Global-e, an e-commerce platform that helps online sellers reach global consumers, filed to go public this morning. The company’s F-1 filing is here, if you’d like to read along.
While Global-e is not a United States-based company — it also has offices in the U.K. and Israel, among other countries — its recent growth underscores that the e-commerce boom we’ve seen domestically is hardly unique. Indeed, Global-e’s growth has been rapid and impressive.
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Hell, the company is profitable while scaling, a rare sight among recent technology IPOs.
We care about the Global-e IPO because it’s a venture-backed former startup. Reading its filing, we can see that Red Dot Capital Partners has a material stake. Logistics giant DHL also put money into the company, along with money managed by Apax Partners and Vitruvian Partners, both private equity players.
Regardless, here’s a company that represents a bucket of private cash going public during a period of intensive flotation activity. Let’s get acquainted with what it does, dig into its numbers and add it to our IPO list.
Recall that Roblox is expected to begin trading tomorrow and Coupan on Thursday, after pricing Wednesday. Olo will price and trade next week. Coinbase is somewhere in the wings ahead of its own direct listing. And there are others: It’s going to be a regular IPO run for the next few weeks, not counting the other filings that will surely drop.
So let’s get our heads around Global-e. Into the tables!
What is Global-e?
Selling and shipping across borders can prove difficult and is probably hardest for smaller online sellers. And the global market is just that, so if you want to reach it, you have to do extra work. Global-e provides services to sellers to make selling around the world a bit easier. Things like, per its F-1 filing, localized browsing, pricing and checkout, shipping options, locally friendly payment solutions and returns support.
Given the e-commerce boom of the COVID-19 era, the company’s business exploded in 2020.
A few metrics make that plain. From 2018 to 2020, the company’s processed gross merchandise volume, or GMV, rose from $211 million to $382 million to $774 million. As you can imagine, its revenues grew as well, scaling from $38.6 million to $65.9 million to $136.4 million across the same time frame.
In 2020, GMV at Global-e grew 103% while revenue expanded 107%. Notably, Global-e’s gross margins also improved, rising from 22.2% in 2018 to 28.3% in 2019 to 31.9% in 2020.
The result of quickly growing revenues that were improving in quality at the same time? Improving net margins. Global-e swung from a 2019 net loss of $7.5 million to a net profit of $7.9 million in 2020.
So we’re dealing with a company of material quality, at least through the end of 2020; how bullish you are regarding the ability of e-commerce to continue its recent winning streak will help determine how enthused you are regarding the potential for Global-e to keep kicking butt in 2021.
Underscoring that concept is the fact that the company’s top line comes via a “volume-based revenue model,” as its F-1 filing notes. “Service fees revenue is generated as a percentage of the GMV that flows through our platform,” it adds. A bet on Global-e, then, may really be a wager on the continued growth of the company inside a market that is itself expected to continue scaling.
I hate to sound positive, but there are even more things to like in the company’s F-1. Global-e has a net dollar retention (NDR) rate metric, for example. It calculates the figure as “GMV from the same set of merchants across comparable periods.” Fair enough, given that we are aware that GMV works out to revenue for the firm. From 2018 to 2020, the company’s NDR grew from 153% to 134% to 172%.
And the company isn’t too concerned about what’s ahead as the world reopens. From its COVID-19 section in its F-1 document, Global-e said the following (emphasis TechCrunch):
While we cannot estimate the duration or scope of the crisis, or the potential effect it may have on our operations, we anticipate that our business will be positively affected by the lasting impact of COVID-19 on physical stores and shopper preferences and the resulting increase in e-commerce sales. While revenue may be more variable in the near term, we believe we are well positioned to continue to benefit from the macroeconomic shift to e-commerce that COVID-19 has accelerated.
Lest you think that we’re being too kind, there are some quibbles worth mentioning. For example, the company has a history of somewhat sharp revenue concentration:
In the years ended December 31, 2019 and 2020, our largest merchant represented approximately 20% and 15% of total GMV, respectively, and generated 25% and 18% of our total revenues, respectively, while our top 10 merchants represented 44% and 37% of our total revenues for the years ended December 31, 2019 and 2020, respectively.
The company does note, however, that it expects those numbers to continue falling. So we’re not really in Affirm-Peloton space here.
I was prepped to mock the company’s voting structure, presuming that it would have a dual or triple-class shareholder setup that would concentrate power in the hands of the few at the expense of the many. Based on our first read of the filing, that doesn’t appear to be the case.
So Global-e is going public with few caveats and some obvious strengths. Let’s see how investors react.
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