Introduction
In the ever-evolving landscape of e-commerce, Global-e Online (GLBE -0.12%) has emerged as a notable player, consistently exceeding its financial expectations. While some investors may have initially overlooked Global-e due to its affiliation with Shopify (SHOP -1.36%), a significant shareholder and services integration partner, recent developments have kindled a renewed interest in this smaller yet promising software provider.
Global-e, a comprehensive software-service suite, caters to companies seeking to expand their online presence beyond their domestic borders. Its offerings encompass an array of services, from customized website experiences, including currency exchange and payment processing, to seamless integration of shipping, logistics, and tax management. Notably, Global-e’s software seamlessly integrates with e-commerce giants such as Shopify, where it is set to unveil Shopify Markets Pro for cross-border e-commerce, and Meta Platforms, facilitating sales on Facebook and Instagram.
The company’s track record of success, dating back to its initial public offering (IPO) in 2021, reflects the growing trend among high-end fashion and apparel retailers to establish a global customer base. The latest quarterly update paints a compelling picture of Global-e’s prowess.
Global-e’s Impressive Performance
In Q2 2023, Global-e recorded a remarkable 54% year-over-year increase in gross merchandise value (GMV) sold, reaching a staggering $825 million. Revenue surged by 53% to reach $133 million, comfortably surpassing management’s forecasts from just three months prior. This impressive performance underscores the growing demand for Global-e’s services in the expanding world of e-commerce.
Moreover, Global-e is rapidly advancing towards profitability. In Q2, the company reported adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $21 million, outpacing earlier projections of up to $18 million. While achieving profitability under generally accepted accounting principles remains a goal, Global-e’s positive free cash flow of $18 million is a promising sign.
A Positive Outlook
With its exceptional Q2 performance, Global-e has once again revised its full-year 2023 outlook, now anticipating revenue in the range of $570 million to $596 million, up approximately 43% from the previous year. Although a growth deceleration is anticipated, Global-e is poised to maintain a robust growth rate of over 30% in the latter half of this year.
A Better Deal Than Shopify?
For current Shopify shareholders, it’s worth noting that ownership of Shopify stock inherently includes exposure to Global-e, thanks to warrants held by Shopify in the smaller software entity. Given Global-e’s size and its reliance on distribution through Shopify and Meta, some investors may find that owning shares in these larger companies provides sufficient indirect exposure to Global-e, making a direct investment unnecessary.
However, for those seeking an enticing e-commerce software growth stock, Global-e may offer a compelling opportunity, particularly when compared to Shopify at this juncture. While both companies continue their journey towards profitability, it is Global-e, the smaller player, that presently boasts superior free cash flow margins. This advantage, combined with Global-e’s competitive valuation, positions it favorably in the market.
Investor Considerations
Investors should exercise due diligence and consider the nuances of this investment, keeping in mind that Global-e remains a relatively small business with a substantial reliance on industry giants. Prudent investors may opt for a cautious, dollar-cost averaging approach if they choose to invest in this intriguing e-commerce player. The rapid growth and financial performance of Global-e certainly make it a stock worth watching closely as it continues to carve out its niche in the dynamic world of e-commerce.
