All right. We'll go ahead and get started here. Thank you very much for joining us at the Morgan Stanley Financials Conference, U.S. Financials Conference. I'm James Spossett, Senior FinTech Analyst here at Morgan Stanley. And before we get started with Amir and Ofer, CEO and CFO, respectively, of Global E, I do have some important disclosures to read. Please see the Morgan Stanley Research Disclosure website at morganstanley.com slash research disclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. So maybe I'll start with the big questions, just really kind of in the order. We get them from investors. But growth durability. 2025, the business grew 35%. You had 122% net dollar retention, implying low double-digit contribution from net new GMB. even in a year when you did not have as much contribution from massive enterprise merchants like you did in 2024. Plus, now the business accelerated incrementally in the first quarter, growing GMB 40% year over year. And for the full year, we're still looking for kind of low 30s. That's how we have you guys modeled, and roughly 30% revenue growth to go with that. But what is driving all of that durability of growth, and how does that really confirm and speak to GlobalEaseValueProp as a key enabler for cross-order e-com? Like, it's a big question, but just, like, what's happening here?
First of all, thank you for having us, James. It's a pleasure, as always, and thank you, Ogi, for coming. I think, actually, the answer is probably in your question. It's thanks to the value proposition that Globally brings to the table. I think when we look at our prospect for growth, first and foremost, we're looking at a massive TAM. Let's not waste time here doing kind of calculations. But the way we look at it, we don't mind the kind of 1 trillion, 2 trillion numbers that are floated out there by the Gartners of the world. We look at real kind of addressable TAMs, so we can probably spend a few hours debating on whether it's $200 billion or $300 billion. But that's kind of the area code of the real kind of accessible TAM that can benefit from kind of a full end-to-end merchant record solution like ours. Out of that, we've got the market for just short of $9 billion this year. the next competitor in line does a quarter of that, and then the one after does a quarter of that. So the market is still heavily, heavily in the greenfield territory. And I think the value proposition that we bring to the table, which is kind of a way for merchants to capitalize on that international opportunity in a way that is kind of risk-free and basically have globally, as the merchant of record, take care of all the headaches, all the risks, all the compliance issues and just let them concentrate on their main business, which is building a brand, product sizing, marketing, and so on and so forth. I think that our unique ability to do that based on the scale that we have, based on the data that we have, based on our unique infrastructure and ecosystem of providers that we orchestrate to bring that to market, that's the only kind of sustainable strategic solution that these merchants can have if they want to capitalize on that international opportunity. because for any individual merchant, they're either too small to even try and do something on their own, and even if they're big, they cannot systematically handle that because it's so fragmented. What you need to do in order to capture the opportunity in market A is completely different than what you need to do in order to capture it in market B. So the only durable way and strategically sound way to do that is to utilize an expert like us that has, I would say, a platform that takes it at a platform approach and handle this for multiple merchants at scale with the expertise and the know-how that comes from the level in which we do that. So I think that is what stands behind our ability, and we are very much, as we put out there in our last investor day, some long-term targets that we very much stand behind. We're even slightly ahead of our plans to continue and grow at kind of the high 20s, low 30s in GMV, and not too far from that in terms of revenue. And while keeping high margins in the kind of low 20s to mid-20s, that, I think, is, as I said, that's thanks to the very unique business model that we bring to the table that is fully aligned with the interests of our merchants.
