Global-e Online Aktie

Welcome to the Global-e Second Quarter 2026 Earnings Announcement Conference Call. This call is being simultaneously webcast on the company's website in the Investors section under News and Events. For opening remarks and introductions, I will now turn the call over to Alan Katz, Global-e's Head of Investor Relations. Please go ahead.

Thank you, and good morning, everyone. With me on the call today are Amir Schlachet, Co-Founder and Chief Executive Officer; Ofer Koren, Chief Financial Officer; and Nir Debbi, Co-Founder and President. Amir will begin with a review of the operations and the business results for the second quarter of 2026. Ofer will then review the financial results of the second quarter in more detail, followed by the company's updated outlook for the full year as well as the Q3 outlook. We will then open the call for questions.

Before I read the forward-looking statements disclaimer, I'll note that as in previous quarters, we have posted an Excel-based metrics file on our IR website. This provides historical data for both financial information and KPIs that may be helpful as investors are researching the company. We have also published slides that highlight our results as well as some of the key themes that we will discuss in today's call. Please feel free to let us know if you have any feedback on either of these documents.

Moving on. Certain statements we make today constitute forward-looking statements. All statements other than statements of historical facts are forward-looking statements, including statements regarding our guidance, growth strategy, long-term targets, competitive positioning, product and platform initiatives, partnerships and share repurchases. These forward-looking statements reflect our current views with respect to future events and are not a guarantee of future performance. Actual outcomes may differ materially from the information contained in the forward-looking statements as a result of a number of factors, including those set forth in our 2025 annual report filed with the SEC. Please refer to our press release issued today, August 12, 2026, for additional information.

In addition, certain metrics we will discuss today are non-GAAP metrics. We believe that these measures provide useful information about operating results, enhance the overall understanding of past financial performance and future prospects and allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making. For more information on these non-GAAP financial measures, including reconciliations to the most directly comparable GAAP measures, please see our press release issued today. Throughout this call, we will also discuss a number of key performance indicators used by our management team. These and other KPIs are discussed in more detail in our press release issued today.

I will now turn the call over to Amir, our Co-Founder and CEO. Amir, please go ahead.

Thanks, Alan, and welcome, everyone, to our second quarter earnings call. The momentum that we saw during the start of the year continued through Q2, resulting in another very strong quarter all around and reinforcing our confidence in our ability to continue to strongly perform against our long-term growth targets. We beat the high end of the range across all of our guidance metrics and are now raising our outlook for GMV, revenue and adjusted EBITDA for the remainder of the year. Operationally, during the quarter, we had some great achievements against our multiyear strategic plan, including continued growth with our existing merchants, launching with exciting new brands and the expansion of our work with our strategic partners.

We also announced and closed on the acquisition of Passport, a global asset-light logistics solution. Passport brings with its strategic logistics capabilities to further create value for our merchants, while also broadening our offering to serve verticals beyond our traditional merchant of record model, thereby expanding our TAM. We continue to make progress on Managed Markets V2 and on driving adoption of our value-added services. Lastly, we expanded our internal use of AI, leveraging this groundbreaking technology to improve our service to merchants and our ability to leverage our unique data assets as well as to lower our cost to serve. The utilization of generative AI allows us to move faster, provide better service and consultancy to our merchants and further leverage our economies of scale.

From a financial perspective, we continue to perform ahead of the long-term plan and targets we presented last year at our Investor Day, both in our high-growth momentum and in the continued adjusted EBITDA margin expansion. Once again, our strong quarterly results and solid outlook for the year helped to illustrate our market leadership position, our growing competitive moats and our ongoing commitment to continue to drive the business towards our long-term targets.

Before we go in more depth to some of the items that I just mentioned, let's first go over the key elements of our quarterly results. Compared with Q2 2025, GMV increased by 44% to almost $2.1 billion, making Q2 the first time we reached more than $2 billion in GMV in a non-peak quarter. Revenues grew by 39% to $299 million, with Q2 being the second quarter in a row in which our last 12 months revenues totaled more than $1 billion. Both GMV and revenues came in considerably higher than our respective guidance. This continued strong execution drives our upwards revised full year 2026 revenue guidance to a 32% year-on-year growth before accounting for Passport, which represents further acceleration from 2025's fast revenue growth, which stood at 28%.

In other words, we have managed to meaningfully accelerate our growth rates compared to last year's trajectory. We believe this is a strong testament to the value our services generate for our merchants, to our market leadership position and to the immense untapped potential we see in this exciting and growing market. But growth alone is only one part of the story. In parallel to this growth in revenues, we continued our steady trajectory of adjusted EBITDA margin expansion over time. We finished Q2 of 2026 with $62.4 million of adjusted EBITDA, up 62% year-on-year to a margin of almost 21%. This is more than a 300 basis point increase compared to the same quarter last year. Simply put, we are not just generating durable high top line growth, we're also generating strong and profitable bottom line growth.

In terms of trading activity, same-store sales growth came in above historical trends once again. Volume growth with both larger and midsized merchants continue to be a significant factor, driven by continued global consumer resilience as well as stronger consumer response to recurring annual promotional activities. For perspective, during Q2, some of our larger brands saw the increase in volumes from the seasonal sales days peak at more than 25% higher than the increase they saw in last year's Q2 promotions.

Besides planned sales promotions, I would be remiss if I didn't congratulate a few of our soccer clubs that we proudly count as Global-e merchants on their fantastic achievements this past season. To name just a few, Arsenal won the Premier League Championship and were also runner ups for the Champions League. Barcelona retained their title as La Liga champions. Bayern Munich won the League title again. And Manchester United came in third in the Premier League and secured their return to the Champions League. This, along with more fans buying jerseys around the FIFA World Cup, led to an increase in volumes within our sports club's score.

Moving on, as I mentioned earlier, our growth is both durable and profitable. Just like in past years, on an annual basis, we expect our free cash flow margin to remain at or higher than our adjusted EBITDA margin. In other words, we continue to generate growing amounts of cash every year. We plan to continue to use this cash to create long-term value for merchants and for our shareholders.

I'll discuss our acquisition of Passport in a moment, but we are also focused on returning excess cash to shareholders via our share repurchase program. As of the end of the quarter, we have completed our 2025 plan of $200 million. In June 2026, the Board approved a new $500 million plan, which we intend to start executing upon as well. We will continue to repurchase shares as long as we believe the market is undervaluing the financial and operational strength of our business as well as the market opportunity that we have ahead of us.

Let's now spend some time on our strategic and operational progress. First, as I already mentioned, we announced and closed on the acquisition of Passport. The team did an incredible job on this deal, which is especially exciting as this is a company that we've been watching for some time. We were happy to welcome Alex and the entire Passport team on board last month and believe this acquisition to be an especially strategic addition to our suite of logistics solutions, while the introduction of a non-MoR option to our suite of service offerings enables us to serve merchant categories we haven't been able to or wanted to address in the past with our MoR solution.

Owning deep best-in-class standard shipping capabilities and know-how broadens our suite of logistics solutions, both outbound and inbound, thereby allowing us to further optimize costs and service levels of standard logistics around the world. This will also allow us to leverage our scale to build dedicated services, including consolidated returns, direct injections and further proprietary duty drawback capabilities. The post-merger integration effort is already well underway, and we are quickly advancing towards completing Phase 1, which is to enable Passport as a shipping service on the Global-e carrier stack.

In parallel, we have kicked off multiple work streams aimed at building additional services and offerings across multiple geographic regions, which we expect to materialize over the coming quarters, thereby greatly enriching our suite of logistics and global trade solutions. Passport is currently on track to generate over $100 million in revenues this year, growing slightly ahead of our overall growth rate. Passport has recently turned adjusted EBITDA and cash flow positive, and we expect its margins and cash flow to further improve as they grow and as we realize integration synergies with our existing scale and framework over the next several quarters.

Moving on, the launch of Shopify Managed Markets version 2 remains on track. In Q2, we officially expanded the geographical footprint of the Managed Markets offering, making it available for the first time to merchants outside of the U.S., namely in Canada and in the U.K. We expect to bring this offering to additional countries down the line. We're starting to see both trading volumes and the onboarding of new merchants on Managed Markets pick up steam and continue to see the significant long-term potential of this innovative new offering beginning to materialize.

We migrated many of the merchants that were on version 1 to version 2 already towards the beginning of the second quarter, with the remaining merchants migrating during the quarter. The process went smoothly and initial feedback from the group of merchants has been very positive, further strengthening our belief that version 2 indeed solves many of the issues that impeded version 1 from being more widely adopted. We continue to work side-by-side with Shopify's team to deliver additional features and capabilities, all aimed at driving both conversion and adoption higher and higher.

During Q2, we also made further progress on driving adoption of another one of our key value-added services, that of duty drawback. As a reminder, this service is designed to enable merchants to potentially reclaim import duties on goods that are exported outside of their home base as well as reclaim certain tariffs paid on return goods depending on the sale parameters. During the second quarter, we had several merchants that started utilizing the U.S. import drawback capabilities, and we expect to see this service growing as more merchants will provide the necessary documentation to support the process. Furthermore, as I already mentioned, we believe that our acquisition of Passport will further expand our capabilities in this field of duty drawback in the future.

Next, Borderfree.com expanded again this quarter. Global traffic into the Borderfree.com brand discovery portal continues to rise, crossing 10 million unique visits in the last 12 months. The share of merchant sales attributable to the Borderfree.com channel is now 6.5% for merchants that are utilizing the platform. This offering is still in its early innings, but we remain pleased with the progress to date and are excited to see its continued adoption.

Lastly, we are continuing on our path to implement AI across the organization as we lean heavily on our AI-first approach to drive service level enhancements and boost efficiency levels all around. By now, we have built AI into many of the processes across R&D, implementation, merchant operations and customer service as well as our corporate and back-office functions. We're empowering our teams to improve the onboarding and development processes for merchants, launch new AI-led processes for research and support and roll out tools to further enhance our level of consultancy and optimization for the benefit of our merchants around the world.

Let's now move on to some of the exciting new brands that have joined the platform and went live across our various geographies during Q2. First off is Europe, where we were thrilled to launch with Ferrari, the legendary Italian supercar maker and one of the most iconic consumer brands in the world, a terrific new logo win for Global-e. Italy also saw the launches of Manebi, the espadrille specialist that turned its Mediterranean summer staple into a year-round luxury item and Liviana Conti, the first brand to launch with us out of the Italian fashion group, Abraham Industries.

In Germany, we launched 6PM, the Berlin-based contemporary streetwear label as well as the influencer-founded fashion brand, Mikuta. Sweden saw several brand launches across a diverse set of verticals, including Malina, the fashion house in Stockholm; C'est Normal, a fashion and lifestyle brand for men founded by professional skier and entrepreneur, Jon Olsson; Synsam, one of the Nordic's largest optical retail chains and even Rimgard, an innovative Swedish engineering brand behind a patented high-end wheel security lock.

In France, we launched with another maison out of the LVMH Group. This time, with Officine Universelle Buly, the Parisian luxury brand fame for its artisanal fragrances since 1803. We also launched with another French brand that has a rich history, J.M. Weston, the French master shoemaker, which was founded in Limoges back in 1891. In the U.K., we launched with Naked Wolfe, a London-born sneaker brand known for its chunky statement footwear and heavy social media presence, with N.Peal, the historic Burlington Arcade cashmere house, famously worn on screen by James Bond and with Montirex, a Liverpool-born technical activewear label.

In North America, we launched with many prominent brands, such as The ROOT Brands, the fast-growing wellness and supplements company; Buffbunny, the popular fitness and activewear brand by fitness influencer and entrepreneur, Heidi Somers, who bootstrapped this brand in 2016 from a living room in San Antonio, Texas; Dolce Vita, the L.A.-based contemporary footwear brand from the Steve Madden family; Six Zero Pickleball, the fast-growing paddle brand riding on the global pickleball boom; and McLaren Golf, the recently launched and highly anticipated brand of golf gear from the well-known McLaren racing team.

Last but not least, in APAC, we launched with a second brand out of the Universal Music Japan Group, continuing our relationship with the label following their Q1 launch; with All Things Golden, a successful Australian boutique label; and with ADERERROR and The Loeil, 2 of Korea's most talked about fashion labels. These are just a few of the exciting brands that have gone live with us over the second quarter. I want to take this opportunity to give credit to our professional services and onboarding teams who have done a tremendous job this year, launching more and more brands onto our platform.

In addition to new merchant launches, Q2 also saw the expansion of our business with a number of prominent brands. FIGS continued to expand with us, opening up new countries across APAC. They remain one of the fastest-growing and most engaged brands on our platform. Other notable brands with which we expanded to additional lanes in Q2 are Fresh, the LVMH-owned skin care brand that launched with us back in Q1; Pokemon, where we expanded this quarter to take on significantly more volume related to their highly anticipated and viral drops; as well as Peter Millar and G/FORE, the Richemont golf-wear brands that launched last quarter; Camper, the Spanish footwear brand; and Isabel Marant, the French luxury fashion house, just to name a few.

To summarize, we have had a great first half of 2026, and we expect continued strong growth and profit expansion in the back half of the year as is reflected in our updated full year guidance. Based on what we see today, we believe we are well positioned to exit 2026, which is the second year in our long-term strategic plan ahead of targets, further solidifying our commitment to durable growth and value creation.

I will now hand it over to Ofer to take us through the quarterly numbers in more depth and lay out our Q3 and updated 2026 full year guidance.

Thank you, Amir, and thanks, everyone, for joining us today for our earnings call. As Amir just highlighted, Q2 was another quarter of very strong growth for Global-e with results again significantly above the Rule of 50 as we continue to execute and deliver against our strategic plan to drive long-term and profitable growth across the business. Before I go into details of the quarter, I'd like to remind everyone again that in addition to our GAAP results, I'll also be discussing certain non-GAAP financial measures. Definitions of these measures and reconciliation to the most directly comparable GAAP measures can be found in our earnings release.

GMV in Q2 was $2.089 billion, up 44% year-over-year. Trading volumes were strong, driven by very strong same-store sales as we continue to see robust consumption patterns across most destination regions. Performance was further accelerated by highly impactful Q2 merchant promotions, which despite being annual events, generated stronger consumer response this year. In addition, we continue to benefit from the positive impact of the merchant cohort that launched in the second half of 2025, see positive contribution from merchants launched in 2026 and benefit from some FX tailwinds as expected.

In Q2, we generated total revenue of $299 million, up 39% year-over-year. Service fee revenue for the quarter was $139.4 million, up 36% year-over-year and fulfillment services revenue for the quarter was $159.6 million, up 42% year-over-year. The service fee take rate of the core business remains fairly stable. And as expected, we saw a onetime decrease in the service fees baseline, driven by the shift of Managed Markets V1 merchants to V2 in the quarter, which due to the V2 accounting treatment reduced revenue, and at the same time, also reduced sales and marketing expenses.

I believe it is important to note that as we continue to expand our suite of solutions with business models such as multi-local, Managed Markets and following the Passport acquisition, which is also mostly non-MoR, we believe take rate trends are becoming a less indicative metric of the state of the business. Since 2024, while take rates have modestly declined, our adjusted EBITDA margins have meaningfully expanded by more than 320 basis points.

Progressing through the income statement. Non-GAAP gross profit was $135.4 million, up 36% year-over-year, representing a non-GAAP gross margin of 45.3% compared to 46.5% in the same period last year. Gross margin was primarily affected by increased fuel costs, resulting from a gap between the time in which carriers update their fuel surcharges and the time we pass those updates on to merchants. While we have a mechanism to adjust for fuel price changes, which we have utilized in recent months, in view of the high fuel prices volatility, at present time, we chose to reduce the level of uncertainty and volatility for the merchants and not to update pricing very frequently. GAAP gross profit was $131.9 million, representing a margin of 44.1%.

Moving on to operational expenses. R&D expense in Q2, excluding stock-based compensation, was $30.4 million or 10.2% of revenue compared to $26.2 million or 12.2% in the same period last year. We continued to benefit from both operating leverage and the utilization of AI tools and agents to drive efficiency into the business during the quarter. Despite the continued investment in the enhancement of our platform to further expand our offering and add value to our merchants, R&D, excluding stock-based compensation, increased only 16% this quarter despite the continued growth in GMV of over 40%. Total R&D spend in Q2 was $35 million.

We also continued to invest in sales and marketing to drive our future growth, including in our go-to-market and quota-carrying team, the marketing of Borderfree.com and investment in building our brand reputation in both new and existing markets. Sales and marketing expense, excluding stock-based compensation and acquisition-related intangible amortization was $31.8 million or 10.6% of revenue compared to $27.2 million or 12.7% of revenue in the same period last year. The decrease in sales and marketing expense as a percentage of revenue is partially driven by the migration of Managed Markets merchants from V1 to V2. Total sales and marketing expenses for the quarter were $35.8 million.

General and administrative expenses, excluding stock-based compensation and acquisition-related contingent consideration, were $11.7 million or 3.9% of revenue compared to $8.8 million or 4.1% of revenue in the same period last year. Total G&A spend in Q2 was $16.4 million. We are happy to see our OpEx, excluding stock-based compensation and acquisition-related intangible amortization at under 25% of revenue, driven by scale leverage and operational efficiencies. This was one of the financial targets we set pre-IPO, and we are very proud to achieve this milestone. Total OpEx as a percentage of revenue was 29%.

Our bottom line continued to grow even faster than our top line. Adjusted EBITDA for the quarter was $62.4 million, representing a 20.9% adjusted EBITDA margin, an increase of 62% from the $38.5 million or 17.9% margin in the same period last year. Non-GAAP net profit for the quarter was $64.9 million compared to $37.9 million in the same period last year. Non-GAAP net profit per share was $0.37 on a fully diluted basis compared to $0.22 in the same period last year. GAAP net profit for the quarter was $47.7 million compared to a net profit of $10.5 million last year and fully diluted GAAP EPS was $0.27.

Turning to the balance sheet and cash flow statement. We ended Q2 with $530 million in cash and cash equivalents, including short-term deposits and marketable securities. Free cash flow in the quarter was $73.2 million. This compares with $63.5 million of free cash flow in Q2 of 2025. Net cash from operating activities was $73.6 million compared to $65 million a year ago.

As Amir mentioned, in Q2, we continued to execute on our share repurchase program and completed the remaining capacity under the $200 million 2025 plan. We repurchased approximately $68 million in stock in the quarter and have now repurchased 5.7 million shares in total since the start of the program. As said, during the quarter, the Board approved a new $500 million share repurchase plan, which we expect to begin executing on moving forward.

Turning to our financial outlook and guidance for Q3 and our updated outlook for the full year 2026. We continue to see 2026 as another year of very strong top and bottom line growth for Global-e. We have raised again both the top and bottom line outlook for the year. In addition, we have included in the guidance the expected contribution of Passport.

For Q3 2026, we are expecting GMV to be in the range of $1.995 billion to $2.045 billion. At the midpoint of the range, this represents a growth rate of 34% versus Q3 of 2025. Out of that, we expect Passport to contribute approximately $20 million from its Merchant of Record service. We expect Q3 revenue to be in the range of $308.5 million to $315.5 million, representing a growth rate of over 41% versus Q3 of 2025. Of that, we expect Passport to contribute $24 million to $26 million. Lastly, for adjusted EBITDA, we are expecting a range of $58.5 million to $62.5 million or 19.4% margin at the midpoint of the range. Of that, Passport is expected to have a contribution of less than $1 million.

