(Address of Principal Executive Offices)
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Ordinary shares, no par value | GLBE | The Nasdaq Global Select Market |
☐ Large accelerated filer | ☐ Accelerated filer | ☒ Non-accelerated filer | ☒ Emerging growth company |
☒ U.S. GAAP | ☐ | International Financial Reporting Standards as issued by the International Accounting Standards Board | ☐ Other |
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A. Selected Financial Data | 8 |
B. Capitalization and Indebtedness | 8 |
C. Reasons for the Offer and Use of Proceeds | 8 |
D. Risk Factors | 8 |
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A. History and Development of the Company | 47 |
B. Business Overview | 47 |
C. Organizational Structure | 65 |
D. Property, Plants and Equipment | 66 |
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A. Operating Results | 75 |
B. Liquidity and Capital Resources | 78 |
C. Research and Development, Patents and Licenses, Etc. | 80 |
D. Trend Information | 80 |
E. Critical Accounting Estimates | 81 |
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A. Directors and Senior Management | 83 |
B. Compensation | 85 |
C. Board Practices | 89 |
D. Employees | 101 |
E. Share Ownership | 101 |
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A. Major Shareholders | 101 |
B. Related Party Transactions | 104 |
C. Interests of Experts and Counsel | 107 |
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A. Consolidated Statements and Other Financial Information | 107 |
B. Significant Changes | 107 |
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A. Offer and Listing Details | 107 |
B. Plan of Distribution | 108 |
C. Markets | 108 |
D. Selling Shareholders | 108 |
E. Dilution | 108 |
F. Expenses of the Issue | 108 |
A. Share Capital | 108 |
B. Memorandum and Articles of Association | 108 |
C. Material Contracts | 108 |
D. Exchange Controls | 108 |
E. Taxation | 108 |
F. Dividends and Paying Agents | 115 |
G. Statement by Experts | 115 |
H. Documents on Display | 115 |
I. Subsidiary Information | 115 |
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F-1 |
• | “Gross Merchandise Value” or “GMV” is defined as the combined amount we collect from the shopper and the merchant for all components of a given transaction, including products, duties and taxes and shipping; |
• | “Adjusted EBITDA” is a non-GAAP financial measure and is defined as operating profit (loss) adjusted for depreciation and amortization, stock-based compensation expenses, offering related expenses and merger and acquisition expenses; |
• | “Net Dollar Retention Rate” for a given period is calculated by dividing the GMV in that period by the GMV in the comparable period in the prior year, in each case, from merchants that processed transactions on our platform in the earlier of the two periods. |
• | our ability to retain existing, and attract new, merchants; |
• | our expectations regarding our revenue, expenses and operations; |
• | anticipated trends and challenges in our business and the markets in which we operate; |
• | our ability to compete in our industry; |
• | our ability to integrate acquired businesses and technologies; | ||
• | our ability to anticipate merchant needs or develop or acquire new functionality or enhance our existing platform to meet those needs; |
• | our ability to manage our growth and manage expansion into additional markets; |
• | our ability to establish and protect intellectual property rights; |
• | our ability to hire and retain key personnel; |
• | our ability to adapt to emerging or evolving regulatory developments, technological changes, and cybersecurity needs; |
• | our anticipated cash needs and our estimates regarding our capital requirements and our needs for additional financing; and |
• | other statements described in this Annual Report under “Risk Factors,” “Operating and Financial Review and Prospects,” and “Business.” |
A. | Selected Financial Data |
B. | Capitalization and Indebtedness |
C. | Reasons for the Offer and Use of Proceeds |
D. | Risk Factors |
• | increase the overall sales volume facilitated by our platforms; |
• | maintain merchant retention rates; |
• | increase merchants’ e-commerce sales conversion rates; |
• | successfully expand our merchants into new geographies; |
• | attract new merchants to our platforms in existing and new geographies, segments and verticals; | ||
• | successfully integrating the technologies and platforms of Flow Commerce Inc., or Flow, and other businesses we may acquire in the future, into our existing platform; |
• | provide integration with our merchants’ online e-commerce web-stores; |
• | maintain the security, reliability and integrity of our platform; |
• | maintain compliance with existing and comply with new applicable laws and regulations, including new tax rates and tariffs; |
• | price our platform effectively so that we are able to attract and retain merchants; |
• | successfully compete against our current and future competition and competing solutions; and |
• | maintain service levels and consistent quality of our platform. |
• | merchants may choose to develop cross-border e-commerce capabilities internally or choose competing solutions; |
• | merchants may merge with or be acquired by companies using a competing solution or an internally-developed solution; |
• | competing solutions may be offered as part of a bundle of e-commerce services; |
• | current and potential competition and competing solutions may adopt more aggressive pricing policies, offer more attractive sales terms, adapt more quickly to new technologies and changes in merchant requirements or devote greater resources to the promotion and sale of their products and solutions than we can; and |
• | current and potential competition may merge or establish cooperative relationships among themselves or with third parties to enhance their products, solutions and expand their markets, forming alliances that rapidly acquire significant market share. |
• | the need to localize our solutions, including product customizations and adaptation for local practices and regulatory requirements; |
• | lack of familiarity and burdens of ongoing compliance with local laws, legal standards, regulatory requirements, tariffs, customs formalities and other barriers, including restrictions on advertising practices, regulations governing online services, restrictions on importation or shipping of specified or proscribed items, importation quotas, shopper protection laws, enforcement of intellectual property rights, laws dealing with shopper and data protection, privacy, encryption, denied parties and sanctions, and restrictions on pricing or discounts; |
• | heightened exposure to fraud; |
• | legal uncertainty in foreign countries with less developed legal systems; |
• | unexpected changes in regulatory requirements, taxes, trade laws, tariffs, export quotas, custom duties or customs formalities, embargoes, exchange controls, government controls or other trade restrictions; |
• | differing technology standards; |
• | difficulties in managing and staffing international operations and differing employer/employee relationships; |
• | fluctuations in exchange rates that may increase our foreign exchange exposure; |
• | potentially adverse tax consequences, including the complexities of foreign tax laws (including with respect to value added taxes) and restrictions on the repatriation of earnings; |
• | increased likelihood of potential or actual violations of domestic and international anti-money laundering laws and anticorruption laws, such as the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act; |
• | uncertain political and economic climates in foreign markets; |
• | managing and staffing operations over a broader geographic area with varying cultural norms and customs; |
• | varying levels of internet, e-commerce and mobile technology adoption and infrastructure; |
• | reduced or varied protection for intellectual property rights in some countries; |
• | new and different sources of competition; |
• | costs and liabilities related to compliance with the numerous and ever-growing landscape of international data privacy and cybersecurity regimes, many of which involve disparate standards and enforcement approaches; and |
• | data privacy laws which may require that merchant and/or shopper data be processed and stored in a designated territory. |
• | require costly litigation to resolve and the payment of substantial royalty or license fees, lost profits or other damages; |
• | require and divert significant management time; |
• | cause us to enter into unfavorable royalty or license agreements; |
• | require us to discontinue some or all of the features, integrations, and capabilities available on our platform; |
• | require us to indemnify our merchants or third-party service providers; and/or |
• | require us to expend additional development resources to redesign our platform. |
• | develop new features, integrations, capabilities, and enhancements; |
• | continue to expand our product development, sales, and marketing organizations; |
• | respond to competitive pressures or unanticipated working capital requirements; or |
• | pursue acquisition opportunities. |
• | actual or anticipated fluctuations in our results of operations; |
• | variance in our financial performance from the expectations of market analysts; |
• | announcements by us or our direct or indirect competition of significant business developments, changes in service provider relationships, acquisitions or expansion plans; |
• | the impact of the COVID-19 pandemic on our management, employees, partners, merchants, and operating results; |
• | changes or proposed changes in laws or regulations or differing interpretations or enforcement of laws or regulations affecting our business; |
• | changes in our pricing model; |
• | our involvement in litigation or regulatory actions; |
• | our sale of ordinary shares or other securities in the future; |
• | market conditions in our industry; |
• | changes in key personnel; |
• | the trading volume of our ordinary shares; |
• | publication of research reports or news stories about us, our competition or our industry, or positive or negative recommendations or withdrawal of research coverage by securities analysts; |
• | changes in the estimation of the future size and growth rate of our markets; and |
• | general economic and market conditions. |
• | the Israeli Companies Law, 5759-1999 (the “Companies Law”) regulates mergers and requires that a tender offer be effected when more than a specified percentage of shares in a company are purchased; |
• | the Companies Law requires special approvals for certain transactions involving directors, officers or significant shareholders and regulates other matters that may be relevant to these types of transactions; |
• | the Companies Law does not provide for shareholder action by written consent for public companies, thereby requiring all shareholder actions to be taken at a general meeting of shareholders; |
• | our amended and restated articles of association divide our directors into three classes, each of which is elected once every three years; |
• | our amended and restated articles of association generally require a vote of the holders of a majority of our outstanding ordinary shares entitled to vote present and voting on the matter at a general meeting of shareholders (referred to as simple majority), and the amendment of a limited number of provisions, such as the provision dividing our directors into three classes, requires a vote of the holders of at least 70% of our voting power; |
• | our amended and restated articles of association restrict us, subject to certain exceptions, from engaging in certain business combination transactions, with any shareholder who holds 20% or more of our voting power. The transactions subject to such restrictions include mergers, consolidations and dispositions of our assets with a market value of 10% or more of our assets or outstanding shares. Subject to certain exceptions, such restrictions will apply for a period of three years following each time a shareholder became the holder of 20% or more of our voting power; |
• | our amended and restated articles of association do not permit a director to be removed except by a vote of the holders of at least 70% of our voting power; and |
• | our amended and restated articles of association provide that director vacancies may be filled by our board of directors. |
A. | History and Development of the Company |
B. | Business Overview |
• | Language – localized marketing messaging and checkout in over 30 languages. |
• | Pricing –support for more than 100 currencies as well as a sophisticated pricing engine customizable according to the shopper’s location, local market retail pricing conventions and the merchant’s pricing strategy. |
• | Payments – over 150 payment methods, with new payment methods being continuously added. |
• | Duties and taxes – the ability to accurately pre-calculate import duties and taxes and remit them in over 170 destination markets, simplifying the customs clearance process and allowing for a guaranteed landed price quote for both the shopper and the merchant. We also ensure we are addressing local market import restrictions. |
• | Delivery – an extensive network of more than 20 shipping carriers, offering multiple shipping modes at attractive rates, including specialized shipping options such as Pick-Up & Drop-Off where applicable. We have found that shopper preferences for shipping modes and pricing vary significantly among markets, and are an important driver of conversion rates. |
• | After-sale support and returns – multi-lingual shopper services and multiple returns options, including pre-paid and local returns in relevant markets. |
• | Increased sales conversion: we enable the merchants to scale internationally in a rapid, efficient manner through our platform. We ensure that the merchants are able to capitalize on their valuable international shopper traffic and growth potential by eliminating friction to close the gap between international markets’ share of traffic and monetization. This enables the merchants to generate an uplift in sales from the conversion of their international shopper conversion. We have seen merchants experience significant uplift (often exceeding 60%) in international traffic conversion after beginning to use our platform. |
• | Enabling expansion flexibility: Global-e presents merchants with flexibility to expand where and when they want to, as they seek to capture the cross-border opportunity. We transform what otherwise would have required significant time and financial investments in proprietary development and go-to-market efforts into an efficient expansion solution managed by adjusting mere configurations on the Global-e platform per market. |
• | Reducing merchant complexity: Global-e assumes the role of merchant of record (“MoR”) vis-à-vis the shopper. We believe that taking on such responsibility significantly reduces legal complexity for the merchants, as we report and forward relevant import taxes and handle import compliance in the local market where a purchase is made, in line with specific market regulations. Our MoR status allows us to handle tax recovery for returned goods, with no hassle to the merchant. We bear certain fraud and foreign exchange risks that would otherwise be borne by the merchants and offer simple access to dozens of local payment methods, which further reduces potential frictions that could deter both merchants and shoppers from engaging in cross-border transactions. We also adapt our systems and operations on an ongoing basis to address the evolving regulatory landscape and technical backdrop. Vis-à-vis the merchant, we streamline order processing by periodically reconciling all international orders in bulk and in the merchant’s native currency. In short, we aim to provide an experience that is akin to a domestic transaction. |