Yeah, I mean, I think, and it's interesting, lots of times when we talk to investors and they become very preoccupied with the addressable market. And, you know, to your point, I think there's an important thing that we like to call out, which you mentioned, which is, A, you have a small portion of that market today. But the second part is that, you know, it's worth reminding people is that cross-border e-commerce generally is a high-friction transaction. And so with globally or the work that you do is you're reducing friction, which by definition will grow that addressable market. And so it kind of feeds on itself. So, you know, another key point or question that we often engage with investors on is take rate because, you know, we can start to forecast like what the volumes are. only can forecast what those GMB growth rates could look like, but another part of the equation is obviously take rate. And this is a key line of questioning that we continue to get from investors. And I think that uncertainty around that probably creates volatility in the stock, even when we see good results. And I think people are worried about the perception that take rates are under pressure. You had a lot of idiosyncratic and one-time issues that were almost entirely out of your control last year in 2025, but the multi-year trend in revenue take rates still has been somewhat down. There's an element where you're winning share with larger merchants, and so the pricing maybe is a little bit different, and it's dollar accretive, but it impacts the percentage. And one thing that I think is probably underappreciated in your business is that you look at the business on a gross profit take rate basis with that metric really being pretty consistent. So help us think through and contextualize what the take rate narrative should be, what matters, and how do you think about how you run the business vis-a-vis
take rates? So yeah, while we definitely understand that take rate is an issue of interest to the investor community, that's not a main concern for us, the way we look at the business. The way we look at it, very simplistically, is we need to create value for the merchants in order for them to stay with us, grow with us, and to add new merchants to have them coming in and generate volumes on the GMV side. and then we need to monetize on those volumes. So basically we are looking at GMV growth and we are looking at bottom line growth because in the middle, and I'll talk about take rates in a second, but in the middle there are different sort of motions and different business models that come into play and sometimes the mix has an impact on take rates or other dimensions while we make sure that whatever business or sort of business model we have with the merchant, the bottom line will be healthy. So we look at volumes and bottom line as sort of the main KPIs that we manage. Of course, revenue is extremely important, so we're not neglecting that, but basically that's the way we approach it. And getting to take rates more specifically, I think there are two different stories around take rates. On the service fee side, although there was some noise mainly related to the rise and fall of Ted Baker for us, I mean, we were working with the European franchisee of Ted Baker, and they had quite a unique model where we also ran marketing or demand generation for them. So that contributed significantly to our take rate, but we also had costs associated with that. But once that went away, there was some noise, a decrease. But since then, things have been very stable. So for the last six quarters, we are around 6.8%, 6.9% in terms of service fee. And the way we view it, at least on the enterprise side, we expect service fees to continue and remain fairly stable because we don't see any significant change in market dynamics. We do see some other impacts, which on the one hand, on average, we have larger merchants and we do price based on volume. So that weighs a bit on take rates. but on the other side we have value-added services that are gradually kicking in and sort of compensating for that. So to make a long story short, we expect to remain quite consistent in terms of enterprise service fee take rates. We might see a certain reduction, not might, we will see a certain reduction in managed market service fees It's just due to the structure of the agreement that we struck with Shopify that basically impacts the way we recognize revenue on that piece of the business. But other than that, things will remain stable. On the fulfillment take rate, it's a different story. First of all, it's not a direct take rate play because we provide merchants rate cards and we generate revenue based on those rate cards. So it's not a pure take rate play and it's impacted by average order value and other parameters. But the main sort of dynamics around the fulfillment take rates were the introduction of multi-local services. Basically, multi-local is a service that we've introduced a few years ago, and it enables us to serve merchants that carry inventory in different destination markets. And it actually expands our time. It's targeting mainly consumer electronics merchants, but also very large legacy merchants that typically have inventory in different destination markets and want to utilize or leverage that inventory in order to serve those markets, but they still want to do direct-to-consumer and leverage our services, and basically multi-local enables that. The only thing is that once the inventory is already in market, either you have a very low fulfillment take rate or the merchant just chooses to sort of do the shipping themselves because now it's pretty straightforward. So by sort of definition, the multi-local piece has very low fulfillment take rates, and that sort of has an impact on the average over time. So it's more a question of mix, but we view multilocal as a very positive story because it expands our time. It enables us to work with very large merchants, and it has a very healthy bottom line associated with it.
So how should we think about, so on that point, like, how should we think about what the realistic pace of multilocal migration is? And you indicated that, and correct me if I'm wrong, that a lot of the multi-local adoption has actually been on consumer electronics. Are we going to see that be true for consumer electronics generally as you continue to expand that? And should we expect multi-local adoption in other categories?