For the full year of 2026, we now anticipate GMV to be in the range of $8.81 billion to $9.11 billion, representing an annual growth rate of 36.4% at the midpoint of the range. Of that, Passport is expected to contribute approximately $60 million in the back half of 2026 from its Merchant of Record service. Revenue for the full year is now expected to be in the range of $1.305 billion to $1.355 billion, representing a year-over-year growth of 38% at the midpoint of the range. Of that, Passport is expected to contribute $55 million to $59 million in the back half of 2026.

Lastly, we expect adjusted EBITDA and adjusted EBITDA margins to continue to expand supported by operating leverage and utilization of AI. We now expect to achieve 2026 adjusted EBITDA in the range of $278 million to $300 million, representing a 46% growth at the midpoint and a 21.7% margin. Of that, Passport is expected to contribute $3 million to $4 million in the back half of 2026. As discussed at the time of the acquisition, Passport is growing slightly ahead of our overall growth rate and is generating a mid-30s gross margin. We expect the Passport margins and cash flow to improve further in 2027 as the business continues to grow and as we realize integration synergies with our existing scale.

In conclusion, we had a very strong first half, and we look forward to continuing to support our merchants on their international journey. We are the clear leader in a fast-growing and exciting market and are continuing to execute well upon our multiyear plan. With our strong momentum, we believe we are well positioned to deliver another year of results well above the Rule of 50.

And with that, Amir, Nir, Alan and I are happy to answer any questions you may have. Operator?

[Operator Instructions] Your first question comes from the line of Andrew Bauch from BMO.

Great quarter, guys. Good to see the acceleration, especially against a tougher comp. I want to ask you about Managed Markets. You made the conversion from 1.0 to 2.0 this quarter. I was wondering if you could share any additional data points on what you're seeing around things like conversion or attach? And what kind of growth are you contemplating for Managed Markets this year because we understand growth in that business was largely on pause last year.

We are seeing an increase in adoption following the rollout of V2. We are also excited with the opening of the general availability on Managed Markets in Canada and U.K., which is positively impacting the interest level outside the U.S. and overall. And lastly, we have seen positive feedback from merchants that migrated from V1 to V2 on the merchant experience and on the overall conversion. Also the continued development we made around managed pricing together with Shopify have yielded good results in terms of its contribution to participating merchants in the conversion. So all in all, we are tracking in the right direction and we see continuous increase in adoption. Managed Markets is a longer-term play. We do believe it will continue to grow over time and continue to accelerate in its contribution to Global-e and to Shopify.

Your next question comes from the line of Billy Fitzsimmons from Piper Sandler.

Good to see the results and guidance. It seems like, first, same-store sales growth continues to outpace expectations. And then second, newly launched merchants, including those that joined Global-e maybe in the back half of 2025, are ramping faster on the platform. Can you guys please contextualize those trends for us a little further? Are newer customers ramping faster because of better onboarding processes within Global-e? Are international trends better because marketing tools in the industry are getting more precise and allowing them to grow faster? Is it macro? And then given the strong backdrop, what are you expecting around same-store sales trends in the back half?

So first of all, we are excited with what we've seen in the first half of 2026 and even further acceleration we have witnessed in Q2. The performance of merchants that launched with us in the back half of 2025 is exceptionally good. We have seen the conversion rates going up, those sales going up even further than our expectation, and this continues to contribute highly in the first half, but also we see the contribution it will yield also to the back half.

In terms of same-store sales, we are trading above the historical level. So consumer demand looks good and resilient across virtually almost all markets around the world. In terms of the backdrop, we do have some normalization baked in as we guided also in previous quarters into the same-store sales. Some of it relates to tailwinds of FX that we had mainly in Q1 and some of it also in Q2 that will no longer expected to be in the back half of the year. And some of that is related to easier comps on the first half of the year due to the duties that were -- duties noise that started in the first part of 2025 and normalized over the year. But in general, we do see strong growth continues, and it's reflected in our guidance that now sees a stronger back half of the year than what we anticipated a quarter ago.

Your next question comes from the line of Rob Wildhack from Autonomous Research.

Okay, good. So you called out some larger promotions by your top merchants in the second quarter. And I was curious if you could add some more context to the effect that those might have had on GMV growth. Are they worth like a couple of percentage points or something like that? And then looking forward, can you remind us on the cadence of that promotional activity through the rest of the year and how that might affect the volume growth that you're guiding to?

Sure. So this -- most of these promotions are annual promotions, a lot of the merchants and some of our larger merchants have sort of a biannual approach to promotions. So they have large promotions in Q4. And then they also have some large promotions in Q2. It's the same promotions every year. So we've seen that in '25, in '24 and even earlier. So nothing out of the ordinary here.

The interesting thing is that the consumer reaction in 2026, in Q2 2026 was very strong to those -- to the same promotions that they run every year. We've seen very strong results for those promotions, and that has contributed to Q2 results. In general, I can say that over the last 2 or 3 years, we are seeing over time a better reaction to promotions. We see consumers planning their shopping, at least some of the consumers. I think it's evident in our last 2 years' Q4 results. So it is a trend. And we believe that we will continue to see this in the future.

Your next question comes from the line of Scott Berg from Needham.

Really nice quarter here. I guess I got a couple. I'm not sure if this is for Amir or Nir. But as you think about the Managed Markets 2.0 traction, what type of KPIs or milestones should we all be looking for? Obviously, GMV commentary is key, but whether it's customers moving from version 1 or what you're seeing from initial adoption of 2.0? It'd just be great to hear if there's any other items you think are worth us paying attention to.

Scott, it's Nir. So basically, we are tracking adoption and tracking GMV on Managed Markets, and this would be our main factors. In terms of the migration itself, it was completely done. It wasn't a long-term phased approach. It was done in a few batches, but it was completed. So we shouldn't expect any more changes in terms of contribution between revenue and cost or expense recorded going forward. It was completed. So now it's just to focus on the business and the growth of it. We, together with Shopify, are fully engaged and behind the product, we continue to develop elements that we believe would get more merchants to trade on it, easier to trade on it with better results. And we do see early indications of increased adoption and better trading. So we are optimistic on the longer-term trend and the continued growth of Managed Markets.

Very helpful, Nir. And then Ofer, you talked about gross margins in the quarter being down in Q1, partially because of the Managed Markets conversions because of the new commercial agreements or the difference in commercial agreements on the Managed Markets 2.0. Is the second quarter gross margin we saw, is this kind of the right baseline start working our models around going forward? Or with the last remaining conversions, would there be another slight step down? Of course, understanding just the EBITDA margin impact is pretty negligible overall.

Yes. So gross margins have been pretty stable in the last few quarters. And in Q2, we've seen a certain decrease. As I mentioned on the prepared remarks, it was mainly driven by fuel prices. Basically, fuel prices were on the increase and also very volatile. And carriers were updating these prices much more frequently than in the past. And our business decision was not to sort of create that volatility on the merchant side. And while we have updated the pricing, we are not doing it as frequently as the carriers, and we decided to absorb some of the cost temporarily. So that was the main impact in Q2.

In terms of Managed Markets, as Nir mentioned, the migration from V1 to V2 is completed. It happened -- some of it happened late Q1, towards the end of Q1, last days of Q1 and the remaining merchants moved within the quarter. So it's behind us. And I think that in that sense, Q2 results reflect most of the impact from the V1 to V2 migration.

Your next question comes from the line of James Faucette from Morgan Stanley.

I want to follow-up with a margin question. And just wondering if you can outline for us how you're thinking about where margins can get. Passport, obviously, is a little below corporate average, but it sounds like those are improving. Can that be ultimately in line with the overall corporate level? And just looking at cross-sell opportunities for Passport into the broader Global-e solution, how should we think about that and that potential to drive both revenue and margin expansion?

Yes. So in terms of our bottom line, we are very happy with the results. We have been able to gradually expand adjusted EBITDA margins as we planned. This was part of our -- of the long-term plan that we've presented in our Investor Day, and we are able to gradually improve, and this is driven by the growth and the operational leverage that we are able to achieve. And we believe that going forward, we will continue to improve over time.

In terms of Passport, we are very excited about this acquisition. Looking at the financials, as we've mentioned, they are growing fast. And they are over the sort of the tipping point as they are adjusted EBITDA positive and also positive in cash flow. We believe that based on Passport growth and the integration to Global-e and the synergies that we are able to achieve, we can get to similar levels of profitability with Passport. In addition to that, we believe that over time, Passport could also contribute, again, from a sort of a synergy side to Global-e as we believe that we will be able to offer a much more complete shipping proposition to the merchants. We believe that we can increase also revenue through that.

Your next question comes from the line of Craig Maurer from FT Partners.

I wanted to ask a couple of questions on Managed Markets. First, did you see the expected acceleration or uplift from the mention in summer additions? And Shopify has built out some extensive AI offerings for its merchants, including Sidekick. And do you know to what degree Managed Markets is being promoted through those channels or being pushed on merchants through those channels?

And secondly, in terms of Passport, is there any seasonality that we should know that might be different from your own over the next 4 quarters, so we understand how to model for the back half of the year and into next year?

It's Nir. I'll take the Managed Markets part. So in general, following additions, we see more interest coming into Managed Markets. We have seen more adoptions and this, together with the switch from V1 to V2 that makes it easier to adopt Managed Markets is creating more interest. We have seen adoptions and trading going up. It's continuously going up, but it is a long-term play. So we are excited with what we see. Shopify is backing the plan. They are pushing it in different channels, including their console. So it is going well, and we continue to work through additional parts of the offering that we think would get the adoption to be quicker and also the trading to be even further efficient and better conversion than what we were able to achieve so far. So we are excited about the long-term possibility, and we already see indications of the growth in adoption. So quite a positive development on the Managed Markets front.

And then to answer your question on Passport seasonality, it's a pretty similar pattern to Global-e. So you can pretty much assume sort of a similar seasonality between the quarters.

Your next question comes from the line of Will Nance from Goldman Sachs.

I wanted to maybe push you guys a little bit on the take rate commentary. I know it's a big focus for investors. When I look at the long-term targets, I think there is a 3- to 5-point gap between revenue and GMV. And so I think the baseline expectation is for modest take rate compression over time. But you're talking a lot about some of these value-added services, Borderfree, duty drawbacks, the marketing services. So maybe you could talk in the context of some of these value-added services, how you think about how this could impact the top line trend relative to GMV and whether you see an opportunity to mitigate some of that take rate compression, just acknowledging the fact that you guys are growing well ahead of the medium-term outlook that you provided at the Investor Day.

Thanks, Will. I think that when we are discussing take rates, it's very important to mention that our focus is on providing the best combination of platform and service for our merchants and in turn to grow our top and bottom line. So over time, we have expanded, as you know, the scope of solutions that we provide to merchants. And these solutions by nature, they carry different take rates. All are accretive to our top line growth and bottom line. So we believe that all of these solutions are great solutions for the merchants and also create value for Global-e. And by offering these different models that are catering different merchant needs, this enables us to drive consistently fast and profitable growth.

So as we evolve our suite of solutions, we believe that take rate has become and will continue to be less indicative of how our business is trending. And for example, if you take the Passport addition into the portfolio, it actually increases our take rate, but we don't see that as a positive nor as a negative, just a different sort of financial profile of the company. So we believe that you need to look at revenue. We need to look at GMV, but we believe that the take rates are less important.

And in terms of value-added services, we are very excited about those, and I'll leave it to Nir to elaborate on that.

Sure. And we are very happy with the development we've seen on the adoption of our value-added services. Duty drawback in general, is growing significantly in its utilization across our merchants worldwide. And in particular, if we speak about import duty drawback in the U.S., we have seen the first few merchants claim being approved. We have seen the process starting to grow. We see more and more clients being able to construct and extract the data they need in order to provide us with the ability to claim on their behalf. And we believe this will become a significant business over time.

In terms of Borderfree.com as well, we continue to see increase in adoption. It grew to become 6.5% of GMV for participating brands. We continue to see an increase in the direct to checkout from Borderfree.com, yielding our affiliation being our affiliation fee. So all in all, quite positive development across our value-added service that over time, we believe will be reflected into the different elements of our take rates. As Ofer indicated, take rates have become much more a result and not something we managed for due to the mix of different business models that we have from multi-local to our regular model to the Passport non-MoR model to digital goods versus physical goods, et cetera. However, we do plan and we do expect it to stabilize due to the value-added services kicking in at a larger scale.

To add specifically for 2026, as reflected in the guidance, excluding Passport, we expect take rates to remain fairly stable throughout the back half of the year.

Your next question comes from Mark Zgutowicz from Benchmark.

Just a couple of quick ones on GMV and specifically 3Q and 4Q implied GMV. Just curious if there's any plus or minus variables to consider that impacts growth in these periods that's different than the normal seasonality you typically witness. And then separately, given a number of newly announced luxury wins, just curious how you compare your GMV exposure to this segment today versus, say, a year ago?

Thank you for that, Mark. In terms of luxury, we did have some nice wins, and we are really excited about being able to have some land and expand motion within the large luxury group. However, as a percent -- in terms of percentage overall, I don't think luxury has increased in the last few quarters, and we don't expect the luxury's share to increase going forward. In terms of seasonality, we do not expect any unordinary trends. We see sort of the normal cadence. So Q3 is typically a bit less promotions and a lighter quarter and Q4, of course, we expect to see sort of similar dynamics to previous years.

Your next question comes from the line of Brian Peterson from Raymond James.

Congrats on a strong quarter. So just one for me. As you're thinking about the top of the funnel, I know we're maybe a year removed from some really volatile times as it relates to tariffs. I'd love to understand the velocity of customers potentially coming to you. And I know you mentioned newer customers kind of ramping a bit bigger. Is that just from a GMV size as they're coming on or are they potentially buying more products?

Brian, in general, about our pipeline, our new merchant launches for 2026 continue to progress very well and as we planned. As Amir mentioned in his talk, we had a very busy first half of 2026 with some amazing brands that have launched with us and are currently -- and we're currently onboarding a significant amount of brands into our second half of the year.

In terms of the sales funnel, we are very happy with what we see across the funnel and the leads that are coming in. So far, 2026 is shaping to be stronger than what we have seen in 2025. Some of it is supported by the AI discovery tools that we deployed late '25, early 2026. So we have seen an increase at the top of the funnel. And some of it is increase in conversion throughout the funnel, as you mentioned, also contributed by the changes of duties, not only in the U.S. or now in Europe in July, the minimums were removed also in the European Union. So a lot of merchants are looking for stronger solutions to streamline their global trade, and this is doing good for us.

Your next question comes from the line of Chris Zhang from UBS Financial.

Again, congrats on the quarter and also I appreciate the new slide deck. My question is also on Managed Markets and just a quick one. Just wanted to think about the opportunity, the size of the opportunities in Canada and U.K. I presume those are important markets for Shopify. And if I look at specifically from your revenue mix in terms of merchant outbound region, U.K. is particularly sizable. Just want to see if that's a good way to think about the potential size of the Managed Markets as well in U.K. and Canada or any other way to think about that kind of commensurate with the overall merchant outbound mix?

Yes. Thanks, Chris. In terms of the potential, we -- as we already mentioned, we continue to see an immense potential in this offering, and Shopify has a very large roster and growing roster of merchants that are relevant for Managed Markets across these geographies. And as Nir mentioned, we are continuing to develop together with them features and capabilities that will make it even easier for these merchants to onboard and therefore, over time, accelerate the pace in which they are joining the platform.

In terms of the outbound regions, it's probably better to look at the outbound market or the merchant distribution on Shopify side. Our distribution is probably not very indicative for that because it's driven by our enterprise business that has other dynamics. But for Shopify, obviously, the U.S. is the largest market. That's why we started together with supporting U.S. merchants and then markets such as Canada and the U.K. and others in descending order.

Your next question comes from the line of Patrick Walravens from Citizens.

Congratulations on the acceleration you guys. It's really impressive. If maybe Nir or Amir, can you talk a little bit about what actually are some of those features and capabilities that will make it even easier to onboard? What are some of those things that you're working on for Managed Markets?

So there are some key developments that we work together with Shopify to deploy. Some of them are related to the ability to basically offer it almost out of the box for any new merchant on Shopify to enjoy the benefits of being global by default. So a lot of work is being done around that, and we are very excited about what's to come there.

In terms of the trading on the site itself, we are building with Shopify more capabilities to get the leverage understanding and best practices we have on the enterprise side into getting them to work by default for Managed Markets as well. Some of it was already rolled out with the managed pricing capability on Shopify side that allowed merchants to enjoy better conversion because it's giving much more local feeling to their international shoppers. It's going to continue into managed pricing also on the shipping side, so a much more complete offering, and multiple other projects we are working behind with Shopify. So very exciting things in the oven, and we are very excited about the potential growth.

And maybe I'll just add, Pat, it's Amir, another example that will maybe give you a sense is that in initial versions or initial iterations of Managed Markets, there was kind of an onboarding process or a qualification process where the merchant needed to first submit an application, then it would be reviewed. Later on, we managed to accelerate that review to be within 24 hours. Now it's same session onboarding. So essentially, for the vast majority of merchants, as soon as they click that they're interested in Managed Markets, the process is done almost instantaneously, and they can go live within a very, very short time span. So that's another type of effort that we put in, in order to make it seamless.

That's great. And just to be clear, so what you're just talking about, Amir, that's done, right, that's live now? As soon as they click, it's done almost instantly?

Yes. This is how it works now.

Your next question comes from the line of Matt Coad from Truist.

A quick one for me. It sounded like you're more optimistic about the Passport integration and synergy opportunity here compared to last time that we talked to you guys. Could you provide a little bit more color on that now that the acquisition is closed?

Basically, we are very excited with the add-on of Passport. We have an excellent management team and seasoned professionals around building strategic standard solutions. And we believe that with our scale and expertise, we will be able to give great offering to all our clients and Passport clients and win more business in the market with smart returns, with more direct injection capabilities, et cetera. Add to it non-MoR and the ability of Global-e now to actually go to additional segments and verticals that are not best fit for MoR. We are excited about the potential in TAM expansion as well.

In terms of the synergies itself, now that we are much more into the weeds, we are much more optimistic on what can be reached within the coming quarters in getting Passport to become much closer to Global-e in terms of its bottom line contribution.

Your last question comes from the line of Matt Bullock from Bank of America.

I had a quick one on duty drawback. It sounds like you made a lot of nice progress during the quarter. I understand it takes some merchants time to prepare the documentation to be onboarded and that the revenue contribution can be pretty lumpy as those merchants try to reclaim import duties for multiple years back. So the question is, how does the pipeline look for customers who are actively preparing that documentation for the back half of this year?

Thanks for the question. So indeed, there is a pipeline of merchants. This is a very valuable offering for U.S. merchants. There's a lot of money that they could potentially reclaim that otherwise would be impossible for them. We have a strong pipeline of those. There's a very good adoption rate of this offering. However, it is taking time, as you indicated, and we are not pushing the merchants because the only chance to reclaim back for a few years is on the first submission. Afterwards, in a subsequent submission, you can only reclaim on the ongoing sales.