• | Emphasizing merchant branding: maintaining the direct shopper relationships is of strategic importance to the merchants, and we are deeply committed to preserving that connection. All throughout the process, the merchants preserve the integrity of the brand experience and enhance their brand equity. Our platform uses minimal Global-e branding – and only where required to do so – so shoppers primarily face the merchant’s existing storefront and brand experience. |
• | Multiple origin countries – we serve merchants from the United States, United Kingdom, multiple European markets and other markets globally. |
• | Multiple product verticals – fashion and apparel, luxury, footwear, cosmetics, accessories, children’s fashion, watches and jewelry, sporting equipment, consumer electronics, toys and hobbies, automotive spare parts, and others. |
• | Multiple product price points – ranging from everyday fashion retailers such as Forever 21 and Marks and Spencer, to ultra-high-end brands such as Hugo Boss, Cartier and Versace. |
• | Multiple merchant sizes – from multi-billion dollar global high-street brands to niche small and medium businesses. |
• | Multiple merchant types – from traditional bricks-and-mortar retailers who have been transitioning to the digital D2C realm to emerging digital-native brands. |
• | A rich, diverse and fast-growing data asset of international transactions, enabling us to produce Smart Insights. |
• | Vertical-level as well as geographical expertise, yielding a competitive advantage when approaching prospective merchants as part of our sales process. |
• | Strong network and word-of-mouth effects within specific verticals and/or geographies. |
• | High business resilience due to steadily decreasing merchant concentration. |
• | A certain level of built-in “natural currency hedge” as a result of our business activity being conducted in a large number of different base currencies. |
• | Direct sales – We have a dedicated team of sales executives that use various data sources to screen, qualify, identify and directly approach prospective merchants. |
• | Inbound and word-of-mouth – As our scale and the number of merchants we have in each individual market grows, so does our own brand equity. This leads to more inbound prospects as well as stronger word-of-mouth-based sales, whereby an existing Global-e merchant recommends our solution to other players in the market. |
• | Channel partnerships – We have established mutually-beneficial strategic partnerships with a range of third parties, including leading e-commerce and technology platforms, shipping providers, third-party logistics providers, payment providers, system integrators and others. In the context of such relationships, our partners pass on leads to our sales teams and provide us with access to merchants. In 2021 we entered into the 2021 Shopify Agreement with Shopify to jointly cooperate in offering e-commerce cross-border solutions to Shopify merchants and in January 2022 we extended our partnership with Shopify and entered into the 2022 Shopify Agreement with Flow and Shopify, for the offering of certain natively integrated cross-border solutions for Shopify’s merchants, especially catering to small and emerging brands. |
• | “Economies of scale” – Our platform facilitates millions of international transactions each year across hundreds of merchants, spread across multiple geographies, product verticals, price levels, and shopper demographics. We thus accumulate a vast and rich data set and are able to benefit from economies of scale. |
• | “Economies of skill” – Our massive and fast-growing data is a key asset due to the “richness” of its content. Based on this data, and coupled with our operational experience accumulated over years, we are able to generate what we call economies of skill, which enable us to ensure that cross-border sales are optimized for the merchants on a market-by-market basis. |
• | Flywheel Effects. Our rich data serves as the basis for a powerful flywheel effect: the uplift we generate for our merchants drives more sales and the ability for them to expand into new geographies, which in turn creates more data, which is then fed back into our systems in order to generate even better conversion rates and more uplift. This in turn drives increased sales for our merchants and attracts new merchants to our platform. Our data engine gets “smarter” with each new site visit, each merchant and each new shopper. |
• | Customer-Obsessed: We are firm believers in putting our customers first in everything we do. This is a principal tenet of our business. We view the merchants as long-term partners and hold their satisfaction as our guiding principle. Our customer success teams have invaluable tools and data to support the merchants’ ongoing needs, as well as direct access to the senior leadership team, including our founders, to leverage on behalf of our merchant partners. |
• | Initiative and innovation driven: Our goal is to enable merchants to break geographic boundaries and become globally successful businesses. As such, we invest millions in research and development each year, track trends in the e-commerce world across geographies and constantly improve our product offering. Similarly, we encourage our employees to expand the scope of their defined roles, to take initiative, and to elevate Global-e to the next level – every employee can, and does make a difference. |
• | Team-Focused: We are a team. We believe in collaboration, from our founding team that has been working together since our inception to our employees across all our offices worldwide. Our hiring decisions are based on attracting people whose values align with ours: creating real, meaningful and sustainable value for our merchants. |
• | Localized browsing – We offer localized browsing features, such as a configurable welcome message or a top-line marketing banner that can be customized by market and presented in the local language. Customization breeds familiarity, reducing bounce rates, increasing conversion and improving shopper confidence through a local shopping experience. |
• | Local market pricing – We offer dynamic price translation to the shopper’s local currency based on market-specific business goals and in accordance with local pricing conventions (e.g. presenting prices in “dollar-ninety-nine” terms, such as $4.99 instead of $5.00, in relevant markets). Global-e offers support for payment in 100 global currencies, and we have found that more than 95% of shoppers choose to pay in their local currency when given the option. The below image shows examples of localized pricing in markets across the globe. |
• | Localized checkout – Embedded within the brand’s e-commerce store, the Global-e checkout system supports over 30 different languages, enabling shoppers to switch the checkout language to their own native tongue for a more customized and local experience. We have found that in some markets, approximately 20% of shoppers choose to switch to their local language at checkout, even if their native language wasn’t supported during browsing. Further, shoppers checkout within the merchant website without being redirected to a third-party site. The below image shows an example of a language menu. |
• | Guaranteed landed cost – We provide shoppers with a “no-surprises” and guaranteed fully-landed cost. We offer multiple options, configurable by market, for handling import duties and taxes. For example, shoppers may select the option to prepay duties and/or taxes at checkout. We have found that on average more than 80% of shoppers from developed markets choose to pre-pay when given such option, despite the fact that it requires payment of a higher price at checkout. Alternatively, our platform has the capability to already embed this cost into the product price within the browsing journey (in full or partially), in order to facilitate an intuitive and frictionless smooth and user-friendly shopper journey. We believe this feature and options are critical in achieving high conversion rates across markets and promoting repeat shoppers. In addition to achieving shopper confidence, pre-collection of import duties and taxes enables orders to be dispatched to shoppers under a “Delivery Duties Paid” scheme through relevant shipping carriers. This serves to greatly simplify and streamline the process of releasing the goods from customs at the destination market, in turn contributing to a quicker and simpler delivery experience for the shopper. |
• | Multiple shipping options – Global-e’s platform allows merchants to choose from a menu of shipping options, offering shoppers multiple delivery alternatives, depending on the destination market: mail, express courier, Cash-on-Delivery, store delivery, drop point delivery and more. As part of its market-specific value proposition, merchants can decide which shipping methods to offer and how to price them, based on Global-e’s competitive shipping rates or through their own contracted shipping carriers. |
• | Localized alternative payment methods – Preferred payment methods of shoppers differ from market to market. In some markets, such as the United States and United Kingdom, the use of global cards (Visa, MasterCard, etc.) is the most common payment method used. In others, local card, or universal alternative payment methods, such as PayPal, prevail. There are markets, both in developed and developing countries, where alternative payment methods are used more frequently than cards. For example, iDeal has the largest market share in the Netherlands; while the majority of online payments in China are carried out through AliPay, WeChatPay, and the UnionPay card scheme. In other countries, payment options such as Cash-On-Delivery or Buy-Now-Pay-Later are popular. |
• | Real-time anti-fraud screening – Each order is scanned in real-time for potential payment fraud. Global-e utilizes advanced third-party screening services, coupled with proprietary algorithms and processes – all managed by a team of anti-fraud specialists. These capabilities enable Global-e to achieve high payment acceptance rates and low chargeback rates across international markets. The authorization/rejection decision is made in real time without the delays and costs associated with manual or semi-automatic transaction screening. This further contributes to a streamlined and satisfying shopper experience. |
• | International customer services – Global-e operates a branded self-service and multi-lingual online customer service portal, which contains answers to many frequently-asked questions that are typically raised post-sale by international shoppers regarding their orders. In addition, Global-e operates a manned contact center that serves to augment the brand’s own customer services team. Global-e’s contact center can provide either “behind the scenes” support for the merchant’s customer services team, or it can be in touch directly with the brand’s shoppers to handle their queries. |
• | Returns process – Global-e offers a comprehensive and efficient solution for product return management. Through Global-e’s proprietary branded and multi-lingual returns portal, shoppers are presented with multiple return options, according to the various returns services that the merchant enables for a given market. Returns options include self-postage, local return addresses, pre-paid postal labels and courier pick-ups. In addition, merchants set for each option an associated cost. Global-e deducts the return cost from the amount refunded to the shopper once merchants confirm successful receipt of the returned product. |
• | Application architecture. We operate a proprietary and modern technology platform, organically developed by our in-house R&D teams over a period of seven years, leveraging leading third-party software where applicable. |
• | Infrastructure. Our platform is deployed via market standard cloud computing infrastructure, allowing us to easily scale our platform globally while maintaining optimal performance. |
• | Disaster Recovery. We maintain a secondary cloud-based data center, holding a full stack of updated applications, which is fully tested at least once a year, with the aim of ensuring the highest reliability for our shoppers. |
• | Security. We employ a multi-layer security approach utilizing both cloud infrastructure security and endpoint protection to enforce the highest degree of security. We adhere with all major security standards, including: PCI/DSS, and GDPR. We perform penetration tests continuously throughout the year by external vendors to identify any vulnerabilities. |
• | Uptime. Our platform maintains excellent service levels. Across all sites, our platform achieved over 99.9% average uptime for the year ended December 31, 2021. |
• | In-House D2C. Some merchants have built and managed international stores and prefer to maintain these operations in-house supported by third-party cross-border components. This DIY approach is expensive and complex to maintain, while also lacking the flexibility and know-how of local preferences that a specialized cross-border provider, such as Global-e, can provide. We believe that with the growing importance to merchants of cross-border D2C, coupled with market awareness of the advantages of using reputable and experienced cross border third parties, such as Global-e, the trend of shifting towards a third-party cross-border enabler will accelerate – with Global-e as the distinguished front runner. |
• | Alternative, Cross-Border End-to-End Platforms. There are a limited number of cross-border platforms offering solutions similar in nature and breadth to those offered by Global-e. However, we believe that none of these providers have the combination of track record, variety of merchants, scale, feature set and data, to match Global-e’s overall offering. The level of sophistication embedded in our platform and solutions stemming from executing millions of transactions annually, across merchants in over 200 destination markets, is what makes us a leader in the world of cross-border ecommerce. |
• | Legacy Players and Local Distributors. Merchants expanding abroad may partner with local distributors, granting them licenses to operate in a given market. Licenses typically include an arrangement to sell goods through bricks-and-mortar locations as well as digital rights to the brand, effectively allowing the local licensee to manage the full client-facing relationship with international shoppers. This may cause frustration among shoppers, as local selection may be limited to best-selling products, and interactions with the merchant are routed through a middle-man. As merchants increasingly understand the value of their digital channels and leverage social media to interact directly with shoppers, we believe wide-ranging agreements with local distributors will continue to become less common, especially for digital D2C e-commerce. Nevertheless, some merchants are constrained by long-term, legacy agreements with distributors, preventing the merchant from directly selling to and interacting with shoppers in select (or all) foreign markets, at least for a certain period of time. |