So we see multi-local adoption in consumer electronics due to the nature of that segment because it's very difficult to do self-importation in consumer electronics, so you typically do B2B. And also this type of merchant typically traditionally had distributors in end markets, So they already brought the inventory in, and that's the way they work. But in addition to that, there are some very large global brands. For example, someone like Disney that carries inventory in different markets. So basically, it's these two segments. It's consumer electronics and large legacy brands. That would be the target segment. In recent years, actually, the share of multi-local out of our business has grown from zero to around 15%. So it outgrew the entire business and hence had an impact on fulfillment take rates. But at least in 2026, we see a more balanced growth, while multi-local is still growing very nicely. It's not outgrowing the business significantly, so we'll see less of an impact in 26, but we believe that going forward, multilocal still presents a large opportunity, so we might see a slightly higher show or a gradual higher show multilocal over time.
And then one question we also get, particularly in periods where fuel prices are very volatile, is how well are you able to protect gross profit dollars when carrier fuel or surcharge costs are moving around?
So that's part of our contracts. On the fulfillment side, we have the mechanisms in place to basically transfer these price hikes. If it's the GPI, as they call it, the annual indexing, or we treat it as an increase because it doesn't ever index down, but also changes in fuel and other surcharges. So we have the ability, and we do pass them on to the merchants. It's not a kind of we don't do it one-to-one because we do take into account kind of relationship considerations with merchants. As an example, if a merchant just went live and got a rate card from us and two months later there's an update to the surcharges or so, we will discuss internally and take a decision, kind of a case-by-case decision, whether we immediately pass it through or typically what we would do is we would wait kind of a quarter or something before we pass it through to them just from a kind of experience or relationship point of view because fundamentally when they come to work with us, They are looking for both the increase in performance and the ability to convert on that international traffic, but also on us simplifying and de-risking the whole international experience for them, and that's part of it. Plus, in addition, thanks to the scale that we work at with these carriers, you know, take D&J, for example, who are a longtime strategic partner of ours, They're even a shareholder in globally, historically. But even irrespective of that, we are one of DHL Express's top five clients in the world when it comes to BTC. So that means that even when they employ kind of rate hikes or surcharges, we have kind of preferential terms in many cases. and we are able to pass some of these benefits on to the merchants by them not having to incur the entire kind of market-level cost hike. So that's part of the value proposition for the merchants, which is why on a long-term basis, yes, everything is transferred to the merchants, but there might be some timing delays, which we do for relationship purposes.
Got it. So let's go back to service fee take rates and that kind of thing. You mentioned the dilution from managed markets, but at the same time, for example, as in the case of Ted Baker, even though they're really not a customer now, but you did indicate that you got some benefit from things like demand generation, et cetera. How do we think about those two dynamics and what that should mean for service fee take rates?
Yeah, so you're right. That's the two types of dynamics that we see around the service fee take rates. On the one hand, we do price based on volumes, and as the merchants grow or the average size of a merchant grows, we see some sort of on average slightly lower service fees. We also have the impact of the sort of what we call the V2 of managed markets. So on, but on the other side, we have been seeing gradual contribution to service fee take rates from the different value-added services that we offer. Some of those are the ones that are worth noting, our duty drawback, which is a service that enables us to actually pick money off the floor for merchants because basically when products go into market, you pay the duties and taxes. But then, you know, an average in 10% of the cases, the product is returned. There's, you know, it varies a lot depending on the type of merchant and on the destination market, but on average it's around 10%. And then you're not able to retrieve those duties and taxes. while your shopper expects to get the full amount refunded and a good experience. In order to create a good experience with the shopper and get that shopper to continue buying in the next time, typically you will pay the full price back. So you have a problem. Now you're just on 10% of the transactions. You got hit by approximately 20% to 25%. So you just lost 2.5% on your P&L. And we are able to retrieve that in many cases. It's a destination country by destination country exercise. But we have quite a decent coverage these days. And basically, we're able to bring that money back to merchants or at least part of it. And we take a certain cut out of it. It's typically up to 20% of the refunded amount. We've also added another duty drawback service lately. It relates to U.S. merchants, which import goods into the U.S. from their manufacturers in Asia or any other location and pay. But then when the product is exported, when it's sold cross-border, They are actually, they can get a drawback for the importation duties, and we received the authorization to do that for the merchants a few months ago. Now we're sort of processing the first application, so that's another piece on duty drawback. In addition to that, as you mentioned, we are also active on helping or supporting the merchants with the demand generation, mainly based on the border-free platform. And we have a few hundreds of merchants that join this platform. And actually, on average, we are already able to contribute approximately 6% of sort of their traffic that is converted into sales. So it's not huge yet, but it's becoming significant. We didn't charge on this service because we wanted to sort of create a network effect. We wanted more merchants coming in and more shoppers signing up for borderfree.com, but we've recently started to charge for that. Not a significant contribution yet, but over time we believe that this could also add a bit to service-free take rates. And while Ted Baker is gone, we do see some opportunity to actually duplicate this model with additional merchants. And just lately, we've sort of launched one of those. it's smaller, significantly smaller than Ted Baker, but we see an opportunity with that as well.