So we have an interest just like the merchants have to give them the time to prepare all the documents that they can and gather all the information that they can backwards. Also, of course, it trains them in what needs to be gathered and retained going forward. So it will make the submission process going forward much easier and smoother. But due to that shared interest, we are working with them and we're giving them all the time they need in order to make that first submission as comprehensive as possible.

All right, everyone. I think that's the end of our Q&A session. Thank you, everyone, for joining the call today. We look forward to speaking with many of you during the quarter and providing our next update on our Q3 call in November. Have a great day, everyone.

Ladies and gentlemen, this concludes today's conference call. Thank you very much for your participation. You may now disconnect.

All right. We'll go ahead and get started here. Thank you very much for joining us at the Morgan Stanley Financials Conference, U.S. Financials Conference. I'm James Faucette, senior fintech analyst here at Morgan Stanley.

And before we get started with Amir and Ofer, CEO and CFO, respectively, of Global-E, I do have some important disclosures to read. Please see the Morgan Stanley research disclosure website at morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative.

So maybe I'll start with the big questions, just really kind of in the order we get them from investors, but growth durability. 2025, the business grew 35%. You had 122% net dollar retention, implying low double-digit contribution from net new GMV even in a year when you did not have as much contribution from massive enterprise merchants like you did in 2024. Plus now the business accelerated incrementally in the first quarter, growing GMV 40% year-over-year. And for the full year, we're still looking for kind of low 30s. That's how we have you guys modeled and roughly 30% revenue growth to go with that. What is driving all of that durability of growth? And how does that really confirm and speak to Global-E's value prop as a key enabler for cross-border e-comm? Like it's a big question, but just like what's happening here?

Sure. First of all, thank you for having us, James. It's a pleasure as always, and thank you for all of you for coming. I think actually, the answer is probably in your question. It's thanks to the value proposition that Global-E brings to the table. I think -- when we look at our prospects for growth, first and foremost, we're looking at a massive TAM. Let's not waste time here doing kind of calculations. But the way we look at it, we don't mind the kind of $1 trillion, $2 trillion numbers that are floated out there by the Gartners of the world. We look at real kind of addressable TAM. So we can probably spend a few hours debating on whether it's $200 billion or $300 billion. But that's kind of the area of the real kind of accessible TAM of -- that can benefit from kind of a full end-to-end merchant of record solution like ours.

Out of that, we've guided the market for just short of $9 billion this year. The next competitor in line does 1/4 of that. And then the one after does 1/4 of that. So the market is still heavily, heavily in the greenfield territory. And I think the value proposition that we bring to the table, which is kind of a way for merchants to capitalize on that international opportunity in a way that is kind of risk-free and basically have Global-E as a merchant of record take care of all the headaches, all the risks, all the compliance issues and just let them concentrate on their main business, which is building a brand, product sizing, marketing and so on and so forth.

I think that our unique ability to do that based on the scale that we have, based on the data that we have, based on our unique infrastructure and ecosystem of providers that we orchestrate to bring that to market, that's the only kind of sustainable strategic solution that these merchants can have if they want to capitalize on that international opportunity because it's too -- for any individual merchant, they're either too small to even try and do something on their own. And even if they're big, they cannot systematically handle that because it's so fragmented. What you need to do in order to capture the opportunity in market A is completely different than what you need to do in order to capture in market B.

So the only durable way and strategically sound way to do that is to utilize an expert like us that has, I would say, a platform that takes it at a platform approach and handle this for multiple merchants at scale with the expertise and the know-how that comes from the level in which we do that. So I think that is what stands behind our ability, and we are very much, as you know, we put out there in our last Investor Day, some long-term targets that we very much stand behind. We're even slightly ahead of our plans to continue to grow at kind of the high 20s, low 30s in GMV and not too far from that in terms of revenue and while keeping high margins in the kind of low 20s to mid-20s. That, I think, is -- as I said, that's thanks to the very unique business model that we bring to the table that's fully aligned with the interest of our merchants.

Yes. I mean I think -- and it's interesting, lots of times when we talk to investors and they become very preoccupied with the addressable market. And to your point, like I think there's an important thing that we like to call out, which you mentioned, which is, a, you have a small portion of that market today. But the second part is that it's worth reminding people is that cross-border e-commerce -- or cross-border commerce generally is a high friction transaction. And so with Global-E or the work that you do is you're reducing friction, which by definition, will grow that addressable market. And so I mean, it kind of feeds on itself.

So another key point or question that we often engage with investors on is take rate because we can start to forecast like what the volumes are and we can forecast what the -- like what those GMV growth rates could look like. But another part of the equation is obviously take rate. And this is a key line of questioning that we continue to get from investors. And I think that uncertainty around that is probably creates volatility in the stock even when we see good results. And I think people are worried about the perception that take rates are under pressure. You had a lot of idiosyncratic and onetime issues that were almost entirely out of your control last year in 2025. But the multiyear trend in revenue take rates still has been somewhat down.

There's an element where you're winning share with larger merchants, and so the pricing maybe is a little bit different and it's dollar accretive, but it impacts the percentage. And one thing that I think is probably underappreciated in your business is that you look at the business on a gross profit take rate basis with that metric really being pretty consistent. So help us think through and contextualize what the take rate narrative should be, what matters? And do you think -- how do you think about how you run the business vis-a-vis take rates?

So yes, while we definitely understand that take rate is an issue of interest to the investor community, that's not a main concern for us, the way we look at the business. The way we look at it very simplistically is we need to create value for the merchants in order for them to stay with us, grow with us and to add new merchants to have them coming in and generate volumes on the GMV side. And then we need to monetize on those volumes.

So basically, we are looking at GMV growth, and we are looking at bottom line growth because in the middle, and I'll talk about take rates in a second. But in the middle, there are different sort of motions and different business models that come into play. And sometimes the mix has an impact on take rates or other dimensions while we make sure that whatever business or sort of business model we have with the merchants, the bottom line will be healthy. So we look at volumes and bottom line as sort of the main KPIs we manage. Of course, revenue is extremely important. So we're not neglecting that. But basically, that's the way we approach it.

And getting to take rates more specifically, I think there are 2 different stories around take rates. On the service fee side, although there was some noise mainly related to the rise and fall of Ted Baker for us. I mean, we were working with the European franchisee of Ted Baker, and they had quite a unique model where we also ran marketing or demand generation for them. So that contributed significantly to our take rate, but we also had costs associated with that. But once that went away, there was some noise, a decrease. But since then, things have been very stable. So for the last 6 quarters, we are around 6.8%, 6.9% in terms of service fee. And the way we view it, at least on the enterprise side, we expect service fees to continue and remain fairly stable because we don't see any significant change in market dynamics.

We do see some other impacts, which on the one hand, on average, we have larger merchants, and we do price based on volume. So that weighs a bit on take rates. But on the other side, we have value-added services that are gradually kicking in and sort of compensating for that. So to make a long story short, we expect to see -- to remain quite consistent in terms of enterprise service fee take rates. We might see a certain reduction, not might, we will see a certain reduction in Managed Markets service fees just due to the sort of the structure of the agreement that we struck with Shopify that basically impact the way we recognize revenue on that piece of the business. But other than that, things will remain stable.

On the fulfillment take rate, it's a different story. First of all, it's not a direct take rate play because we provide merchants rate cards, and we generate revenue based on those rate cards. So it's not a pure take rate play, and it's impacted by average order value and other parameters. But the main sort of dynamics around the fulfillment take rates were the introduction of multi-local services. Basically, multi-local is a service that we introduced a few years ago, and it enables us to serve merchants that carry inventory in different destination markets. But -- and it actually expands our TAM. It's targeting mainly consumer electronics merchants, but also very large legacy merchants that typically have inventory in different destination markets and want to utilize or leverage that inventory in order to serve those markets, but they still want to do direct-to-consumer and leverage our services and basically, multi-local enables that.

The only thing is that once the inventory is already in market, either you have a very low fulfillment take rate or the merchant just chooses to sort of do the shipping themselves because now it's pretty straightforward. So by sort of definition, the multi-local piece has very low fulfillment take rates, and that sort of has an impact on the average over time. So it's more a question of mix, but we view multi-local as a very positive story because it expands our TAM. It enables us to work with very large merchants, and it has a very healthy bottom line associated with it.

So how should we think about -- so on that point, like how should we think about what the realistic pace of multi-local migration is? And you indicated that -- and correct me if I'm wrong, that a lot of the multi-local adoption has actually been on consumer electronics. Are we going to see that be true for consumer electronics generally as you continue to expand that? And or should we -- and should we expect multi-local adoption in other categories?

So we see multi-local adoption in consumer electronics due to the nature of that segment because it's very difficult to do self-importation in consumer electronics, so you typically do B2B. And also this type of merchants typically traditionally had the distributors in end markets. So they already brought the inventory in, and that's the way they work. But in addition to that, there are some very large global brands. For example, someone like Disney that carries inventory in different markets. So basically, it's these 2 segments. It's consumer electronics and large legacy brands that would be the target segment. In recent years, actually, the sort of -- the share of multi-local out of our business has grown from 0% to around 15%.

So it outgrew the entire business. And hence, had an impact on fulfillment take rates. But at least in 2026, we see a more balanced growth. While multi-local is still growing very nicely, it's not outgrowing the business significantly. So we see less of an impact in '26, but we believe that going forward, multi-local still presents a large opportunity. So we might see a slightly higher share or gradual higher share of multi-local over time.

And then one question we also get, particularly in periods where fuel prices are very volatile is, how well are you able to protect gross profit dollars when carrier fuel or surcharge costs are moving around?

So that's part of our contracts with -- on the fulfillment side, we have the mechanisms in place to basically transfer these price hikes, if it's the GPI, as they call it, of the annual indexing or we treat it as increase because it doesn't ever index down, but also changes in fuel and other surcharges. So we have the ability, and we do pass them on to the merchants. It's not kind of -- we don't do it one-to-one because we do take into account kind of relationship considerations with [indiscernible]. As an example, if a merchant just went live and got a rate card from us and 2 months later, there's an update to the surcharges or so, we will discuss internally and take a decision kind of a case-by-case decision, whether we immediately pass it through or typically, what we would do is we would wait kind of a quarter or something before we pass it through to them just from a kind of experience or relationship point of view.

Because fundamentally, when they come to work with us, they are looking for both the increase in performance and the ability to convert on that international traffic, but also on us simplifying and derisking the whole international experience for them, and that's part of it. Plus, in addition, thanks to the scale that we work at with these carriers, take DHL, for example, who are a long-time strategic partner of ours or even a shareholder Global-E historically. But even irrespective of that, we are one of DHL Express's top 5 clients in the world when it comes to B2C.

So that means that even when they employ kind of rate hikes or surcharges, we have kind of preferential terms in many cases. And we are able to pass some of these benefits on to the merchants by them not having to incur the entire kind of market level cost hike. So that's part of the value proposition for the merchants, which is why the -- on a long-term basis, yes, everything is prepared to the merchants, but there might be some timing delays, which we do for relationship purposes.

Got it. So let's talk -- go back to service fee take rates and that kind of thing. You mentioned the dilution from Managed Markets. But at the same time, for example, in the case of Ted Baker, even though they're really not a customer now, but you did indicate that you got some benefit from things like demand generation, et cetera. Like how do we think about those 2 dynamics and what that should mean for service fee take rates?

Yes. So you're right. That's the 2 types of dynamics that we see around the service fee take rates. On the one hand, we do price based on volumes. And as the merchants grow or the average size of a merchant grows, we see some sort of on average, slightly lower service fees. We also have the impact of the sort of what we call the V2 of Managed Markets so on. But on the other side, we have been seeing gradual contribution to service fee take rates from the different value-added services that we offer. Some of those or the ones that are worth noting are duty drawback, which is a service that enables us to actually pick money off the flow for merchants because basically, when products go into market, you pay the duties and taxes.

But then on average, in 10% of the cases, the product is returned. There's -- it varies a lot depending on the type of merchant and on the destination market. But on average, it's around 10%. And then you're not able to retrieve those duties and taxes while your shopper expects to get the full amount refunded and the good experience. In order to create a good experience with the shopper and get that shopper continue buying in the next time, typically will pay the full price back.

So you have a problem. Now you just -- 10% of the transactions, you got hit by approximately 20% to 25%. So you just lost 2.5% on your P&L. And we are able to retrieve that in many cases. It's a destination country by destination country exercise, but we have quite a decent coverage these days. And basically, we're able to bring that money back to merchants or at least part of it. And we take a certain cut out of it, typically up to 20% of the refunded amount.

We've also added another duty drawback service lately. It relates to U.S. merchants, which import goods into the U.S. from their manufacturers in Asia or any other location and pay. But then when the product is exported, when it's sold cross-border, they are actually -- they can get a drawback for the importation duties. And we received the authorization to do that for the merchants a few months ago. Now we're sort of processing the first application. So that's another piece on duty drawback.

In addition to that, as you mentioned, we are also active on helping or supporting the merchants with demand generation, mainly based on the Borderfree platform. And we have a few hundreds of merchants that join this platform. And actually, on average, we are already able to contribute approximately 6% of sort of their traffic that is converted into sales. So it's not huge yet, but it's becoming significant.

We didn't charge on this service because we wanted to sort of create a network effect. We want more merchants coming in and more shoppers signing up for Borderfree.com, but we've recently started to charge for that. That's the significant contribution yet. But over time, we believe that this could also add a bit to service fee take rate. And while Ted Baker is gone, we do see some opportunity to actually duplicate this model with additional merchants. And just lately, we've sort of launched one of those. It's smaller, significantly smaller than Ted Baker, but we see an opportunity with that as well.

Got it. I want to shift to demand. But before I leave take rates, just make sure if there are any questions in the audience? One up here for Michael, please.

Is there any way to frame like how broad-based the demand is for duty drawback? Like as I think about a U.S. merchant, like why would they not want to be using this and what's reflected in your pipeline?

Yes. So generally speaking, you're right. This is -- as Ofer kind of framed it, this is picking money off the floor. And I think for both types of duty drawbacks, we expect the kind of the attach rate to be very high in those cases where we can actually support it, and we are constantly enlarging that envelope.

I think that the one thing maybe to call out is that on that part of the service for U.S. merchants that enables us to kind of draw back the original duties that were paid on the import when the products are exported. That is -- on that, too, we expect very, very high attach rates. But this specific service, we expect it to take slightly longer to -- for the actual volumes to pick up for this -- the reason that unlike the kind of, call it, regular duty drawback where we export the goods and then the goods return and we draw back the duties on the return. In those cases, we did both sides of the transaction. So we have full information, and we have everything we need essentially in order to make that submission to the authorities.

When it comes to drawing back duties on kind of commercial imports, the original importation into the U.S. was done by the merchant sometimes a year ago, even more than that, and it's been sitting in inventory. And they haven't really thought about actually collecting all the information that we need in order to make that submission. We need it from them. Now it's not rocket science, but they need to gather that information. And there is an incentive for them and for us for the -- specifically for the first submission to collect all the information they can because only on the first submission, you can actually submit 3 years in arrears. You can collect back on 3 years' worth of imports or on re-exports.

From the second submission onwards, it's just on the ongoing business. So we work with the merchants. We try to find ways to make it easiest for them. But at the end, they need to open the drawers in the archive and get those documents out and provide the information for us. As part of that, they also learn what they need to provide. So from the next submission onwards, we expect that to be fairly easy. But this specific offering for the initial submissions of all these merchants, we expect it to take a bit more time. That's the only kind of nuance. But overall, long term, we expect the attach rate across the board to be extremely high.

Got it. So last few minutes here. I want to hit 3 key things. First, demand. Where are you seeing strength geographically in demand? And are there...

Consumer demand.

Consumer demand, yes. So actual GMV and volume. Where are you seeing consumer demand strong versus where is it weak or changing for better or worse?

Yes. So happily in the last few months or even towards the end of '25 onwards, we've seen very healthy consumer demand almost across the board. I think that the type of consumers that our brands are targeting, which is typically sort of I would say, mid- to high and sometimes even very affluent. Those are doing pretty well, and we've seen very, very healthy consumption patterns in the last few months. And as I mentioned, it's been across the board in most destination markets. There was some interruption in the GCC and the Middle East region due to the Iran conflict. So for a few weeks, we have seen some decrease or significant decrease in specific markets in that region, but that came back as well. So all in all, we see good consumption patterns lately.

Got it. Got it. So let's talk about a key partnership that has been developing for years now, and that's with Shopify and what you're doing within Managed Markets. How should we be thinking about what you're seeing with respect to Managed Markets specifically? And how you built in a Managed Markets ramp within second half '26? And can that become -- can that accelerate in 2027?

Yes. So basically, as you know, we've -- one of the main rationales behind our kind of newer or the -- what we call it 1P or kind of Managed Markets part of our new strategic agreement that we signed last year was around our understanding from the first iteration of the lessons learned from the first iteration of Managed Markets that, on the one hand, it kind of fortified our belief or joint belief of ours and Shopify and the massive opportunity that lies ahead in a service like Managed Markets.

On the other hand, we realized that we needed an additional build. We weren't done because we kind of simplistically say we nailed the onboarding piece. We had to improve the ongoing experience. It wasn't good enough. We underestimated the effect of the changes that going on Managed Markets required from the day-to-day operations of these merchants. And because, on average, merchants on Managed Markets tend to be on the smaller side of the scale, it turned out to be more difficult than expected for them to adapt to managing now a different kind of stream of business that is international.

So we went ahead and we spent a lot of work on both sides, on our side and on the Shopify side and got to a place where Managed Markets is now fully integrated within Shopify Payments and the operational processes, the money flows, all the reporting, all of that kind of the day-to-day of the store now works basically just the same as the merchants are used to when it comes to managing their domestic store. So that is kind of the essence plus a few other things around kind of applicationless onboarding and some additional features that were the basis of the new build of Managed Markets.

Now in terms of the, I would say, what that translates to in terms of a ramp-up in volumes, so we're still in pretty early innings because the new version went live kind of late last year in Q4. And -- but still the -- we're -- before the kind of marketing push, I would say, from Shopify, there's work continues, and we've recently launched Managed Markets in 2 additional markets in Canada and the U.K. for merchants in Canadian merchants and British merchants. And work continues on additional features. But we do expect and Shopify is planning to start to more actively push it currently in general availability, but it's not being actively promoted.

The plan is for them to start promoting it as part of the next editions, the next Shopify editions, which has been pushed out a bit was originally supposed to be a spring edition. Now it's more of a summer edition. It's supposed to be at the end of this month. And on the back of it, start to more actively promote Managed Markets. That translates into our original assumptions that we're going to start to see a more meaning -- we are already seeing a ramp-up because just the product is out there. It's doing well. We're getting good reviews in merchant forums, et cetera.

So it is growing by itself, but we do expect to see an inflection point kind of in the second half of the year. And I would say we're currently solving for a good offering, a solid offering and growth in the run rate to kind of exit 2026, hopefully, in a much larger run rate. It will not have too much of an aggregate impact on 2026, but we're solving for already a meaningful impact and contribution to our top and bottom line in 2027 onwards.