• | Non-D2C Online Channels. Non-D2C online channels, such as marketplaces, represent digital alternatives to the traditional distributor model. Such online channels are varied, ranging from local, multi-local, regional and global platforms. They generate online traffic from shoppers by marketing under the marketplace’s own brand and command a fee, or “take rate” that may represent a meaningful percentage of the merchant’s revenue. To facilitate the transaction between shopper and seller, online channels may provide complimentary services such as payment acquiring, fraud protection, order management, and access to shipping providers. Merchants do not have direct access to shoppers; rather, they must list their products through the intermediary – i.e., the marketplace – to gain exposure. As such, by selling through non-D2C online channels, merchants often expose their brand to direct competition from other brands sold in parallel through such online channels (e.g. a common feature of marketplaces is “people who bought this also bought this” lists which may include different brands). |
C. | Organizational Structure |
• | Global-e online Pte Ltd (Singapore) |
• | Globale UK Limited (England) |
• | Crossborder Global Apparel and Equipment Trading L.L.C (UAE) |
• | Global-e Middle East FZCO Dubai Branch (UAE, Jebel Ali Free Zone) |
• | Global-e Middle East FZCO (DAFZA) (UAE, Dubai Airport Free Zone) |
• | E Commerce Globale Middle East FZCO (UAE, Dubai Commercity Free Zone) |
• | Global-e Canada e-commerce Ltd. (Canada) |
• | Global-e CH AG (Switzerland) |
• | Global-e NL B.V (Netherlands) |
• | Global-e Japan KK (Japan) |
• | Global-e France SAS (France) |
• | Olami E-Commerce Solutions Ireland Limited (Ireland) |
• | Global-e Australia Pty Ltd. (Australia) |
• | Global-e Spain S.L (Spain) |
• | Global-e HK Limited (Hong Kong) |
• | Global-e (Beijing) Technology Co., Ltd. (China) |
• | Global-e US Inc. (Delaware, USA). |
• | Global-e Panama Inc. (Panama, Colon Free Zone) |
• | Global-e Solutions Ltd. (Israel) |
• | Global-e South Africa (PTY) Ltd. (South Africa) |
• | Flow Commerce Inc. (Delaware, USA) |
• | Flow Commerce Limited (Ireland) |
• | Flow Commerce Australia Pty Ltd. (Australia) |
• | Flow Commerce Canada Inc. (Canada) |
• | Flow Trading Shanghai Company Limited (China) |
• | Flow Commerce UK LTD (England) |
D. | Property, Plants and Equipment |
Year Ended December 31, | ||||||||||||
($ in millions) | 2019 | 2020 | 2021 | |||||||||
Gross Merchandise Value | $ | 382 | $ | 774 | $ | 1,449 | ||||||
Net Dollar Retention Rate | 134 | % | 172 | % | 152 | % | ||||||
Revenue | $ | 65.9 | $ | 136.4 | $ | 245.3 | ||||||
Gross Profit | $ | 18.7 | $ | 43.5 | $ | 91.4 | ||||||
Gross Profit as % of Revenue | 28.3 | % | 31.9 | % | 37.3 | % | ||||||
Adjusted EBITDA | $ | (4.6 | ) | $ | 12.6 | $ | 32.4 | |||||
Adjusted EBITDA as % of Revenue | (6.9 | )% | 9.2 | % | 13.2 | % |
• | Continued Growth in Cross-Border E-commerce: We expect to benefit from significant tailwinds including growth in global e-commerce over time, the continued rise in the influence of social media on shopper spending habits worldwide, the increasing relevance of D2C, as well as increased cross-border e-commerce. The rise in complexity of cross-border trade, stemming from constantly-changing regulations and technology, serves as an additional tailwind by driving merchant demand for third-party solutions with the relevant expertise and infrastructure, such as Global-e. |
• | Increasing Existing Merchant Retention and Expansion: We care deeply about the merchants we serve. Our commitment to their success, we believe, increases retention and likelihood of expanding their activity on our platform. Supporting our merchants begins with enhancing both the shopper and the merchant experience; as such, we focus our efforts on developing products and functionality to ease the complexity they face when engaging in cross-border e-commerce. We provide customer support services to their shoppers, take full responsibility for processing duties and taxes, employ dedicated teams to optimize their offering and increase their sales conversion and continue to take steps to boost retention. Our effectiveness in retaining and expanding our existing merchants’ sales is a critical component of our revenue growth and operating results. |
• | New Merchant Acquisition: Our growth depends in part on our ability to attract new merchants and add their GMV to our platform. Over the past seven years, we have experienced substantial expansion in the number of merchants served by our platform, which totaled 657 and 442 as of December 31, 2021 and December 31, 2020, respectively. New merchant acquisition is a key to scaling our platform. We have historically achieved efficient payback periods driven by a combination of direct sales, inbound inquiries, word-of-mouth referrals and channel partnerships. Continuing to add merchants to our platform in an efficient manner is a key component of our ability to grow our revenues. As a result of the recently signed expansion of our partnership with Shopify, we expect that we will be able to accelerate the growth of our merchant base. |
• | Successful Expansion to Additional Geographies: We believe our platform can compete successfully around the world, as it enables merchants, regardless of geography, to expand their market footprint to more shoppers by selling globally. In order to successfully acquire merchants across geographies, Global-e has local sales teams in the United States, the United Kingdom and the EU, and recently also Japan and Australia as part of our efforts to expand our business within the APAC region. We plan to add local sales support in further select international markets over time to support our growth. |
• | Investing to Scale Our Platform and Merchant Base: We have made, and will continue to make, significant investments in our platform to retain and scale our merchant base and enhance their experiences. In the years ended December 31, 2019, 2020 and 2021, excluding stock based compensation, we spent $12.0 million (or 18.2% of revenue), $14.9 million (or 10.9% of revenue) and $25.6 million (or 10.4% of revenue), respectively, on research and development. These amounts represent year over year increases of 24.6% and 71.7% in the years ended December 31, 2020 and 2021, respectively. In the years ended December 31, 2019, 2020 and 2021, excluding the amortization of the Shopify warrants related asset and stock based compensation, we spent $4.6 million (or 6.9% of revenue), $9.4 million (or 6.9% of revenue) and $19.1 million (or 7.8% of revenue), respectively, on sales and marketing. These amounts represent year over year increases of 105.6% and 103.3% in the years ended December 31, 2020 and 2021, respectively. Overall research and development expenses were $12.0 million, $15.4 million and $29.8 million in the years ended December 31, 2019, 2020 and 2021, respectively. Overall sales and marketing expenses were $4.6 million, $9.8 million and $104.7 million in the years ended December 31, 2019, 2020 and 2021, respectively. We plan to continue to invest significantly in go-to-market and innovation to address the needs of merchants. We also plan to increase headcount. The resources we commit to, and the investments we make in, our platform are designed to retain and expand the sales of our merchants, expand into new geographies and acquire new merchants, fuel our “Smart Insights” data set and improve our operating results in the long term. |
• | Revenue Seasonality: Our revenue is correlated with the level of GMV that our merchants generate through our platform. Our merchants typically process additional GMV each year in the fourth quarter, which includes Black Friday, Cyber Monday and the holiday season, driven by an uptick in e-commerce sales. As a result, we historically have generated higher revenues in the fourth quarter than in other quarters. In the years ended December 31, 2019, 2020 and 2021, fourth quarter GMV represented approximately 38%, 39% and 35%, respectively, of our total GMV. We believe that similar seasonality trends will affect our future quarterly performance. |
• | Increased Efficiency from Economies of Scale: as our GMV scales, we can achieve margin expansion due to operating leverage. In addition, our larger size allows us to negotiate better terms with our suppliers allowing us to further optimize our cost base. As the number of merchants on our platform grows, we also generate increasing amounts of data which in turn enable smarter decisions and optimizations that further increase efficiency. |
• | COVID-19: The global pandemic resulting from the spread of COVID-19 increased e-commerce volumes, a trend that we believe has had a positive impact on our business. Lockdown restrictions contributed to an increased shift of shoppers to online retail activity. In addition, store closures and social distancing requirements accelerated the transition of merchants to focusing on D2C e-commerce in general, and cross-border e-commerce in particular. Our platform remained active, with no material outages or service disruptions. We successfully navigated elevated global order volumes as well as the need to rapidly adapt to changing circumstances such as temporary closures due to lockdowns, demonstrating our platform’s resilience, flexibility and effectiveness during the period of global volatility. We expect e-commerce growth rates to normalize in the short-term, as physical stores re-open and social distance requirements ease. However, we continue to witness the accelerated transition of merchants to D2C e-commerce in general and cross-border e-commerce in particular, which we believe is a long-term direction due to the clear advantages of D2C. | ||
• | Global macro-economics: Inflationary pressures and rising interest rates in key markets, coupled with potential impact of the belligerent situation in Ukraine may influence consumer sentiment and may have a negative effect on consumer spend. |
A. | Operating Results |
Year Ended December 31, | ||||||||||||
2019 | 2020 | 2021 | ||||||||||
(in thousands) | ||||||||||||
Revenue | $ | 65,852 | $ | 136,375 | $ | 245,274 | ||||||
Cost of revenue | 47,188 | 92,902 | 153,841 | |||||||||
Gross profit | 18,664 | 43,473 | 91,433 | |||||||||
Operating expenses: | ||||||||||||
Research and development | 12,034 | 15,400 | 29,761 | |||||||||
Sales and marketing | 4,593 | 9,838 | 104,687 | |||||||||
General and administrative | 6,988 | 9,822 | 22,643 | |||||||||
Total operating expenses | 23,615 | 35,060 | 157,091 | |||||||||
Operating profit (loss) | (4,951 | ) | 8,413 | (65,658 | ) | |||||||
Financial expenses, net | 2,559 | 4,339 | 8,570 | |||||||||
Profit (loss) before income taxes | (7,510 | ) | 4,074 | (74,228 | ) | |||||||
Income taxes | 34 | 160 | 705 | |||||||||
Net profit (loss) | $ | (7,544 | ) | $ | 3,914 | $ | (74,933 | ) |
Year ended December 31, | ||||||||||||
2019 | 2020 | 2021 | ||||||||||
(as a % of revenue) | ||||||||||||
Revenue | 100.0 | % | 100.0 | % | 100 | % | ||||||
Cost of revenue | 71.7 | 68.1 | 62.7 | |||||||||
Gross profit | 28.3 | 31.9 | 37.3 | |||||||||
Operating expenses: | ||||||||||||
Research and development | 18.3 | 11.3 | 12.1 | |||||||||
Sales and marketing | 7.0 | 7.2 | 42.7 | |||||||||
General and administrative | 10.6 | 7.2 | 9.2 | |||||||||
Total operating expenses | 35.9 | 25.7 | 64.0 | |||||||||
Operating profit (loss) | (7.5 | ) | 6.2 | (26.7 | ) | |||||||
Financial expenses, net | 3.9 | 3.2 | 3.5 | |||||||||
Profit (loss) before income taxes | (11.4 | ) | 3.0 | (30.3 | ) | |||||||
Income taxes | 0.0 | 0.1 | 0.3 | |||||||||
Net profit (loss) | (11.5 | )% | 2.9 | % | (30.6 | )% |
Reconciliation to adjusted EBITDA |
Year Ended December 31, | |||||||||||||||
2019 | 2020 | 2021 | |||||||||||||
Operating profit (loss) | (4,951 | ) | 8,413 | (65,658 | ) | ||||||||||
1 | Stock-based compensation: | ||||||||||||||
Cost of revenue | 2 | 10 | 85 | ||||||||||||
Research and development | 79 | 507 | 4,192 | ||||||||||||
Selling and marketing | 22 | 442 | 1,287 | ||||||||||||
General and administrative | 118 | 2,997 | 6,437 | ||||||||||||
Total stock-based compensation | 221.00 | 3,956 | 12,001 | ||||||||||||
2 | Depreciation and amortization | 171 | 235 | 331 | |||||||||||
3 | Secondary offering costs | - | - | 879 | |||||||||||
4 | Commercial agreement asset amortization | - | - | 84,298 | |||||||||||
5 | Merger and acquisition costs | - | - | 573 | |||||||||||
Adjusted EBITDA | (4,559 | ) | 12,604 | 32,424 |
B. | Liquidity and Capital Resources |
Year ended December 31, | ||||||||||||
(in thousands) | 2019 | 2020 | 2021 | |||||||||
Net cash (used in) provided by operating activities | $ | 7,028 | $ | 29,350 | $ | 15,748 | ||||||
Net cash used in investing activities | (452 | ) | (24,046 | ) | (40,489 | ) | ||||||
Net cash provided by financing activities | 147 | 59,360 | 398,607 |
C. | Research and Development, Patents and Licenses, Etc. |
D. | Trend Information |
• | Transformation of retail to be online-focused – While e-commerce may face some headwinds from the re-opening of physical stores, the retail market is undergoing a shift towards e-commerce, with growth in online sales overtime, outpacing that of traditional retail. |
• | Rise of cross-border e-commerce – Cross-border e-commerce growth rates are outpacing domestic growth rates, propelled by the rise of social media and global influencers, resulting in globalization of consumer tastes and increased cross-border demand. |
• | Emphasis on D2C sales – e-commerce enables a stronger model of D2C sales for traditional and new merchants, which paves a strategic route for merchants to take ownership of shopper relationships worldwide. |
• | Difficulty in executing on a Do-It-Yourself (“DIY”) strategy – Managing a D2C cross-border network is capital-intensive, requires deep local know-how, and a complex combination of features and capabilities to navigate across markets, further exacerbated by local on-going regulatory changes. |
• | Tailwinds from COVID-19 – The COVID-19 pandemic accelerated existing trends of shoppers moving online and merchants prioritizing digital channels; in general, these trends are expected to continue post-pandemic, although there may be some headwinds as physical stores re-open in key markets. | ||
• | Supply chain evolution and disruption – Supply chains and in particular cross border supply chains are developing and enabling more efficient trade over time. The COVID-19 pandemic has disrupted supply chains and weighed on e-commerce trade, the impact was significantly less evident in D2C channels, as merchants prioritize D2C over other channels. | ||
• | Global macro-economics – Inflationary pressures and rising interest rates in key markets, coupled with potential impact of the belligerent situation in Ukraine may influence consumer sentiment and may have a negative effect on consumer spend. |
E. | Critical Accounting Estimates |
1. | Service Fees –The Company provides merchants a cross-border e-commerce platform which enables to sell their products to consumers worldwide. Revenue is generated as a percentage of the value of transactions that flow through the Company’s platform. |