Got it. I want to shift to demand, but before I leave Taker, just make sure if there are any questions in the audience.
One up here for Michael, please.
Hey, guys. Is there any way to frame how broad-based the demand is for duty drawback? As I think about a U.S. merchant, why would they not want to be using this and what's reflected in your pipeline?
Yeah, so generally speaking, you're right. This is, as Offer kind of framed it, this is picking money off the floor. And I think for both types of duty drawback, we expect the kind of the attach rate to be very high in those cases where we can actually support it and we're constantly enlarging that envelope. I think that the one thing maybe to call out is that on that part of the service for U.S. merchants that enables us to kind of draw back the original duties that were paid on the import when the products are exported, on that, too, we expect very, very high attach rates. But this specific service, we expect it to take slightly longer for the actual volumes to pick up for the reason that unlike the kind of call it regular duty drawback where we export the goods and then the goods return and we draw back the duties on the return, in those cases, we did both sides of the transaction. So we have full information, and we have everything we need, essentially, in order to make that submission to the authorities. When it comes to drawing back duties on kind of commercial imports, the original importation into the U.S. was done by the merchants sometimes a year ago, even more than that, and it's been sitting in inventory. And they haven't really, you know, thought about actually collecting all the information that we need in order to make that submission. We need it from them. Now, it's not rocket science, but they need to gather that information, and there is an incentive for them and for us specifically for the first submission to collect all the information they can because only on the first submission you can actually submit three years in arrears. You can collect back on three years' worth of imports or on re-exports. But from the second submission onwards, it's just on the ongoing business. So we work with the merchants. We try to find ways to make it easiest for them. But at the end, they need to open the drawers in the archive and get those documents out and provide the information for us. As part of that, they also learn what they need to provide. So from the next submission onwards, we expect that to be fairly easy. But this specific offering for the initial submissions of all these merchants, we expect it to take a bit more time. That's the only kind of nuance. But overall, long-term, we expect the attach rate across the board to be extremely high.
Got it. So the last few minutes here, when I hit it, three key things. First, demand. Where are you seeing strength geographically in demand? and are there any... Consumer demand, yeah. So actual GMB and volume. Where are you seeing consumer demand strong versus where is it weak or changing for better or worse?
Yeah, so happily in the last few months or even, you know, towards the end of 25 onwards, we've seen very healthy consumer demand almost across the board. I think that the type of consumers that brands are targeting, which is typically sort of, I would say, mid to high, and sometimes even very affluent, those are doing pretty well, and we've seen very, very healthy consumption patterns in the last few months. And as I mentioned, it's been, you know, across the board, you know, in most destination markets, there was some interruption in the GCC and the Middle East region due to the Iran conflict. So for a few weeks, we have seen some decrease or significant decrease in specific markets in that region. but that came back as well. So all in all, we see good consumption patterns lately.