So last question. We're over time here, so we're going to keep it really short, but we've got to ask the requisite AI question. You called out AI benefits across R&D, support, monitoring, compliance and prospecting. What is your -- the single case that you're most excited about where you're seeing AI returns and productivity gain?

I think -- I would say there are 2, if I may. If I may go for 2. One of them is on our ability to kind of harness and put into action the massive proprietary data asset that we have and that we continue to accelerate because we're already seeing with proprietary tools that we've built kind of that are AI-based that, that gives us a huge leverage that it doesn't just accelerate our kind of efficiency and effectiveness. It is also something that is -- that competitors cannot replicate because with all the respect to AI, you need to feed it with relevant data and know-how in order to get the benefits. So I think that's one.

The other one is on the R&D efficiency. So there are efficiencies across the board that we can get. I think what we're seeing already in the use cases that we've already put into play is that there are massive R&D benefits to a point where when we look at our growth going forward, we think that we can become much more efficient all across the board using AI. Specifically on R&D, not only do we not see a reason to grow the headcount, and despite the growth that we expect in the coming years, we'll probably be able to scale it down by quite a bit and still be more effective in the total outcome of R&D.

Great. Well, Amir, Ofer, thank you so much. We'll leave it there. Thank you so much.

Thank you as always. Good day.

Welcome to the Global-E Q1 2026 Earnings Announcement Conference Call. This call is being simultaneously webcast on the company's website in the Investors section under News and Events.

For opening remarks and introductions, I will now turn the call over to Alan Katz, Global-E's Head of Investor Relations. Please go ahead.

Thank you, and good morning, everyone. With me on the call today are Amir Schlachet, Co-Founder and Chief Executive Officer; Ofer Koren, Chief Financial Officer; and Nir Debbi, Co-Founder and President. Amir will begin with a review of the business results for the first quarter of 2026. Ofer will then review the financial results for the first quarter in more detail, followed by the company's updated outlook for the full year as well as the Q2 outlook. We will then open the call for questions.

Before I read the forward-looking statements, I'll note that we have posted an Excel-based metrics file on our IR website. This provides historical data for both financial information and KPIs that may be helpful as investors are researching the company. Please feel free to let me know if you have any feedback on this document.

Moving on, certain statements we make today may constitute forward-looking statements. All statements other than statements of historical fact are forward-looking statements, which reflect our current views with respect to future events and are not a guarantee of future performance. Actual outcomes may differ materially from the information contained in the forward-looking statements as a result of a number of factors, including those set forth in our 2025 annual report filed with the SEC. Please refer to our press release issued today, May 13, 2026, for additional information.

In addition, certain metrics we will discuss today are non-GAAP metrics. We believe that these measures provide useful information about operating results, enhance the overall understanding of past financial performance and future prospects and allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making. For more information on these non-GAAP financial measures, please see the reconciliations provided in our press release issued today.

Throughout this call, we will also discuss a number of key performance indicators used by our management team. These and other KPIs are discussed in more detail in our press release issued today.

I will now turn the call over to Amir, our Co-Founder and CEO. Amir, please go ahead.

Thanks, Alan, and welcome, everyone, to our first quarter 2026 earnings call. Having just celebrated yesterday the fifth anniversary of Global-E going public, we had a great Q1 as the Global-E team continued to execute against our growth plans. We beat the midpoint across all guidance metrics and are raising our outlook for GMV, revenue and adjusted EBITDA for the remainder of the year. We achieved this strong performance despite some headwinds from the ongoing conflict with Iran and its impact on trading into the Middle East and the GCC region.

During the quarter, we continued to execute against our multiyear strategic plan, growing with our existing merchants, launching with new merchants and expanding with our strategic partners. Our updated guidance for the full year 2026 further solidifies our journey to reach the long-term targets we presented last year at our Investor Day. We believe that our Q1 results help illustrate the fact that we remain slightly ahead of plan in our progress towards reaching these targets.

With that, I'll turn to the quarterly results. Compared with Q1 2025, GMV increased by 40% to $1.74 billion and revenues grew at 33% to $252 million. We were able to achieve this growth while realizing efficiency gains across the organization and at the same time, investing in our sales efforts to drive additional pipeline expansion. Our non-GAAP gross profit margin for the quarter was 47%, up 150 basis points from the same quarter of last year. And Q1 adjusted EBITDA was $50.2 million, up 59% year-on-year to a margin of nearly 20%, a 330-basis-point increase compared to the same quarter last year.

Before I go through our recent merchant launches and expansions, I would like to spend a few minutes on some of the drivers of our impressive performance in Q1 and provide a few key updates regarding our business and our offering. Activity across geographies was strong in the first quarter with both new and existing merchants showing solid trading patterns. As expected, same-store sales growth came in well above historical trends. Volume growth with both larger and midsized merchants was a significant driver of that as was the quick ramp and strong performance from merchants that we onboarded in the back half of 2025. AOV increased as consumer activity remained strong, while merchants priced in some of the impact from the increased tariffs. We also saw the impact of FX tailwinds given currency volatility stemming from global economic factors, albeit slightly less than our expectations as of the Q4 earnings release.

We continue to reinvest our cash, aiming to drive growth in the quarter and plan to keep doing so moving forward, both organically and through strategic acquisitions. At the same time, we also returned excess cash to shareholders via our share buyback program. As of the end of Q1 2026, we have repurchased $131 million worth of stock out of a $200 million 2025 share repurchase plan.

Let me move on to an update on our business and offering. First, on our Q4 call, we provided an overview regarding the launch of Shopify Managed Markets version 2.0, the new iteration of our white label self-service merchant of record solution on Shopify. As I mentioned last quarter, the new Managed Markets offering is on track and both us and Shopify are pleased with the progress to date.

Over the past several months, we have worked with Shopify to expand the offering, and we continue to make progress towards making Managed Markets more widely available for merchants, including in additional countries such as Canada and the U.K. in the near term. We're also on track to bring a number of new features and enhancements to the platform over the next quarters. As we have mentioned in the past, we believe the trading volumes on Managed Markets will pick up steam in the back half of the year as we begin to realize the immense potential of this innovative new offering.

Second, we made further progress in Q1 on our duty drawback offering. As a reminder, this is an important value-added service designed to enable merchants to potentially reclaim import duties on goods that are exported outside their home base as well as reclaim certain tariffs paid on returned goods depending on the sale parameters. During the quarter, we added new markets in which we are now able to reclaim duties and taxes, and we extended the programs for drawbacks in some markets to allow duty reclaim also with economy shipping partners.

Next, both the number of merchants and volume of referrals expanded on borderfree.com in Q1. The share of merchant sales attributable to the borderfree.com channel is now over 6% for merchants that are utilizing the platform. Moreover, we began monetizing this offering and while still small, we are pleased to see the progress to date.

I also want to provide a quick update on our use and implementation of AI as both a lever for growth and a driver of service level enhancements and efficiencies across Global-E. We have implemented an AI-first approach across the organization from R&D, to data analysis, to ongoing operational monitoring and controls. By embedding AI deep within our R&D processes, we believe we have already been able to meaningfully increase our capacity to ship features without adding more resources, and we plan to continue reaping efficiency and velocity gains as we continue to move forward towards a more Agentic product development life cycle over the next few quarters.

Simply put, the huge advancements in the capabilities of Agentic and generative AI platforms, combined with our infrastructure and deep topical know-how, are enabling us to do much more and much quicker with less. We believe this acceleration does not come at the expense of the quality of our service to merchants and consumers. On the contrary, our internally developed LLM-based support tools are enabling us to provide fast, detailed and accurate answers to customers through our customer service chatbot. In parallel, through the development and deployment of proprietary LLM-based internal tools, we have already seen a meaningful reduction in the time it takes our teams to investigate and resolve tech support and merchant support tickets.

We're also using AI to help navigate an increasingly complex environment from a regulatory and compliance perspective as well as in terms of commerce flows and logistics. This increased complexity around duties and taxes or fulfillment, coupled with our unique scale, data and know-how, provide an opportunity for us to further solidify our differentiation in the market by providing a best-in-class coherent combination of tech and services to meet the evolving needs of our merchants.

Lastly, on AI. On the Q4 call, I spoke about the increase in traffic originating from AI-based chats. As we anticipated, this trend has continued. While still small in absolute volumes, as product discovery and referral traffic continues to expand within AI chats, we are beginning to see this as a potential incremental referral channel for our merchants. We are fortunate to work with some of the hottest and most forward-thinking brands on the planet. These are the types of brands that leverage AI in the globalization of their marketing efforts and position themselves well in a world of Agentic commerce referrals. And we are there to provide them with the best-in-class end-to-end service so that their hard-earned global shoppers will get a fully localized, convenient and intuitive online experience.

As we have previously discussed, we view these developments as incremental to our other growth opportunities with the potential to contribute to our competitive moat against both existing competition and potential new entrants. Our strong results and forward outlook and the activity in our pipeline further cement that in an increasingly complex global environment, our merchant of record and fulfillment services become even more valuable for merchants, coupled with our robust worldwide trading and compliance infrastructure, our vast and proprietary data assets and our unique know-how.

Finally, before I move on to some of the exciting new brands that have joined our platform in Q1, I want to spend a minute on the implications of the conflict with Iran. I'll start by saying that we are hopeful that the ceasefire will continue to hold and a peaceful resolution can be reached for the benefits of all parties involved.

In terms of the direct business impact, approximately 5% of our inbound GMV is to countries that have been directly impacted by the current conflict. And we saw a temporary and partial reduction in volumes to these countries in the second half of Q1. While this had a certain impact on our Q1 results, based on recent trends, demand volumes appear to have mostly recovered in the past few weeks.

In terms of the increased cost of fuel and how this is addressed within the fulfillment part of our P&L, we have mechanisms that allow us to pass through significant changes in pricing or surcharge costs, which we have already utilized to update fuel surcharges. We are monitoring the ongoing developments in the market and employ a balanced approach towards the situation, at times making strategic decisions to support our merchants in navigating these challenging times to the best of our abilities.

Let's move on to some of the exciting new brands that joined the platform and went live across our various geographies during Q1. In North America, we launched with prominent brands such as Gallery Dept., the Los Angeles-based art-Inspired streetwear label, Andie Swim, the fast-growing direct-to-consumer swimwear brand and Fembites, a women's wellness gummy supplement brand.

Q1 also saw the go-live of Fresh, the LVMH-owned premium skin care brand from New York, further extending the scope of our partnership with the LVMH Group of brands, which now includes more than 20 Live Maisons. We expanded our business also with the Richemont luxury group as we went live in Q1 with 2 more of their U.S.-based brands, G/FORE and Peter Millar, both offering luxury golfwear.

In Europe, we launched several leading French brands, Coperni, the Paris-based luxury house known for its futuristic womenswear and viral runway moments. Paraboot, the family-run handcrafted leather footwear maker, the menswear brand, Lafaurie Paris, and the online store of the Roland-Garros Grand Slam tennis tournament. We also launched with the TheDoubleF, the curated luxury designer fashion e-tailer and POEVE, the handcrafted women's footwear brand, both out of Italy and with capeesh, the Danish ski clothing brand.

In Germany, we launched with Perplex, the luxury-inspired streetwear label and with the new Audi Revolut Formula 1 team. In addition, during Q1, we began offering managed services for [indiscernible] EU and U.K. regional network. In the U.K., we also launched String Ting the London-based viral phone strap and charm brand and Quadrant, the motorsport lifestyle and streetwear brand by Lando Norris, the reigning Formula One World Champion.

In APAC, we launched with the first 2 brands out of the Tokyo-based brand Universal Music Japan as well as with Asian Portal, the online exporter of Japanese fishing gear and outdoor equipment. We also launched with the Singaporean fashion brand, Something to Hold; with Shanghai Tang, the Hong Kong-based luxury fashion brand; with Weber Workshops, the Taiwanese maker of high-end coffee grinders and tools; with Billy J, the women's clothing accessory retailer out of Australia; and with Hardkernel, the South Korean consumer tech company behind the popular ODROID single-board computers. And this is just a partial list as our professional services and onboarding teams have been very busy launching more and more brands onto our platform.

In addition to new merchant launches, Q1 also saw the expansion of our business with a number of our existing brands. One notable example would be ALO Yoga, with which we expanded into several additional markets that have previously been served by a local distributor, and also enabled for them our BOPIS or Buy Online Pickup In Store offering into Canada, the U.K. and several additional markets in Europe. We now service ALO in almost every country in our service footprint and are proud to be an important partner for them throughout their ongoing impressive international growth journey.

Other notable brands with which we expanded the scope of our activities during Q1 are FIGS, where we launched throughout Eastern Europe and expanded in Asia; Bandai Namco, where we opened up markets in the Middle East, Africa and Eastern Europe; Stella McCartney, where we expanded into more than a dozen additional markets; and Patou, another brand out of the LVMH Group, which expanded its list of markets with us to cover the rest of the world.

As we believe is evident from both our numbers and our business advancements, Q1 was a great start to 2026, which we expect to be yet another year of strong and durable growth and another year of steady progress along our multiyear strategic plans. As such, and as reflected in our updated full year guidance, we believe that throughout 2026, we will achieve and potentially even overachieve on the path towards our long-term targets, even when faced with potential macro headwinds from the ongoing tensions in the Middle East.

We feel good about the trends that we are seeing within the business and believe we are uniquely positioned to provide brands of all shapes and sizes with the end-to-end envelope of infrastructure and services they need to take full advantage of their true global direct-to-consumer potential.

I will now hand it over to Ofer to take us through the quarterly numbers in more depth and lay out our Q2 and updated 2026 full year guidance.

Thank you, Amir, and thanks, everyone, for joining us today for our earnings call. As Amir just highlighted, Q1 was another quarter of strong profitable growth for Global-E. We started the year in strong momentum with Q1 results above the Rule of 50 and continued executing against our strategic plan to deliver long-term high pace and profitable growth across the business.

Before I go into the details of the quarter, I'd like to remind everyone again that in addition to our GAAP results, I'll also be discussing certain non-GAAP results. Our GAAP financial results, along with the reconciliation between GAAP and non-GAAP results can be found in our earnings release issued today.

GMV in Q1 was $1.742 billion, up 40% year-over-year. Trading volumes were strong, driven by healthy consumption in most regions, aided by the benefit of FX tailwinds and the positive impact of recently launched merchants, which were slightly offset by certain disruption from the Iran war that impacted consumer demand in the Middle East and GCC regions and temporarily strengthened the U.S. dollar versus other currencies.

Based on current trends, despite lower FX tailwinds, we expect Q2 to be a solid quarter, supported by healthy consumer demand and successful large promotions by some of our top merchants. In Q1, we generated total revenue of $252.1 million, up 33% year-over-year. Service fee revenues for the quarter was $120.8 million and fulfillment services revenue for the quarter was $131.3 million.

Service fees take rate remained fairly stable at 6.9%, while fulfillment take rate was similar to last quarter at 7.5% and as expected, lower compared to the first quarter of 2025, given the shift of certain volumes to multi-local and our growth within verticals that are multi-local by nature.

Progressing through the income statement. Non-GAAP gross profit was $118.5 million, up 37% year-over-year, representing a non-GAAP gross margin of 47% compared to 45.4% in the same period last year. GAAP gross profit was $114.9 million, representing a margin of 45.6%.

Moving on to operational expenses. R&D expense in Q1, excluding stock-based compensation, was $28.5 million or 11.3% of revenue compared to $24.5 million or 12.9% of revenue in the same period last year. Q1 benefited both from leveraging our scale and the utilization of AI tools and agents that are driving efficiencies into the business. Despite the continued investment in the enhancement of our platform to further expand our offering and add value for our merchants, R&D, excluding stock-based compensation, increased by only 16% on a GMV base growing 40%. Total R&D spend in Q1 was $33 million.

As Amir discussed, we are continuing to invest in sales and marketing to drive our future growth. Sales and marketing expense, excluding Shopify-related amortization expenses, stock-based compensation and acquisition-related intangible amortization was $26.3 million or 10.4% of revenue compared to $23.3 million or 12.3% of revenue in the same period last year. Shopify warrant-related amortization expense was $530,000, and this amortization expense is now fully gone from the P&L moving forward.

Total sales and marketing expenses for the quarter were $34.4 million. General and administrative expenses, excluding stock-based compensation, acquisition-related contingent consideration, were $10.8 million or 4.3% of revenue compared to $8.3 million or 4.4% of revenue in the same period last year. Total G&A spend in Q1 was $14.5 million. Our bottom line continued to grow even faster than our top line.

Adjusted EBITDA for the quarter was $50.2 million, representing a 19.9% adjusted EBITDA margin, an increase of 59% from the $31.6 million or 16.6% margin in the same period last year. As we have discussed in the past, we aim to optimize the business to ultimately drive GMV and adjusted EBITDA growth, and we are very pleased with the levels of growth of trading volumes and bottom line dollars that we have been able to achieve in Q1.

Non-GAAP net profit for the quarter was $46.9 million compared to $32.4 million in the same period last year. Non-GAAP net profit per share was $0.27 on a fully diluted basis compared to $0.18 in the same period last year. GAAP net profit for the quarter was $30.4 million compared to a net loss of $17.9 million last year, and fully diluted GAAP EPS was $0.17.

Turning to the balance sheet and cash flow statement. We ended Q1 with $553 million in cash and cash equivalents, including short-term deposits and marketable securities. Free cash flow used in the quarter was $72.9 million, as expected, driven primarily by seasonal working capital. This compares with $72.6 million of free cash flow used in Q1 of 2025. As a reminder, we typically see an outflow of cash in the first quarter, driven by post-peak working capital dynamics.

Net cash used by operating activities was $72.6 million compared to $72.1 million used a year ago. As Amir mentioned, in Q1, we continued to execute on our share repurchase program. We repurchased close to $60 million in stock in the quarter and have now repurchased a total of 3.6 million shares for a total of $131 million. As of the end of Q1, we had $69 million of capacity remaining on our 2025 repurchase plan.

Moving to our financial outlook and guidance for Q2 and our updated outlook for the full year 2026. We continue to see 2026 as another year of very strong top and bottom line growth for Global-E. We have raised both the top and bottom line outlook for the year. For Q2 2026, we are expecting GMV to be in the range of $1.945 billion to $1.985 billion. At the midpoint of the range, this represents a growth rate of 35.2% versus Q2 of 2025.

We see strong GMV growth continuing in Q2 despite significantly less FX tailwinds compared to Q1, aided by successful large promotions of some of our top merchants in the quarter. We expect Q2 revenue to be in the range of $278.5 million to $285.5 million, representing a growth rate of 31.2% versus Q2 of 2025.

Lastly, for adjusted EBITDA, we are expecting a profit in the range of $55 million to $58 million or a 20% margin at the midpoint of the range.

For the full year of 2026, we now anticipate GMV to be in the range of $8.53 billion to $8.88 billion, representing an annual growth rate of 32.5% at the midpoint of the range. Based on current trends, we expect GMV growth to remain strong throughout the year.

