by 50 markets or 100 markets or 200 markets, It's virtually impossible to do as a merchant. There's no one-size-fits-all here. The consumer preferences, Local regulations and requirements are vastly Different if you want to sell to a brazilian customer or to A swiss customer or to a japanese customer. There's no one-size-fits-all. You can't do it just by yourself. And what that means is that brands are just not realizing their global direct-to-consumer e-commerce opportunity. And they know that because they look at their traffic patterns. The average brand that has some brand equity will have a hefty chunk of its traffic coming from non-domestic markets, sometimes as high as a third or even more of its traffic because of the way they build their brand today, all relying on social media, social marketing influences. It's all global by design. But then when it comes to their bottom line, the share of actual Sales to international consumers is typically far, far less than Their sharing traffic because of all these barriers and issues. And this is exactly where global income comes in. What we've built is a full end-to-end platform that solves These problems in one go for both sides. For the shoppers, we provide a seamless, fully localized consumer experience right there on the brand site. And at the same time, for the merchant, we increase conversion rates and we reduce and remove all the risks and complexities that are typically involved in selling internationally. And the way we do it, the way we simplify this experience for both sides is via a full end-to-end comprehensive platform and set of services that we integrate or allow our brands to integrate to via a single integration through which they get access to all the necessary capabilities and services. So once they are integrated, once our solution is integrated and live on their existing store, they get full access to all the deep localization capabilities that are required in order to create that seamless shopping experience on their site. Out of the box, their site now supports local messaging in more than 30 different languages. More than 100 different currencies, more than 150 different payment methods, so shoppers can pay just like they're used to paying domestically. We precalculate and guarantee the duties and taxes, so there are no surprises for the merchants or the shoppers upon delivery. We work with a network of more than 20 different carriers in order to provide multiple shipping options at different service levels at attractive prices. We facilitate easy local returns in case shoppers need to return something. And as I said, we de-risk the transaction. We take the fraud risk upon ourselves. We take the duties and taxes risk. We take the foreign exchange risk on returns. So for the merchants, it becomes just as easy as selling domestically. But we actually don't stop there. because apart for all these advanced and sophisticated capabilities, we also have another thing. We have a lot and a lot of data. As we scale up and as we work today with more than 1,400 enterprise merchants and many more on managed markets on Shopify, and we transact more than tens of millions of transactions a year, billions of users' interactions all around the world, that very diverse and very broad set of data allows us to create very, very meaningful insights for our merchants. We basically slice and dice all this data, feed it through very sophisticated statistical algorithms that enable us to take a certain merchant situation, it can be a new merchant, it can be an existing merchant, And provide data-driven, very kind of curated, we call them smart insights that take into account the vertical that they're in, the price point, the origin and destination market, and other parameters in order to provide very specific, very curated advice that tells our merchants not just what they can do with all these capabilities that we bring to them through our platform, But actually what our data shows that they should do and exactly how they should configure all the elements of the international shopping experience on their site in order to have the optimal conversion rate and take advantage of that international opportunity. And when you combine that kind of capabilities and know-how, you get a very, very seamless, fully localized customer experience right there on their site. From the moment the shopper enters a globally enabled website, Our technology will recognize where they're coming from based on the ip address or they can also switch that manually. And they'll get greeted into the site with marketing messaging in local language that is customized based on our data that shows what works best in that specific situation in order to reduce bounce rates. We will then localize the entire browsing experience on the site with localized pricing and product availability. We localize the entire checkout experience, offering the full landed cost, inclusive of all the duties and taxes, shipping, and so on. So there are no surprises for the shoppers. They know exactly how much they're going to pay. I mentioned earlier, we work with a wide network of carriers so we can offer multiple modes of shipping at attractive prices. We can let shoppers self-select those that care more about time versus those that care more about price of shipping. And also those that prefer to use one of our specialized shipping methods like cash and delivery, like delivery to drop-off points, All depending on what we know, again, from our data that Consumers prefer in that specific market. We then let them pay using their preferred local payment method. And we don't stop there. We support also the after sale Experience in case they need some help. We provide multilingual customer services and we facilitate Returns to a fully managed returns process and returns portal. So a full end-to-end solution. And that set of capabilities, that value that we are able to deliver to our merchants and their consumers worldwide, is really what has propelled our tremendous growth since inception. We started a company in 2013, Shaha Anir and myself, with nothing, just an idea. And now some 12 and a bit years later, we're here expecting to trade this year more than $6 billion for our merchants on the platform, generating close to a billion dollars in revenues, continuing to grow fast, and have all this growth done in a very durable and scalable way as we generate cash and a high adjusted EBITDA margin. And that success is, of course, thanks to the thousands of different merchants that have basically chosen globally to be their partner and to enable their international direct-to-consumer sales, Including some of the world's most iconic brands. We have two of our favorite brands joining us today for a Panel later on. But i think you can recognize here Many different brands across different verticals, different Price points from luxury to everyday fashion, different Types of merchants from kind of established brands that have Transformed into the digital world and like adidas or Yugo boss and are now moving to the next stage to direct to Consumer internationally using globally. Basically, you name the brand, the vertical that they're in, The type of merchant that they are, we can add value to Them and help them to fulfill their own goals of going global And selling direct to consumer around the world. I think the reason or the fundamental reason why these Brands trust us with their global sales is because our Business model is tightly coupled to their success. We work on a success-based model. So the only way we can generate revenues is by enabling our Merchants sales around the world. And you can see that when you look at our tremendous revenue revenue growth that grew almost seven times since our ipo and how tightly it's coupled to the growth of gmv which is essentially the sales that we enabled for our merchants and in order to maintain that value generation for merchants that that is at the at the basis Of this fully aligned business model is our technology. And in order to achieve that, we keep investing and reinvesting In building additional capabilities, sharpening our existing Capabilities, adding more operating models, adding more Optionality to our platform that enables us to cater to more And more merchants around the world and more and more Merchant situations. And you can see that from our Investment in r and d. Our cto is going to dive a little Bit deeper into that in the next session. But if you just look at our investment in r and d, which has Grown sevenfold since the ipo, i think it speaks for itself. But at the same time, we operate on a very, very efficient Operating model, and we keep our eye always. We don't just want to grow for the sake of growth. We want to make sure that we build a longstanding, Sustainable business model that's built on profitable Growth, on durable growth, and on cash generation. And that is evident, i think, from the fact that from the IPO, we've managed at the same time that we grew Seventh-fold revenue-wise, we're actually able to expand our Adjusted EBITDA margin from just 9% at the time of ipo to 20%, which is what we expect to do this year. We've actually reached the 20% on a quarterly basis in q4, and In 25, we expect to do that on an annual basis. So what drives this success? What drives the value creation that our platform provides The basis of it, and i mentioned it briefly earlier, is a full end-to-end comprehensive tech platform that we've built that takes care of all the different needs and requirements that are there in order to localize that shopping experience for the consumers and for the merchants alike. On top of that broad set of capabilities, we add data models using AI and machine learning and integrate that via APIs to external providers as well in order to provide that layer of applications that powers each and every element, each and every capability out of those that I mentioned earlier. That together form that fully localized experience. On top of that, we add go-to-market elements such as demand generation, Such as those smart insights that I mentioned, In order to deliver the true value for our merchants to grow their business. So that tech sits in the middle and orchestrates all that we do. And that's connected to a very, very broad and growing set of T1 providers out there that are integrated into our platform via Hundreds of apis and together form the ecosystem that enables All of our services. And it starts from the e-commerce Platforms. As you are all aware, we have integrations into pretty much any e-commerce platform out there. There's, of course, our longstanding and successful partnership with Shopify. We have great integrations and relationships with all the other leading platforms, from Salesforce commerce to Magento to big commerce, et cetera. But those of you that were around at the time of our IPO, maybe remember this slide, And we'll notice that there are many more logos on this slide because we keep adding more and more providers, more and more such integration. I think a recent one is Scale, a fast-growing, successful e-commerce platform that food integrating with Scale and partnering with them. We got two very exciting deals already, Harrods and Manchester United, two great, relatively new clients of ours. Same is true for payment providers. We keep adding integrations to additional payment gateways in order to create both redundancy and capabilities and performance on the payment side. Additional carriers to better our logistical reach and performance and so on and so forth. Now, the combination of investing in our technology and Constantly expanding the ecosystem of partners that we Work with is really what drives our innovation all across the Board, all across the different elements of our offering from The very beginning, from the relatively new demand generation Capabilities that we went live with, border free, which you An example here is one of them. Neer will talk a little bit more about that later on. Excuse me. Through adding, as i mentioned, additional Capabilities around payments, additional optionality and Sophisticated logistics offerings. Through to investments in better and better risk Management models for the sake of our merchants. And, of course, keeping us and our merchants always fully compliant with local regulations, with local duties, taxes, tariffs, et cetera, all the way to completely new operating models. If it's the relatively new multi-local offering that we Added just a few years ago. If it's support for digital Goods, which we are enabling as we speak, and, of course, many Capabilities that are starting to rely more and more on Artificial intelligence, both internally to make our Operations more effective and efficient, and also externally Like our, for example, our multilingual customer services Board. So really, innovation all across The board is driving that growth. And when you look, I think the best evidence probably to that Value that we deliver to our merchant through innovation is The very fast growth in the number of merchants that are joining us uh along the way if you look at just the enterprise side of the house we've tripled the number of merchants of enterprise merchants that we had at the time of the ipo but we've actually quadrupled the number of large merchants those that generate more than a million dollars of revenues on our platform i think this is evidence to the growing value that we bring To our clients. And we don't just add additional Merchants to the platform. We also add services like Multilocal, for example. Multilocal was virtually non-existent On our platform when we IPO'd. It was just kind of initial Attempts. Now, if we fast forward to 2025, we We expect around 15% of our gmv to be generated through this Innovative offering, which is mainly catering to our larger Global megabrands. We're also entering new verticals as We go along. Again, an example is consumer Electronics. Virtually nonexistent when we Now expecting to do more than a quarter billion dollars just in This vertical in 2025 alone. So if you broaden the lens for a second and look at the TAM that we are going after, it is already massive. Even if we just look at global b2c cross-border trade, that's Already more than a trillion-dollar market, and it's Continuing to outpace in its growth the domestic e-commerce. But actually with the new models in place, especially Multilocal and others, we're actually expanding the time That we plan towards the broader global e-commerce Opportunity and expect over the next few years to capture more And more out of that opportunity. I think that rapid growth that we have already generated and Expect to continue generating in both the levels of our Activity, the visits to the sites, the interactions, and The number of merchants, that yields two things that go hand In hand. One is scale, of course, Generating economies of scale, enabling us to operate on an Efficient model and giving us constant access to to one Providers that complete our ecosystem. But at the same time, that data asset that i talked about and Our ability to harness it generates what we call Internally economies of skill. Basically knowing more and more what these best practices are. What are those insights and things that only we can come up with because we are the only ones that have that combination of scale and know-how and broad view over the entire value chain that is required in order to sell effectively internationally. And that combination of scale and skill is what's driving our Very effective competitive flywheel effect. Because the better our insights, the sharper our Insights, the better performance we can generate, the better Conversion uplift we can generate for our merchants. On average, we generate more than 40% conversion uplift, Broadly speaking to our merchants. It's a massive upgrade. It's not just a marginal improvement. It's a complete change in how they do their business Internationally. The more of that conversion Uplift we generate, the more sales these merchants have. The more sales they have, the more merchants also join our Platform because we have more case studies and more track The more data we gather, which enables us to even sharpen our Insights even further, and so on and so forth. And that's a very, very powerful dynamic flywheel effect That's propelling our business forward. Now, if i pause for a second and take a look at the road ahead, We're very excited as you probably noticed from what We've been able to achieve so far, but we're actually much More excited by what is in stock for us for the next near Term and long term. Because if we look at the road Ahead of us, first of all, you saw the that we're in. There's still a massive opportunity to grow both with Existing merchants, capturing more and more of their business And bettering our performance with them. And, of course, also to add additional merchants in all the Geographies that we already operate in. In addition to that, there is still a lot of room both for Geographical expansion to support more outbound markets. We grew from supporting nine outbound markets at the time of our ipo uh just under four years ago to close to 40 different outbound markets that we support today but there's still more room for growth still additional lanes that we can support on the album and expansion to additional verticals i mentioned consumer electronics we've also had in the last years a lot of success entering the sports teams vertical and there are additional That we think that over time we can expand into. Near is going to go into a bit more depth into our go to Market strategy later on. But i'll just mention for now That another thing that we are constantly transitioning over Time is from doing mostly outbound sales, which is what We did i would say many years ago, to relying much more today on channel partnerships to be a force multiplier if you want on our ability to reach new merchants both in our existing geographies and new geographies another thing we can do using our very long-standing and intimate relationships that we have with all of our merchants is also to go beyond the i would say baseline value that we bring to them which is already very meaningful for them and very broad we think that over time we can add more and more value-added service services i'm sorry on top of that driving more value to our merchants and increasing even further the stickiness of our services some of those we've we've already mentioned and we'll mention uh today like border free for example which is our demand generation service um like global duty drawback but there are many others that we believe we can develop over time in order to broaden even further the scope of our work with these merchants. Now, if I look at the slightly longer horizon, managed markets, which is our solution developed together with Shopify aimed at the masses of relatively smaller merchants on the Shopify platform, that's showing very good signs of initial traction, and we believe that over the next few years, with additional investments, with additional work hand-in-hand with our partners at Shopify, we can actually drive this line of business into a very big opportunity By itself. And lastly, if i look even further Into the horizon, we operate today almost solely in the b2c Market. But if you look at the b2b market, There's actually a massive opportunity there as well. B2b is always slightly behind b2c in terms of adoption of new Operating models of new solutions, innovative solutions But fundamentally, there's no reason why B2B brands will not be able in the future to cater to their business customers around the world directly in the same manner that the B2C brands that are working with us are doing. And we believe that in the longer term we can actually play In that arena as well and rely on the know-how and Capabilities that we've already built plus new capabilities that We know we need to add in order to lead that market as well. So that's what i wanted to cover kind of to start the day off. If I summarize what I've talked about, is first and foremost, I think it's very clear. We are the clear market leader in the global e-commerce enablement field, and we operate in an already big and fast-growing market opportunity, which we are capturing more and more of. We drive revenue growth for our merchants and therefore for us. That's the fundamental 100% alignment between us and our merchants that is enabling us to propel the business forward. And we do that on the back of continuously innovating, continuously adding additional services, additional capabilities, additional offerings to our platform. We don't just invest in capabilities. We invest in data as well and in harnessing the fast-growing Data asset that we have. And that is powering very, Very compelling competitive flywheel effects that are Further increasing our quality and performance gap versus Anybody else. And we do all of that on the Back of a very attractive, scalable, yet profitable growth Model. And as we look into the future, we Actually see many different avenues for additional growth Over many years to come, both in the near term and the Longer term.