2. | Fulfillment services – The Company offers shipping, handling, and other global delivery services in order to deliver merchants’ goods to consumers. |
A. | Directors and Senior Management |
Name | Age | Position | ||||
Executive Officers | ||||||
Amir Schlachet | 45 | Co-Founder, Chief Executive Officer, Director | ||||
Shahar Tamari | 50 | Co-Founder, Chief Operations Officer, Director | ||||
Nir Debbi | 48 | Co-Founder, President, Director | ||||
Ofer Koren | 51 | Chief Financial Officer | ||||
Eden Zaharoni | 45 | Chief Technology Officer | ||||
Ran Fridman | 48 | Chief Revenue Officer | ||||
Non-Executive Directors | ||||||
Thomas Studd | 41 | Director | ||||
Miguel Angel Parra | 54 | Director | ||||
Tzvia Broida | 53 | Director | ||||
Anna Bakst | 61 | Director | ||||
Iris Epple-Righi | 57 | Director |
Board Diversity Matrix | ||||
Country of Principal Executive Offices: | Israel | |||
Foreign Private Issuer | Yes | |||
Disclosure Prohibited under Home Country Law | No | |||
Total Number of Directors | 8 | |||
Female | Male | Non- Binary | Did Not Disclose Gender | |
Part I: Gender Identity | ||||
Directors | 3 | 5 | - | - |
Part II: Demographic Background | ||||
Underrepresented Individual in Home Country Jurisdiction | 1 | |||
LGBTQ+ | - |
B. | Compensation |
• | at least a majority of the shares held by all shareholders who are not controlling shareholders and do not have a personal interest in such matter, present and voting at such meeting, are voted in favor of the compensation package, excluding abstentions; or |
• | the total number of shares of non-controlling shareholders and shareholders who do not have a personal interest in such matter voting against the compensation package does not exceed two percent (2%) of the aggregate voting rights in the Company. |
Name and Principal Position(2) | Base Salary ($) | Benefits and Perquisites ($)(3) | Variable compensation ($)(4) | Equity-Based Compensation ($)(5) | Total ($) | |||||||||||||||
(in thousands, US dollars) (1) | ||||||||||||||||||||
Amir Schlachet, Co-Founder, Chief Executive Officer, Director | 341 | 49 | 129 | 1,402 | 1,921 | |||||||||||||||
Shahar Tamari, Co-Founder, Chief Operations Officer, Director | 340 | 79 | 129 | 1,402 | 1,950 | |||||||||||||||
Nir Debbi, Co-Founder, President, Director | 339 | 69 | 129 | 1,402 | 1,939 | |||||||||||||||
Ofer Koren, Chief Financial Officer | 340 | 88 | 129 | 1,105 | 1,662 | |||||||||||||||
Ran Fridman, Chief Revenue Officer | 173 | 47 | 79 | 204 | 503 |
(1) | All amounts reported in the table are in terms of cost to us, as recorded in our financial statements. | ||
(2) | All Covered Executives listed in the table are our full-time employees. Cash compensation amounts denominated in currencies other than the U.S. dollar were converted into U.S. dollars at the average conversion rate for 2021. | ||
(3) | Amounts reported in this column include social benefits paid by us on behalf of the Covered Executives, convalescence pay, contributions made by the company to an insurance policy or a pension fund, work disability insurance, severance, educational fund and payments for social security | ||
(4) | Amounts reported in this column refer to incentive and variable compensation payments which were paid or accrued with respect to 2021. In accordance with the Company’s compensation policy, we also paid cash bonuses to our Covered Executives upon compliance with predetermined performance parameters and an over achievement bonus as set by the compensation committee and the board of directors. These amounts were provided for in our 2021 financial statements (but will be paid during 2022). | ||
(5) | Amounts reported in this column represent the expense recorded in our financial statements for the year ended December 31, 2021 with respect to equity-based compensation grants-- options and restricted share units. The relevant amounts underlying the equity awards granted to our officers during 2021, will continue to be expensed in our financial statements over a four-year period during the years 2021-2024 on account of the 2021 grants in similar annualized amounts. Assumptions and key variables used in the calculation of such amounts are described in Note 7 to our audited consolidated financial statements included in Item 18 of this Annual Report. All equity-based compensation grants to our Covered Executives were made in accordance with the parameters of our Company’s compensation policy and were approved by our compensation committee and board of directors. |
• | 0.5% of the outstanding ordinary shares as of the last day of the immediately preceding fiscal year, determined on a fully diluted basis; or |
• | such other amount as our board of directors may determine. |
C. | Board Practices |
• | the Class I directors are Amir Schlachet, Miguel Angel Parra and Iris Epple-Righi, and their terms will expire at our annual general meeting of shareholders to be held in 2022; |
• | the Class II directors, are Nir Debbi and Anna Jain Bakst, and their terms will expire at our annual meeting of shareholders to be held in 2023; and |
• | the Class III directors are Shahar Tamari, Thomas Studd and Tzvia Broida, and their terms will expire at our annual meeting of shareholders to be held in 2024. |
• | at least a majority of the shares of non-controlling shareholders and shareholders that do not have a personal interest in the approval voted at the meeting are voted in favor (disregarding abstentions); or |
• | the total number of shares of non-controlling shareholders and shareholders who do not have a personal interest in such appointment that re voted against such appointment does not exceed two percent (2%) of the aggregate voting rights in the company. |
• | retaining and terminating our independent auditors, subject to ratification by the board of directors, and in the case of retention, to ratification by the shareholders; |
• | pre-approving audit and non-audit services to be provided by the independent auditors and related fees and terms; |
• | overseeing the accounting and financial reporting processes of our company and audits of our financial statements, the effectiveness of our internal control over financial reporting and making such reports as may be required of an audit committee under the rules and regulations promulgated under the Exchange Act; |
• | reviewing with management and our independent auditor our annual and quarterly financial statements prior to publication or filing (or submission, as the case may be) to the SEC; |
• | recommending to the board of directors the retention and termination of the internal auditor, and the internal auditor’s engagement fees and terms, in accordance with the Companies Law as well as approving the yearly or periodic work plan proposed by the internal auditor and reviewing and discussing the results of internal auditor activities, including significant findings and management’s responses to significant findings; |
• | reviewing policies and procedures with respect to transactions (other than transactions related to the compensation or terms of services) between the Company and officers and directors, or affiliates of officers or directors, or transactions that are not in the ordinary course of the Company’s business and deciding whether to approve such acts and transactions if so required under the Companies Law; and |
• | establishing procedures for the handling of employees’ complaints as to the management of our business and the protection to be provided to such employees. |
• | making recommendations to the board of directors with respect to the approval of the compensation policy for office holders and, once every three years, regarding any extensions to a compensation policy that was adopted for a period of more than three years; |
• | reviewing the implementation of the compensation policy and periodically making recommendations to the board of directors with respect to any amendments or updates of the compensation policy; |
• | resolving whether or not to approve arrangements with respect to the terms of office and employment of office holders; and |
• | exempting, under certain circumstances, a transaction with our Chief Executive Officer from the approval of our shareholders. |
• | recommending to our board of directors for its approval a compensation policy in accordance with the requirements of the Companies Law as well as other compensation policies, incentive-based compensation plans and equity-based compensation plans, and overseeing the development and implementation of such policies and recommending to our board of directors any amendments or modifications to such policies the committee deems appropriate, including as required under the Companies Law; |
• | reviewing and approving the granting of options and other incentive awards to our Chief Executive Officer and other executive officers, including reviewing and approving corporate goals and objectives relevant to the compensation of our Chief Executive Officer and other executive officers; |
• | approving and exempting certain transactions regarding office holders’ compensation pursuant to the Companies Law; and |
• | administering our equity-based compensation plans, including without limitation, approving the adoption of such plans, amending and interpreting such plans and the awards and agreements issued pursuant thereto, and making awards to eligible persons under the plans and determining the terms of such awards. |
• | such majority includes at least a majority of the shares held by shareholders who are not controlling shareholders and shareholders who do not have a personal interest in such compensation policy; or |
• | the total number of shares of non-controlling shareholders and shareholders who do not have a personal interest in the compensation policy and who vote against the policy does not exceed two percent (2%) of the aggregate voting rights in the Company. |
• | the education, skills, experience, expertise and accomplishments of the relevant office holder; |
• | the office holder’s position and responsibilities; |
• | prior compensation agreements with the office holder; |
• | the ratio between the cost of the terms of employment of an office holder and the cost of the employment of other employees of the company, including employees employed through contractors who provide services to the company, in particular the ratio between such cost to the average and median salary of such employees of the company, as well as the impact of disparities between them on the work relationships in the company; |
• | if the terms of employment include variable components — the possibility of reducing variable components at the discretion of the board of directors and the possibility of setting a limit on the value of non-cash variable equity-based components; and |
• | if the terms of employment include severance compensation — the term of employment or office of the office holder, the terms of the office holder’s compensation during such period, the company’s performance during such period, the office holder’s individual contribution to the achievement of the company goals and the maximization of its profits and the circumstances under which he or she is leaving the company. |
• | with regards to variable components: |
o | with the exception of office holders who report to the chief executive officer, a means of determining the variable components on the basis of long-term performance and measurable criteria; provided that the company may determine that an immaterial part of the variable components of the compensation package of an office holder shall be awarded based on non-measurable criteria, or if such amount is not higher than three months’ salary per annum, taking into account such office holder’s contribution to the company; |
o | the ratio between variable and fixed components, as well as the limit of the values of variable components at the time of their payment, or in the case of equity-based compensation, at the time of grant; |
• | a condition under which the office holder will return to the company, according to conditions to be set forth in the compensation policy, any amounts paid as part of the office holder’s terms of employment, if such amounts were paid based on information later to be discovered to be wrong, and such information was restated in the company’s financial statements; |
• | the minimum holding or vesting period of variable equity-based components to be set in the terms of office or employment, as applicable, while taking into consideration long-term incentives; and |
• | a limit to retirement grants. |
• | overseeing and assisting our board in reviewing and recommending nominees for election as directors; |
• | assisting our board in its oversight relating to corporate responsibility and environmental, social and governance matters; |
• | overseeing periodic assessments of the performance of the members of our board and its committees; and |
• | establishing and maintaining effective corporate governance policies and practices, including, but not limited to, developing and recommending to our board a set of corporate governance guidelines applicable to our business. |
• | information on the business advisability of a given action brought for his, her or its approval or performed by virtue of his, her or its position; and |
• | all other important information pertaining to such action. |
• | refrain from any act involving a conflict of interest between the performance of his, her or its duties in the company and his, her or its other duties or personal affairs; |
• | refrain from any activity that is competitive with the business of the company; |
• | refrain from exploiting any business opportunity of the company for the purpose of gaining a personal advantage for himself, herself or itself or others; and |
• | disclose to the company any information or documents relating to the company’s affairs which the office holder received as a result of his, her or its position as an office holder. |
• | an amendment to the company’s articles of association; |
• | an increase of the company’s authorized share capital; |
• | a merger; or |
• | interested party transactions that require shareholder approval. |
• | a financial liability imposed on him or her in favor of another person pursuant to a judgment, including a settlement or arbitrator’s award approved by a court. However, if an undertaking to indemnify an office holder with respect to such liability is provided in advance, then such an undertaking must be limited to events which, in the opinion of the board of directors, can be foreseen based on the company’s activities when the undertaking to indemnify is given, and to an amount or according to criteria determined by the board of directors as reasonable under the circumstances, and such undertaking shall detail the abovementioned events and amount or criteria; |
• | reasonable litigation expenses, including legal fees, incurred by the office holder (1) as a result of an investigation or proceeding instituted against him or her by an authority authorized to conduct such investigation or proceeding, provided that (i) no indictment was filed against such office holder as a result of such investigation or proceeding; and (ii) no financial liability, such as a criminal penalty, was imposed upon him or her as a substitute for the criminal proceeding as a result of such investigation or proceeding or, if such financial liability was imposed, it was imposed with respect to an offense that does not require proof of criminal intent; and (2) in connection with a monetary sanction; |