As expected, Q1 same-store sales came in well above historical averages. We expect Q2 same-store sales to remain above historical ranges as well, although lower compared to Q1. Our guidance assumes that same-store sales growth rates will moderate to a more normalized level for the back half of 2026, closer to multiyear averages.

Revenue for the full year is now expected to be in the range of $1.22 billion to $1.28 billion, representing an acceleration of the growth rate compared to last year to 29.9% at the midpoint of the range.

Lastly, we expect adjusted EBITDA and adjusted EBITDA margins to continue expanding, supported by operational leverage. We now expect to achieve 2026 adjusted EBITDA in the range of $264.5 million to $289.5 million, representing a 39.5% growth rate at the midpoint and a 22.2% margin.

In conclusion, we are off to a strong start in 2026 and are looking forward to executing for the remainder of the year. Our pipeline of new logos is robust, and we have exciting new services that are generating interest across the e-commerce universe. We believe we are well positioned to deliver another year of results above the Rule of 50.

And with that, Amir, Nir, Alan and I are happy to answer questions you may have. Operator?

[Operator Instructions] And your first question comes from Billy Fitzsimmons of Piper Sandler.

As we think about Managed Markets 2.0, you expanded early access mode to Canada, the U.K. is on deck. I guess, first, how should we just think about the progression of that business to date relative to your initial expectations? Is the view still that we should see a more material ramp in the back half?

And then second, just in terms of the customer migrations and adoptions for 2.0, any specific merchant segments, either by customer size or vertical that are adopting faster than others?

Billy, it's Amir. Thanks for your question. Generally speaking, as I noted in the prepared remarks, both Shopify and us are very happy with the progress that we're seeing in Managed Markets, and it's progressing according to our plans. We see a gradual uptick in the number of adoptions and a good increase in the conversion of leads to adoption. We are waiting for the additional marketing support that is expected later in the year. And we are waiting also for, as you noted, the opening up of the additional markets, which again, should hopefully happen soon. And all in all, we remain optimistic about, as we indicated in the past, about Managed Markets starting to ramp up in a more meaningful way in the back half of the year and into next year.

In terms of specific verticals or segments of merchants, we're not seeing, I would say, anything too particular to note. As we expected, this is a very compelling offering for a very wide range of merchants of types and verticals, and that's part of why we are so excited by this new offering.

And your next question comes from Scott Berg of Needham.

Really nice quarter here. Lots of questions. I guess let's go with take rate. Take rate, I know, Ofer, you mentioned stable versus last quarter. My model actually has it up 0.1 for both lines, service and fulfillment. But certainly stabilizing a trend downward last year because of multi-local. I guess how are you thinking about take rate relative to multi-local this year? Will there be an incremental impact on take rates because of more customers using multi-local? Or is the range that we saw in Q1 a range that we should generally expect here for the balance of the year?

So as reflected from our guidance, we expect service fees -- sorry, take rates in general to be much more stable this year. In terms of fulfillment take rate, we expect a much more balanced mix in 2026. So while there may be a certain limited decline, it shouldn't be anything material. In terms of service fee take rates, they have been fairly stable for the last, I think, 6 quarters, around 6.8%, 6.9%. And we do expect service fees for the enterprise business to remain very close to these levels.

We do see a certain impact from Managed Markets moving to the V2, the migration of existing merchants because as we've mentioned in the past, there's a different P&L structure for the V2 merchants, where we recognize only our share of the revenue versus the entire service fee that was charged as it was in the previous model. However, the bottom line impact is very low as we don't have a revenue share in our OpEx line. So it's a different structure, which will have some impact on Managed Markets service fee take rate. But other than that, we expect also service fee take rate to be fairly stable.

Excellent. Understood. And then you all called out duty drawback a little bit. It sounds like you've had some initial success there and continue to roll out new markets. I guess any way to help us understand maybe the impact it had on the business in Q1 and how you're thinking about assumptions here in calendar '26? Or is the data still maybe too early around what customer adoption and usage has been like?

Scott, as you said, we do see increasing importance for duty reclaim and duty management in general as it's becoming more important to both our merchants and those shoppers. This year, we added a few markets that we are now able to reclaim duties and taxes within. We also extended the programs of drawback in some markets to allow reclaim with more carriers, including some standard carriers.

As for the U.S.A. import duty drawback, we have seen very strong interest from our merchants about it. However, it takes time for the merchants to gather the relevant data from their import into the U.S.A., their wholesale import into the U.S.A. to gather the relevant data to provide it to us and for us to reconcile it with the import documents in order to manage the claim process. So this takes slightly longer than expected. However, we already initiated the process for a few of the early adopters, and we have quite a lot in the pipeline. So yes, we do expect it to contribute more. It will start to be visible only later in the year.

And your next question comes from Andrew Bauch of BMO Capital Markets.

Nice set of results here. Nir, I want to touch on borderfree.com. It sounds like the number of merchants and volume referrals expanded in the quarter. How are you thinking about that trend line as we progress through the remainder of the year? I know you said the 6% for merchants that are using the platform, but I'm just trying to get a sense of what you think the upper bound is there on merchants within your base that could potentially leverage that solution?

Sure. Thanks for the questions. And Andrew, we are very excited on the progress we've made with borderfree.com. If you recall, just, I think, a couple of quarters ago, 3 quarters ago, we mentioned we are at 4%. Now we crossed 6% contribution from Borderfree to participating brands. We believe we haven't hit the maximum yet, and we still have way to grow. We have initiatives around that.

And as for adoption for many more merchants to join it, I think that it's a chicken and an egg because once you have much more success for existing merchants, it's becoming very interesting at 6% and growing towards the 10% of their volume over time, many more would adopt it because merchants are looking for a cost-effective way to promote their brand around the world, especially given all the changes with the LLMs taking a share of the traffic and no one actually knows exactly how to monetize on that versus the usual channels of search and social networks that are becoming more expensive to get attribution from.

So all in all, we see great excitement. We have additional initiatives in the backlog to grow it, and we are very optimistic about its contribution to our brands and also over time, to our take rates as we started to charge for the service just from the beginning of this year.

Great. And then on my follow-up, I was wondering, the strength in gross margin in the quarter was particularly noticeable. I know you had some comps that were more favorable in there, and that likely continues into 2Q. But can you just unpack the gross margin strength that you saw in the quarter and how you kind of expect that to trend through the remainder of the year?

Sure. So I think that we have seen some positive mix impact in Q1 that contributed to gross margin. And in addition, the slightly higher service fee take rate also had a positive contribution. Going forward, I think we do not expect any sort of incremental gross margins. It might fluctuate a bit, but we believe that it will be close to the levels that we have seen in the previous quarters.

And your next question comes from Mark Zgutowicz of Benchmark.

Just a couple from me. And certainly an impressive list of global enterprise launches in 1Q that you outlined in your press release. I'm just curious, as you look across North America, Europe and APAC, where you're most optimistic and where you can maybe talk about tangible pipeline build into the second half as well as into next year?

And then a similar question on existing customer expansion. You highlighted a few tangibles as well in the press release. I'm just curious how much of your same-store sales growth today and over the next 12 months will come from just general regional or global expansion versus product-driven? And if there's any specific products that you might see leading here either today or in the near future?

Mark, it's Amir. So Yes, we're definitely excited by the growth that we have seen across the different geographies, and we've seen growth in both the new merchants that have gone live in the back half of 2025 and are trading very well. And as we indicated in our remarks, also strong same-store sales that are driving momentum into the trading of our existing brands, and that is true pretty much across geographies in U.S., in Europe and in APAC. And we continue to see this also in Q2.

It is important to note that this elevated kind of same-store sales, we actually have seen it already kicking in, in the back half of 2025. So going forward, for the back half of '26, we are assuming in our guidance kind of a normalization of the same-store sales back to historical levels. But all in all, the strong trade and performance is happening all around as is also reflected in our pipeline as more and more merchants want to start using our services to optimize the way they sell globally.

In terms of expansion with existing merchants, yes, we expect to continue and see this trend for, I would say, 3 main vectors. One is, especially with larger merchants, we sometimes start working with them on a subset of markets and then later on, either as part of the original gradual rollout plan or down the line with them just seeing the success and efficiency of working through Global-E, they decide to add additional markets. So that's kind of an embedded land-and-expand motion.

And we are also seeing -- as we noted also on this call and on previous calls, we're also seeing brand groups kind of adding more and more brands to the roster and just generally kind of word of mouth between associated brands. And on top of that, we keep adding additional value-added services. We mentioned borderfree.com on this call. We mentioned duty drawback. We are planning additional value-added services. All of these will contribute over the long term to increase the scope of our business with existing merchants.

And our next question comes from William Nance of Goldman Sachs.

I wanted to maybe follow up on some of the prior points you've made on the strength in same-store sales because it sounds like there are a couple of different things that are driving that between better underlying same-store sales, outperformance of some of the merchants launched last year, FX tailwinds in 1Q and to a lesser degree throughout the year and then obviously, some of the disruptions in the Middle East maybe going the other direction.

So wondering if you could maybe take apart and help us isolate like how much of this is truly just better macro and same-store sales versus some of the implementations of larger merchants last year that seemed to outperform quite nicely.

Will, it's Nir. So if we are trying to break out the same-store sales for the key contributors, I think by far, we see better macro trading for most of our merchants. So if you look on a broad-based basis across our 1,500 Enterprise Solution clients, the growth rate based versus last year on the same stores is actually much better than our historical averages. So this is by far the single largest contributor for the same-store sales.

The second is indeed, as you indicated, our back half of last year launches that were super successful and those merchants are trading super well into 2026, above our expectation and actually contributing to our overall growth in net dollar retention in Q1.

Got it. That's helpful. And if I could follow up just on a different topic. It was nice to see some of the expansions with existing merchants this quarter, new markets, things like taking over for some of the local distributors in certain markets. I was wondering if you could provide some high-level thoughts on what the embedded opportunity is in your existing base of customers.

And as we think about the strong net dollar expansion that you guys tend to see from year-to-year, how do you think about the runway for things like adding new corridors and value-added services within the existing merchant base?

Thank you, Will. So generally speaking, we continue to see opportunities for, we call it, land and expand. Some of them are clients that have been with us for a few years. So land is a bit weird, but expand is still right. We just had it with a very large merchant of ours that has been with us for now almost 5 years on the platform and just recently ended up distribution agreements in several markets, moving those to Global-E to be supported from the global website. So now e-commerce was taken from the local distribution into the home base of the merchant, giving us a significant increase with that brand.

It's a behavior we've seen repeatedly happening with others as well, not at that scale, but we have seen it happening with others as well. And we do see still potential to have it with other merchants. So all in all, on that, we do believe there's still upside that will support same-store sales growth in the coming quarters and years.

In terms of new products, there was a question earlier about Borderfree. We do see an increased adoption of Borderfree. We started to see some contribution, some dollar contribution coming into our top line also from Borderfree. We expect it to continue to grow, still at small scale, but we do believe that it will be adopted much more over time.

We spoke also in previous questions about duty drawback, where despite the huge service that it gives the client, it also generates additional revenue and fees for Global-E, and we believe that the adoption there will continue to grow as the complexity of trading global tariffs becoming even harder. Europe, just as a reminder, is moving -- European Union, EU, is removing the de minimis, the same as the U.S. has done last year.

So as of July, which is just around the corner, duties would apply. So managing it correctly and the reclaim would become even stronger as an offering. The duty reclaim in the U.S. despite the actual adoption is slightly slower than expected in terms of getting the merchants to be able to deliver the relevant data for the reclaim. The opportunity is high, and we believe it will contribute, again, incrementally into our back half of the year and for sure into 2027.

So a lot of things in motion, and we are quite optimistic about the growth ahead of us with existing merchants and of course, the opportunity to continue and win many more brands in the open market.

And your next question comes from Craig Maurer of FT Partners.

Just a quick modeling question. Can you discuss what degree of FX you have embedded in the guide considering that we saw some euro and British pound rates recovering quarter-to-date. So just what you're building in?

Sure. Thank you for that. Basically, we always sort of -- when we model, we take the last known spot rate. So you should look at sort of the last week spot rate. I think that the major currencies have sort of bounced back versus the USD in recent weeks. And I think that FX rates were quite stable in the last 10 to 14 days.

And basically, since we cannot guess what FX rates will be at, we use the latest known spot rates, and that is embedded in our guidance. And as a result of that, we expect to see lower FX tailwinds in Q2 compared to Q1, which sort of was a peak quarter in that sense and very low FX tailwinds for the back half of the year.

And your next question comes from Matt Bullock of Bank of America.

I wanted to ask about the guidance because clearly, the underlying strength of the business is strong, really nice guidance increase for the full year. As I look at 1Q results, obviously, there's some noise in there from the conflict in the Middle East, maybe some softer-than-expected FX tailwinds in the quarter.

So I was hoping you could put a finer point on the impact of the Middle East conflict and the slightly softer FX tailwinds in 1Q. And then help us think about what's embedded in the full year guide regarding the Middle East conflict.

Yes. So thank you for the question. In terms of Q1, I think we estimate the impact of the conflict in the Middle East -- on Middle East markets and GCC markets, probably including sort of the FX fluctuation at just above 1%. That's the impact we see in Q1. Since then, it's mostly recovered. At least for now, it looks fairly stable and the trading is almost at the previous levels. So at least for now, we don't see any additional impact in Q2.

In terms of -- regardless of the conflict, when we look at Q1, we assume that FX tailwinds contributed probably 3% to 3.5%. And going forward, in terms of our guidance, we haven't sort of assumed any improvement or any crisis, big crisis in terms of the conflict in the Middle East. And as I mentioned, in terms of FX rates, we assume that we will continue to see the current spot rate.

And your next question comes from Samad Samana of Jefferies.

So maybe first, just in terms of the pipeline, you guys have mentioned a couple of times that it's fairly robust. Can you help us think through what the composition of that looks like versus this time last year? Are there larger chunkier potential candidates in there versus just kind of more breadth and depth?

And then the second question related to that is, how are you seeing pipeline conversion? Any change given businesses are navigating a lot of different macro challenges. What have you seen on pipeline conversion?

Samad, it's Nir. Our new merchant launches for 2026 are progressing in line or even slightly above our plan as we had a very busy Q1 of onboarding multiple merchants, some of them Amir named. And we have exciting brands lined up for Q2 as well. In terms of the funnel itself, we are happy with what we see with both the level of engagement and the number of quality leads that are coming in.

And in terms of your questions about mix, we see 2026 looking closer to what we had in 2025 in terms of the average size of merchants, which is much more distributed across midsized merchants and not a few giants. But the pipeline itself is -- part of it -- is less concentrated than we have in 2024, much more similar to 2025. This is an advantage both from the margin perspective of new merchants and their contribution and also lower risk from delays in the onboarding process that can actually affect our guidance in the coming quarters.

All in all, so...

Maybe just -- go ahead, sorry?

So all in, we aim to have another record year of launches based on the current funnel. We are also very happy with the initial success of our AI prospecting tool. We see much better discovery of new potential brands for Global-E. And as we build the capabilities and the processes to convert those into deals, we believe there is an upside in the funnel in the coming quarters.

Great. Then maybe just one follow-up. In terms of the monetization of Borderfree, Ofer, have you seen -- what kind of cohort behavior looks like out of the customers now that you're monetizing it is retention holding? Are you seeing volumes pick up? Just help us understand how the impact of turning that monetization on has changed volumes on Borderfree?

So thank you, Samad. As for Borderfree monetization, I think that we've previously mentioned a few times that while we started to monetize, we didn't expect a significant contribution this year. We are seeing it growing nicely, but the numbers are still not very significant. At the end of the day, at the beginning, we are very careful with the attribution, and we want the merchants to be happy and to see that this is actually driving business their way. So the momentum is positive and the trends are positive, but we don't expect it to contribute materially in 2026.

I think one thing to note on the positives that you asked is that despite starting to charge, we haven't seen any churn of the platform that is higher than previous quarters. So merchants are happy with the service they get for the fee that is now being charged. We haven't seen any negative dynamics there.

And your next question comes from Patrick Walravens of Citizens.

Congratulations, you guys. Amir, or maybe Nir, I was hoping you could help us, this is a question I get from investors, understand a little bit the differentiation between where Managed Markets starts and stops versus what Shopify is doing natively. And where that comes from is on this last earnings call, Shopify talked about international, and they said it's -- I'm sure you heard this comment about an example of massive but almost invisible complexity. And they said, we're consistently rolling out new updates and products to grow our international footprint.

In Q1, we quietly shipped updates that individually may not make the headlines, but together are steadily making Shopify more native to more places and then they go on and they give examples of things that they were rolling out natively. So if you could just help us understand sort of the differentiation of the dividing line, that would be really helpful.

Sure. Thanks, Pat. It's Amir. Generally, first, I would say we fully agree with Shopify. We think every merchant should think about international basically from the get-go. And I think, first and foremost, the fact that Shopify themselves are putting international on a pedestal is great for the market in general, and it drives interest and focus from merchants.

I think the divide is actually pretty clear. Shopify and, by the way, other platforms as well have been developing and adding specific features that have to do with international like multicurrency, like some alternative payments, et cetera, to their kind of self-service parts of the platform. And that is important. It is important for merchants that just want to start and dip their toe in the international waters and may want to enable one or even several of these features on their website. And that's on the Shopify -- in the Shopify world, that is what is called Shopify Markets. And we believe they will keep on developing these features.

But at some point, when the merchant wants to get serious about international, and it starts to be a meaningful part of their business and strategy going forward, that's when they need to switch to Managed Markets basically because as you noted and as Shopify noted, correctly on their call as well, there is a huge complexity when it comes to international when you factor in all the different elements. And that's where kind of the merchant of record approach of Managed Markets and later on, also as they grow of our enterprise offering kicks into play because there's just -- it's not feasible for merchants to do it by themselves.

There's a lot of kind of white gloves element to its, service elements to it and know-how that only comes from having the proprietary data asset and years and years of experience and know-how that we have that enables us to do it in an optimized manner. So that's kind of the divide, and we think all 3 are going to continue to develop in parallel.

And your next question comes from Brian Peterson of Raymond James.

I'll keep it to one. You mentioned some really successful promotional activity from some of your merchants. I'm curious what you're seeing broadly on the pricing environment? I know that's been some debate and maybe how we should be thinking about that as energy prices rise. Just curious any context there.

Brian, it's Nir. First, we do see even a stronger reaction of consumers to promotional activity. We've seen it through a few of our large brands going into promotion and the effect it had on the reaction of consumers and the increase in sales, which was even stronger than what we've seen in previous quarters and years. So this is one thing that we've seen.

The other that we have seen is that especially prices into the U.S. with the rationalization of tariffs and the Supreme Court ruling, some of our merchants actually took a step back on the price increases into the U.S., and we were able to reduce some of it back. So this was another happy note that we've seen.

We don't see merchants running towards price increases as merchants are much more concerned now with gaining the traffic and preserving unit economics, less increasing of profitability. There are some challenges to it, especially given the fuel prices that affect transportation in cross-border. But for now, we see most merchants standing still as they expect and hope that it's only a periodic impact of the crisis in the Middle East, and this we hope to rationalize soon.

And lastly, your question comes from James Faucette of Morgan Stanley.