Amir Schlachet, CEO

So with that, i want to hand it Over to your cto to lift the hood a bit on globally and give You a glimpse, a deeper glimpse into the tech that enables all of this and i'll let him take it from here thank you very much amir thank you good morning everyone i'm richiam shinder globally cto in this session today and i would i would like to walk you through our product and technology story it's a story of scale innovation and excellence that power global emergence we are going to explore the way our technology is shaping the future of First, let's start with our key performance metrics. In 2024, we delivered 2 billion site visits with over 120 billion API calls. In addition, at peak, we delivered 15,000 API calls per second. We managed to deliver this tremendous volume While achieving an uptime of 99.98%. We are 100% cloud native, and we are integrated with more than 300 third-party APIs Via open APIs framework, which allows us to connect to key e-commerce partners. With more than 50% of our workforce in R&D We continuously innovate And last year we delivered 442 versions to production Globally, our commitment to R&D and continuous innovation is clear We increased our R&D spend by three and a half times Crossing the $100 million mark our team also tripled over this year and we also expanded our footprint into nine different r&d locations this strategy allows us to top into words top talents support our merchants within the region and also accelerate innovation our success is built on four pillars the first one is a robust and scalable architecture that deliver reliability at scale the second is our continuous innovation of product and technology that drives new capabilities all the time the third pillar is entering security and trust which keeps our merchants and shoppers safe and lastly it's the high-performing team that makes all of this happen let's take a closer look global e-commerce requires reliability at scale our first pillar a robust and scalable architecture allows businesses to grow without limits over the past four years we experienced significant growth in platform demand and usage Api calls a surge 8x crossing the 120 billion calls per annum Reflecting a dramatic increase of platform volume. The total number of products managed by our system grown by 5x and most importantly number of orders increased by 4 effects. Demonstrating that our usage increase not only reflect iusage of the system but also driving real growth for our merchants. This continuous combination of rising api calls, product expansion and order volume demonstrated our architecture and scalable cloud native platform can handle the growing demands our platform is built on a 100 multi-tenant cloud powered by aws and cloud for cdn for content delivery we ensure our availability of the platform by building in building in significant redundancy and also deploying a fully functional disaster recovery set up in a separate aws region this allows us to ensure availability at all times of both the pci and public environments this architecture is highly scalable and capable to handle any volume and demand we are committed to continuous investment in state-of-the-art technology And also keeping our infrastructure up to date And keep optimizing it more and more Our continuous investment keeps our platform in the forefront of innovation And allows to handle any demand Our architecture is built in four different layers The first layer is the infrastructure Which is powered by AWS and Cloudflare And this actually allows us to operate our entire platform Then we have the core capabilities Which are the essential functions of our system Such as checkout, payments, fulfillment Communication, fraud prevention, data and security These core capabilities are then wrapped with another layer of APIs which allows simplicity extensibility and also fast integrations we have different API's for a order creation returns dispatch notification gift cards refunds tracking events and shipping documents the last layer is the product features that actually represent the end-user functionalities like localized Check out different payment gateways and methods, carriers integrations, price calculation, duties and taxes, to name only a few. This layered approach allows us to ensure that every component is optimized for scale. It also allows us to easily integrate with different partners across the ecosystem. Globally, a robust architecture powers more than 1,400 direct and thousands of indirect merchants. Now, let's explore the way our architecture seamlessly connects to the ecosystem. Our platform sits at the center of a very connected ecosystem and connecting to a wide range of partners in fulfillment and logistics solutions, payment providers fraud management tools and also various of e-commerce platforms our open api approach actually allows us rapid and flexible integration and integrating with partners merchants and the other parties at the fast manner in essence our platform is access the central lab of the of the global e-commerce ecosystem Delivering a seamless experience for both our merchants and shoppers. Here you can see two merchants, Logitech and Herods, that testimony about our capabilities to Onboard very robust and complex projects in a fast time to market. Harrods managed to re-platform the entire e-commerce system in under six months, and Logitech described globally as one of the fastest and most versatile e-commerce projects they ever had. This testimonial speaks directly about our robust architecture and agility that allows us to support high-scale merchants with very unique requirements and a fast onboarding time. our second pillar is continuous innovation of technology and product at globally we believe that true innovations comes from collaborative inputs we get from different parties on the left side you can see the different sources for the inputs like discussion with Merchants requirements from partners internal ideas and also Advises from external experts these inputs are then becoming A requirement that are moving into a process of design Development and qa the output of this process is a swift Innovation delivered across our platform and apis we also put in focus stability and security in every product release by co-developing features in partnership with our ecosystem we continue to refine our platform and meet our to meet our merchants and partners needs earlier presented our broader product roadmap our rapid growth and involvement of solutions allows us to innovate even faster and i would like now to show you a few examples of that ai is core of everything we are doing in the company today we have multiple use cases in play and others that are being deployed across our different platforms and services the first example is our ai powered chatbot for customer services returns can be a major pain for both customers and merchants and these solutions remind the entire process by leveraging AI we guide customers step-by-step throughout the return process reduce the support overhead and overall improve the post purchase experience for the shopper this video demonstrating our CS chat bot guiding a buyer through the return process as you can see it takes the shopper step by step through the journey starting from choosing the product you would like to return selecting a return reason and finally generating the return label pay attention to how intuitively it leads the shopper through the different phases of this process. Now return is only one use case of the chatbot. Today the CS chatbot is handling more than 50% of the total customer services tickets it also improves significantly the shopper experience allowing to receive a return label about 10 times faster than it would take him if he would open a support ticket the second example is related to extending our only channel capabilities we developed a new feature Buy online, pick up in store. It allows the shopper to choose one of The merchant's physical location as the pickup location. It also presents multiple advantages both to the Merchants and the shoppers, like leveraging the local store Inventory, reducing shipping costs, allow immediate And also increase the footfall to our merchant's stores. This feature actually streamlined between the online and Offline shopping experiences and also improve the shop experience And provide our merchants tangible benefits. The next example is a key area that we are focusing on. which is developing more self-service capabilities for our merchants that will allow them to manage their e-commerce business independently and in a very intuitive way. One of the recent developments we did related to self-service analytics. Our merchants can access now to a live view dashboard To track the daily sales performance in real time. In addition, they have access to the sales and funnel performance Dashboards in which they can track their different location, Countries and geographies and also track top kpi such as Orders, returns, average order value and conversion rate. By providing our merchants access to this data, we allow them to get into a much faster data-driven decisions, improving their operations, increasing conversion rates, and ultimately driving additional growth. The third pillar is our security, which is a key in our platform in order to ensure the safety of our merchants and shoppers We took an holistic approach from cloud infrastructure to secure software development process We built security into every layer of our organization On the cloud infrastructure level we leverage cloud flow for traffic protection and net scope for secured access this ensure that our Perimeter is well defended On the local endpoints. We use different tools for Protecting devices and user identities reinforcing zero trust model We also adhere to leading security standards and testing protocols, such as PCI, SOC 2, ISO, SOCs, and GDPR. And we are doing continuous penetration testing to validate our defenses. On top of that, we have secure software development process that is baked into our SDLC, In which we are doing automatic code scans and periodic security audits to Ensure that our code is written in a very safe way. By integrating security across cloud endpoints compliance and Secure coding we ensure that every transaction and piece of data is Secured and safe. Our last pillar is our high High-performing team a cornerstone of our success our r&d team is composed of over 600 engineers Which 200 out of them are software developers the team grew significantly over the last four years And we also expanded our global footprint We have a strategically located the R&D centers in key markets and this allows us to attract top talents and also support our merchants within the regions to support our ambitious goals and fast growth a we attracting top talents and continuously invest in their development let me highlight four aspects of our approach first of all we built a structure onboarding program which immerses new wires into our culture and technology fast they end their real real life projects from day one making sure they are productive and comfortable with their journey early our R&D team is built under a good structure which composed from specialists from different domains like software development qa devops and ai these specialists collaborate on solutions and making sure we apply the same standards between different teams the guilds also take active part in hiring and onboarding our new employees Our SHIFT-F approach in continuous integration and continuous delivery ensures that we test everything early in the process, ensuring that security standards are being met and that performance metrics are being followed. This allows us to catch things early in the process and by that deliver high-quality software and in a faster menu finally we empower engineers with a cutting-edge AI tools like cursor copilot and other LLM coding assistance by doing that we allow our engineers to foster also a learning culture that make them keep finding new ways to optimize the way they develop software by 2027 we aim that 50% of globally code will be generated by AI by that we'll be able to accelerate innovation in an efficient way altogether these strategies provide an environment that allows our talent to develop and our innovation to accelerate Let me summarize the five key takeaways of our discussion today Our highly scalable platform was built by diverse experience and agile teams Ensuring resilience, adaptability, and continuous innovation at scale Our technology is seamlessly embedded into a wide ecosystem In having deep integration, frictionless connectivity, and Enhance capabilities for merchants and partners. AI is driving efficiency and smarter solution and also allow Us to provide much more personalized shopping experiences. We see AI as a key in everything we are doing these days and in the future. we adopt a robust approach for security that spans from a different layer of our organization and this approach ensures that both our merchants and customers can trust our platform to protect their most sensitive information lastly we continuously innovate across technology and We're driving smarter solutions. We provide our merchant self-service capabilities. And overall, we deliver more and more features that support our merchant growth. In closing, I would say that global is more than e-commerce platform. It's the engine that power global commerce and the platform that combines state-of-the-art technology, continuous innovation and a world-class team that deliver unparalleled results thank you for very much for your attention and i look forward to discuss any question you may have during the q a session thank you thank you very much thank you very much everyone for joining us today it's a pleasure to meet in person in the event four years after the ipos nearly a month

