Peterson re-rated after hosting meetings with co-founder and CEO Amir Schlachet and co-founder and President Nir Debbi, where the analyst dove into the company’s key growth initiatives.
Peterson came away from the meetings with an increased appreciation of GLBE’s competitive differentiation, as it enables higher conversion rates and simplifies complexity for merchants and consumers.
Given the nascent stage of cross-border e-commerce, Peterson thinks this creates ample headroom in growth both from new customers and expansion with the company’s ~1k merchant base.
While the analyst understands investor pushback on valuation and near-term macro risks, several key long-term growth opportunities will take time to materialize and are likely outside CY23 and CY24 valuation metrics.
Global-e continues to progress in its partnership with Shopify IncSHOP, as Shopify Markets Pro runs for a small set of merchants.
The company will continue to work with Shopify to improve integration and conversion, with expectations for merchant ramps in 2023 and a more material GMV contribution in 2024.
GLBE believes it can further expand its already impressive conversion rates by leveraging shoppers on the BorderFree platform, creating additional future marketing and analytics opportunities.
GLBE will look to migrate merchants over to the GLBE platform over time, and the analyst saw more significant revenue synergies in 2023.
Global-e mentioned its duty drawback product as an incremental opportunity to drive improving results for merchants.
As this product gets deployed across multiple geographies, Peterson believes GLBE will have an incremental opportunity to save money for merchants, which should help new customer acquisition and provide a potential uplift on take rates.
While margins took a step back in 2022, given its M&A efforts, the analyst expects operating expense growth to lag revenue growth in the future.
With management guiding to adjusted EBITDA margins of ~11% for 2022, Peterson thinks an EBITDA margin profile in the teens looks reasonably achievable in the near-to-intermediate term.
Given the nascent nature of the cross-border opportunity and GLBE’s increasing competitive differentiation, the analyst believes shares represent one of the most open-ended growth stories in his coverage universe.
Price Action: GLBE shares traded lower by 0.20% at $20.12 on the last check Monday.