• | reasonable litigation expenses, including legal fees, incurred by the office holder or imposed by a court in proceedings instituted against him or her by the company, on its behalf or by a third-party or in connection with criminal proceedings in which the office holder was acquitted or as a result of a conviction for an offense that does not require proof of criminal intent; and |
• | expenses, including reasonable litigation expenses and legal fees, incurred by an office holder in relation to an administrative proceeding instituted against such office holder, or certain compensation payments made to an injured party imposed on an office holder by an administrative proceeding, pursuant to certain provisions of the Israeli Securities Law, 1968 (the “Israeli Securities Law”). |
• | a breach of the duty of loyalty to the company, to the extent that the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company; |
• | a breach of the duty of care to the company or to a third-party, including a breach arising out of the negligent conduct of the office holder; |
• | a financial liability imposed on the office holder in favor of a third-party; |
• | a financial liability imposed on the office holder in favor of a third-party harmed by a breach in an administrative proceeding; and |
• | expenses, including reasonable litigation expenses and legal fees, incurred by the office holder as a result of an administrative proceeding instituted against him or her, pursuant to certain provisions of the Israeli Securities Law. |
• | a breach of the duty of loyalty, except to the extent that the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company; |
• | a breach of the duty of care committed intentionally or recklessly, excluding a breach arising out of the negligent conduct of the office holder; |
• | an act or omission committed with intent to derive illegal personal benefit; or |
• | a fine, monetary sanction or forfeit levied against the office holder. |
D. | Employees |
E. | Share Ownership |
A. | Major Shareholders |
• | each person or group of affiliated persons known by us to own beneficially more than 5% of our outstanding ordinary shares; |
• | each of our directors and executive officers individually; and |
• | all of our executive officers and directors as a group. |
Number of Ordinary Shares | ||||||||||||
Name of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percentage of Outstanding shares | Percentage of Voting Power | |||||||||
Principal Shareholders | ||||||||||||
Red Dot Capital Partners L.P.(1) | 14,737,000 | 9.47 | % | 9.47 | % | |||||||
Deutsche Post Beteiligungen Holding GmbH(2) | 21,423,600 | 13.76 | % | 13.76 | % | |||||||
Cross Ship S.à r.l.(3) | 21,831,075 | 14.03 | % | 14.03 | % | |||||||
Shopify Inc. and its affiliates (4) | 14,451,558 | 9.28 | % | 9.28 | % | |||||||
FMR LLC and its affiliate (5) | 8,705,225 | 5.59 | % | 5.59 | % | |||||||
Abdiel Qualified Master Fund, LP and its affiliates (6) | 8,554,841 | 5.50 | % | 5.50 | % | |||||||
Directors, Director Nominees and Executive Officers | ||||||||||||
Amir Schlachet (7) | 5,766,474 | 3.7 | % | 3.7 | % | |||||||
Shahar Tamari (8) | 5,765,932 | 3.7 | % | 3.7 | % | |||||||
Nir Debbi (9) | 6,005,782 | 3.8 | % | 3.8 | % | |||||||
Eden Zaharoni (10) | 327,378 | 0.2 | % | 0.2 | % | |||||||
Ofer Koren (11) | 341,250 | 0.2 | % | 0.2 | % | |||||||
Ran Fridman | ||||||||||||
Thomas Studd(12) | ||||||||||||
Miguel Angel Parra(13) | ||||||||||||
Tzvia Broida (14) | 4,010 | * | * | |||||||||
Anna J. Bakst (15) | 4,010 | * | * | |||||||||
Iris Epple-Righi (16) | 4,010 | * | * | |||||||||
All executive officers and directors as a group (11 persons) | 18,218,846 | 11.6 | % | 11.6 | % |
* | Indicates ownership of less than 1%. |
(1) | This information is based on a Schedule 13G filed with the SEC on February 7, 2022. Red Dot Capital Partners, L.P. may be deemed to be the beneficial owner of 14,737,000 ordinary shares. The address for Red Dot Capital Partners, L.P. is 1 Ha’Shikma St. P.O.B 89 Savyon 5691502 Israel. |
(2) | Represents 21,423,600 ordinary shares held by Deutsche Post Beteiligungen Holding GmbH which is affiliated with DHL International GmbH. The address for the Deutsche Post Beteiligungen Holding GmbH is Charles-de-Gaulle-Straße 20, 53113 Bonn. Federal Republic of Germany. |
(3) | This information is based on a Schedule 13G filed with the SEC on February 11, 2022. Cross Ship S.à r.l., Vitruvian III Luxembourg S.à r.l., VIP III Nominees Limited, and Vitruvian Partners LLP may be deemed to be the beneficial owners of 21,831,075 ordinary shares. VIP III LP may be deemed to be the beneficial owner of 21,503,609 ordinary shares, and VIP III CO-INVEST LP may be deemed to be the beneficial owner of 327,466 ordinary shares. Cross Ship S.à r.l. is wholly owned by Vitruvian Investment II Luxembourg S.à r.l. (“Vitruvian Luxembourg”). VIP III Nominees Limited, an England and Wales limited liability company (“VIP Nominees”) and in its capacity as nominee for and on behalf of VIP III LP, an English limited partnership and VIP III Co-Invest LP, a Jersey limited partnership (collectively, the “Funds”), are the sole legal shareholder of Vitruvian Luxembourg. Vitruvian Partners LLP, an England and Wales limited liability partnership (“Vitruvian Partners”) is the manager of the Funds, and sole shareholder of VIP Nomine LLP. The address of the principal business office of VIP Nominees, VIP III LP and Vitruvian Partners is 105 Wigmore Street, London W1U 1QY; the address of the principal business office of VIP III Co-Invest LP is 12 Castle Street, St Helier, Jersey JE2 3RT; and the address of the principal business office of Cross Ship and Vitruvian Luxembourg is 21, rue Philippe II, L-2340 Luxembourg. |
(4) | This information is based on a Schedule 13G filed with the SEC on January 7, 2022. Shopify Inc. may be deemed to be the beneficial owner of all of the reported shares and Shopify International Limited may be deemed to be beneficially own 12,689,569 ordinary shares consisting of: (i) vested warrants exercisable for 11,701,759 ordinary shares, and (ii) warrants exercisable for an additional 987,810 ordinary shares that have vested within 60 days of January 6, 2022 (On each of February 12, 2022 and March 12, 2022 Shopify International Limited exercised 493,905 warrants to ordinary shares). Shopify Strategic Holdings LLC, a wholly owned subsidiary of Shopify Inc., is deemed to beneficially own 1,761,989 ordinary shares consisting of: (i) 472,925 ordinary shares directly held by it, and (ii) vested warrants exercisable for 1,289,064 ordinary shares. The principal business address of Shopify Inc. is 151 O’Connor Street, Ground Floor, Ottawa, Ontario, Canada K2P 2L8.The principal business address of Shopify International Limited is 2nd Floor Victoria Buildings 1-2 Haddington Road, Dublin 4, D04 XN32, Ireland. |
(5) | This information is based on a Schedule 13G filed with the SEC on February 9, 2022. Both FMR LLC and Abigail P. Johnson may be deemed to be the beneficial owners of 8,705,225 ordinary shares. Abigail P. Johnson is a Director, the Chairman and the Chief Executive Officer of FMR LLC. Members of the Johnson family, including Abigail P. Johnson, are the predominant owners, directly or through trusts, of Series B voting common shares of FMR LLC, representing 49% of the voting power of FMR LLC. The Johnson family group and all other Series B shareholders have entered into a shareholders' voting agreement under which all Series B voting common shares will be voted in accordance with the majority vote of Series B voting common shares. Accordingly, through their ownership of voting common shares and the execution of the shareholders' voting agreement, members of the Johnson family may be deemed, under the Investment Company Act of 1940, to form a controlling group with respect to FMR LLC. Neither FMR LLC nor Abigail P. Johnson has the sole power to vote or direct the voting of the shares owned directly by the various investment companies registered under the Investment Company Act ("Fidelity Funds") advised by Fidelity Management & Research Company LLC ("FMR Co. LLC"), a wholly owned subsidiary of FMR LLC, which power resides with the Fidelity Funds' Boards of Trustees. FMR Co. LLC carries out the voting of the shares under written guidelines established by the Fidelity Funds' Boards of Trustees. The address of FMR LLC and Abigail P. Johnson is 245 Summer Street, Boston, Massachusetts 02210. |
(6) | This information is based on a Schedule 13G filed with the SEC on February 3, 2022. Abdiel Qualified Master Fund, LP may be deemed to be the beneficial owner of 8,554,841 ordinary shares. Abdiel Capital, LP, may be deemed to be the beneficial owner of 263,116 ordinary shares, Abdiel Capital Management, LLC, Abdiel Capital Advisors, LP and Colin T. Moran may be deemed to be the beneficial owners of all reported shares. Abdiel Capital Management, LLC and Abdiel Capital Advisors, LP serve as the general partner and the investment manager, respectively, of Abdiel Qualified Master Fund, LP and Abdiel Capital, LP. Colin T. Moran serves as managing member of Abdiel Capital Management, LLC and Abdiel Capital Partners, LLC, which serves as the general partner of Abdiel Capital Advisors, LP. Each of the reporting persons disclaims beneficial ownership of the shares reported herein except to the extent of its or his pecuniary interest therein. The address for the reporting persons is 90 Park Avenue, 29th Floor, New York, NY 10016. |
(7) | Includes 4,280,472 ordinary shares that Mr. Schlachet holds directly, 17,202 restricted share units that will be settled within 60 days of March 21, 2022, and 1,468,800 ordinary shares underlying options that were fully vested as at December 31, 2021. |
(8) | Includes 4,279,930 ordinary shares that Mr. Tamari holds directly, 17,202 restricted share units that will be settled within 60 days of March 21, 2022, and 1,468,800 ordinary shares underlying options that were fully vested as at December 31, 2021. |
(9) | Includes 4,519,780 ordinary shares that Mr. Debbi holds directly, 17,202 restricted share units that will be settled within 60 days of March 21, 2022, and 1,468,800 ordinary shares underlying options that were fully vested as at December 31, 2021. |
(10) | Includes 327,378 ordinary shares underlying options that will be exercisable within 60 days of March 21, 2022. |
(11) | Includes 341,250 ordinary shares underlying options that will be exercisable within 60 days of March 21, 2022. |
(12) | Mr. Studd holds no shares directly. Mr. Studd is a partner at the Vitruvian Group, which manages funds that collectively own ordinary shares. See note 4 above. Mr. Studd disclaims beneficial ownership of the ordinary shares held by Cross Ship S.à r.l., except to the extent of his pecuniary interest, if any, in such ordinary shares by virtue of his interest in the Vitruvian Group and his indirect limited partnership interest in the Vitruvian Group. |
(13) | Mr. Parra holds no shares directly. Mr. Parra serves as the Chief Executive Officer of DHL Express Americas which is affiliated with Deutsche Post Beteiligungen Holding GmbH. |
(14) | This information is based on restricted share units that will be exercisable within 60 days of March 21, 2022. |
(15) | This information is based on restricted share units that will be exercisable within 60 days of March 21, 2022. |
(16) | This information is based on restricted share units that will be exercisable within 60 days of March 21, 2022. |
B. | Related Party Transactions |
Shareholder | Series E Preferred Shares | Total Purchase Price ($) | ||||||
Cross Ship S.à r.l. | 20,011 | 50,000,485.15 | ||||||
Deutsche Post Beteiligungen Holdings GmbH | 3,695 | 9,232,511.75 |
C. | Interests of Experts and Counsel |
A. | Consolidated Statements and Other Financial Information |
B. | Significant Changes |
A. | Offer and Listing Details |
B. | Plan of Distribution |
C. | Markets |
D. | Selling Shareholders |
E. | Dilution |
F. | Expenses of the Issue |
A. | Share Capital |
B. | Memorandum and Articles of Association |
C. | Material Contracts |
D. | Exchange Controls |
E. | Taxation |
• | the expenditures are approved by the relevant Israeli government ministry, determined by the field of research; |
• | the research and development must be for the promotion of the company; and |
• | the research and development are carried out by or on behalf of the company seeking such tax deduction. |
• | Amortization of the cost of purchased know-how and patents and rights to use a patent and know-how which are used for the development or advancement of the Industrial Enterprise, over an eight-year period, commencing on the year in which such rights were first exercised; |
• | Under limited conditions, an election to file consolidated tax returns with related Israeli Industrial Companies; |
• | Expenses related to a public offering are deductible in equal amounts over a three-year period commencing on the year of the offering. |
F. | Dividends and Paying Agents |
G. | Statement by Experts |
H. | Documents on Display |
I. | Subsidiary Information |
2020 | 2021 | |||||||
(in thousands) | ||||||||
Audit Fees | $ | 303 | $ | 1,300 | ||||
Audit Related Fees | - | $ | 510 | |||||
Tax Fees | $ | 12 | $ | 30 | ||||
All Other Fees | - | - | ||||||
Total | $ | 315 | $ | 1,840 |
Incorporation by Reference | ||||||||||||
Filed / | ||||||||||||
Exhibit No. | Description | Form | File No. | Exhibit No. | Filing Date | Furnished | ||||||
F-1 | 333-259371 | 3.1 | September 7, 2021 | |||||||||
F-1 | 333-259371 | 4.1 | September 7, 2021 | |||||||||
* | ||||||||||||
F-1 | 333-259371 | 10.1 | September 7, 2021 | |||||||||
F-1 | 333-259371 | 10.2 | September 7, 2021 | |||||||||
F-1 | 333-259371 | 10.3 | September 7, 2021 | |||||||||
F-1 | 333-259371 | 10.7 | September 7, 2021 | |||||||||
F-1 | 333-259371 | 10.6 | September 7, 2021 | |||||||||
4.6† | F-1 | 333-259371 | 10.4 | September 7, 2021 | ||||||||
4.7† | F-1 | 333-259371 | 10.5 | September 7, 2021 | ||||||||
F-1 | 333-259371 | 10.8 | September 7, 2021 | |||||||||
F-1 | 333-259371 | 10.9 | September 7, 2021 |
* | |||||||||||
* | |||||||||||
* | |||||||||||
4.13 | F-1 | 333-259371 | 4.2 | September 7, 2021 | |||||||
* | |||||||||||
* | |||||||||||
* | |||||||||||
** | |||||||||||
** | |||||||||||
* |
101.INS | Inline XBRL Instance Document. |
101.SCH | Inline XBRL Taxonomy Extension Schema Document. |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
101.DEF | Inline XBRL Taxonomy Definition Linkbase Document. |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104 | Inline XBRL for the cover page of this Annual Report on Form 20-F, included in the Exhibit 101 Inline XBRL Document Set. |
* | Filed herewith. |
** | Furnished herewith. |
† | Portions of this exhibit have been redacted pursuant to Item 4 of the “Instructions As To Exhibits” of Form 20-F because the Company customarily and actually treats the redacted information as private or confidential and the omitted information is not material. The Company hereby agrees to furnish an unredacted copy of the exhibit to the Commission upon request. |
# | Indicates management contract or compensatory plan or arrangement. |
GLOBAL-E ONLINE LTD. | ||
Date: March 28, 2022 | By: | /s/ Amir Schlachet |
Name: | Amir Schlachet | |
Title: | Chief Executive Officer |
Global-E Online LTD.