Nir Debbi

a month shy of four years almost so it is an exciting opportunity for us globally has done a very strong performance over the last four years since ipo on average we've grown four to five x versus the global e-commerce market in each and every of the years since the IPO. We were able to do it by a combination of things from growing our own clients faster than what the market is growing, winning more business from our existing clients, as well as winning more and more business out of the market itself. We did it on a multi-layer GTM strategy that is compiled at the bottom of it of the basis for all, which is winning more and more new business and scaling up our ability to win new business. We're doing it through a better and a more proficient direct sales approach, combined with the ability to do it in many more markets. Amir spoke about our market expansion. We came out of around 10 markets at IPO to 39 markets that we will be able to transact with merchants out of within 2025. So it's scaling the direct sales capabilities across those markets. And on the top of it, the continuous widening of our channel partnerships. The second layer of our growth that is contributing a lot into our ability to continue and scale at a high pace is actually growing our own merchants. Both Amir and Iyam spoke about it. We continue to invest heavily in our product development in order to give better capabilities to our merchants, in order to change with their needs as they grow and scale, as well as giving them more data to transact better with the capabilities they get from us. This extra growth creates confidence and relationships that actually drive the second layer of growing within our base, which is actually lend and expand, where we get more markets from large enterprises that launch with us and continue to grow with us over time giving us more share of their business and on top of it we completed with additional value-added services such as a global duty drawback program such as demand generation and other tools we provided our merchants over time and all of it comes and is wrapped with the ability of globally to actually branch out into additional business models around us that allows us to actually capture more time and more business outside the traditional cross-border business we came from so once we double click into into the first part of winning new business then then I would say it's a it's a it's a base of it is actually uh the fact that we expanded dramatically our approach into uh into it's it's more than 30 it's it's actually 37 markets that are only already transactional two markets that are going to be transactional within the next quarter bringing us to a total of of 39 markets around the world uh a huge uh i would say uh a huge growth we were able to make in a very efficient manner, still maintaining our S&M under control and our operational expenses under control, but this allows us, I would say, to continue and grow with our brands and also win new brands in territories we couldn't do before. Going into those markets, what's driving our growth within them is actually that we have a very sophisticated approach into how we source leads of prospects into our system how do we cultivate them we use multiple technology technological tools in order to do it and data sources that we crunch automatically through our models into a place where we actually see a prospect and what this prospect is actually worth for globally what platform is coming for So we know what's the level of complexity we see in investing in him. So if he has his own built-in home platform, however, he's very small, we know that it might not be a high priority. So we look at what platform is coming from, what's the percent of international traffic he gets, what's the level of localization that he currently has, how good is his proposition in each and every market. All of this is being done automatically through the tools. and actually being uploaded into a CRM system that actually allows us to see per market, all our relevant prospects, and on the back of it, we can look at and continue to enrich that data. Then we add into, how do they do an international demand generation? Do they spend money? Do we see any signals? Did they go into a funding round? Did they change management? Did they hire a new vp for international a lot of signals that we had and on the back of it we decide how to make the approach to them So a combination of the size the complexities opportunity would actually decide where to go from an automatic sequence Down to a junior employee or to a very senior And member of our staff that would actually reach out and all that when we go into the larger ones We map it through our growing channel partners So we might decide that it's even not a direct approach despite the fact that we we found we understood that there is an opportunity now We will direct it to a channel partners that we know is very much connected to that client in order to get a better A better response from the client and actually expedite our ability to onboard To onboard this client And this is of course coupled with our Growing ecosystem. We do have a lot of clients that are being onboarded All the time. Yachiam spoke about it from the technical Side, that we grew from around 90 external APIs to around 300. Those 300 are actually providers that work with us. They make money when we make money. They grow their business when we grow their business. They have an inherent incentive to work with us, channel clients Towards us because we see the growth of those clients and they continue to enjoy it. That what led into what you see here that we got in 2024 to a Point that more than 60% of our business, of our book gmv in 2024 actually came through channel partners. Some of them are channel partners that two years ago were Not part of our network. Amir mentioned that too. He spoke about scale. Scale came in and on the back of Scale joining us saying we want a partnership with you. Within a year's time, we got Harrods into the roster and Manchester United into the roster, two of our largest brands that just launched in 2024. Within those channel partners, we have two that are more strategic. They have been with us for a long period of time. On the one hand, we have Shopify. We are already five years into the partnership with Shopify. The initial term was three years, and then we continue and extend our partnership every year. And within it, we also expanded the partnership. When we launched the partnership with Shopify, it was just for the 3P solution, which is our enterprise platform. I think a bit shy of a year later, we expanded this partnership to also power Shopify managed markets. So we extended and widened the partnership. And now we continue and extend this partnership going forward. Same goes with DHL that has been with us for 10 years. It's a very long lasting partnership. We believe in it. It's doing great for us. It's doing great for DHL. And it allows us not only to enjoy MFN or preferable rates. It allows us to provide our merchants with those partners a better service level. We have access to the relevant team. We get better service. Our merchants enjoy better service through our relationship with these partners. And the last thing that we do when we look at how we go to market to win new business is actually taking advantage and acting proactive on changes that are happening in the market. I'm not sure you all heard of it, but there are some recent issues around tariffs around the world. It's recently in the news. Maybe some of you follow it. On the back of it, on the one hand, it creates pressure. Look at yourself. Everybody here around the room is aware of it from the left that I hear. It means that our merchants, for sure, are aware of it. and other merchants that are not our merchants are aware of it and consumers are aware of it. On the one hand, short-term, yes, it creates pressure. It creates pressure on consumer sentiment because you start to hear a lot of discussion about it will make pricing higher, it will cause inflations. People are likely to cut down on their spending. That might be a reasonable outcome for the short, mid-term When you look at the consumer side, however, when you look at the broader picture, it makes life more complex. And this is where globally thrives. Complexity and making complexity simpler is where globally makes its money. We know how to tackle things that are very complex and make them simple. Well, just think about the duty changes now for a European merchant that is selling, on average, 50% of his products that are country of origin, China. Now the 10% that were levied, and then the extra 10% that were levied on China, what he needs to do in order to work with it is not just saying, okay, I'll bump my prices 20% up to the U.S. No, because of the extra 10% that are actually suspending the $800 de minimis, now he needs to be able to make sure that he has a carrier that can actually deliver duty-guaranteed products into the U.S. Because maybe he was selling a $200, $150, $100 average order basket. He could use whoever he wanted. It was never stopped in customs. Now it's all going to be stopped in customs. If you don't have the right carrier, you just can't get goods into the country. So you need to switch a carrier. You need to make changes to pricing to a specific country. You need to make sure that if you have a duty tariff set and you show guaranteed landed costs, you need to adjust that duty calculation. And all of that is for a single market. It might be, if you're European, on average 15% to 20% of your business. So the complexity it's creating for you is huge. And this is where globally gives you simplicity. We tell you what to do. We tell you what we expect the effect on your business would be. We can calculate it for you because we run it for our existing brands. We run it through our systems. We know how much of the products sold to the U.S. were country of origin, China. We know what would be the effect. We tell you how much you should uplift your prices in order not to hurt too much your conversion rates. We will transfer seamlessly your orders into relevant carriers that can actually get it into the country. And if we do more than that, we can even connect it into a plan that can assist you with duty reclaim for the 10% or 15% returns that you have back from the U.S., saving you another 1% or 2% of your total cost of trading into the U.S. So this is only one market, but now look about it when it evolves. Canada is implementing 25% or implemented 25% on the U.S. for certain HS code. You need to be a PhD to understand how does it apply to me. Do I sell this HS code? Is this 5%, 7%? You don't need to do it with Globally. This is our business. We'll tell you what the effect on you and we'll tell you what to do with it. That's why we love it. That's why on the back of such events, globally is reaching out and explaining to merchants the value we can bring. Over time, we believe, as we've seen it happening in actual, in Brexit, over time, it will bring more business to globally. So all in all, the combination of those channel partners, direct sales, more markets, being proactive, is what's driving this exceptional growth in our ability to win new business out of the market. In the last four years, GlobalEar has quadrupled the new bookings of GMV into our platform. Just to give some perspective, in 2020, our entire platform, GMV for the year, as Amir showed it, was $770 million. We signed 50% more of it, new business only in 2024, that's how we do better on executing on our go-to-market strategy, winning new business. And these are some of the names. Each one of them is amazing by itself, but these are some of the names that just joined us in 2024. Victoria's Secret, amazing brand. It was the second largest client of one of our competitors that decided to switch to globally. Herods jumped straight into the top five clients of Globally. Herods came out of the debacle of Farfetch. So we win business. Some of it is out of the market. They did not have any solution. Some of it, as you've seen in this example, is actually coming out of being able to demonstrate what we built over there, the strength of it versus competition and bring more business to us. Third example is the same. Manchester United. Together we scaled in partnership. We actually replaced Fanatics and went into Manchester United. So we have a lot of nice names. We do a lot in growing the business. And this is just one year. Think about all the changes. New verticals, sports goods. Just below it, look at Logitech. Amazing brand. It's our first really nice brand that is actually the bread and butter of consumer electronics. And when you win such a brand, you get a certificate of excellence within the vertical. And this will allow us to propel and double up on our penetration efforts into bringing much more consumer electronics. Supreme, amazing, direct-to-consumer, super amazing brand. We go with them. We open market by market in addition in new territories, and it's just spiraling up like crazy. So quite a lot that you see all around new businesses that we're able to acquire. And these businesses are from different verticals. The largest vertical for us would be apparel and accessories. That would be the largest. This is what people like to buy. on the consumer side the most then you would have the likes of consumer electronics and a lot of beauty and cosmetics a sport and fitness is actually growing for us so it's still small but it is growing very rapidly for us and most of our business is done with the brands in the past if you look at globally five to ten years ago we have a much larger share of retailers over time you see the brands are moving forward wanting to transact globally directly with their own consumers so we see the growth in share of our trading and in 2024 reaching 70 percent that is actually brands that actually selling directly and around the globe and that takes us to the second layer that finalized our our way new business layer and now we're going into how we grow our business with existing, which is, I would say, a multiplier of growth. This also is comprised out of three components that we spoke about, and now let's dive into how we grow our own clients. We have a team of CSMs, almost, I would say, a hundred of them, together with data analysts that are supporting them. They are based in each and every geography we operate merchants from. So the CSM is the focal point for our merchant. Anything they need, they are their ambassador within Global E. They need to bring the knowledge of Global E to the brand, of their onboarding. This is before the merchant even launched on Global E. The moment a merchant is signing, in parallel to the tech track of getting them live, a CSM is sitting with them and rebuilding their global proposition in order to make sure that out of the gate, the clients feel the difference, the consumer feels the difference of trading with them. And this leads to what Amir mentioned earlier. Out of the gate, once you're going live with globally, on average, our merchants see typically 40% growth in sales conversion, and this is huge because the most expensive thing for a merchant is actually sales and marketing traffic generation in online. The cost of it is spiraling up. It's killing the brands. And if you can get 40% more of existing traffic that is already coming to your site and you already paid for it, Then this is a tremendous out-of-the-gate result that we can bring on the combination of our capabilities, our know-how, and the dedicated support they get from our team. over time the CSM is the one that should bring the global knowledge into the merchant because what we guided you when you onboarded is not the same on what I can tell you a year later I know your data, I know how your consumers reacted to what globally has done with you, to the new capabilities you didn't transact in a local currency You didn't have duties embedded into the price. You didn't have Ideal, or you didn't have Klarna embedded. Now we learn a lot, and we continue to optimize because we get you into a peer group. We look at how you trade versus your peer group in each and every market. We do it on a relative conversion rate so we can actually take everyone into the same language, and this allows us to tell you you're doing not as good as X, which is not the merchant, but your peer group. And we know why. We can tell you why. Because your return offering is not in par. You offer a return in Germany for 15 euros. He offers it for five. This by itself caters for around 15% conversion. You offer outbound shipping for 10. They offer it on average for five, the best practices. If you match that and you're just thinking your prices, your AOV, you increase it 2%, you will get another 7% uplift. We have this data. We know how to embed it for you. And over time, this is what our CSM are bringing to the fingertips of our merchants in order to grow them faster. And this is combined with the ongoing product innovation that Yehiham spoke about. Our approach to the product innovation is merchant-based. Yes, we do look at ourselves. We do understand changes in the market. We do things that are internally driven. But a lot of it is from listening to clients. Clients are more sophisticated. We have a diverse ecosystem of clients. We have those that are just direct-to-consumer, all of our businesses online. We have those that are traditional. We hear them all. We listen to them all. Once a year, we take all of our top 100 merchants into three events around the globe, sitting with them, listening, sharing what we think is a roadmap, getting their feedbacks, and aligning in order to make sure that we develop what they need in order to do better going online, but making it simple for them to trade better. and the result of that effort is actually translated into numbers because it's not only that we get a push once we onboard into the global e-platform but over time when you look at our different cohorts since inception actually we're at a 4x on average cohort growth we don't only onboard them we continue to grow them over time We grow our clients. You see it in our NDRs that are tracking over the 120%. You see it in the first typical onboarding that gives them a 40%. All of it over time translates into a huge tool of growth coming out of our existing clients. And when you grow your clients and you have a track record, you make your merchants your own brand ambassadors. I didn't double-click on it, but when you looked at where we get our business from, 62% was channel partners. We spoke about the 29% that was direct. 9% is coming out of ambassadors that are clients. They are actually bringing clients to us. Those inbounds, a lot of them are merchants bringing other merchants to us or people that are actually moving from one place of employment to others, we have e-comm director for the fourth time working with Globally. They switched four positions, four positions. What they thought was a successful decision or a good decision to bring to their new job was actually coming and bringing Globally in, which we highly regard as a testimonial of success. And when your brands are happy with you, it gives you two levers of growth. One, you grow with your own brand. So especially when you go to the larger brands, Disney's of the world, the Adidas of the world, you don't get everything. They don't just say, oh, take my e-commerce. But over time, if they trust you and you do good work for them, you actually win more and more business. You can see the Adidas example here. Well, some of it was planned between 21 and 22. Other is actually continue to expanding it. And when you see the numbers of markets, It's not just a number by itself. It's a much bigger market over time. Usually you start with the smaller markets, and if they gain confidence, more and more larger markets are being moved to globally. And the same goes into brand groups. You can see that we have a continuous growth over the last six, seven years with the LVMH group. I think that today we have over 30 maisons out of LVMH with us, and it continues to track year after year. We have it since 2018 with Pink and Marc Jacobs, but it's now six, seven years that we're on the road and we continue to onboard more and more Maison out of LVMH. And this trust goes back to the flywheel effect that Amir spoke about. I'm not going to bore you. Again, with a robust explanation about it, more data, more merchant, more trading, brings a small merchant gives us better advice and actually let's drive a competitive that that is driving our competitive moat and the competitive moat globally is by far the market leader in global e-commerce enablement however we do have competition we have competition that is an outlet for a branded marketplace in the past we used to see it more we spoke about we spoke about farfetch with herods we spoke about the world solutions for luxury especially like matches fashion like net a porter a lot of them are either not with us anymore or are not doing well so this is this is not not doing great as as brands continue towards direct-to-consumer, and we enjoy the trend. We do see some point solutions in the cross-border arena itself, and none of them was able to scale as globally scaled. If I would look at my competitive landscape five years ago, It was a much stronger player versus globally, not to speak about 10 years or more than that when we just started and there were different competitors much stronger than us. We managed to execute better. We managed to generate, I would say, that flywheel of data and capabilities and scale. And it's a game of scale in global e-commerce that makes it very hard to compete with. but that goes into our main challenge it used to be and it still is the vast majority of time is we need is within in-house and this is what we need to continue and educate merchants and that goes back into my approach on the opportunistic changes when it becomes more complex we need to educate merchants that it's better to do it with a trusted partner that this is day to day he knows how to take those complexities out of your life. You don't need to all the time employ your team in doing things that are not the core business of what you know to do as a brand. And this places us in a very good competitive place. And the last bit that is actually driving globally growth is our ability to move into adjacent businesses leveraging what we built in globally, leveraging our capabilities and know-how and trying to push it into additional time that we see applicable. We just recently launched borderfree.com. That was, I would say, one of the key pillars why we decided to buy Borderfree a couple of years ago. We wanted to give a tool, because of the growing cost of demand generation, and we're seeing our merchants struggling to invest in growing their global presence. And if they need to cut down, as everybody now is again stressed, the first thing that is being cut down is international markets because they have own bias, and here is where globally can play a big part, giving them an access to demand generation at scale at a guaranteed ROI of 10x, which is amazing for virtually any brand. We have a base of more than 2 million registered users on it, and I think we can play the video now, and on the back of it, I'll speak about initial numbers since we launched it.