I wanted to just quickly circle back -- just one question for me. I wanted to quickly circle back to the de minimis exemption in the EU. And with that being implemented from non-EU countries in 2026 and just wondering how we should think about level setting the impact? Should we expect similar dynamics to what we saw in the U.S. where parcel volumes or corridors were pressured, but pricing AOV moved higher? And is that enough to impact the GMV, so it's largely protected? And just what kind of mitigation and impact on your business? Just trying to get a better handle on that issue.

Sure. Then -- it's Nir, thank you for the question, James. What we expect to see is not the same effect that we had in the U.S. as we expect the average increase on our average merchant order value to be significantly lower than the removal of the de minimis in the U.S.. Just to set the records on it, the U.S. de minimis rate was at USD 800 versus EUR 150 in -- which are approximately around USD 180. So less orders are affected.

There is a significant chunk that anyway is being taxed today already. And for those that are affected, the impact of the duties that are going to be levied as of July 2026, it's significantly lower as well. We estimate that for an average merchant at around 5% versus 15%, 20% to 25% that we have seen in the U.S. So to embed it into the price or to absorb it by the merchant is something that we believe would be the strategy that most merchants would follow. So we don't expect much of an impact on the trading.

Thank you. And there are no further questions at this time. I'd now like to turn the call back over to Alan Katz for closing comments.

Great. Thank you, everyone, for joining the call today. We look forward to speaking with many of you during the quarter and providing our next update on our Q2 call in August. Hope everyone has a great day.

Ladies and gentlemen, this concludes today's conference. We thank you for participating and ask that you please disconnect your lines.

Good morning. Welcome to the Global-E Fourth Quarter and Full Year 2025 Earnings Call. This call is being simultaneously webcast on the company's website in the Investors section under News and Events.

For opening remarks and introductions, I will now turn the call over to Alan Katz, Global-E's Head of Investor Relations. Please go ahead.

Thank you, and good morning, everyone. With me on the call today are Amir Schlachet, Co-Founder and Chief Executive Officer; Ofer Koren, Chief Financial Officer; and Nir Debbi, Co-Founder and President. Amir will begin with a review of the business results for the fourth quarter and full year of 2025. Ofer will then review the financial results for the fourth quarter and full year in more detail, followed by the company's outlook for 2026. We'll then open the call for questions.

Before I read the forward-looking statements, I'll note that we have posted an Excel-based metrics file on our IR website. This provides historical data for both financial information and KPIs that may be helpful as investors are researching the company. Please feel free to let me know if you have any feedback on this document.

Moving on, certain statements we make today may constitute forward-looking statements and information within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including, without limitation, statements regarding our future results of operations and financial position, growth strategy and plans and objectives of management for future operations, including onboarding new merchants, expanding our offerings and introducing and integrating new solutions are forward-looking statements. These forward-looking statements reflect our current views with respect to future events and are not a guarantee of future performance. Actual outcomes may differ materially from the information contained in the forward-looking statements as a result of a number of factors, including those set forth in the section titled Risk Factors in our annual report on Form 20-F filed with the SEC on March 27, 2025, and other documents subsequently filed with or furnished to the SEC.

These statements reflect management's current expectations regarding future events and operating performance and speak only as of the date of this call. You should not put undue reliance on any forward-looking statements. Except as required by applicable law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. Please refer to our press release issued today, February 18, 2026, for additional information.

In addition, certain metrics we will discuss today are non-GAAP metrics. The presentation of this financial information is not intended to be considered in isolation from as a substitute for or superior to the financial information prepared and presented in accordance with GAAP. We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe these measures provide dutiful information about operating results, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making. For more information on these non-GAAP financial measures, please see the reconciliation tables provided in our press release issued today.

Throughout this call, we will provide a number of key performance indicators used by our management and often used by competitors in our industry. These and other KPIs are discussed in more detail in our press release issued today.

I will now turn the call over to Amir, our Co-Founder and CEO. Amir, please go ahead.

Thanks, Alan, and welcome, everyone, to our fourth quarter and full year 2025 earnings call. 2025 was another record-breaking year for Global-E, in which we surpassed our guidance both for the fourth quarter and on an annual level across all parameters, from top line revenue down to adjusted EBITDA. 2025 was a very successful first year of a multiyear strategic plan, which we laid in front of you at our Investor Day in March. As we continue to execute on our strategy, and further solidify our leadership position in the Global e-commerce enablement space.

We believe that our outstanding results in 2025. Coupled with the guidance we are providing today for 2026 showing acceleration in revenues growth from 27.8% in 2025 to close to 30% in 2026. In parallel to significant bottom line margin expansion driving our adjusted EBITDA margin to 21.9% are all a testament to the durability of our business model and to our confidence in our ability to uphold our long-term strategic goals. Furthermore, as we look beyond 2026 to the subsequent years of our multiyear strategic plan, given the enormous opportunity that lies ahead of us with a massive TAM that is still mostly greenfield and the increase in demand for our services due to the growing complexity in the global tariff landscape, we believe that our business momentum, our market and product leadership position and our various business development vectors will enable us to continue and deliver against our multiyear financial targets in the years to come across all parameters. In fact, given the strong ending to 2025 and the forward-looking outlook that we are laying out today, we believe we are slightly ahead of our multiyear plan with lots of room for growth ahead of us.

Back to last quarter's results. Our merchants had a very strong holiday sales period, including the Black Friday and Cyber Monday weekend, and we achieved our first ever $1 billion GMV month in November of 2025. When I think about the fact that our total annual GMV for 2020, just 5 years ago, was $774 million, transacting over $1 billion in a single month is quite an achievement. It is attributed to the tireless efforts and meticulous execution of all our amazing team members here at Global-E.

Looking at the full quarter, Q4 was our strongest quarter ever and came in well above our guidance ranges on all metrics. We finished Q4 with a record $2.36 billion in GMV with GMV growth accelerating to over 37% year-on-year. Revenue growth accelerated as well to 28% year-on-year, totaling $337 million in the quarter. In terms of profitability, our non-GAAP gross profit margin for Q4 was 46.8%, up 80 basis points from the same quarter of last year. And our Q4 adjusted EBITDA was $87.2 million, up 53% year-on-year for a 25.9% margin and almost 420 basis points increase compared to the same quarter last year.

In terms of the full year, 2025 was first and foremost, another year of fast growth. GMV for the year came in at approximately $6.57 billion, up 35% with revenues for the full year at $962 million, up 28%. And with adjusted EBITDA at $198.5 million, representing a 41% growth rate and a 20.6% margin for the full year. Our strong profitability growth was driven by the strong top line growth and operational leverage, partly as a result of AI deployment across different functions and processes within Global-E, coupled with our commitment to and track record at all, cost control and utilization of efficiencies of scale throughout the various parts of our business model. 2025 was also our first full year of GAAP profitability with GAAP EPS of $0.39. This is another incredible milestone for us as a company, and we expect to remain profitable in future years as well.

We continue to be a highly cash-generative business. We are reinvesting this cash to drive growth both organically and through strategic acquisitions as well as returning excess cash to shareholders via our share buyback program, as part of which we have already completed $72 million in share repurchases within Q4 of 2025.

Moving on and before I go through our recent merchant launches, I would like to provide you with a few key updates regarding our business and our offering. First, we are seeing good initial traction with the launch of Shopify Managed Markets Version 2.0, the new iteration of our white label self-service merchant of record solution on Shopify. With this exciting new build, Managed Markets is now fully integrated in Shopify payments, enabling much more harmonization between global and domestic financial and operational flows, along with faster payouts enhanced control over global product availability and compliance and more.

The product is working as expected, and both us and Shopify are pleased with the progress to date. I'm also happy to say that we are working with Shopify to expand the offering to additional countries in the coming quarters as well as on many exciting new features and enhancements. With the 2.0 build out there and starting to gain traction, we believe that trading volumes on this new and innovative offering will pick up throughout the year.

Second, on our Q3 call, I discussed our duty drawback offering, an important value-added service designed to enable merchants to potentially reclaim import duties on goods that are exported outside their home base as well as reclaim certain tariffs paid on return goods, depending on the sales parameters.

With the rapidly changing tariff environment in the U.S. and Europe as well as in other areas of the world, we are now doubling down on this offering, which provides crucial pricing and profitability advantages for our merchants. Last quarter, we got the permit to offer duty drawback to our U.S.-based merchants for goods that are exported out of the U.S. to international customers, further supporting them in optimizing their cost of trade in times of change. This attractive new offering is now made available for all eligible U.S.-based merchants.

During the fourth quarter, we continued to make good progress also on our Borderfree.com offering. We saw further growth in shopper sign-ups as well as a significant increase to the share of merchant sales attributable to the borderfree.com channel, which stands now at over 6% for merchants that are utilizing Borderfree.com.

Lastly, as discussed last quarter, we continue to view AI as a meaningful lever for growth, service level enhancements and efficiencies across our business. There continues to be a lot of focus across the organization on identifying and deploying use cases for AI-driven platform enhancements, restructuring some of our services and building additional ones to provide faster, better and more efficient services for the benefit of our merchants. Overall, given our unique merchant of record business model that combines trade compliance solutions and licenses, a unique data assets, robust global payments infrastructure, physical fulfillment frameworks and post purchase services, all at scale, we view AI as a very positive factor for our business and is a driver of durable value creation over time.

Let me provide you with a few examples on how we are already integrating AI into our operating model. How it's beginning to influence our sales and merchant acquisition efforts and what we are seeing as agentic commerce continues to emerge. Internally, we are leveraging AI across the organization to drive efficiencies and optimize the impact of our resources. We're seeing faster turnaround times in R&D with entire features and in some cases, even entire subsystems already designed, developed, tested and deployed through vilcoting, speeding up time to market for new features and enhancing the efficiency of our R&D. These efficiencies are already evident in our numbers as 2025 saw around 70 basis points of reduction in our R&D spend as a percentage of revenues.

We plan to continue on this path and as such, intend for all our massive growth in activity planned for 2026 to be carried out by the existing R&D team without any meaningful increase in headcount.

LLM based tools are also helping us day-in and day-out to speed up and automate daily tasks as well as to organize, update and deploy know-how and business information across different departments in the organization, like was never possible before. A good example of this would be our internally developed and highly successful customer service chatbot. For more than 2 years now, this chatbot has been handling larger and larger portions of our incoming customer inquiries in near real time to the satisfaction of the end customers and without a need for human escalation.

We are also relying on AI in our newly launched full site localization offering. This in-house developed LLM based value-added service allows merchants to easily and seamlessly translate the entire content of the website into different languages, including language and pricing embedded onto graphic content, while ensuring full coherency across the entire customer journey throughout the browsing, checkout and post-purchase phase. We are just job launching the first 2 merchants on this new service and believe more will join in the coming quarters.

Another area in which we are increasingly deploying AI-based capabilities is around product classification and restrictions management. Our proprietary LLM Phase 2 can now classify large product catalogs, assigning the correct customs to products faster. We've built in iterative learning feedback loops, achieving constantly growing levels of accuracy. Such improved processes across R&D and G&A should help us to manage and optimize spend, which in turn would contribute to the adjusted EBITDA margin expansion we expect to see through 2028.

We are also applying AI to significantly enhance our sales efforts, and I believe this is a particularly compelling use case. As a reminder, our consultative sales approach requires an understanding of merchant-specific value drivers, product nuances and geographic priorities among other things. In order to deliver the conversion improvements we are known for. Until recently, each prospect opportunity required expert research, qualification and enrichment by our BD team before any reach out is made by a salesperson.

Seeking to greatly expedite this process, during the fourth quarter, our internal innovations team developed and refined a proprietary agent built in-house from the ground up. It uses AI and a broad set of data sources and signals to support these efforts. Based on a large set of factors such as site traffic, vertical, product mix, average order value, current Global e-commerce postured more. The system is able to identify these prospect merchants and qualify opportunities with immediate high confidence value.

With the system operating at scale, we are now able to fill the top of the sales funnel and a combination of speed and quality that was unimaginable prior to the AI revolution. As such, we are already seeing a meaningful increase in the number of demos run per month, which is expected to rise even further after we feel the next evolution of the system, which the team is already working on. This next iteration will add an AI agent that will automate the initial rear process with a highly tailored and customers approach. While still early, we're encouraged by the initial results and excited about the potential impact on our new merchant acquisition pipeline.

Lastly, on AI. In terms of the e-commerce market dynamics, we are seeing a steep increase in traffic originating from AI-based chats, albeit from a low base. We expect to see AI-based chats continuing to grow over time as a discovery channel for our brands, and we are working through our various e-commerce platform integrations to provide seamless support for our merchants' global discovery efforts through this increasingly important channel. We have also made sure that through our integrations to the different e-commerce platforms, we are geared to support agentic commerce transactions, utilizing our platform capabilities behind the scenes, and have already seen a small number of transactions done utilizing these capabilities. The same holds for the newly released UCP or universal Commerce protocol co-created by our partners at Shopify together with Google. We view all these developments as additive to our opportunity set, supporting our merchants trading through more D2C channels every year around the world.

As merchants look to extend agentic workflows into cross-border commerce, the underlying complexity of their global transactions increases materially, making our merchant of record services ever more valuable for.

Beside these many exciting developments, in Q4, we also saw many new brands joining the platform and going live across all geographies. In North America, we launched with prominent brands such as Nadine Merabi, Laura Geller, Popsockets and Parsel. In Europe, we launched all 3 iconic brands of the French SMCP Group, Sandro, Maje and Claudie

Pierlot, as well as other leading french brands such as Maison Alaïa from Richemont Group, and Jerome Dacus. We launched Stella McCartney and Amina Lady in Italy, Food Art, Dunhill and Graff in the U.K., multiple Scandinavian brands such as from Denmark, softwood from Sweden and Fiegen from Norway. And also went live with Pusa, the largest maker of 3D printers in Europe, which is based in the Czech Republic.

In APAC too, we launched with many brands during the quarter, including Tutor, a seller of high-performance e-bikes out of Hong Kong, Genco from Singapore, and source known from South Korea, and Port from Australia. We also went live with multiple Japanese brands, such as Rainy, Dunton and Sanyo probably best known for its Hello Kitty character. Besides new merchant launches, Q4 also saw the expansion of our business with a number of brands, including Logitech, became the first to launch on a new integration with the TikTok Shop marketplace. Zimmerman, the iconic Australian high-end women's fashion brand, which now uses Global-E also into the EU and the U.S. And Karl Longerfield, Pokemon, Toner, and Martin all of which added support for additional lanes during the quarter.

One of the main topics which were and continue to be top of mind for all merchants is the issue of global tariffs and the challenges posed by them. In 2025, we have witnessed tremendous changes in the global tariff landscape, mainly driven by changes in the U.S. tariffs and changes to personal import de minimis. As expected, this created some pressure on trading volumes in the short term, especially with regards to trading into the U.S. However, as we anticipated, this had a positive effect on our pipeline and subsequently, on our growth in the midterm as reflected in our Q4 2025 growth figures and in our strong outlook into 2026.

As the tariff landscape is expected to remain dynamic, most notably with the EU de minimis removal and tariff changes, we believe our platform, especially with regards to its merchant of record trade compliance and optimization capabilities is making our offering even more critical for merchants into the future.

Ofer will go through our detailed results and our financial outlook for 2026 in a moment. But before that, as we wrap up 2025. I do want to take a minute to acknowledge the tremendous performance from our team despite the challenges and uncertainties in the global consumer markets that we all face throughout 2024. We believe this truly speaks to the resiliency of our model. Our performance over the past 12 months has proven once again that our business brings incredible value to our merchants and that we have a huge opportunity ahead of us.

I will now hand it over to Ofer to take us through the quarterly numbers in more depth and lay out our Q1 and 2026 full year guidance.

Thank you, Amir, and thanks, everyone, for joining us today for our earnings call. As Amir just highlighted, we achieved another quarter of strong profitable growth in Global-E and ended the year at or above the high end of our guidance across all key metrics. Our strong top line and bottom line performance drove record free cash flows and Q4 continued to perform well above the Rule of 40.

We are reiterating the multiyear targets presented at our Investor Day early in 2025, and we believe our strong 2025 results, along with the 2026 guidance I will discuss shortly, clearly indicate that we are on track in executing our strategy and achieving our high growth and increased profitability, multiyear targets.

Before I go into the details of the quarter, I'd like to remind everyone again that in addition to our GAAP results, I'll also be discussing certain non-GAAP results. Our GAAP financial results, along with the reconciliation between GAAP and non-GAAP results can be found in our earnings release issued today.

Looking at the full year of 2025, it was another year of strong growth for us, driven by both new merchant launches and existing merchant relationships. GMV and revenue grew 35% and 28% year-on-year, respectively. Non-GAAP gross profit also grew at 28%, reflecting a non-GAAP gross margin of 46.3% for the year. Adjusted EBITDA grew by 41% to $198.5 million, reaching an adjusted EBITDA margin of 20.6% on an annual basis. Furthermore, 2025 was another record year of free cash flow generation, which amounted to $281 million, reflecting a free cash flow margin of 29%.

Throughout 2025, merchants operating on our platforms continue to trust us and to grow with us. As reflected in the annual NDR rate of 122% and DDR rate of 96%. Drilling down into Q4, we delivered another quarter of rapid growth and robust cash generation. GMV growth accelerated during the quarter, reaching $2.36 billion of GMV, an increase of 38% year-over-year. This performance was driven by strong consumer demand which, together with some favorable FX tailwinds supported strong same-store sales performance. Growth was further boosted by strong trading volumes of new merchants that launched during 2025.

In Q4, we generated total revenue of $337 million, up 28% year-over-year. Service fee revenue was $160.9 million, up 37%, and fulfillment services revenue was up 21% to $175.7 million. Service fee take rate was 6.82%, just about flat compared with both last quarter and Q4 of 2024, as expected. Fulfillment take rate was 7.44%, slightly lower than expected, driven by higher-than-expected average order value, which contributed to the strong GMV.

Moving down the P&L. Q4 non-GAAP gross profit was $157.5 million, up 30% year-over-year, representing a gross margin of 46.8% compared to 46% in the same period last year. GAAP gross profit was $154.8 million, representing a margin of 46%.

Moving on to operational expenses. In Q4, we continued to invest in the enhancement of our platform and in the expansion of our offerings and services while focusing on driving efficiencies. R&D expense in Q4, excluding stock-based compensation, was $28.5 million or 8.5% of revenue compared to $24.1 million or 9.2% of revenue in the same period last year. Total R&D spend in Q4 was $33.1 million.

We also continue to invest in sales and marketing to support future growth. Sales and marketing expense, excluding Shopify-related amortization expenses, stock-based compensation and acquisition-related tangible -- intangible amortization was $31.7 million or 9.4% of revenue compared to $29.8 million or 11.3% of revenue in the same period last year. Q4 sales and marketing expenses already reflect the updated 3P Shopify revenue share.

Shopify warrant-related amortization expense was $8 million. This amortization expense should be fully gone from the P&L in January 2026. Total sales and marketing expenses for the quarter were $43.8 million.

General and administrative expenses, excluding stock-based compensation and acquisition-related contingent consideration, was $10.8 million or 3.2% of the revenue compared to $10.7 million or 4.1% of the revenue in the same period last year. Total G&A spend in Q4 was $14.7 million.