Page | |||
Report of Independent Registered Public Accounting Firm (PCAOB ID: 1281) | F-2 | ||
F-3 | |||
F-4 | |||
F-5 | |||
Consolidated Statements of Convertible Preferred Shares and Shareholders’ Equity (Deficit) | F-6 | ||
F-7 | |||
F-8 |
F - 1
To the Shareholders and Board of Directors of Global-E Online Ltd.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
KOST FORER GABBAY & KASIERER A Member of EY Global |
F - 2
As of December 31, | ||||||||
2020 | 2021 | |||||||
(Audited) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | 68,637 | 448,623 | ||||||
Short-term deposits | 6,457 | 41,985 | ||||||
Accounts receivable, net | 3,594 | 9,185 | ||||||
Prepaid expenses and other current assets | 23,047 | 46,568 | ||||||
Marketable securities | 16,871 | 18,464 | ||||||
Funds receivable, including cash in banks | 34,492 | 57,635 | ||||||
Total current assets | 153,098 | 622,460 | ||||||
Property and equipment, net | 717 | 3,269 | ||||||
Operating lease right-of-use assets | 4,160 | 20,108 | ||||||
Long term deposits | 2,223 | 2,219 | ||||||
Deferred contract acquisition costs, noncurrent | 729 | 1,314 | ||||||
Other assets, noncurrent | 368 | 213 | ||||||
Commercial agreement asset | 0 | 196,544 | ||||||
Total long-term assets | 8,197 | 223,667 | ||||||
Total assets | 161,295 | 846,127 | ||||||
Liabilities, Convertible Preferred Shares and Shareholders’ Equity (Deficit) | ||||||||
Current liabilities: | ||||||||
Accounts payable (including related party payables of $14,058 and $18,158 as of December 31, 2020 and 2021, respectively) | 19,057 | 24,064 | ||||||
Accrued expenses and other current liabilities (including related party payables of $3,120 and $3,357 as of December 31, 2020 and 2021, respectively) | 29,432 | 47,358 | ||||||
Funds payable to Customers | 34,492 | 57,635 | ||||||
Short term operating lease liabilities | 915 | 2,517 | ||||||
Total current liabilities | 83,896 | 131,574 | ||||||
Long-term liabilities: | ||||||||
Deferred tax liabilities, net | 105 | 0 | ||||||
Warrants liabilities to preferred shares | 5,738 | 0 | ||||||
Long term operating lease liabilities | 3,513 | 18,803 | ||||||
Total liabilities | 93,252 | 150,377 | ||||||
Commitments and contingencies (Note 9) | 0 | 0 | ||||||
Convertible preferred shares, with 0 par value, 162,875 and 0 shares authorized as of December 31, 2020 and 2021, respectively; 162,101 and 0 issued and outstanding as of December 31, 2020 and 2021, respectively; | 112,553 | 0 | ||||||
Shareholders’ equity (deficit): | ||||||||
Ordinary shares, with 0 par value, 5,902,275,000 and 300,000,000 shares authorized as of December 31, 2020 and 2021, respectively; 21,761,400 and 150,456,501, shares issued and outstanding as of December 31, 2020 and 2021, respectively; | 0 | 0 | ||||||
Additional paid-in capital | 8,087 | 823,550 | ||||||
Accumulated comprehensive income (loss) | 111 | (159 | ) | |||||
Accumulated deficit | (52,708 | ) | (127,641 | ) | ||||
Total shareholders’ (deficit) equity | (44,510 | ) | 695,750 | |||||
Total liabilities, convertible preferred shares and shareholders’ (deficit) equity | 161,295 | 846,127 |
Year Ended December 31, | ||||||||||||
2019 | 2020 | 2021 | ||||||||||
(Audited) | ||||||||||||
Revenue | 65,852 | 136,375 | 245,274 | |||||||||
Cost of revenue (including related party costs of $26,106, $53,861 and $90,315 for the years ended December 31, 2019, 2020 and 2021, respectively) | 47,188 | 92,902 | 153,841 | |||||||||
Gross profit | 18,664 | 43,473 | 91,433 | |||||||||
Operating expenses: | ||||||||||||
Research and development | 12,034 | 15,400 | 29,761 | |||||||||
Sales and marketing | 4,593 | 9,838 | 104,687 | |||||||||
General and administrative | 6,988 | 9,822 | 22,643 | |||||||||
Total operating expenses | 23,615 | 35,060 | 157,091 | |||||||||
Operating profit (loss) | (4,951 | ) | 8,413 | (65,658 | ) | |||||||
Financial expenses, net | 2,559 | 4,339 | 8,570 | |||||||||
Profit (loss) before income taxes | (7,510 | ) | 4,074 | (74,228 | ) | |||||||
Provision for income taxes | 34 | 160 | 705 | |||||||||
Net profit (loss) | (7,544 | ) | $ | 3,914 | (74,933 | ) | ||||||
Undistributed earnings attributable to participating securities | 0 | 3,189 | 0 | |||||||||
Net earnings (loss) attributable to ordinary shareholders | (7,544 | ) | 725 | (74,933 | ) | |||||||
Net earnings (loss) per share attributable to ordinary shareholders, basic | $ | (0.38 | ) | $ | 0.03 | (0.74 | ) | |||||
Net earnings (loss) per share attributable to ordinary shareholders, diluted | $ | (0.38 | ) | $ | 0.03 | (0.74 | ) | |||||
Weighted-average shares used in computing net loss per share attributable to ordinary shareholders, basic | 19,654,276 | 21,120,208 | 101,737,026 | |||||||||
Weighted-average shares used in computing net loss per share attributable to ordinary shareholders, diluted | 19,654,276 | 28,637,801 | 101,737,026 |
The accompanying notes are an integral part of these consolidated financial statements. |
Year Ended December 31, | ||||||||||||
2019 | 2020 | 2021 | ||||||||||
Net profit (loss) | $ | (7,544 | ) | $ | 3,914 | (74,933 | ) | |||||
Other comprehensive income: | ||||||||||||
Unrealized gain (loss) on available-for-sale marketable securities, net | 0 | 111 | (270 | ) | ||||||||
Other comprehensive income (loss) | 0 | 111 | (270 | ) | ||||||||
Comprehensive income (loss) | (7,544 | ) | 4,025 | (75,203 | ) |
Convertible Preferred Shares | Ordinary Shares | Additional Paid-in Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Total Shareholders’ Deficit | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||
Balance as of January 1, 2019 | 138,395 | 53,732 | 19,502,400 | 0 | 3,224 | 0 | (49,078 | ) | (45,854 | ) | ||||||||||||||||||||||
Issuance of ordinary shares upon exercise of share options | 218,400 | 0 | 147 | 147 | ||||||||||||||||||||||||||||
Share-based compensation expense | 221 | 221 | ||||||||||||||||||||||||||||||
Net loss | (7,544 | ) | (7,544 | ) | ||||||||||||||||||||||||||||
Balance as of December 31, 2019 | 138,395 | 53,732 | 19,720,800 | 0 | 3,592 | 0 | (56,622 | ) | (53,030 | ) | ||||||||||||||||||||||
Issuance of Series E convertible preferred shares, net of issuance costs of $473 | 23,706 | 58,821 | �� | |||||||||||||||||||||||||||||
Issuance of ordinary shares upon exercise of share options | 2,040,600 | 0 | 539 | 539 | ||||||||||||||||||||||||||||
Unrealized gain on available-for-sale marketable securities, net | 111 | 111 | ||||||||||||||||||||||||||||||
Share-based compensation expense | 3,956 | 3,956 | ||||||||||||||||||||||||||||||
Net Profit | 3,914 | 3,914 | ||||||||||||||||||||||||||||||
Balance as of December 31, 2020 | 162,101 | 112,553 | 21,761,400 | 0 | 8,087 | 111 | (52,708 | ) | (44,510 | ) | ||||||||||||||||||||||
Conversion of preferred shares to ordinary shares | (162,101 | ) | (112,553 | ) | 97,260,600 | 112,553 | 112,553 | |||||||||||||||||||||||||
Issuance of warrants to ordinary shares | 280,842 | 280,842 | ||||||||||||||||||||||||||||||
Exercise of options and vested RSUs granted to employees | 2,018,942 | 0 | 1,584 | 1,584 | ||||||||||||||||||||||||||||
Other comprehensive loss | (270 | ) | (270 | ) | ||||||||||||||||||||||||||||
Share-based compensation expense | 12,001 | 12,001 | ||||||||||||||||||||||||||||||
Issuance of Ordinary shares in IPO, net | 17,250,000 | 396,344 | 396,344 | |||||||||||||||||||||||||||||
Exercise of Warrants to ordinary shares | 12,165,559 | 12,139 | 12,139 | |||||||||||||||||||||||||||||
Net Loss | (74,933 | ) | (74,933 | ) | ||||||||||||||||||||||||||||
Balance as of December 31, 2021 | 0 | 0 | 150,456,501 | 0 | 823,550 | (159 | ) | (127,641 | ) | 695,750 |
Year Ended December 31, | ||||||||||||
2019 | 2020 | 2021 | ||||||||||
Cash flows from operating activities: | ||||||||||||
Net profit (loss) | $ | (7,544 | ) | $ | 3,914 | $ | (74,933 | ) | ||||
Adjustments to reconcile net profit (loss) to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 171 | 235 | 331 | |||||||||
Share-based compensation expense | 221 | 3,956 | 12,001 | |||||||||
Commercial agreement asset amortization | 0 | 0 | 84,298 | |||||||||
Long term deposit revaluation | 0 | 0 | 24 | |||||||||
Impairment of marketable securities | 0 | 0 | 140 | |||||||||
Warrants liabilities to preferred shares | 5 | 5,523 | 5,872 | |||||||||
Changes in operating assets and liabilities: | ||||||||||||
Increase in accounts receivable. | (1,193 | ) | (1,652 | ) | (5,591 | ) | ||||||
Increase in prepaid expenses and other assets | (3,916 | ) | (12,273 | ) | (23,239 | ) | ||||||
Increase in funds receivable | (1,317 | ) | (11,829 | ) | (29,272 | ) | ||||||
Increase in long-term receivables | 0 | (150 | ) | 0 | ||||||||
Increase in funds payable to customers | 12,508 | 12,884 | 23,143 | |||||||||
Decrease (increase) operating lease ROU assets | (606 | ) | (2,761 | ) | 1,382 | |||||||
Increase in deferred contract acquisition costs | (245 | ) | (429 | ) | (814 | ) | ||||||
Increase in accounts payable | 4,131 | 10,018 | 5,007 | |||||||||
Increase in accrued expenses and other liabilities | 4,184 | 18,874 | 17,926 | |||||||||
Increase (decrease) in deferred tax liabilities | (7 | ) | 52 | (90 | ) | |||||||
Operating lease liabilities | 636 | 2,988 | (437 | ) | ||||||||
Net cash provided by operating activities | 7,028 | 29,350 | 15,748 | |||||||||
Cash flows from investing activities: | ||||||||||||
Investment in marketable securities | 0 | (16,759 | ) | (2,806 | ) | |||||||
Proceeds from marketable securities | 0 | 0 | 748 | |||||||||
Purchases of short-term investments | (43 | ) | (6,375 | ) | (117,185 | ) | ||||||
Proceeds from short-term investments | 0 | 0 | 81,657 | |||||||||
Purchases of long-term investments | (145 | ) | (456 | ) | (20 | ) | ||||||
Purchases of property and equipment | (264 | ) | (456 | ) | (2,883 | ) | ||||||
Net cash used in investing activities | (452 | ) | (24,046 | ) | (40,489 | ) | ||||||
Cash flows from financing activities: | ||||||||||||
Proceeds from exercise of share options | 147 | 539 | 1,584 | |||||||||
Issuance of convertible preferred shares, net of issuance costs | 0 | 58,821 | 0 | |||||||||
Proceeds from issuance of Ordinary shares in IPO, net of issuance costs | 396,494 | |||||||||||
Proceeds from exercise of warrants to ordinary shares | 529 | |||||||||||
Net cash provided by financing activities | 147 | 59,360 | 398,607 | |||||||||
Net increase in cash, cash equivalents, and restricted cash | 6,723 | 64,664 | 373,866 | |||||||||
Cash and cash equivalents and restricted cash-beginning of period | 13,646 | 20,369 | 85,033 | |||||||||
Cash and cash equivalents and restricted cash-end of period | $ | 20,369 | $ | 85,033 | $ | 458,899 | ||||||
Supplemental disclosures of cash flow information: | ||||||||||||
Cash paid for income taxes | $ | 65 | $ | 68 | $ | 5 | ||||||
Supplemental disclosures of noncash investing and financing activities: | ||||||||||||
Purchases of property and equipment during the period included in accounts payable | $ | 11 | $ | 13 | $ | 1 | ||||||
ROU assets and lease liabilities created during the period | $ | 1,209 | $ | 3,734 | $ | 17,329 | ||||||
Conversion of warrants liability | $ | 11,610 | ||||||||||
Recognition of Commercial agreement asset | 0 | 0 | $ | 280,842 |
1. | Organization and Description of Business |
Global-E Online Ltd. was incorporated on February 21, 2013 under the laws of the state of Israel and commenced operations at that time.
The company and its subsidiaries (together, "Global-E", the "Company") offer a leading platform to enable and accelerate global, direct-to-consumer (“D2C”) cross-border e-commerce. The platform was purpose-built for international shoppers to buy seamlessly online and for merchants to sell from, and to, anywhere in the world. The Company’s platform localizes the shopper experience in effort to make international transactions as seamless as domestic ones. The platform increases the conversion of international traffic into sales by removing much of the complexity associated with international e-commerce. The platform provides an integrated solution that creates a localized and frictionless shopper experience and is simple to manage, flexible to adjust and smart in its local market insights and best practices. The vast capabilities of the Company’s end-to-end platform include interaction with shoppers in their native languages, market-adjusted pricing, payment options tailored to local market preferences, compliance with local consumer regulations and requirements such as customs duties and taxes, shipping services, after-sales support and returns management. These elements are unified under the Global-e platform to enhance the shopper experience and enable merchants to capture the cross-border opportunity.