Operator

Whatever you like.

Pat, Analyst — Citizens

Order free. We're in the world.

Nir Debbi

Whatever you like. so basically uh we launched it in november just three months ago we are still in the early days we still learn a lot but i can tell you we're quite happy with how we see it forming up we had in the last three and a half months two and a half million visits to borderfree.com half a million of them were actually redirected from within orderfree.com to our clients on average for the plus 200 merchants that already participate in the border-free program, more than 2.5% of the revenue on global came out of borderfree.com and its marketing activities. For the top performers within them, we crossed 10% of the global sales that are actually coming from the affiliate of borderfree.com where we drive the traffic to them through our marketing activities. We have more than 170,000 subscriptions of new members within that period into the borderfree.com program. And we got word exposure with, I would say, basically transacting in more than 100 markets. and we just recently got our first two success studies out of it really nice brands many of you I'm sure know both Frank and Eileen and APL Frank Frank and Eileen 14% of the sales GMV in the period came out of border free.com marketing activities it's huge it's a huge proportion that we managed to do for them over time we aspire with the changes and adjustments we are now doing to borderfree.com that many others would follow towards a 10 percent mark it's not only that it's great for that brand it will enable us to sell it much more when we go into the second phase of rolling it out to more merchants within the globally within the global arena and much more than that it creates another competitive barrier. Think about the merchants that globally is creating 5, 10, 15% of his business. If someone now comes and wants to sell an alternative cross-border solution or a global e-commerce solution, even if he's offering it 0.5% cheaper, no one wants to lose a tool that is actually driving 10% of his growth. Acquiring new consumers today is super expensive, so So it's another layer of stickiness and another layer in growing our clients' businesses into the future. Same goes for APL. 6.7% of the GMV is globally. 30% higher AOV with shoppers that were introduced to the brand through globally, actually transacting or sold already in 21 markets. The next initiative that we launched a couple of years ago is Shopify Managed Markets. We did it on the back of extending our partnership that I spoke about with Shopify from only the 3P solution, which is our enterprise platform, into what we call 1P, which is globally behind the scenes, powering Shopify Managed Markets, unlocking a vast-time opportunity. A lot of it are smaller merchants that what we can handle or we would take on the enterprise platform. In the last 18 months, since we actually went into GA and launched the product, we were able to get it as simple as less than a one-day onboarding time. On average, to onboard and transact with global is six weeks to 12 weeks. Here you see less than one day. Some of them are going live within two hours. They are able to transact by pressing a button. Two hours later, they are actually transactional on managed markets. That allows us this crazy amount of brands that already transacted on managed markets, which is more than 10,000 merchants that actually utilized the solution, selling to more than 170 markets worldwide. We are working closely with Shopify in order to see how do we increase the adoption, how do we make it, I would say, X time bigger than what it is now as part of it. We are investing heavily now in changing elements of how we built it, not on the consumer side. The consumer would not see major differences, but much more at the back-end side, making it super seamless to adapt to the merchant, not only to onboard. Onboard is already, as you see, quite sophisticated, but actually as simple as trading domestically with Shopify today. We want to make it seamless for them within the same dashboards, within the same processes, within the same payouts system, and the same payout calendar. So a lot of it is being done behind the scene, and we hope to deploy it within the coming two quarters. Also, Amir mentioned it, we expanded our business model into global e-commerce. We used to be cross-border e-commerce. That was our main focus. Today we have 15% of our business which is global e-commerce. In order to get on a high-growth platform over time from zero in 2020 to 15% that it's expected to be in 2025, you understand that the growth of multi-local for us is much more than the 15% that is reflected on the overall. It's growing tremendously for us. allowing us to access terms that we couldn't access before, allowing us to bring clients from vertical we couldn't access before because they don't do cross-border, because of registration, licenses, et cetera, which is, I would say, a great business that we believe would continue to fuel our growth into the future. And the last bit when we speak about new time and opportunity is actually B2B or global business-to-business e-commerce. The potential for it is immense. The contribution today for us is very low. However, the value itself is tremendous. It's $20 trillion market that is currently trading B2B e-commerce. But most of it, by far, is centralized in domestic e-commerce because the cross-border e-commerce for them has the same difficulties that Amir presented that are facing also B2C merchants. However, if we are able to build over time solutions for them, utilizing our core competencies, we have core competencies about transacting in multiple countries. However, they require some variation of it. In order to remove the specific barrier for B2B, it requires some variation because they don't use B2C carriers. It's not just putting a two-kilo parcel and send it over. It can be something that needs a freight forward. It can go maybe freight by air, but most likely it will need freight by sea. And it might be that it does not require a full container, but it just needs to have a pallet on a container. So you need to have a solution that allows it seamlessly for them to be able to do it for you to that lane. It goes into having an IOR, because if you want to give a guaranteed landed cost to someone that is buying a $50,000 machine from you, and you're not a tech expert on how is it to import into Switzerland, you need someone that can actually be the clearance on the other side, where globally can actually leverage our capabilities, not our current capabilities, by the way. Today, our business is based on a personal import of the consumer but actually globally building and accelerating our model of being an IOR for such clients in order to give a guaranteed landed social to a B2B down into the formal clearance and whatever required as formal clearance. So there was huge opportunity. I believe that the next wave of growth would be from those clients targeting global e-commerce because the rationale to cut out the middleman that was in the past in B2C, Because if you spoke 10 years ago, five years ago, with Versace, with Adidas, and told them about global e-commerce, they would tell you, no, we have a distributor in country A, we have a distributor in country B, we don't want to interfere with our business. And then you've seen it changing over time, accelerated in COVID, but changing over time, where they actually take the ownership of the e-commerce to become global because they want to own the client relationship. The same logic applies here. So over time, we believe that if we build the right solution and we see the platforms, e-commerce platforms are moving that direction, Salesforce, Shopify, others, we believe that if we take part of that, it will create a next wave of growth into the longer term for globally. So just to summarize what we spoke about, we have a highly efficient S&M model and approach, allowing us to enjoy less than nine months payback period despite the fact that we're growing dramatically on new bookings year by year our channel partnership are evolving and growing actually hitting a record of more than 60 percent of our business coming out of channel partners and we expect it to continue going forward it allows us also to go upscale because the larger brands the super large brands work with consultants and agencies etc and in order to get to them you need to have channel partners that believe in you we have multiple levers for growth not only from winning business in the market but from growing our current business and continue to execute well on getting our clients to grow we have a data-driven consulting approach that are getting us very close to the client and making the relationship tight as a partnership creates much lower attrition rate out of our platform and we have a lot of new horizons we spoke about to support growth in the longer term. Engines like demand generation, like managed markets, like B2B, so quite a lot of things for us to do. Thank you very much.