Adjusted EBITDA for the quarter was $87.2 million, representing a 25.9% adjusted EBITDA margin, an increase of 53% from $51.7 million or 21.7% margin in the same period last year. As I will discuss in a few minutes, when we go through our 2026 guidance metrics, we are well positioned to see continued adjusted EBITDA margin expansion in 2026 in accordance with our long-term plan.

As Amir noted, in 2025, we also turned GAAP profitable for the full year, driven by a rapid growth and the significant decrease in the Shopify warrant-related amortization expense. Net profit for the quarter was $62.5 million compared to a net profit of $1.5 million last year and GAAP EPS was $0.35. Starting this quarter, we are also presenting a new non-GAAP net profit metric as can be found in our earnings release. Non-GAAP net profit for the quarter was $85.8 million compared to $52.9 million in the same period last year. Non-GAAP net profit per share was $0.49 on a fully diluted basis compared to $0.30 in the same period last year.

Switching gears and turning to the balance sheet and cash flow statement. We ended 2025 with $623 million in cash and cash equivalents, including short-term deposits and marketable securities. Cash generation accelerated in Q4 with operating cash flow in the quarter at $216 million compared to an operating cash flow of $129 million a year ago. 2025 was a very strong cash generation year with free cash flow of $280.7 million, increasing 68% from 2024. Operating cash flow for the full year was $283.8 million.

It is important to note that our operating and free cash flows for the quarter and the year were impacted by onetime positive effect of certain favorable working capital dynamics related to a few sizable merchants. As a rule of thumb, we expect annual free cash flows to be driven by adjusted EBITDA, and typically also by some additional contribution from favorable working capital dynamics.

As Amir mentioned, as of the end of Q4, we have repurchased 1.8 million shares for $72 million in the quarter and had $128 million of capacity remaining on our repurchase plan. We have continued to buy and make progress on our repurchase plan during Q1 of 2026.

Moving on to our financial outlook and guidance for Q1 and the full year 2026. We expect 2026 to be another year of very strong top and bottom line growth for Global-E. For Q1 2026, we are expecting GMV to be in the range of $1.705 billion to $1.745 billion. At the midpoint of the range, this represents a growth rate of 38.8% versus Q1 of 2025. We expect Q1 revenue to be in the range of $247 million to $254 million, representing a growth rate of 32% versus Q1 of 2025. Lastly, for adjusted EBITDA, we are expecting a profit in the range of $46.5 million to $49.5 million or 19.2% margin at the midpoint of the range.

For the full year of 2026, we anticipate GMV to be in the range of $8.45 billion to $8.80 billion, representing an annual growth rate of over 31% in the midpoint of the range. We expect GMV growth to remain strong throughout the year. We saw very strong same-store sales during recent months, including the first half of Q1. Our guidance assumes that same-store sales growth rates will moderate to a more normalized level for the remainder of 2026, closer to multiyear averages, in part driven by FX tailwinds subsiding. But should -- they remain at these elevated levels, we would be well positioned to deliver results at or even above the top end of our guidance range.

Revenue for the full year is expected to be in the range of $1.21 billion to $1.27 billion, representing an acceleration of the growth rate to 29% at the midpoint of the range. Based on this outlook, 2026 will be our first year achieving greater than $1 billion in revenue. This is an exciting benchmark for any company, but we are especially excited that we are seeing a reacceleration of growth while already at scale. We expect adjusted EBITDA and adjusted EBITDA margins to expand, thanks to our increased efficiencies and operating leverage. For 2026 adjusted EBITDA, we are expecting to be in the range of $259 million to $284 million, representing almost 37% growth at the midpoint, and a 21.9% margin.

Our 2026 guidance reflects an acceleration in revenue as well as expansion of our adjusted EBITDA margin which is expected to put us above the Rule of 50.

In conclusion, we are well on our way to achieve the targets that we laid out at our Investor Day last March with our 2025 results and 2026 outlook putting us slightly ahead of our multiyear plan. We see strong same-store sales growth and merchant expansions, a healthy pipeline of new logos and exciting new services that are generating interest across the e-commerce universe. We look forward to delivering another strong year in 2026.

And with that, Amir, Alan and I are happy to answer questions you may have. Operator?

[Operator Instructions] Your first question comes from the line of Will Nance with Goldman Sachs.

Very nice results. I wanted to maybe ask about some of the outperformance that you guys saw in the fourth quarter. It sounded like in the prepared remarks, there's an element of stronger same-store sales as well as FX. And it sounds like that has continued into the first quarter. And I heard the assumption about assuming that the same-store sales component doesn't continue. Maybe could you drill down a bit and help just delineate between sort of the FX driven versus same-store sales. I think our understanding is that the FX-related impacts fall off starting in the second quarter. So -- any color you can give on just helping get apart those pieces.

Will, it's Ofer. Thank you for the question. We have seen very strong GMV results in Q4. And as I mentioned, also in the beginning of Q1. And as you mentioned, it's driven by multiple factors. Initially, we are very happy with the new merchants that have launched during '25 and especially in the second half of 2025. We have seen very strong results with some of the larger merchants. So I think they are satisfied, and we are very satisfied. On top of that, same-store sales have been very strong, well above our multiyear averages. This was partially driven by strong demand and also some of the large merchants that are doing very well on their business. But also from some FX tailwinds because last year or, I should say, towards the end of '24, the USD has strengthened versus most currencies. This has continued into Q1 and then started to decline, and it's pretty low right now. So we do see some FX tailwinds out of that.

When we look at Q1 and the entire 2026, we assume that we would still enjoy some of the fixed tailwinds, and we see higher same-store sales regardless in Q1 -- but we also assume that this will normalize for the rest of the year for the remaining of the year. However, if this continues, as I mentioned, we might see some upside.

Got it. That's great. And just maybe to focus on some of the other growth drivers of the business. You've given commentary in the past around pipeline. I was just wondering if you could talk through kind of independencies for the outlook over the course of the year in terms of customer implementations? And then just any color on sort of large versus small merchants geographies and timing as we think about the cadence of the year. And nice results again.

Will, it's Nir. The booking pipeline looks great. It looks stronger today than it did in the same period in 2025. The contribution of new in 2025 was already a record year in terms of contribution to the growth. We expect -- in absolute terms, we expect that to continue forward. Pipeline is filling up quite quickly. We are beginning to see impact from the AI led sales to that Amir mentioned, driving significantly more deals and demos to the top of our funnel, and we expect that to materialize throughout the year. And we also see increased demand as we expected and guided to in previous quarters from the increased complexity driven by the global tariff changes throughout '25 in the U.S. and now also with the removal of de minimis that is upcoming in Europe.

And your next question comes from the line of Brian Peterson with Raymond James.

Maybe for Amir or Nir. Just you guys have a very strong value proposition, and you've been able to go to merchants and they see an uplift in their cross-border GMV. I'm curious what you think could change about that in an AI world. And if that's something that you can enable with new merchants, how should we think about putting that functionality in the hands of your existing merchants, which is obviously a very large GMV base today?

Yes. I think that will, as you mentioned, our value proposition is indeed very complex. It is a combination of robust infrastructure, trade compliance, infrastructure, payment infrastructure across more than 40 legal entities worldwide. This is coupled with a very unique data asset that globally has. And on the back of it, AI can actually accelerate as we can train on a unique data in order to optimize our merchant trading in data that is not available outside Global-E, coupled that with our capabilities into fulfillment and the scale that Global-E has that allows us to build a trading models that are more efficient in terms of duty drawbacks, in terms of local registration, et cetera, and the combination of it all, I think, will just benefit from AI as a driver, I don't see a being able to replace elements of it. So we feel very confident and we already see a lot of this positive tailwind being built and being deployed and we see the effect on our customers' trading.

Or maybe one follow-up. I appreciate the guidance on GMV and revenue. I would love to understand any color you can share in terms of the take rates of the individual segments.

Sure. So service fee has been pretty stable for the last 4, 5 quarters, and we expect it to remain stable in 2026 as well. Fulfillment, as a reminder for everybody, unlike service fee take rates, which are based on a percentage of GMV, is based -- is actually a derivative of the business model that is a sort of a per transaction basis. And as part of our business, multi-local is growing faster than our traditional cross-border model. And this has a mix of impact, which results in certain decline in total fulfillment take rate over time. Specifically for 2026, we expect overall revenue to grow only slightly lower than GMV growth. As I mentioned, we do not expect service fee take rate to change much. It might fluctuate a bit between quarters. And we expect fulfillment take rates to be slightly lower. Again, you might see some volatility, but all in all, we expect them to be slightly lower compared to the previous year.

And your next question comes from the line of James Faucette with Morgan Stanley.

I want to follow up on the service fee take rate commentary. And you're clear that you expect that to be relatively stable through '26, the service the component. Can you just talk about like how much benefit you got from maybe Marks & Spencer coming back online versus value-added services? And I'm also curious, given that if we look at the spread between your expected GMV and revenue growth in 2026, it looks to be narrower than the medium-term framework you gave at the beginning of last year. Can you just talk about like what's driving that to be a bit better maybe than you had thought a year ago?

James, thanks for the question, it's Nir. In terms of the service take rate, we do see it stabilizing over the last few quarters, and we expect that to continue going forward. Marks & Spencer did not have an effect on it. It's a matter of mix and the mix in general, didn't change much and this allowed the service take rates to change -- to remain stable. I think that going forward, when you look into our expectation next year and the narrowing of the gap between the GMV and service fee, I think part of it is driven by our pipeline. We have good visibility into client launching in the coming quarters. And we see that the mix that we see coming is going to be relatively in a mix that simulates what we have today, maybe slight more towards multi-local, and this is inclining into the slight broadening -- slight gap that is still remaining between our GMV growth and revenue growth. But all in all, we do believe that it's going to stabilize a bit the share of multi-local and over -- and due to that, most of the gap is being narrowed.

The other part, as you indicated, we do start to see some traction with value-added services that we deploy across borderfree.Com, trade compliance. It started to some revenue. And the combination of both gives us, I would say, the ability to give a strong focus on the growth of revenue.

That's great. And then I wanted to follow up on managed markets. It's exciting to hear the progress there. And I know you've spoken in the past about harmonizing domestic and international merchant experiences. But can you just tell us -- give us a little color what has changed mechanically in this version versus the prior implementation, firstly? And secondly, how much should we think about is embedded into the outlook from -- for 2026 from managed markets?

Sure. James, it's Amir. I'll start with the mechanics, and then I'll let Ofer to give you some color about the guide. But basically, there are quite a few changes and upgrades in this new iteration of managed markets, but I would say overwhelmingly, the biggest change that drives that harmonization that you mentioned, is the fact that this new build actually integrates all the services, all the financial flows and the operational flows to go through Shopify Payments versus the previous iteration, which kind of stood on a separate set of payment rails. So that really allows merchants that go on to manage markets to basically keep on operating their store and selling just like they do in their home store, using the same processes, the same familiar kind of ways of conducting their business, without a need to learn the workings of a completely different store.

And there are many other changes in terms of their visibility and control over what can be sold where and so on. But I would say mechanically, that's the biggest change, and there was the big uplift on both sides, from our side and from Shopify side in order to enable this major upgrade.

In terms of contribution in 2026, we expect managed market to still way a bit on growth in the first few months of the year as it hasn't been pushed in recent months. We do expect to see contribution for it to grow above our average rate in the back half of the year. We were still a bit cautious when we were budgeting and remains to be seen what the actual results would be, but we are cautiously optimistic.

And your next question comes from the line of Samad Samana with Jefferies.

First one, maybe Nir, when you were talking about the agentic commerce components where you're starting to see some early transactions. I know you said it's still small, but can you help us think through what early observations you have there? Is there a certain type of product that's getting purchased through the agentic channel? Is it a certain average order value? Just something that we can think about what it might signal for down the road, especially as consumers get more comfortable? And I guess, along that line, is there a certain geography where you're seeing it already deployed? And then I have a follow-up question.

Samad, it's Nir. We do believe that agentic AI or agentic commerce is a great opportunity for our merchants. Starting at the top of the funnel as a discovery channel where we have already seen a significant increase in the share of traffic that gets to our platform and our brands from AI chats, we expect to see AI-based chats continue to grow over time as a discovery channel for our brands and this has grown dramatically, as I said, although from a small base, but still have grown significantly. We have also started to see in small numbers yet. Agentic-commerce transaction. And as part of it, we did make sure that's through our integration to the different platforms, we will natively support it for cross-border transactions. So all in all, on the discovery, we already see it getting to scale on the agentic commerce as both transactions, we have seen a small number of transactions to date. But what we made sure is that our infrastructure and our integration and our ecosystem will be able to support us for cross volume.

And I'll just add, Samad, that I think these are still very low numbers. So it's still a bit early to draw conclusions. I think we're seeing much more experimentation now from early adopter brands. And so I think it's a little bit too early. But -- we are certain that this will continue to grow over time as it becomes more widely adopted and then we'll probably see some emerging things. But anyhow, as Nir said, we're -- we are anyhow there to support all of them on their global transactions, we'll probably see the market shape over the next few quarters and years.

The Excel file with the metrics is very helpful. So thank you to the team for putting that together. Saw the net dollar retention actually accelerated from '24 to '25, went to 122%. I was wondering a couple of things. Could you one, help us understand was that a function of lapping the Ted Baker comp? Or is that an organic acceleration in NRR? And if so, maybe what drove that? And how are you thinking about what's embedded in the '26 guidance from an MRR perspective?

Samad, it's Ofer. Thank you for the question. We had very solid and healthier in terms of net dollar retention and gross dollar retention. Actually, we've been able to improve our GDR from the previous year. As you mentioned, we lost that Baker in the previous year. And above that, we've seen healthy trading with some of our leading merchants. So all in all, it was a good year in terms of net dollar retention. We expect 2026 to be a continuation of 2025. So we don't expect any material changes. And again, it might be impacted over the year from changes in same-store sales.

And your next question comes from the line of Chris Zhang with UBS.

The first question is on your investment priorities for 2026. Can you share with us or any new areas you're looking at, that you didn't perhaps had enough of investment dollars before that you wanted to highlight.

Well, I think the multiple things that we are prioritizing into 2026. I think first to mention is our trade compliance infrastructure is we see more and more countries around the world take a churn, increasing their tariffs, removing their de minimis exemptions, which actually makes the cost of trade in Global e-commerce higher, we see a huge benefit for us to continue and invest in reducing those costs for our clients. With advanced trading models with the ability to do duty drawback on goods that are exported for the import duties to duty drawback in different countries for goods that are returns from final shopper. So a lot of investment and focus is going into reducing the cost for trade given the circumstances. This brings us a lot of demand as well as increased retention with our brands. The second is, of course, AI. We spoke quite a lot about it. But we see a continuous investment in AI in almost, I would say, every field of our activities, from better utilization of our data asset in order to better optimize our clients' trading and drive a faster same-store sales into our own pipeline top-of-funnel demand generation and from there even down to an outreach agent and the outreaches in order to be able to do it at scale. And going into optimizing different elements around the company, from value-added services such as translation services down to allowing chats to our client on examining their data and comparable data from Global-E to allow them to take a better decision. And all the way into optimizing our R&D spend, marketing spend and other places that AI can drive. So that would be the second early where we're going to focus quite dramatically. And also, we are planning to continue and invest heavily in optimizing our fulfillment networks in order to offer best-in-class services to our clients with different price points, more efficient than we have even today in order to allow them again to trade with a cost-effective structure given the changes in the global landscape.

All right. Awesome. Just a follow-up. Wanted to hear any update on what metrics you shared at the Investor Day, which was the multi-local GMV, understandable one-off disclosure and made back in March of last year, and that was expected to be not $100 million in 2025. But can you talk directionally to how the year trended versus that initial expectation and what you're seeing that going to 2026? Again, this is on the multi-local GMV.

Yes. So we -- 2025 traded pretty close to our initial expectations with regards to multi-local, and we are at approximately 15% of GMV. Looking into 2026, we expect multi-local to continue to grow, but we don't think it will outgrow the entire business by a lot. So -- that's what we see for now. We are very happy, and we think that this provides us a competitive advantage and it's a great offering for our clients.

And your next question comes from the line of Koji Ikeda with Bank of America.

Just one question from me here. I wanted to ask on GAAP EPS earnings. And so congratulations on being GAAP EPS profitable for the full year. And so how should we be thinking about GAAP EPS growth from here on out, especially with factors like efficiency gains that you're seeing with AI and the R&D organization?

Thank you for the question. So we have been able to turn GAAP profitable, and we are very excited about that, and we expect to continue to see a GAAP profitability also in the coming periods. We have provided also -- and we will continue to provide also non-GAAP net income and EPS number, which is a very important metric in our view. Generally speaking, when you look at that non-GAAP net income, it is not -- there isn't a significant gap between adjusted EBITDA and this metric. And we expect -- we expected to grow along the lines of adjusted EBITDA. There could be some gaps, but generally speaking, directionally, this is the way to look at it.

And your next question comes from the line of Bill Pittman with Piper Sandler.

As I think about the prepared remarks and the focus on leaning into AI tools internally and automated workflows, if we look in that adjusted EBITDA guidance midpoint for 2026, can you maybe break down the expected margin expansion from simply structural scale in the business versus some of those AI driven efficiencies that were outlined? And then secondly, any additional anecdotes or examples as you could share in some of the specific ways you've increased R&D velocity with AI recently?

Mark, it's Nir. I think that dividing the expansion in our EBITDA margins into 2026. And onwards, we do expect it to continue as we guided in our multiyear plan. Some of it -- significant part of it, by far, we can contribute to AI. I think that when you look into our R&D and our ability to continue and develop multiple new services support the growth of the business. And as Amir indicated, virtually almost not recruiting any new headcount into our R&D is driven by AI efficiencies. We see it in the ability of writing code, deploying code, writing stories in product down to et cetera. We see a lot of leverage around that. So there, I would say, a significant portion is AI-based. We do see advantages and support also for the growth in our sales and marketing. So yes, it will not replace an enterprise consultative sales manager speaking to an enterprise brand. However, lead generation, we are increasing dramatically the input and output without actually increasing headcount because most of the work will be done by our AI prospecting tool and AI outreach tool. So -- and if we take it through the different arenas of what globally handles from handling forward to classification of products to restriction management, trade compliance and down into even our finance group and making sure that each and every order reconciled correctly, we do see a lot of leverage coming over from AI. Not all of it, of course, would be realized in 2026. So we do have a lot that is -- in our road met we built this year. But out of what we put on paper for '26, a significant chunk is AI-based.

And just -- it's Amir. Just to add one point. I don't think scale and AI are mutually exclusive. There's actually a lot of dependencies between them because there are a lot of things that AI can do, but the ability to really extract tangible real value from AI is dependent on data. Data is what fuels AI and definitely the very broad and deep and unique data assets that we have and that it continues to grow quickly over time as we scale up the business, that's what can fuel the AI models to generate that value. So I think the scale and the AI go hand in hand.

And your next question comes from the line of Patrick Walravens with Citizens.