2. | Summary of Significant Accounting Policies |
December 31, | |||||||||
2019 | 2020 | 2021 | |||||||
Cash and cash equivalents | $ | 5,034 | $ | 68,637 | $ | 448,623 | |||
Cash and cash equivalents included in funds receivable | $ | 15,138 | $ | 16,193 | $ | 10,063 | |||
Restricted cash included in other assets | $ | 197 | $ | 203 | $ | 213 | |||
Total cash, cash equivalents, and restricted cash | $ | 20,369 | $ | 85,033 | $ | 458,899 |
Year ended December 31, | ||||||||
2020 | 2021 | |||||||
Unrealized gain on marketable securities | Unrealized gain (loss) on marketable securities | |||||||
Beginning balance | $ | 0 | $ | 111 | ||||
Net current period other comprehensive income (loss) | 111 | (410 | ) | |||||
reclassification adjustments for losses included in net income | 0 | 140 | ||||||
Total accumulated other comprehensive income (loss) | $ | 111 | $ | (159 | ) |
Computer and software | 3 years |
Furniture and office equipment | 3 – 7 years |
Leasehold improvements | Shorter of remaining lease term or estimated useful life |
1. | Service Fees –The Company provides merchants a cross-border e-commerce platform which enables to sell their products to consumers worldwide. Revenue is generated as a percentage of the value of transactions that flow through the Company’s platform. |
2. | Fulfillment services – The Company offers shipping, handling, and other global delivery services in order to deliver merchants’ goods to consumers. |
1. | Identification of the contract, or contracts, with the customer |
2. | Identification of the performance obligations in the contract |
3. | Determination of the transaction price |
4. | Allocation of the transaction price to the performance obligations in the contract |
5. | Recognition of the revenue when, or as, a performance obligation is satisfied |
a. | Service Fees -the revenues are recognized once the transaction is considered completed, when the payment is processed by the Company, and the merchant goods arrive at the Company’s hub. The Company determined it acts as an agent since it does not have control over the goods provided to the shopper, based on the agreement with the merchant. The Company is not primarily responsible for the acceptability of the goods (for example – the quality of the goods provided to the consumer). Furthermore, the Company has no discretion in determining the prices paid by the consumer for the goods. The Company earns a fee based on a fixed percentage of the total amount of the goods. Therefore, revenues derived from the service fees are presented on a net basis. |
b. | Fulfillment services - the service is recognized over the shipment time starting upon the dispatch to the carrier until it reaches the consumer. The Company determined it acts as a principal since it is the primary obligor to fulfill its promise to its customers, controls the services (i.e. the Company directs other parties to provide services on its behalf), has discretion in determining the carrier it uses to provide the service and bears the risk of loss if the actual cost of the fulfillment service will exceed the fee. Therefore, revenues derived from the fulfillment services are presented on a gross basis. |
Year Ended December 31, | ||||||||||||||||||||||||
2019 | 2020 | 2021 | ||||||||||||||||||||||
Percentage | Percentage | Percentage | ||||||||||||||||||||||
Amount | of Revenue | Amount | of Revenue | Amount | of Revenue | |||||||||||||||||||
(in thousands, except percentages) | ||||||||||||||||||||||||
Service fees | 23,498 | 36 | % | 49,927 | 37 | % | 96,659 | 39 | % | |||||||||||||||
Fulfillment services | 42,354 | 64 | % | 86,448 | 63 | % | 148,615 | 61 | % | |||||||||||||||
Total revenue | $ | 65,852 | 100 | % | $ | 136,375 | 100 | % | $ | 245,274 | 100 | % |
Year Ended December 31, | ||||||||||||||||||||||||
2019 | 2020 | 2021 | ||||||||||||||||||||||
Percentage | Percentage | Percentage | ||||||||||||||||||||||
Amount | of Revenue | Amount | of Revenue | Amount | of Revenue | |||||||||||||||||||
(in thousands, except percentages) | ||||||||||||||||||||||||
United Kingdom | 51,799 | 79 | % | 80,122 | 59 | % | 113,835 | 47 | % | |||||||||||||||
United States | 9,529 | 14 | % | 34,140 | 25 | % | 71,095 | 29 | % | |||||||||||||||
European Union | 4,344 | 7 | % | 21,269 | 15 | % | 58,177 | 23 | % | |||||||||||||||
Israel | 180 | * | ) | 844 | 1 | % | 1,052 | * | ) | |||||||||||||||
Other | 0 | 0 | 0 | 0 | 1,115 | * | ) | |||||||||||||||||
Total revenue | $ | 65,852 | 100 | % | $ | 136,375 | 100 | % | $ | 245,274 | 100 | % |
Year Ended December 31, | ||||||||||||
2019 | 2020 | 2021 | ||||||||||
(in thousands) | ||||||||||||
Beginning balance | $ | 318 | $ | 563 | $ | 987 | ||||||
Additions to deferred contract acquisition costs | 343 | 618 | 1,188 | |||||||||
Amortization of deferred contract acquisition costs | (98 | ) | (194 | ) | (374 | ) | ||||||
Ending balance | $ | 563 | $ | 987 | $ | 1,801 | ||||||
Deferred contract acquisition costs (to be recognized in next 12 months included in other current assets) | $ | 143 | $ | 264 | $ | 487 | ||||||
Deferred contract acquisition costs, noncurrent | 420 | 723 | 1,314 | |||||||||
Total deferred contract acquisition costs | $ | 563 | $ | 987 | $ | 1,801 |
December 31, | ||||||||||||
2019 | 2020 | 2021 | ||||||||||
(in thousands) | ||||||||||||
Israel | $ | 1,444 | $ | 1,685 | $ | 18,383 | ||||||
United Kingdom | 212 | 3,093 | 2,642 | |||||||||
United States | 208 | 74 | 2,326 | |||||||||
Rest of world | 31 | 25 | 26 | |||||||||
Total property and equipment, net | $ | 1,895 | $ | 4,877 | $ | 23,376 |
Year Ended December 31, | ||||||||||||
2019 | 2020 | 2021 | ||||||||||
(in thousands) | ||||||||||||
Beginning of the year | $ | 210 | $ | 215 | $ | 5,738 | ||||||
Change in fair value | 5 | 5,523 | 5,872 | |||||||||
Conversion to shares | 0 | 0 | (11,610 | ) | ||||||||
End of year | $ | 215 | 5,738 | $ | 0 |
3. | Prepaid expenses and other current assets |
December 31, | ||||||||
2020 | 2021 | |||||||
(in thousands) | ||||||||
Indirect tax receivables and related prepaid expenses | $ | 20,591 | $ | 39,030 | ||||
Prepaid expenses | 2,388 | 6,271 | ||||||
Other | 68 | 1,267 | ||||||
Prepaid expenses and other current assets | 23,047 | 46,568 |
4. | Property and Equipment, Net |
December 31, | ||||||||
2020 | 2021 | |||||||
(in thousands) | ||||||||
Computer and software | $ | 998 | $ | 1,603 | ||||
Furniture and office equipment | 162 | 429 | ||||||
Leasehold improvements | 263 | 2,271 | ||||||
Property and equipment, gross | 1,423 | 4,303 | ||||||
Less: accumulated depreciation and amortization | (706 | ) | (1,034 | ) | ||||
Property and equipment, net | $ | 717 | $ | 3,269 |
5. | Commercial Agreement Asset |
6. | Accrued Expenses and Other Current Liabilities |
December 31, | ||||||||
2020 | 2021 | |||||||
(in thousands) | ||||||||
Accrued Expenses | $ | 3,769 | $ | 11,668 | ||||
Accrued indirect taxes and related liabilities | 15,301 | 15,798 | ||||||
Accrued compensation and benefits | 4,589 | 9,797 | ||||||
Advancements from customers | 4,417 | 7,426 | ||||||
Other current liabilities | 1,356 | 2,669 | ||||||
Accrued expenses and other current liabilities | $ | 29,432 | 47,358 |
7. | Convertible Preferred shares, shareholders’ Equity (Deficit) and Equity incentive Plan |
a. | General: |
b. | Share options plans: In 2013, the Company adopted the Global-e Online Ltd. 2013 Share Incentive Plan (“2013 Plan”), under which the Company may grant various forms of equity incentive compensation at the discretion of the board of directors, including share options. The awards have varying terms, but generally vest over four years. Share options expire 10 years after the date of grant. The Company issues new Ordinary Shares upon exercise of share options. In February 2019, the Company extended the contractual term for all share option grants from 7 years to 10 years. The Company concluded that the extension of the contractual term for all share option grants modified the terms of all outstanding share options held by employees and nonemployees. We no longer grant any awards under the 2013 Plan as it was superseded by the 2021 Plan, although previously granted awards remain outstanding. Ordinary Shares subject to outstanding options granted under the 2013 Plan that expire or become unexercisable without having been exercised in full will become available again for future grant under the 2021 Plan. |
The 2021 Share Incentive Plan, or the 2021 Plan, was adopted by our board of directors on March 1, 2021. The 2021 Plan provides for the grant of equity-based incentive awards to our employees, directors, office holders, service providers and consultants in order to incentivize them to increase their efforts on behalf of the Company and to promote the success of the Company’s business. The maximum number Ordinary Shares available for issuance under the 2021 Plan is equal to the sum of (i) 13,500,000 shares, (ii) any shares subject to awards under the 2013 Plan which have expired, or were cancelled, terminated, forfeited or settled in cash in lieu of issuance of shares or became unexercisable without having been exercised, and (iii) an annual increase on the first day of each year beginning in 2022 and on January 1st of each calendar year thereafter during the term of the Plan, equal to five percent (5%) of the outstanding ordinary shares of the Company on the last day of the immediately preceding calendar year. No more than 13,500,000 Ordinary Shares may be issued upon the exercise of incentive stock options, or ISOs. If permitted by our board of directors, shares tendered to pay the exercise price or withholding tax obligations with respect to an award granted under the 2021 Plan or the 2013 Plan may again be available for issuance under the 2021 Plan. Our board of directors may also reduce the number of Ordinary Shares reserved and available for issuance under the 2021 Plan in its discretion. A summary of share option activity under the Company’s equity incentive plan and related information is as follows:
|
Options Outstanding | ||||||||||||||||
Outstanding Share Options | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value | |||||||||||||
(in thousands, except share, life and per share data) | ||||||||||||||||
Balance as of December 31, 2020 | 12,418,350 | $ | 2.04 | 7.83 | $ | 121,325.91 | ||||||||||
Granted | 0 | |||||||||||||||
Exercised | (1,994,371 | ) | $ | 0.83 | $ | 124,762.70 | ||||||||||
Forfeited | (291,825 | ) | $ | 2.66 | ||||||||||||
Balance as of December 31, 2021 | 10,132,154 | $ | 2.26 | 7.13 | $ | 619,339.90 | ||||||||||
Exercisable as of December 31, 2021 | 7,955,457 | $ | 2.15 | 6.80 | $ | 487,203.07 |
Year Ended December 31, | ||||||||
2019 | 2020 | |||||||
Expected term (years) | 6.11 | 6.11 | ||||||
Expected volatility | 70.0 | % | 70.0 | % | ||||
Risk-free interest rate | 1.7% - 2.6 | % | 0.37% - 1.45 | % | ||||
Expected dividend yield | 0.0 | % | 0.0 | % |
• | Fair Value of Ordinary Shares. Prior to IPO, the fair value was determined by our board of directors, with input from management and valuation reports prepared by third-party valuation specialists. Post IPO, the fair value of each ordinary share was based on the closing price of our publicly traded Ordinary Shares as reported on the date of the grant. |
• | Risk-Free Interest Rate. The risk-free rate for the expected term of the options is based on the Black-Scholes option-pricing model on the yields of U.S. Treasury securities with maturities appropriate for the expected term of employee share option awards. |
• | Expected Term. The expected term represents the period that options are expected to be outstanding. For option grants that are considered to be “plain vanilla,” the Company determines the expected term using the simplified method. The simplified method deems the term to be the average of the time-to-vesting and the contractual life of the options. |
• | Expected Volatility. Since the Company has no trading history of its Ordinary Shares, the expected volatility is derived from the average historical share volatilities of several unrelated public companies within the Company’s industry that the Company considers to be comparable to its own business over a period equivalent to the option’s expected term. |
• | Expected Dividend Yield. The Company has never declared or paid any cash dividends and does not presently plan to pay cash dividends in the foreseeable future. As a result, an expected dividend yield of zero percent was used. |
Amount of RSU’s | Weighted average grant date fair value | |||||||
Unvested as of December 31, 2020 | 0 | $ | 0 | |||||
Granted | 467,589 | 63.75 | ||||||
Vested | 24,571 | 68.46 | ||||||
Forfeited | 0 | |||||||
Unvested as of December 31, 2021 | 443,018 | $ | 63.49 |
Share-Based Compensation
The share-based compensation expense by line item in the accompanying consolidated statements of operations is summarized as follows:
Year Ended December 31, | ||||||||||||
2019 | 2020 | 2021 | ||||||||||
(in thousands) | ||||||||||||
Cost of revenue | $ | 2 | $ | 10 | $ | 85 | ||||||
Research and development | 79 | 507 | 4,192 | |||||||||
Sales and marketing | 22 | 442 | 1,287 | |||||||||
General and administrative | 118 | 2,997 | 6,437 | |||||||||
Total share-based compensation expense | $ | 221 | $ | 3,956 | $ | 12,001 |
Convertible preferred shares at December 31, 2020 consisted of the following:
December 31, 2020 | ||||||||
Designated Shares Authorized | Shares Issued and Outstanding | |||||||
Series A | 19,298 | 19,298 | ||||||
Series A-1 | 20,364 | 20,364 | ||||||
Series B-1 | 37,361 | 37,361 | ||||||
Series B-2 | 17,792 | 17,792 | ||||||
Series C | 15,822 | 15,822 | ||||||
Series D-1 | 27,758 | 27,758 | ||||||
Series E | 23,706 | 23,706 | ||||||
Total convertible preferred shares | 162,101 | 162,101 |
The Company has the following Ordinary Shares reserved for future issuance:
December 31, | ||||||||
2020 | 2021 | |||||||
Conversion of convertible preferred shares | 97,260,600 | 0 | ||||||
Outstanding share options | 12,418,350 | 10,132,154 | ||||||
Unvested RSU’s | 0 | 443,018 | ||||||
Remaining shares available for future issuance under the 2021 Plan | 3,470,250 | 2,749,064 | ||||||
Total shares of ordinary shares reserved | 113,149,200 | 13,324,236 |
Ordinary Share warrants
In April and November 2020, the Company recorded $1,346 and $809, respectively, of share-based compensation expenses associated with the two secondary share purchase transactions during the year ended December 31, 2020. The secondary share purchase transactions were executed among certain of the Company’s founders, employees, and shareholders. The April 2020 secondary share purchase transaction was consummated concurrently with the issuance of the Company’s Series E convertible preferred shares. The Company assessed the impact of these transactions as holders of economic interest in the Company acquired shares from the Company’s employees and founders at a price in excess of fair value of such shares. Accordingly, the Company recognized such excess value as share-based compensation expense.