Erica Mannion, Head of Investor Relations

All right, all right. Just wanted to get the session kicked off here. First and foremost, I want to thank two of our most, let's just say, exciting brands for joining us today. Never an easy one to step away from the day-to-day, so honestly, thank you. And more importantly, excited to hear the story. And I think there's a few things that obviously we'd love to walk the forum through here today. So first off, introduction. So why don't we start with Michelle? Maybe you can give a quick introduction on yourself and then the brand as well.

Michelle Wasserman

Hi, everyone. Thanks for having me. My name is Michelle Wasserman, and I have a background in scaling retail businesses for nearly 20 years. And I am currently the GM at FIGS of the international business. and figs is a medical apparel and lifestyle brand with a mission to serve those who serve others and it's been a really incredible journey at figs and partnering with globally all right thank you dan i'm dan almost nino good to meet everybody and thank you for having me as well um similarly i I have a long background within the e-comm space.

Dan Alstonino

And I work with Kith about eight years full time. And it's been an exciting journey for everybody who doesn't know what Kith is. We're a lifestyle brand as well in a very different way. We're a retail, we've, you know, foundationally we're founded as a footwear retailer. And we've, you know, converted into the fashion space. We do multi-season product, a lot of collaborative release product definitely an exciting space as you know many many uh growing fast uh fast growing businesses you know you wear multiple hats so like as a title i i wear um chief brand development chief web whatever you know that chief expansion whatever the the growth requirement has been over the course of the years but we're in a very very good hyper growth state and you know global is Globalizing is a very big piece of that, and I'm happy to be a partner.

Erica Mannion, Head of Investor Relations

I love it. Chief travel, chief store, chief, yeah. Lots of chiefs. But no, I think it's exciting because I know we've heard throughout the discussion this morning a lot about enablement, right? Global enablement, why typically brands would partner, whether they do it in-house, whether they have a current set-up establishment today. but more importantly why did you decide to go with it with an e-commerce enabler right and i i want to start that question maybe michelle uh with figs and tell us your story tell us your journey i know we've been partnered for many many years but curious on what that initial excitement you know really really took place so figs expanded internationally into three markets in 2020 And at first we did it all in-house.

Michelle Wasserman

The demand was good. The customer experience was very poor and it was very operationally complex. So we decided to partner with Globally for four reasons. The first is we always put the customer first. so um customer experiences is obviously very important and the ability to localize is um you know and near customer expectations around payment setup obviously currency payment options messaging and even language so customer experience is first second is i always like to think of our team. And so having that support around global compliance management and tax payments, as well as other operational complexities. And then as a P&L owner, profitability. So I know we partner a lot on profitability. No, we don't negotiate at all. um and but um but it's a big benefit to partner with globally because we have shared um scale and so much better parcel rates than we would achieve on our own especially to some of our emerging markets as well as duty and tax drawback for returned items so the you know there's so many components to selling globally and we have a lot of support on um everything that might make It complex and really cumbersome. And then the fourth is it's very easy To continue to expand globally. So i will call matt and we'll open A new market.

Erica Mannion, Head of Investor Relations

I don't usually turn them on.

Michelle Wasserman

We'll talk about it. And there's very little dev work Needed to expand globally.

Erica Mannion, Head of Investor Relations

And so it just really supports our Strategy in terms of reinforcing the customer and then managing managing the business successfully and then i'm going to i mean same question but digging a bit deeper on on some of your because i know we've been working together since 2019 um so we've been together for for a while um and i know your challenges are differ than than the average retailer right tell us your story tell us some of the challenges tell us some of the you know the barriers you face that kith so first of all i want to keep going after michelle because i can It just covers most of my answers, regardless.

Dan Alstonino

But I would say that further to the specific nature of what Kithwa's dealing with at the time, our e-com scaling and globalization goals in 2018 were similar in the sense that we were doing it in a very painful way. At the time, e-com used Pitney Bowes or whatever the service was, and you printed a label, and you attempted to do this DDP process, DDU process, rather, and then you have a consumer who would just reject the package, saying I didn't know whatever the price So looking back on it, I remember the process, reviewing it, speaking with Matt, speaking with the team, speaking with other people in the landscape. And I think that to answer the question more specifically that you asked, the challenge that we faced is we are a high volume Merchant in the sense of we get throttled, we get botted. We were dealing with a lot of flash selling issues, significant Flash selling issues. When i thought of what was the key For the partnership, it wasn't necessarily just the idea of Selling international. There are multiple solutions. But when we were reviewing the solutions, what we found with Globally and specifically with matt was the direct interest to Partner with developers. And i think that our Our integration was one that was so unique and such a spinoff Within the global e landscape because we literally built our Own scaled version of how do we mitigate flash selling. So we would actually take sales. We built a program that was Unique within globally and i think that knowing that i had a Partner that was able to scale with me in response to the Market and in response to the consumer behavior and trying to Very desired product created a massive difference to the Landscape that was just offering international shipping service Partnerships. So when we were able to see a Partner that had a development team that can dedicate hours And resources independently to our needs and then work with Logistics partners that we were working with at the time to Personalize that experience as well and we can have a lot of Of control over a very limited amount of product versus a very High amount of demand and we were able to take massive entries, Look at fraud patterns and work with a cart partner who was Able to really specify that to us was extremely, you know, Differentiating factor and to this day has been the most Meaningful part of the partnership.

Erica Mannion, Head of Investor Relations

I have a specified tailored need to our business where in market most people want to you know cover 80 percent or and and not really focus on the on the rest no it was and i think the the first day we met you told me if you're going to want to partner with kith i've had a sale that will literally shut down the platform that serves me today um and globally needs to be ready and you're right and i think it's one of those where having that investment having the team relationship and being able to build together you also helped us build those capabilities which obviously has been long-standing and helped us evolve our offering as well on the market so thank you for that um and now i'm going to shift into the multi-local strategy right which has been a big topic for today around brands that are starting to really accelerate and i think through your journeys although it started out as breaking down some of those very we think of them as basic barriers which is not basic to many um we started to see inventory positions and entering different markets as a strategy to expand globally in a more economical efficient way whether it be for brand focus whether it be for logistics what have you so i'm going to start with kith on this one um because i think your journey started when brexit hit correct so tell me the entry into europe the strategy you know on on how barriers you faced and and the journey there so same you know same kind of same kind of theme we really worked together You know, very closely actually on a very personalized approach.

Dan Alstonino

We took a very fast growing flash site within kith.com. And at the same time we expanded our physical footprint, our Retail footprint. We have close to 15 global doors. Continuing to grow, adding more annually. But our main goal at that point was to partner our expansion Physically in europe with a european entity website. So i would have product that was already grounded for my retail And i would open a third party 3pl in that location and i would Have a digital experience. Working with globally directly As a shopify ecom store, we really recognized after looking At the hurdles and specifically around this flash selling issue That was happening at the time, that we would actually entertain And work on a solely based globally shopping cart. So i have no native shopping cart even to this day on my eu Website. So eu.Kith.Com operates independently Of kith.Com and within that integration we built an Exclusive card experience. With that, at the exact same Time of building it, brexit gets finalized and it really Changed a lot of what the intent there was. But again, working Understanding what was going to happen once product was grounded Within e.U., how we would serve those Customers differently and what that user experience was going To be. Still feeling localized within both Of those markets, we've been able to sustain and have a very, Very healthy business where u.K. Actually is the largest ship To country within our e.U. Portfolio.

Michelle Wasserman

On the figs front, tell us, right, and i know the journey started single dc and yeah so um so for localization um you know it's really important for the customer experience to um mirror your positioning as a brand and so um there's there are some brands where there's a lot of pull and you just need to enable it and the traffic comes and then you know figs is a little bit earlier on our international journey where we're still building our relationships and so that premium experience and matching customer expectation is So important and so we localize the site to varying degrees Depending on the market and its needs but you know site assets And merchandising and then obviously the currency and Payment options but as we look to support our international Customers more so those who follow figs may know that we're Exploring additional international dcs and we're Really excited to bring the product closer to the customer. And even when we do so, we will continue to partner with global e Because we are able to take advantage of continued parcel Rate efficiency, the local currency and payment options, Which, again, we would not necessarily partner with some Obscure payment providers in finland. But those are really important to the customer. But then also we will continue cross-border transactions Because it will help us with our inventory management And reduce that complexity. So we're excited. We're still earlier on our journey, but we're excited in The next couple of years to take those steps.

Erica Mannion, Head of Investor Relations

We're excited to be there with you. And I think it's one that, And i quote you on this one, to have a single site and serve Positioned inventory around the world is the dream. To be able to have, you know, local inventory and not have to build up that tech debt um is something that and i see that's where it's heading you know i really do and i know that there's a lot of complexities to make that happen and to enable it but obviously further on in the journey but not far behind in the journey um but it's just it's it's exciting for us to see and be part of that together um and i know the team had mentioned earlier tariffs um so i i think this is going to be a new theme that we have to talk about in every meeting that we're in uh and we are you know making sure that we keep your emails full with what's happening um but curious on the overall tariff situation the trade war you know how is it impacting your

Michelle Wasserman

business and you know how do you foresee this you know really impacting the strategy so fortunately figs does not have a lot of exposure to china um and is not produced domestically so We aren't that impacted today. But outside of the dynamic Environment that we are experiencing today, there's a lot Of change globally. The other day I received an email From globally saying, in the Middle East, HS codes are now 12 digits instead of 8 digits. Japan now requires payment authorization to a second degree hgs codes for certain categories in canada now have a different duty rate increased tariffs on in finland and israel and you know and and then it says so i'm like wow but then it says as with all duty and tax regulations globally has automatically implemented these changes no action is needed on your end i'm like as an operator those are the the words you want to hear you want to be up to date with the information but not necessarily spending your time focusing on the dev work that is required to support those changes. So thank you.