Got it, got it. So let's talk about a key partnership that has been developing for years now, and that's with Shopify and what you're doing within managed markets. How should we be thinking about what you're seeing with respect to managed markets specifically And how have you built in a managed markets ramp within second half 26? And can that become, can that accelerate in 2027?
Yeah, so basically, as you know, one of the main rationales behind our kind of newer, what do we call it, 1P, or kind of managed markets part of our new strategic agreement that we saw with Shopify last year was around our understanding from the first iteration of the lessons learned from the first iteration of Managed Markets that, on the one hand, it kind of fortified our belief, our joint belief, ours and Shopify's, in the massive opportunity that lies ahead in a service like Managed Markets. On the other hand, we realized that we needed an additional build. We weren't done because we kind of simplistically say we nailed the onboarding piece. we had to improve the ongoing experience. It wasn't good enough. We underestimated the effect of the changes that going on managed markets required from the day-to-day operations of these merchants. And because, on average, merchants on managed markets tend to be on the smaller side of the scale, it turned out to be more difficult than expected for them to adapt to managing now a different kind of stream of business that is international. So we went ahead and we spent a lot of work on both sides, on our side and on the Shopify side, and got to a place where managed markets is now fully integrated within Shopify payments and the operational processes, the money flows, the reporting, all of that kind of the day-to-day of the store now works basically just the same as the merchants are used to when it comes to managing their domestics. store. So that is kind of the essence, plus a few other things around kind of applicationless onboarding and some additional features that were the basis of the new build of managed markets. Now, in terms of the, I would say, what that translates to in terms of a ramp up in volumes, So we're still in pretty early innings because the new version went live kind of late last year in Q4, but still we're before the kind of marketing push, I would say, from Shopify. There's work continues, and we've recently launched managed markets in two additional markets in Canada and the UK. for merchants, Canadian merchants and British merchants. And work continues on additional features. But we do expect, and Shopify is planning to start to more actively push it. Currently, it's in general availability, but it's not being actively promoted. The plan is for them to start promoting it as part of the next editions, the next Shopify editions, which has been pushed out a bit, It was originally supposed to be a spring edition. Now it's more of a summer edition. It's supposed to be at the end of this month. And on the back of it, start to more actively promote managed markets. That translates into our original assumptions that we're going to start to see a more meaning. We are already seeing a ramp up because just, you know, the product is out there. It's doing well. We're getting good reviews in, you know, merchant forums, et cetera. So it is growing by itself, but we do expect to see an inflection point kind of in the second half of the year. And I would say we're currently solving for a good offering, a solid offering, and growth in the run rate to kind of exit 2026, hopefully in a much larger run rate. It will not have too much of an aggregate impact on 2026, but we're solving for already a meaningful impact and contribution to our top and bottom lines in 2027 onwards.
So last question. We're over time here, so we're going to keep it really short, but we've got to ask the requisite AI question. You called out AI benefits across R&D, support, monitoring, compliance, and prospecting. What is the single case that you're most excited about where you're seeing AI returns and productivity gain?
I think I would say there are two, if I may go for two. One of them is on our ability to kind of harness and put into action the massive proprietary data asset that we have and that we continue to accelerate. because we're already seeing with proprietary tools that we've built that are AI-based that that gives us a huge leverage that it doesn't just accelerate our kind of efficiency and effectiveness, it is also something that competitors cannot replicate because with all due respect to AI, you need to feed it with relevant data and know-how in order to get the benefits. So I think that's one. The other one is on the R&D efficiency. So there are efficiencies across the board that we can get. I think what we're seeing already in the use cases that we've already put into play is that there are massive R&D benefits to a point where, you know, We think that we can become much more efficient all across the board using AI, specifically on R&D. Not only do we not see a reason to grow the headcount, and despite the growth that we expect in the coming years, we'll probably be able to scale it down by quite a bit and still be more effective in the total outcome of R&D.
Great. Well, Amir, Ofer, thank you so much. We'll leave it there. Thank you so much. Good to see you.