8. | Leases |
Year ended | Year ended | Year ended | ||||||||||
December 31, 2019 | December 31, 2020 | December 31, 2021 | ||||||||||
Components of lease expenses | ||||||||||||
Operating lease cost | $ | 655 | $ | 1,023 | $ | 1,406 | ||||||
Short-term lease | $ | 22 | $ | 66 | $ | 51 | ||||||
Total lease expenses | $ | 677 | $ | 1,089 | $ | 1,457 |
Year ended | Year ended | Year ended | ||||||||||
December 31, 2019 | December 31, 2020 | December 31, 2021 | ||||||||||
Supplemental cash flow information | ||||||||||||
Cash paid for amounts included in the measurement of lease liabilities | $ | 684 | $ | 1,017 | $ | 1,015 | ||||||
Supplemental non-cash information related to lease liabilities from obtaining ROU assets | $ | 1,209 | $ | 3,734 | $ | 17,329 |
For the year ended December 31, 2021, the weighted average remaining lease term is 9.1 years, and the weighted average discount rate is 3.29 percent. The discount rate was determined based on the estimated collateralized borrowing rate of the Company, adjusted to the specific lease term and location of each lease.
Maturities of lease liabilities as of December 31, 2021 were as follows:
December 31, 2021 | ||||
(in thousands) | ||||
Year Ending December 31, | ||||
2022 | $ | 2,549 | ||
2023 | 2,896 | |||
2024 | 2,632 | |||
2025 | 2,644 | |||
2026 | 2,656 | |||
Thereafter | 11,049 | |||
Total operating lease payments | $ | 24,426 | ||
Less: imputed interest | 3,105 | |||
Total | $ | 21,321 |
9. | Income Taxes |
a. | Israeli taxation: |
1. | Industry Encouragement (Taxes) Law, 1969 |
2. | Ordinary taxable income in Israel is subject to a corporate tax rate of 23%. |
3. | The Company has not received any final tax assessments since inception. |
4. | The Company has net operating losses from prior tax periods which may be subjected to examination in future periods. As of December 31, 2021, the Company’s tax years until December 31, 2015 are subject to statutes of limitation in Israel. |
5. | Measurement of taxable income in U.S. dollars: |
b. | Income taxes of non-Israeli subsidiaries: |
Non-Israeli subsidiaries are taxed according to the tax laws in their respective countries of residence.
c. | The components of the net profit (loss) before the provision for income taxes were as follows: |
Year Ended December 31, | ||||||||||||
2019 | 2020 | 2021 | ||||||||||
(in thousands) | ||||||||||||
Israel | (4,932 | ) | 1,293 | (83,028 | ) | |||||||
Foreign | (2,578 | ) | 2,781 | 8,800 | ||||||||
Total | (7,510 | ) | 4,074 | (74,228 | ) |
d. | The provision for income taxes was as follows: |
Year Ended December 31, | ||||||||||||
2019 | 2020 | 2021 | ||||||||||
(in thousands) | ||||||||||||
Current: | ||||||||||||
Israel | $ | 0 | $ | 16 | $ | 0 | ||||||
Foreign | 41 | 92 | $ | 795 | ||||||||
Total current income tax expense | 41 | 108 | $ | 795 | ||||||||
Deferred: | ||||||||||||
Israel | 0 | 0 | 0 | |||||||||
Foreign | (7 | ) | 52 | (90 | ) | |||||||
Total deferred income tax (benefit) expense | (7 | ) | 52 | (90 | ) | |||||||
Total provision for income taxes | $ | 34 | $ | 160 | $ | 705 |
e. | Reconciliation of the theoretical tax expenses: |
A reconciliation of the Company’s theoretical income tax expense to actual income tax expense is as follows:
Year Ended December 31, | ||||||||||||
2019 | 2020 | 2021 | ||||||||||
(in thousands) | ||||||||||||
Theoretical income tax expense (benefit) | $ | (1,727 | ) | $ | 937 | $ | (17,072 | ) | ||||
Change in valuation allowance | 1,506 | (2,235 | ) | 26,822 | ||||||||
Return to provision true ups | 0 | 0 | (2,490 | ) | ||||||||
Foreign tax rate differentials | 56 | (150 | ) | (76 | ) | |||||||
Non-deductible Share-based compensation | 26 | 910 | 1,513 | |||||||||
Non-deductible expenses | 122 | 1,290 | 1,517 | |||||||||
Deductible expenses | 0 | 0 | (9,661 | ) | ||||||||
Foreign exchange impact | (41 | ) | (357 | ) | 273 | |||||||
State Taxes | 0 | 0 | 63 | |||||||||
Other | 92 | (235 | ) | (184 | ) | |||||||
Total | $ | 34 | $ | 160 | $ | 705 |
f. | Deferred tax assets and liabilities: |
December 31, | ||||||||
2020 | 2021 | |||||||
(in thousands) | ||||||||
Deferred tax assets: | ||||||||
Net operating loss carryforwards *) | 6,052 | 30,129 | ||||||
Research and development expenses | 2,889 | 4,327 | ||||||
Leasing liabilities | 1,018 | 4,823 | ||||||
Accruals and reserves | 296 | 351 | ||||||
Share-based compensation | 0 | 1,371 | ||||||
Gross deferred tax assets | 10,255 | 41,001 | ||||||
Valuation allowance | (9,255 | ) | (36,077 | ) | ||||
Total deferred tax assets | 1,000 | 4,924 | ||||||
Deferred tax liabilities: | ||||||||
Deferred contract acquisition costs | 90 | 376 | ||||||
Leasing assets | 957 | 4,548 | ||||||
Property and equipment | 43 | 0 | ||||||
Gross deferred tax liabilities | 1,090 | 4,924 | ||||||
Net deferred taxes | $ | 90 | 0 |
g. | Uncertain tax position |
December 31, | ||||||||
2020 | 2021 | |||||||
(in thousands) | ||||||||
Beginning balance | 0 | 0 | ||||||
Increases related to tax positions taken during the current year *) | 0 | 19,389 | ||||||
Ending balance | 0 | 19,389 |
9. Net Earnings (Loss) Per Share Attributable to Ordinary Shareholders |
The following table sets forth the computation of basic and diluted net loss per share attributable to ordinary shareholders for the periods presented:
Year Ended December 31, | ||||||||||||
2019 | 2020 | 2021 | ||||||||||
(in thousands, except share and per share data) | ||||||||||||
Basic net profit (loss) per share | ||||||||||||
Numerator: | ||||||||||||
Allocation of net profit (loss) | (7,544 | ) | 3,914 | (74,933 | ) | |||||||
Net income allocated to preferred shareholders | 0 | 3,189 | 0 | |||||||||
Allocation of net profit (loss) attributable to Ordinary shareholders | (7,544 | ) | 725 | (74,933 | ) | |||||||
Denominator: | ||||||||||||
Weighted-average shares used in computing net profit (loss) per share attributable to Ordinary shareholders | 19,654,276 | 21,120,208 | 101,737,026 | |||||||||
Basic net profit (loss) per share attributable to Ordinary shareholders | (0.38 | ) | 0.03 | (0.74 | ) | |||||||
Diluted net profit (loss) per share | ||||||||||||
Numerator: | ||||||||||||
Allocation of net profit (loss) attributable for diluted computation | (7,544 | ) | 725 | (74,933 | ) | |||||||
Denominator: | ||||||||||||
Shares used in computing net earnings per share of ordinary share, basic | 19,654,276 | 21,120,208 | 101,737,026 | |||||||||
Weighted average effect of dilutive securities - effect of stock-based awards | 0 | 7,517,593 | 0 | |||||||||
Weighted-average shares used in computing net profit (loss) per share attributable to Ordinary shareholders | 19,654,276 | 28,637,801 | 101,737,026 | |||||||||
Diluted net profit (loss) per share attributable to ordinary shareholders | (0.38 | ) | 0.03 | (0.74 | ) |
The potential shares of Ordinary Shares that were excluded from the computation of diluted net loss per share attributable to ordinary shareholders for the periods presented because including them would have been anti-dilutive are as follows:
Year Ended December 31, | ||||||||||||
2019 | 2020 | 2021 | ||||||||||
Convertible preferred shares | 83,037,000 | 92,946,600 | 0 | |||||||||
Unvested RSU’s | 0 | 0 | 443,018 | |||||||||
Outstanding warrants to Ordinary Shares | 0 | 0 | 7,902,480 | |||||||||
Warrants to convertible shares | 0 | 312,600 | 0 | |||||||||
Outstanding share options | 9,154,800 | 0 | 10,132,154 | |||||||||
Total | 92,191,800 | 93,259,200 | 18,477,652 |
December 31, 2021 | ||||||||||||||||
Fair value measurements using input type | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Mutual Funds | $ | 1,274 | $ | 0 | $ | 0 | $ | 1,274 | ||||||||
Government debentures | 0 | 1,908 | 0 | 1,908 | ||||||||||||
Corporate debentures | 0 | 15,282 | 0 | 15,282 | ||||||||||||
Total financials assets | $ | 1,275 | $ | 17,190 | $ | 0 | $ | 18,464 |
December 31, 2020 | ||||||||||||||||
Fair value measurements using input type | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Mutual Funds | $ | 1,200 | $ | 0 | $ | 0 | $ | 1,200 | ||||||||
Government debentures | 0 | 1,359 | 0 | 1,359 | ||||||||||||
Corporate debentures | 0 | 14,312 | 0 | 14,312 | ||||||||||||
Total financials assets | $ | 1,200 | $ | 15,671 | $ | 0 | $ | 16,871 | ||||||||
Liabilities | ||||||||||||||||
Warrant to convertible preferred shares | 5,738 | 5,738 | ||||||||||||||
Total financials liabilities | $ | 0 | $ | 0 | $ | 5,738 | $ | 0 |
12. Marketable Securities |
At December 31, 2021 the Company held marketable securities classified as available-for-sale securities as follows: |
December 31, 2021 | ||||||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Gross Realized Losses | Fair Value | ||||||||||||||||
Mutual funds | $ | 1,252 | 22 | 0 | $ | 0 | $ | 1,274 | ||||||||||||
Government debentures | $ | 1,894 | 23 | 0 | $ | (9 | ) | $ | 1,908 | |||||||||||
Corporate debentures | $ | 15,617 | $ | 24 | $ | (228 | ) | $ | (131 | ) | $ | 15,282 | ||||||||
18,763 | $ | 69 | $ | (228 | ) | $ | (140 | ) | $ | 18,464 |
December 31, 2020 | ||||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
Mutual funds | $ | 1,200 | 0 | 0 | $ | 1,200 | ||||||||||
Government debentures | $ | 1,360 | 6 | $ | (7 | ) | $ | 1,359 | ||||||||
Corporate debentures | $ | 14,200 | $ | 116 | $ | (4 | ) | $ | 14,312 | |||||||
$ | 16,760 | $ | 122 | $ | (11 | ) | $ | 16,871 |
On November 24, 2021, we entered into an agreement to acquire Flow Commerce Inc. (“Flow”) through the statutory merger of Flow with Global-e NewCo Inc., our wholly owned indirect subsidiary, with Flow as the surviving corporation and our wholly owned subsidiary.
The deal is valued at up to approximately $500 million (in equal portions of cash and Global-e shares), comprised of a base consideration of approximately $425 million and up to approximately $75 million in potential additional consideration based on certain financial results in 2021.
Concurrently, Global-e has signed an agreement to expand the strategic partnership with Shopify and issued to Shopify warrants to purchase (A) up to an aggregate of 1,289,064 of our ordinary shares for a purchase price of $0.01 per share which vested on the date of the agreement and since have been exercised in full, and (B) up to an aggregate of 738,081 of the Company’s ordinary shares for a purchase price of $0.01 per share which vest upon certain performance milestones.
The Company expects to recognize an asset of approximately $71 million related to the 1,289,064 warrants, this asset represents the probable future economic benefit to be realized over a four-year period and is determined based on the fair value of the warrants at the grant date. The amount of future expense related to the 738,081 warrants upon meeting the milestones, is expected to be up to approximately $41 million and will be recognized as an expense over a four-year period which represents the probable future economic period. The amortization will be included within the sales and marketing expenses.