Erica Mannion, Head of Investor Relations

You're welcome. I didn't write that email. Somebody wrote that email. Yeah, exactly, exactly. But on the KIF side, right? So it started in Brexit. It then evolved to where we're at now. I'm curious on how you see the tariff situation. You know, similar question, right? Impacting your business and things you're doing to stay ahead.

Dan Alstonino

It impacts the business. I think the one thing it's shown us was on the last administration change we had, there was the original tariffs within China. At the time, we were sourcing product from there, and I think that was the awakening of you have to stay as a brand as ready as possible. You want to have diversity within production. You want to have options and understand what is going to Maintain, help you maintain margin. Like ultimately these are Margin hits and you're going to absorb them on the business side And you're going to try to find a way to manage production and Source products in more efficient ways as much as possible. So to me the awakening came years ago, the first round, and And it's shown us that you have to stay as ready as possible to Just be agile to respond to the market. I'm in a fortunate position as I say a lot of that stuff. I have a product that's within consumer demand. I create demand within our own brand storytelling. But ultimately it's not like I can just pass any of this stuff down the line. So we're very conscious of pricing. We've really tried to maintain a zero price raise as much as Possible. So internally it means that Somebody's got to eat it or you've got to be better at how You get product. But the consumer reaction Fortunately has not been as painful. And again, having product that's limited in nature and Staying very engaged with the consumer and maintaining demand Is for us the biggest focus. As long as people are still You know, we'll have to increase our volumes, but we can sustain.

Erica Mannion, Head of Investor Relations

Protect against the bots. But, yeah, no, and i think it's One, and i know it's been mentioned also, but, you know, These tariff changes, yes, although heightened now, has Really been around for quite some time, right? Whether it be australia implementing gst, whether it be Norway, whether it be switzerland, whether it be, you know, the Eurozone, whether it be the uk and brexit, what we saw, right? so i think yes it's very highlighted now and and there's a lot of agility that's needing to take place right now behind the scenes to make sure that profitability stays key for what the brands are doing but it's one of the most important things and you know keeping a brand profitable and growing in a market that's ever so changing is it needs to happen um and i've got two closing reflections which i i want to dig in on a bit um but number one right what is one key piece of advice that you would give for anyone entering you know their international journey in a similar

Michelle Wasserman

spot to where you know you may have started yours this one i'm going to tee up and let anybody i was going to share um so at figs we like to really think about um what is our um value proposition as a brand where we have the greatest expertise and we focus those resources in-house and then we partner with best-in-class companies to support and leverage their expertise in areas that are less key to us as a brand but very important to us as a business and so that's where you know finding the best partners and being aligned in how we serve our customer is so important um and you know i'm going to put you on the spot right because we do have data-driven insights you've heard amir you've heard near you've heard i think everybody has mentioned the insights that we drive so i i want to talk about this one journey that you took into canada where you challenged the data it's not a journey it was a bet and i'm curious i'm curious about that overall friendly wager and what what was the outcome so uh just to bring everyone along on on this on this journey so we talked a lot about customers expectation around pricing structure and so in europe duties and taxes are included in all the pricing in the philippines it's added at checkout in canada duties are included in the base price taxes are added at checkout and every country has a different version based on their customers expectations early on in my journey with figs and global e i really wanted to keep prices as low as possible for our canadian customers and so i said matt let's just let's add let's add duties at checkout like it's fine it'll keep the prices low no no problem he's like i don't think so i don't think so we have we have data-driven insights that tell us not to do this um it was just a couple week test but needless to say um i lost the bet and you owe me dinner i do i still owe him dinner i know

Erica Mannion, Head of Investor Relations

but here i am but it was and it was a fun one and i think uh as you see it um it's just always that we have a good good laugh about it and i'm not getting into it with you because the first time i met dan massaging my shoulders saying there will be a moment where i offer free shipping mat Today is not that day. Just make sure my clients can buy Seamlessly. But advice to the room, tell us.

Dan Alstonino

We have a really strong philosophy during what we call Hypergrowth for us, and it's be great at what you're great at. I'm great at storytelling, creating product, and focusing on This transitional period of retail experience. So if retail experience, experiential activations, pop-ups, Product and storytelling partnerships and evolving Product is really our core function. I don't really want to get into the business of figuring out how To land vat reconciliation in belgium. It's just not my core strength and it's not something that i'd Want to take and tackle and now do that for 29 countries within One region and then figure out what are my most popular Countries to have to continue to reconcile. I think it's been an evolution of proving that. The case study shows that working with a partner that can Handle that side of the business, handle localized currency, Remit my net dollars to continue doing my business is the core Function and the core focus for the business in every aspect. I want to work with partners that are going to make it Seamless, provide me the opportunity to expand, and not Weigh me down with as much burden as possible. So they're great at what they're great at. I'm great at what i'm great at. We find each other. We find the points of what needs review, and we continue to go From there. Like i was saying, for the idea That it can continue to kind of be the case, look at some of Largest platforms that handle commerce for most of the large Brands in the digital space, you know, they're looking and They found ways to integrate this into their service offering Because that is now what was being asked of them. So when you see, you know, a shopify or a salesforce work Directly with the globally, i think it proves more to that Point that merchants were feeling too weighed down by a Process that is basically impossible unless you have a Really large accounting and reconciliation team. and find a partner that can just handle that and do it for you. And as long as everything is reconciled properly, I provide a file to my accountants, to my auditors, and I close out my year, and that's just what it is. And it doesn't need to be more than that.

Erica Mannion, Head of Investor Relations

And with that said, I just want to thank you. Because I think, you know, and I know we mentioned it earlier, you know, coming out here away from the day-to-day, I know you're in Japan, in Honolulu, I know you're in L.A., I know it's not easy to get away, especially for any sort of speaking like this. so thank you thank you for the input thank you for challenging us to the platform and obviously uh the the insight and guidance for the room today appreciate it thank you thank you for having us all right so um it's good to see all of you here uh um and thank you for coming and uh and participating in our first ever uh investor day and uh yeah start off uh with the financial

Ofer Koren, CFO

strategy so we can i'll try to to keep pace so we can keep ample time for q a later on so since this is an investor day i thought why not start with asking why own globally or why consider owning the globally stock so i think that it has been illustrated in the previous sessions That we operate in a large and fast growing market not only That but we are well positioned to capture growth increase Our share within that market and continue to grow rapidly in The coming years so this is the first reason number two we Have a diverse wide and growing customer base across Different industries different verticals from apparel to to consumer electronics, across different geos from the U.S. through Europe to our latest penetrated market of APAC that we are very excited about, and different customer sizes from the smallest SMBs that currently serves on managed markets to the largest, most prestigious global brands. So a large and diversified customer base. And three, we have executed well, and I think that we have shown over the years a very strong financial performance. We have grown rapidly our top line while expanding our margins, and that has enabled us to show very strong cash generation. So just a few high-level points why we think globally is a Unique opportunity within tech in general and within e-commerce Enablement in particular. And as i mentioned we have built A very strong track record of execution. We are an execution first company and we are very proud in the fact that we have been able to achieve or even surpass all of our business and financial pre-IPO targets. You can see it here on the right-hand side, but I will double-click so we can see a few more numbers. As we already mentioned, our TAM has grown significantly in the last few years since our IPO. On the one hand, there is organic growth. Direct-to-consumer cross-border is growing fast, and this expands our time. But on top of that, we have been able to expand our offering over time and open up new time that now we are after. GMV has grown very rapidly, And we expect to see eight-time growth from the time of the last pre-IPO year, which is 2020, to 2025. Revenue, which is driven by GMV, follows the GMV trail. And we expect to see seven times growth from 2020 to 2025. As I mentioned, not only that we have been able to grow our top line rapidly, but at the same time we were able to also expand our margins as you can see we have surpassed our non-gap gross profit pre-ipo target of 40 percent significantly has landed on 46 percent In 2024 and our adjusted ebda in q4 24 is it at 20 which was Was our long-term adjusted ebda pre-ipo target all of that has Translated very nicely into free cash flow generation we've Generated almost 170 million of free cash flow in 2024. So you've already seen our gmv figures. I think i'll just run through it shortly again. We have been able to grow very fast from 774 million dollars in 2020 to over 4.8 billion in 2024. And we're expecting to hit over 6.3 billion in 2025. This isn't just important because obviously all of us here in the room want globally to grow fast, but this also creates and enables us to build a significant competitive position. As we scale up, we become more efficient. But not only that, we are able to reinvest more and create more value for the merchants by expanding our product and building new capabilities. And this further strengthens our competitive position and enables us to go after this massive market. we believe that in the next few years we can continue this rapid growth and in a few minutes i will share with you our view of the next few years financial targets as you have seen in the previous session we put the merchants in the front and center without the merchants we don't have a business. The merchants stay with us, we grow with them, and they grow with us, as reflected in our NDR and GDR figures. Our NDR has been typically above 120%, and our GDR has typically been over 97%. The existing merchants play a significant role in our future growth as well, as i will illustrate a bit later when i will discuss our growth algorithm our business is also becoming more and more diversified over time our top 10 merchants generated 36 percent of our gmv in 2020 when we look at the 2024 figures the top 10 merchants are now generating Only 25% of our gmv. And those are actually much larger Merchants. Over the years we've been able to Attract larger merchants to our platform. And if we look at the top 10 list, the current top 10 lists, Only three of the merchants were part of the top 10 in 2020. Not only that our merchant base is diversifying, also our Destination markets are highly fragmented we have only three Markets we generate more than 10% of our business those are The us canada and the uk while we operate in close to 200 Destination markets most of them are sub 2% of the total GMV that is generated on the globally platform so very fragmented merchant base also a very fragmented destination markets the outbound markets we've seen a lot of dynamics around that in recent years the u.s. currently represents over 45% of our business it has grown very nicely for us in recent years so thank you for that matt and uh europe and the eu i should say and the uk combined represent also over 45 percent of the business we have had we saw great success in the last two years in developing new outbound markets especially with APAC-based brands. We've invested in that in the last 24 months. And while the others here, which are mostly APAC, represent just 6% of the business, they've been growing at a very fast pace. And we believe that there is significant potential even in the near future and definitely in the long term in APAC. Revenue follows GFV. It's driven by GMV and follows GMV pretty closely. It has grown at a slightly lower pace, seven times from 2020 to 20 or what we expect to see in 2025, with a CAGR of 47% over that period. And for those of you that are maybe newer to the story, i would like to take a minute and discuss our business model so as i think it is easy to understand everything is driven out of gmv for us and we have two main revenue generation pillars the first one is service fees and the second one is fulfillment services revenue Service fees is charged for the use for the utilization of our End-to-end platform and is based on a take rate model. As was mentioned earlier, we believe that that is the right Model for us as it aligns the interests of the merchants and Us. We make money only if the Merchants grow as it is volume driven. Fulfillment services are generated mainly from shipping and return services that we provide our merchants And the pricing of those services are based on rate cards that we offer to our merchants Service fees revenues have contributed just below 50% of our overall revenue While fulfillment services have been just above 50% of our overall revenue However, when we look at the contribution to the gross profit line It is slightly different as the margins of service fee are significantly higher Service fees contribute approximately 70% to our gross profit line while fulfillment services contribute the remaining 30%. Our gross profit growth has been outpacing our top-line growth for the last few years. We are obviously very happy about that, and we have been leveraging scale efficiencies. You've heard the term scale a few times today. It is very important for us. It enables us to drive efficiencies and also invest more in optimization And this is what we have been doing for the last several years In addition to that also there was an impact from the higher share of services Service fee revenues that grew Over time and that all of that has enabled us to increase gross margins from 32% in 2020 to around 46% in 2024. So we believe that we can continue and optimize. We see more potential on operational leverage in the coming years, but we will continue to invest in optimization and to leverage our scale over time. We are running a very efficient business model. First and foremost, it's a game of, again, scale. As we scale up, we are able to drive efficiencies and, as I mentioned, more importantly, create more value for the merchants. We call it economies of scale and also economies of skill as those data insights are also driving a lot of value for the merchants and in return helping us to grow the business for globally. On the R&D side, we have a multi-tenant platform approach which enables us to be very efficient. All enhancements and developments or most of the enhancements And upgrades to the platform are basically open for all Merchants that are active on the platform, making it very Efficient. We develop a feature once and then It serves the existing merchant base and is open to any new Merchant that will join. Also, as near mentioned, we have A very efficient go-to-market strategy which is based on the The growing recognition that globally has in the market But also a lot on the channel partnerships the channel partnerships enables us to be very efficient on the go-to-market Approach and maintain our costs At a relatively low level In addition to that as we grew we grew As not as a pure SAS company And in order to do well, we needed to really have a DNA of efficiency in the company. And this is actually something that we continue to nurture, and we believe that it is in our blood to try and optimize and be as efficient as we can, while we believe that we will need to continue and reinvest in the growth of the business, On the product side, on the sales and marketing side, but at the same time, stay very efficient as we have been able to do in recent years. All of that has enabled us to improve our adjusted EBITDA margins significantly. And adjusted EBITDA is a very important KPI for us as it translates very nicely into free cash flow. Adjusted dbda margins have grown from 9% in 2020 to 20% in q4 in the last quarter of 2024. And based on our guidance, we expect to see it hovering around that level in 2025 as well. It has grown 14 times from 2020, or we expect it to grow 14 times from 2020 to 2025. As I mentioned, this is translated, adjusted EBITDA is translated very nicely into free cash flow generation. Typically, free cash flow margins are slightly above adjusted EBITDA margins. and as you can see in 2024 we hit a record adjusted the SRE free cash flow margin for globally reaching 22 percent which we are very happy about but we do think that we can continue and improve this KPI over time. I think we've discussed our growth algorithm in different ways throughout this day but before we will discuss our financial framework for the future I thought it would be a good idea to jump again into this so we have a multi-component growth algorithm the first component the basic component and The most important component for us is the existing merchants. And basically existing merchants growth is driven by two sources. The first one is what we call same store sales. So basically it's driven by the growth of the e-commerce market And the direct to consumer channel within it. On a typical year this would be a high single digit to a low Double digit number. on top of that as mentioned previously we have the land and expand motion that is relevant mainly for large large brands that typically land on the platform with a subset of the of the geos or the lanes and then over time once they gain trust they add additional markets you've seen That did this example previously and then there are a lot of other good examples The second layer is Merchants that have onboarded in the previous year. That's still part of our NDR And those merchants basically are growing very fast in the first year For two reasons one is essence. The other one is technical In terms of essence There is a significant uplift when brands initially Start working on the globally platform as near mentioned the typical uplift would be 40% and we see that Over the first few months of activity So that is a very important growth driver on top of that There's the annualization impact so those merchants on board at a certain point in a given year and then in the next year it's the first time that basically we see a full year of activity basically those two components built our ndr the next one which is extremely important is the contribution of new merchants that They've onboarded within a given year. That number has been growing from year to year. It's becoming, it's a challenge. As the base growth, we need to bring in more, but we have been able to do that. And as Nir previously shown, 2024 was a record year for us in terms of signings. Not all of those merchants have already onboarded. Some of the onboarding will take place in 2025. but basically uh this is the this third uh piece of our growth algorithm the next one is new tam or additional tam in the short term and we see a lot of potential a much larger potential in the longer term we have managed market shopify managed markets which is already contributing and we see a lot of massive potential for the future after we go through this few more months of investment with Shopify to align the merchant experience. And we see also new opportunities. We've discussed B2B. It will take time to get there. we still have a lot of work in order to touch that time but we believe that this is a massive opportunity and in the longer term we can reach that time and we can develop additional business initiatives on top of all of that and that doesn't contribute to GMV but it may contribute to revenue we have all of value-added services initiatives, and this is definitely important in order to create more volume and better engage with the merchants, but also to generate additional take rate. So, we've mentioned demand generation, we mentioned duty drawback, and there are additional initiatives in place. Moving on to our financial framework or four-year plan that we would like to share with you As we've already reached or surpassed all of our business and financial targets or pre-IPO targets We thought this would be a good time to share our vision of what we would like to achieve in the next few years On the GMV side, we believe that we can continue to grow rapidly, and the time frame for this is 2025 to 2028. We believe that we can continue to grow at a pace of high 20s to low 30s over that period of time. In terms of revenue, we believe that we can grow in the mid-20s. It's slightly lagging behind GMV because we do believe that multi-local will continue to play a role in our growth story. In terms of margins, as I previously mentioned, we do believe that we can optimize and continue to inject efficiencies into our business. We think a lot of it would be on the operational leverage side. So in terms of non-GAAP gross margin, we believe that our target is to be at the high 40s. And we believe that this could generate an adjusted EBITDA margin in the low to mid-20s. And as i previously mentioned adjusted debida is historically Translated very well for us into free cash flow generation. We believe that we can get over this period to free cash flow Margin of in the mid to high 20s. So we think that this is challenging, but a very achievable target that will enable globally to be a much larger, stronger, and a cash-generating company in the coming years. We believe that this plan will enable us to generate over $1 billion in free cash flow in this four-year period. And we have different plans on how to allocate this capital. Our first priority, as always, is the opportunity we see is massive, is to reinvest in organic growth. So we will continue to invest in our product, in our R&D, in building capabilities, and in our go-to market, while maintaining efficiencies as we did in the past. The second pillar is inorganic growth. While we don't have any specific targets at this point in time, we are looking at different opportunities, mainly for complementary product offerings and capabilities that can accelerate our time to market or inject new capabilities that we currently don't have in globally. we believe that after integrating flow and border free which are already well in place this would be a good time to look at additional opportunities and then the third pillar would be share repurchase and we are considering it we don't have an exact time frame for that or a We thought about but this is something we are considering and We may introduce in the near future. So this is how we think about capital allocation in the Coming years. And to summarize Five key takeaways. The first one is that we built a very strong track record of execution delivering on our business and financial objectives we are also well positioned in a massive market and we believe that we can capture additional share and grow rapidly in the coming years in a very efficient way as we did in recent years we will continue to prioritize top-line growth again the opportunity out there is massive and we will continue to do that but at the same time we will also continue to optimize and build efficiencies we believe that this is a key for our future success we expect to generate over 1 billion dollars of free cash flow in the in the next four years 2025 to 2028 so i'll leave you with that and after uh setting up uh the stage uh we can go uh to q a we're gonna start the q a i just ask that you wait for the mic to get near you for the benefit of the webcast uh good afternoon brent braceland

Brent Braceland, Analyst — Piper Sandler

uh piper sandler uh for me the big takeaway from the presentation um was multi-local uh the new disclosures here this is a a bigger business than the shopify markets uh managed markets opportunity uh next year almost 2x larger growing triple digits how big is the multi-local market opportunity, does tariffs actually, could tariffs actually accelerate that multi-local business? And then maybe for you, Ofer, could you talk about the unit economics of that relative to maybe gross margin impact, maybe lower take rate overall, just those three things, just given how big multi-local is and triple digit growth, certainly much faster than I would have thought. Thanks.

Nir Debbi

Thank you, Brent. Then we do believe that the multi-local opportunity is massive. Some of it is, as presented, I think, in the session that Medled is hand-in-hand working with current clients within their growth journey to go into a multi-local setup because it's more efficient economically for them and supporting also physical presence they are evolving into, et cetera. but most of it for us is winning business out of new terms that we couldn't address before i think that early this year logitech was the largest example of lending such a such a business that is multi-local by nature we had a few smaller ones before but it takes us into a single client that is a different scale on the back of it we we believe that we will continue to win more We see it in our pipeline. We see it in our panels. We direct our sales approach and sales team towards it. So I do believe there's a massive opportunity that we will continue to see over there. You asked about the connection to that and to the tariffs. I think they are highly connected. Multilocal will get a huge push out of tariffs. if merchants are afraid of a trade war that is coming, it will push the mass much faster towards, especially the larger ones, into the larger lanes, into a multi-local setup that would allow them to leverage economies of selling wholesale into the market, enjoying a lower heat on the P&L. And this is where globally you can actually leverage new capabilities we bring into the market. We spoke about the 3B2C. 3B2C can allow a merchant to avoid a local setup in market in order to go multi-local and just use a wholesale entity, registered entity, without any operations linked to it, to import into a market, saving huge amounts of cash on duty and taxes burden, and through globally, just continue selling domestically through a legal entity in country of globally that is buying it domestically from the importing company and selling it to the consumer. So we have seen adoption of this model. We have a couple of large brands that are going to adopt that model. to at least two large markets in the coming future, and we will believe it will be a key selling point going after new clients in the coming weeks and months.

Ofer Koren, CFO

In terms of the impact on economics, maybe I would just start by saying that this is mostly relevant for large brands as building an inventory, not the 3B2C, the full multi-local approach, is building additional inventories in other markets has a cost associated with it and adds complexities. In terms of the impact on our financials, the main impact is on the fulfillment services side because now when the inventory is domestic, fulfillment becomes domestic as well which makes it much simpler and it is also at the lower cost which means that there are two alternatives one is that the merchants would just handle it independently again it's a relatively simple transaction in this case and then we get no fulfillment revenue or the other alternative is that in some cases merchants want to wants us to handle it end-to-end just you know to put all that hustle aside and just focus on on the brand and the product but in that case also the take rates would be lower since now it's a it's a domestic shipping transaction.

Koji Ikeda, Analyst — Bank of America

Hey, guys. Koji Keta from Bank of America. Thanks for doing this. Great presentation. Maybe a follow-up here on multi-local. It does seem like tariffs are a big driver for a lot of your companies to think about adopting multi-local strategies. And while that's great for you're helping the customers get the product to where they need to for their customers, what's the driver for these customers to ever go back to what they were doing before, meaning could it be potentially a take rate accelerator for you as tariffs come off in the future, or potentially not? Could we see take rates improve, or are these customers structurally changing the way and the way that they're thinking about getting their products to the end market?

Nir Debbi

Generally, thinking of it, I believe it's a structural change. We don't see a lot of examples of merchants moving into a multi-local setup and scaling down again. We have seen a few. It's not that we haven't. We have seen a few merchants that took that step because they found it very compelling because the cost of domestic shipping looked much simpler. The time to ship a parcel to the client might be shorter. However, the level of skews that they had that required a level of inventory in country versus the scale in sales did not justify the savings that they had. and they ended up maybe with something that looked on an order level, looked like a better commercial, but they ended up losing money from the new setup because they didn't have enough scale in order to take into the overheads of the double inventory, etc. So on that, I think that if you do it while you have already scale, to see it going back would be rare cases there might be some that the tipping point for a decision was or will be the new tariffs because new tariffs, if you pay now an additional 25% on a retail price and now you can move into a 3B2C model or a local setup that would be a 50% on a wholesale or a cost price which is 50 percent of it you save actually 12 percent 10 to 12 percent it's huge so it might drive a decision also for merchants that are a bit subscale to actually do the model over time if those tariffs are actually removed will it happen will they scale back or will they stay with a with a new setup i think time would tell hi uh samad samana from jeffrey's first i just want to say it's amazing.

Samad Samana, Analyst — Jefferies

There's a lot to celebrate over the last four years since the IPO. So congratulations on all the success. Maybe a couple of questions here. First, just on borderfree.com, you have 200 plus customers. What's the gating factor to maybe getting the rest of those 1,400 enterprise customers in the full install base to sell on it? And can non-globally merchants sell on there? And is that a potential customer acquisition vehicle? Essentially just trying to see what both the existing base opportunity to get that to is and how you can attract others through it.

Nir Debbi

So we have high aspirations for borderfree.com. Yes, I'll start from the later. We do believe that if we build it right and we scale it to the level of scale it can get to, it will be a competitive tool for us to win more business in the market versus competition and also from in-house showing and demonstrating we can guarantee to you traffic in different countries at a guaranteed ROI that just to open the countries by yourself or try to grow within the country is an expensive adventure. However, in order to do it, we need to show that we're bringing success to our current clients using it. It's true for selling it outside. It's true for selling it inside. The early adopters, the 200 merchants, were happy with the explanations. They were happy with the understanding of the opportunity and embraced it. I think that it will be a few waves of education for the rest of our client base in order to try and drive adoption. We don't expect to have 100% adoption across the platforms. We have merchants with very strong brands in the key location. Some of them will not join as we look into the future, but we do believe that a two-digit percent of our volume and a nice two-digit percent of our volume over time will adopt. Once they adopt, it's actually creating a network effect Because once every merchant joins the platform, actually from his own sales through the platform, from his own checkout, we have a tick box for borderfree.com that people can opt in into borderfree. this would scale the memberships and if we continue to scale the memberships significantly and as we scale the platform more joining it we will have a tool that by that if you look at it for any single merchant or out of globally his own clients contribution into that platform is sub 1%. So actually, in return, you get 99% clients that are not your clients, which actually allows you to get to an efficient brand awareness and grow your brand in the market. We believe that once brands understand it and the scales would bring it more and more and the success stories that you've seen, they just came out of the oven last week. It's fresh. We're building it now. It's coming now. We are doing learning. The platform we came out of the gate in November is not the platform that is trading now for borderfree.com in March. And it for sure will not be the platform and the capabilities that you would see when you go into it in June. We are evolving. We have a lot to do. And I believe it can be a great tool into our future growth and especially to our merchants' future growth.

Samad Samana, Analyst — Jefferies

Very helpful. And maybe just a quick follow-up. Ofer, I think I saw on the slide that there's the indirect partners accounting for 60% of GMV, might have been new GMV, but can you tell us who those indirect partners are? I think I have a suspicion on at least one. And how do you diversify that over time just from a concentration standpoint? Thank you.

Ofer Koren, CFO

So I think this is a good question for Nir as well. but we have I'll start and I'll let I think that the channel partnership has grown very nicely for us in the last few years some of it is driven by our efforts and some of it is just driven by the natural cadence of our recognition in the market so it makes it lot more interesting for for the parties to be involved in that and as Neil mentioned in his session that in many cases there's also an inherent interest of the partner to provide us leads because the carriers we see more packages are flowing through them the payment processors we see more volumes of payment processing going through them and so on and so forth so I would I would say this is the framework and I let near continue from here so the immediate suspects as you can believe well over we're on the board it can spend from a DHL to Shopify but the beauty of it is that you would be

Nir Debbi

surprised on the composition of this channel partners and what they bring to us within with the names that are actually in that roster and not only that it's different names they change all the time if you look at 2023 um scale as a partner brought us zero which nothing The contribution of the GMV signed in 2024 from scale by itself was over 10% of our book GMV that year. If you look at FedEx, FedEx brought us nothing in 2023. FedEx gave us a few percentages already in 2024. You can scale it up and look at how it evolves. it can go into the likes of Accenture. We never worked with Accenture in the past. Accenture is a gateway for very large brands that makes their decision with consultants. We just had a breakthrough for the first time. Accenture brought to us a client ready to go after they sold it a couple of weeks ago. So it's evolving, it's changing, I think. And it will continue to propel our growth over time. And it's not just the name you thought about, it's a much more evolving landscape of global but also local players. It can be a domestic agency in Australia that fell in love with it and just go client by client in the roster and fueling around 15% of our growth in Australia. So it can come from multiple places, but channel partnership is one of our key levers to future growth.

Yechiam Shinder, CTO

And I just want to add on that, and Nir kind of teed it up, that apart from being a false multiplier for our growth generally in the markets that we already work in, it's also become an important component of expanding to new markets because historically before we had the you know the track record and the ability to really work with these global partners starting a new market was just you know coming over putting a flag in the ground saying we're open for business and starting to go after clients and it's very hard even if you have a great track record in other markets it's still very hard to to get those first meaningful clients on board so over the recent years as we've gained more experience and more credibility to work with these global partners it's also serving as an important component of us hitting the ground running if you want and we've seen that in markets near mentioned australia japan was uh was also a great example of opening the business not just with a a strong team on the ground and a strong focus on the market but also on the back of a strategic partnership from the get-go in this case with transcosmos and with the local uh dhl branch

Samad Samana, Analyst — Jefferies

that really has enabled us to get out of the gate uh much quicker than than we previously did when we opened new markets hi way way way way in the back uh thanks again uh i would certainly echo THE THOUGHTS AND HAVING YOU ALL JOINED TODAY. I HAVE TWO QUESTIONS. THE FIRST IS KIND OF A FOLLOW-UP TO SAMAD'S QUESTION, BUT IF YOU ZOOM OUT AND THINK ABOUT THE VALUE ADD SERVICES, YOU KNOW, THAT'S IN YOUR ROADMAP, BROADLY SPEAKING, HOW DO YOU, YOU KNOW, HOW WILL YOU ULTIMATELY MONETIZE THOSE?

Nir Debbi

IS THIS REALLY JUST TRYING TO PUSH MORE VOLUME, MORE GMV INTO THE PLATFORM AND YOU'LL INDIRECTLY MONETIZE, YOU KNOW, SOME OF THOSE OFFERINGS THROUGH THAT OR IS THERE AN OPPORTUNITY TO MAYBE EVEN CHANGE THE BUSINESS MODEL SLIGHTLY WITH WHAT THOSE SERVICES could be so so i think it's it's both uh depending on what's the service and how we decide to go with it into market on the one hand you have a service like global duty drawback program global duty drawback program allows our merchants much more simplicity and allows a much better consumer experience because wherever you buy from the world from a brand here in the us once you make a return you will be refunded in full you will be refunded for the duty and taxes you paid in your country and the merchant is actually kept whole as globally is taking that cost into our cost structure through the insurance plan that is global duty drawback program however in order to make that insurance plan good for you as a merchant globally developed duty drawback across multiple geos making our cost of trade offering that insurance cost effective because in many countries around the world they can actually reclaim the money back from the authorities that any merchant by himself would find it difficult or impossible to do. So on that, yes, we are selling it, we are making a margin on it so it will affect our top line once it continues its adoption. Same goes into demand generation. Demand generation is a service that we are doing at scale. We are making it cost-efficient to merchants. We give a guaranteed ROI related to it. For the first tier now, we decided specifically even not to charge for it because we wanted to scale, because there is an efficiency of scale once you get it into a volume. However, over time, yes, it will contribute to our take rates because we will charge for it. We will charge something that is much more efficient for a brand and to try to do it with meta in multiple countries, et cetera. But over time, yes, we will charge for it. Some of the services are actually part of leveraging or giving you better capabilities. We will not charge for them direct as a service. If you look at 3B2C, we will allow you better access into certain countries to optimize your cost of trade. On the back of it, we believe that it will grow you faster. If you grow faster because you have a better economic model into the market and you can be more aggressive in your demand generation operations, in your pricing, you will grow faster in market. We will get our percent out of it because we're aligned with you on the business model. So some would be from that. Some would be from actually charging for this bus.

Samad Samana, Analyst — Jefferies

Helpful. I guess I should have said scapper. I need them for the transcript. That will be out from this. But my follow up is for you, Ofer, if you think about your 28 target model that you have out there, I think what's interesting in the global e-business since your IPO is while you've had 11 points of leverage in the adjusted EBITDA line, roughly speaking, is you've had almost zero leverage though in your operating expenses. All the leverages come in the COGS line, right? You've had 28% of your revenue flowing through your OPEX pretty consistently from then.

Ofer Koren, CFO

But your 28 model kind of reverses that a little bit. you're going to get less uh leverage in the in the gross margin line where does that ultimately come from is it just natural leverage in the model or will there be a i don't know slightly different composition to think of in 28 thank you so uh yeah as you rightfully uh mentioned we expect things to slightly change in the coming years and we expect to see most of the margin expansion driven from operational leverage. I think that the main item that we can create efficiencies on, as Yechia mentioned, is the R&D side. AI will play an important role, but in addition to AI, We have also different initiatives, and also scale plays a significant role here. I think that we have reached a scale that enables us to create operational leverage efficiencies. We have been able to do that around GNA. I think we can continue and do that. We have the potential of doing that around R&D, and around some of the sales and marketing components, as some of it is variable cost on the sales and marketing, the rev share, and some of the other costs are variable costs. But we definitely believe that there is a significant potential to gradually pull that operational leverage and improve margins.

Pat, Analyst — Citizens

Oh, great.

Yechiam Shinder, CTO

Thanks. it's pat at citizens so um amir it seems to me the the biggest question is uh can you guys keep executing against this opportunity right and so as ceo what do you think are the top two or three things that you need to get right to make sure that your team can keep executing against it yeah i think um first of all you're you're right and uh i think uh what has uh brought us uh here to where we are today is a combination of a great market opportunity, a great model to seize that opportunity, and relentless execution in doing so. And honestly, I think these are also the components that would drive our growth forward. And we covered some of those during the various presentations. One is continuing to innovate and continuing to push and have our team push to innovate across the board, enabling additional openings of new TAMs, new opportunities, and new ways to capture the existing TAM with both our existing merchants and the new merchants that are going to join the platform. I think the second component is continuing to find ways within our go-to-market strategy. Part of it is, as we mentioned, leveraging more channel partners, making our sales processes even more effective and efficient going forward because there's no shortage of opportunity. It's about being able to balance between our wish to prioritize growth and grow the business across the board with keeping our reputation. I think you heard from our clients here on stage just how important and central the globally offering is within their ability to grow their business. this is key for us in whenever we prioritize growth, but whenever we need to take a decision between growing that one or two extra percentages versus risking the reputation or our ability to support our merchants 100%, we will always choose to go for the service levels because we think that over time, this is what's going to enable us to continue and work and grow with these merchants and win that trust from additional merchants down the line. And the way to do all of that is by remaining super focused. And I think probably most of the work you see here, part of the the management team there are additional members of management in various roles around the world i think as a team i probably wouldn't be exaggerating if 80 of our work goes into thinking about that managing that managing that downwards towards the respective teams and making sure that everybody remains super focused on achieving those goals, but doing it in the most efficient way possible. I think with those components in place and our relentless focus on execution as a leadership team and as an entire organization, that's what's going to drive our success in the coming Thank you. just one note one sentence to double click on it I think it starts and ends with our commitment to our merchants if you look at the six people sitting here