Great. And congratulations, you guys. Amir, can we dig deeper on the point that you were just starting to make, which is across the industry, people are worried about AI disruption. And what is it -- what are the moats that protect your business from being disrupted by some other use of AI? I mean you just touched on data. What else?

Pat, it's Nir. Thank you for the question. So there are four things that we continue to differentiate us and would make it virtually impossible for any model to replace what Nobody is actually doing. The first and foremost is scale. Then it's expertise and know-how, then it's a trade compliance, and then it's our overall infrastructure, across legal entities in more than 40 jurisdictions, coupled with infrastructure on payments, all embedded into one. So if we stick just to the first thing about our scale. And this allows us to access actually Tier 1 pricing and working with the best partners and getting the best service from those partners across fulfillment, across payments across trade compliance, and it gives us a huge pricing mode that is coming from a true differentiated cost structure, that even if you develop a beautiful tool on LLM, you will not have access to, not to some of the partners for sure and definitely not to the prices.

The second we spoke about his expertise and the data asset. I think that in order to enjoy the benefits of AI, it needs to be trained on relevant data for what you're trying to do. And if what you were seeking is optimization of your trading per market across 200 markets worldwide. According to your specific dynamics to train a tool, you need to have the data, and this is unique data that Global-E has and at scale that no one else has access to.

The third is our infrastructure and our MRR model. This is a heavy lifting model. With a significant level of build-in compliance and risk requirements across dozens of legal entities around the world, allowing us to do business in more than those 200 markets worldwide efficiently. This includes securing and managing licenses from various governments and regulators, providing aftersales capabilities in which we need to work with multiple parties establishing solution across trade compliance and logistics.

And continue to that into our payments infrastructure with multiple PSPs working with us, invest in class rates with a sophisticated system, allowing us to do without domestic acquiring, et cetera, across multiple destinations. All of it is business logic capabilities, set of agreements, know-how, expertise that an AI, however, good LLM is does not have the ability to do.

And your next question comes from the line of Scott Berg with Needham.

Super quarter here. I guess just one question for me, and it's on the -- due to clawback that Amir noted was released here in the quarter. I guess what are you hearing on initial feedback from U.S.-based customers on that solution. I mean the belief that there's almost no reason why most of them don't adopt us at a relatively quick nature at least? And then how do we think about the impact in fiscal '26 guidance, if any?

So we do hear great feedback from clients about the capability. We need to -- we obtained the license as we indicated late 2025, deploy the solution into a POC mode early this year, and now we are releasing it to all our clients. Initial feedbacks are great. It has a tremendous effect on the cost of trading for our U.S. client base. We expect high level of adoption once we are geared with a streamlined process that we can extend the offering simply to all our clients. For now, in the first batch, we outreached the level of adoption is very high. We did embed it into our guidance on a certain level. We did take some conservatism as it's a new solution, but we did bake it into our guidance as we do see it contributing to our revenue within 2026 for sure.

And ladies and gentlemen, this concludes our question-and-answer session. I'll hand it back to Alan Katz for closing remarks.

Thank you, everyone, for joining the call today. We look forward to speaking with many of you during the quarter and providing our next update on our Q1 call in May. Hope everyone have a great day.

Thank you. And ladies and gentlemen, this now concludes today's conference call. Thank you all for joining. You may now disconnect.

All right. Let's get started, and thank you for everybody that joined us this early, and I know there are also hundreds or thousands of people on the webcast. My name is Chris Zhang. I'm part of the UBS Payments and Fintech research team, and we're super, super excited to have Global-e you with us today. We have Amir Schlachet, CEO; and Ofer Koren, CFO, with us. Welcome, and thank you again.

Thank you very much for having us here and in general in the conference, great event.

All right. So thank you. I appreciate it. And also, I guess the first question, I think for those of us that are not as familiar with the story, I think, Amir, would you like to kind of give us a walk-through of how you get here? What's the early days in the company, what's happened since you IPO-ed and all the journey or your growth and basically your vision of the company as well?

Sure. Absolutely. I'll try to be sync that we have a lot to go through. So there's a big clock running here. So let's say a quick overview. We started the company with 3 co-founders, Nir, Shahar and myself started the company in 2013. Still running the company today. I'm the company's CEO. Nir is the President and Shahar is our COO.

But I would say, generally speaking, what Global-e does is we enable international direct-to-consumer e-commerce for brands and branded retailers around the world. That's kind of the tagline. But what that means is that we provide to these merchants kind of -- you can think of it as 3 layers of services, all bundled together. The first one is a full end-to-end capability suite, which is integrated into their e-commerce website. So whichever platform they're running on, think of us as a plug-in, an actual plug-in to whatever platform they are running on. And once they're plugged in, all of a sudden, the website becomes automatically localized irrespective of where the shopper is coming from. We support more than 200 countries, and we fully localize the entire customer journey. We localize pricing, we localize payment methods. We localize the entire checkout experience. We take care of duties and taxes and so on and so forth. So it's a full end-to-end localization.

But it doesn't stop there because it comes bundled with all the suite of services and operations that you need in order to actually execute the transaction. So we will actually become the merchant on record instead of the merchant which means that we'll take upon us all the complexities of kind of compliance, duties and taxes, guarantees, foreign exchange exposures, all of that, actually for the merchant, it becomes also a fully localized transaction, not just for the shopper, and we actually take care of all the risks and complexities in between.

And we don't even stop there because it's not just that we provide a merchant with all the set of capabilities and services. We also use our vast data set that comes from working for the last kind of 13 -- 12, 13 years with thousands of merchants across more than 30 different outbound markets, more than 200 inbound markets and all the various kind of verticals, price points and so on and so forth, that gives us very unique data that we then use in order to create an optimized experience for every such combination.

So the end result of that is on average, around 40-plus percent uplift in international conversion rates, coupled with 0 hassle, 0 risk for the merchant. That's essentially the model. We work today with thousands of enterprise merchants and many, many thousands of SMBs through a partnership that we have with Shopify, but we provide the back -- kind of the white label solution for what's called Shopify Managed Markets. Maybe we'll talk about it later.

Just briefly, so we started as a small start-up, 3 co-founders sitting in the same room. We still sit in the same room until today, but the company has grown a bit. We're around 1,200 people spread across more than 25, I think, locations now. So a truly global company. And yes, I guess that's a quick overview.

All right. Awesome. Thanks for the overview, and it's a fascinating story for sure. I guess maybe just switching to -- over for the next one. If we just look at how you did in 2025, it's a year with no shortage of headline volatilities, but I think you've been executing pretty steadily. I think maybe can you just give us a recap of your updated guidance and what has been driving the GMV strength throughout the year? If you can just start from there.

Sure. So it has been, on the one hand, a year with a high level of uncertainty in the market, geopolitical tensions, the tariff dynamics and some economic question marks. But surprisingly, in terms of consumption trends and consumer behavior, it was a relatively stable year if we compare it to '24, '23. We've seen less fluctuations. And overall, the trading patterns over the year has been good. We've seen solid trading throughout the year and even slightly better trends in the second half of the year.

So basically, that sort of drove growth of existing merchants as in recent years, as long as we are able to keep the merchants satisfied, create value for them and they stay with us, we actually grow with them because e-commerce continues to grow faster than physical retail and cross-border and direct to consumer, in particular, grow a bit faster compared to other segments. And basically, we've seen that continuing in '25.

And again, good consumption behavior that continued also into the peak season. So as you probably know, many of you, we issued a PR yesterday regarding November in general and more specifically, the volumes that we saw in Black Friday, Cyber Monday weekend. And again, the numbers were very strong. In addition to that, we had a very good year in terms of new merchants onboarding. We had a good project pipeline, and it materialized very nicely throughout the year. So everything worked as planned. It was a quiet year -- a relatively quiet year in terms of our project team.

And we've seen good contribution coming out of new merchants. In some cases, we actually had positive surprises in terms of the volumes generated. I think one merchant that we can call out because they were vocal about it is Aritzia that launched recently with us. And I think they are very happy with the results. They've seen a nice uplift, and we've seen better numbers than we initially expected. So that's just one example, but we had a few of those. So generally speaking, to summarize, good trade patterns with existing merchants, successful new merchant joining throughout the year. Basically, that has been driving GMV.

All right. That's perfect answer. Also just covered the holiday sales as well. So I appreciate it. I guess maybe turning to Amir, if we look back at the past year, can you maybe discuss any changes to your go-to-market strategy and the sales process?

Sure. So first of all, our go-to-market strategy has evolved quite considerably from when we started the company. For the first few years, it was mostly kind of outbound sales. But in the last few years, as we've grown in size and as we've kind of gathered what I think is a very impressive roster of clients and track record. We work today with some of the largest brands in the world. Adidas uses us for their international, Disney, Hugo Boss, SKIMS, Alo Yoga, all of these big brands, they base their international direct-to-consumer online activity on the Global-e service.

That has enabled us to also create 2 strong go-to-market channels. One is also inbound. We don't just go outbound. We actually get quite a few inbound leads from brands that just hear about us in the market or actually people moving from one company to another and kind of calling us to come in and help them do what we did for them in the previous company. But I think most importantly, more than 50% of our leads today are generated through channel partners. And I think the great thing about our service is that it just creates more pie for everyone because we enable these direct-to-consumer international sales in a way that no single provider can.

So all of the -- if it's logistics providers, we work with more than 30 different logistics providers, more than 10 different payment providers, fraud providers, et cetera, all this vast ecosystem also feeds us with leads. And with some of them, we have kind of a strategic agreement to do that and they get compensated for that. Some of them do that without being specifically compensated for that because it just creates more business for them. And that has really enabled, I would say, a very strong and robust go-to-market motion over the last few years.

Today, we're also -- in the last couple of quarters, we're also taking the outbound reach a notch up using AI. We've actually spent the last few months building kind of a custom built UI-based tool, agentic UI-based tool that kind of takes multiple data sources, kind of qualifies the leads and enriches them with data in a unique way that is relevant for us and sizes -- seizes the opportunity based on our kind of know-how and expertise, that we fed into the model.

And essentially can -- we believe that it's currently being deployed, and we believe it can further accelerate quite considerably the top of the funnel generation. And then a second agent, which is in the making that will automate the kind of tailored and customized outreach to these deals. So we believe that over the next kind of year plus, we can use that to further accelerate the go-to-market motion because our -- I think one of the most interesting things about our market is that it's not just that we are the by far leader in the market. There are not that many players out there anyhow. But actually, the market itself is, per our estimates, around 90% greenfield. So it's more a matter of how efficiently and how quickly can we get to those merchants, qualify them as opportunities and get them through the funnel.

All right. That's a very awesome recap of the go-to-market strategy and also like where it's evolving. I guess maybe a related topic on the agentic commerce, I think maybe more from a perspective of the merchant interaction with the shoppers, how is the company positioned for the agentic commerce age?

Sure. So I think when you look at agentic commerce, we actually break it into 3. So there are 2 parts that are, I would say, already happening today, and we're seeing them. It's happening on a very small scale but we are already seeing some initial sparks of kind of assisted checkout, people using AI-powered browsers in order to assist them in the checkout process and also just referrals, kind of people using mostly ChatGPT from our traffic info, but using ChatGPT to kind of discover products, discover brands. That's already happening right now. That's natively supported. It doesn't matter for us where the browsing process started or where -- which browser is used to do the checkout. It anyhow flows through our integration into those websites and through our rails.

It's very, very, very small scale. It's almost meaningless right now, but we do expect it to grow over time as people -- as consumers will probably use more of these tools in the future. In terms of kind of instant integrated checkout kind of people checking out on ChatGPT or other AI platforms, that is currently not really in the market. There are some initial trials on a domestic level when it comes to international. This is currently out of scope for all these platforms because of all the complexities that are involved that I mentioned earlier. We are in discussions with both the platforms, and we plan to also discuss that directly with the various AI providers once it's relevant, once the market starts to think about how the piping should work behind the scenes. But anyhow, the value proposition that we bring to the table is essential for those transactions as well.

Just like neither the merchant nor the platform wants to be the merchant on record for these international transactions and solve all of these compliance, risks, complexity issues, neither do the AI providers. So it's more a matter of how the piping will shape up behind the scenes in order to -- for us to provide these services for either side, the platform or the AI provider because we believe both of them will still play a vital role in these kind of integrated checkout scenarios in the future.

All right. Awesome. Maybe let's turn to 2026. And maybe can you start with sharing a little bit your priorities for 2026 operationally or strategically? And then from a GMV perspective, I know it's too early to talk about the 2026 specific numbers but what do you think are some of the key growth drivers for 2026? And maybe that's one for Ofer.

Sure. So I think that looking into 2026, our priorities have not shifted much. We continue to work hard to earn the trust of our merchants because this is basically the foundation of our growth, and we will continue to do that. If we look at sort of more granular view, we are pushing harder in APAC. We've been doing that in the last few years. and we are seeing good results out of APAC. APAC is growing more than its share in our portfolio.

We are focusing on Japan, South Korea, Australia, but we also see merchants out of Hong Kong and Taiwan lately. So that's an important focus from us in terms of geographies. In terms of propositions, we continue to optimize for the merchants. So as many of you know, we have developed the multi-local solution in recent years, and I think that we will continue to see more of that.

We are doing a lot to add value to merchants around the tariff dynamics and we will continue to try and help merchants optimize for that, if it's the 3B2C solution or -- and/or duty drawback solutions for merchants. So this is something that we'll definitely continue to focus on going into 2026. I think we've already mentioned a word, managed market. So it's a very important for managed market as well, as hopefully, we can sooner rather than later, and this is eventually Shopify's decision, relaunch the managed market or what we call the V2 of managed markets, actually already live and running, but it's sort of a testing phase. And hopefully, we can get that up and running sooner rather than later.

I think those are sort of our product priorities going into the year. And in terms of financials, I think that we will continue and prioritize bottom line growth. So we have different businesses with different sort of financial profiles but we always prioritize growth but specifically with a focus on sort of bottom line dollar growth. And I think that this will continue to be a significant KPI for us in 2026.

Generally referring to sort of what we expect to see in terms of numbers going into 2026. So we haven't guided for the year yet. We'll do that in the next earnings release. However, we do believe that we are on track to achieve our long-term targets that we've presented in the Investor Day earlier this year in New York. And we very much believe that we are on track to get there.

All right. That's great. And maybe just a quick follow-up on 2026. From your current sales and implementation pipeline perspective, what do you think the merchant cohort is going to look like compared to this year where you have probably fewer of those backup merchants joining?

Yes. I think when we look at the pipeline, it's looking very, very healthy going into 2026. It's right where we wanted it to be across all the levels. So first of all, the pipeline of merchants that have already signed during the year but are planned -- or in integration, and are planned to go live at the beginning of the first part of next year. So that's looking very healthy. Our project teams are very busy working on getting these merchants live and on time like they did for the cohort of merchants that went live this year before the holiday season, before the kind of code freeze.

And in addition, when we look at our, what we call advanced discussions pipeline, so basically, merchants that are in our funnel at a stage where we've already engaged with them. There have been multiple discussions. They've seen a demo. It's kind of progressing through the pipeline. That's looking very, very healthy as well. And we have, over the years, developed pretty good kind of experience and statistics about how much -- how many of these brands will actually end up being kind of signed. Some of these will still contribute if they sign early enough in 2026. They can already go live within the year and contribute at least partially to 2026, but the rest will contribute to 2027 in the same kind of multiyear motion.

So all in all, a very healthy looking pipeline. And as I mentioned earlier, we're also taking very kind of interesting actions, I think, in order to feed the top of the funnel to make sure that it remains strong, if not stronger for the following years using capabilities that kind of modern LLMs are giving us today that weren't available a year or 2 years ago.

All right. Awesome. And then looking longer term beyond 2026, what are some of the areas are you most excited about in terms of new deals, verticals or any adjacent markets?

Sure. So first of all, it's -- it almost sounds boring, but it's very exciting for us just to look at the potential. I mentioned briefly earlier that we believe that around 90% of the market is still greenfield, and that's -- the majority of that is still in markets that we're already established in. So markets like -- I'm talking about outbound markets like here in the U.S. or North America in general, Continental Europe, the U.K., kind of places where we're already established, we've been working for many, many years. And still, there is massive potential.

And the -- I think the beauty of it is that the potential keeps on growing because we are sitting on the, I would say, a combination of 3 secular trends that are all pointing in our direction. So as you all know, commerce continues to go online. These days, it feels like everybody is buying everything online, but it's actually not true. E-commerce is still has a lot of share to gain from the general commerce pie over kind of physical retail.

In addition, the motion of brands and consumers is to go as much as possible to direct-to-consumer and kind of disintermediate the transactions. So the holy grail for brands is to sell directly to their shoppers and gain that kind of direct relationship. And also shoppers are increasingly looking to buy directly from the brands that they like and gain access to the full assortment of products and all the options and a better price typically. So that's pointing in our direction as well.

And in addition, for most, if not all of the brands that have some kind of brand equity, international is the most important growth area and the place where they can leverage their brand equity in ways that are more difficult in their domestic market where the competition is much higher, and it's easier for people to kind of attack and gain share from them. So that means that we do still plan to devote a lot of resources and attention to just continuing to grow and based on our reputation and our track record in the markets that we're already established in.

In addition, as Ofer mentioned, APAC is doing very well for us. When we IPO-ed 4.5 years ago, APAC was just a business development line in our prospectus. Nowadays, APAC is already commanding a sizable share, almost 10% and kind of outpacing that in terms of kind of pipeline and new merchants going live. So that's a very exciting motion for us. Managed markets, which, again, Ofer mentioned, we think that it has -- over the next few years, has a lot of potential to become a multibillion-dollar GMV business by itself.

And a lot of the value-added services that we are working on, some of them are already live but we are continuing to develop them like the borderfree.com-based demand generation platform that we are building, like duty drawback, which is a service that we keep on adding capabilities to and developing. All of these, we think, over 2026 and onwards, will kind of further augment the already very wide suite of services that we provide to our merchants and continue to generate more and more value to our existing merchants and the new merchants that are joining the platform.

So lots to be excited about for the next few years -- and I think we're in kind of the poor position to grab more and more of this exciting market.

All right. That's awesome. I guess with the 1 or 2 minutes left, I just wanted to quickly hit on Shopify. I feel like we can't end the session without hitting Shopify, but I think that kind of almost warrants a separate breakout session. But I guess just to recap, what's your overall expectations of the Shopify agreement changes on your bottom line?

And then on the 3P side, any change in your enterprise sales motion with the Shopify merchants specifically? And I think actually from your press release, I've seen some of the large Shopify merchants joining us both in recent quarters and pretty much every quarter.

Right. So maybe just -- I'll start with the second part very quickly and then let Ofer explain the implications on our economics. But generally speaking, there is no change. Our go-to-market on the enterprise side, on the 3P side of our agreement with Shopify has always been our own go-to-market. We did receive some interest from Shopify from time to time but it's basically our go-to-market. So -- and given that our win rates against the very few enterprise-level providers out there are super high anyhow, even on our platforms where we never had any exclusivity where it's an even playing field. we don't expect and we don't see any change in our competitive positioning on Shopify even after the new agreement where we switched from being kind of the exclusive provider in Shopify to the preferred provider.

So basically, no real change in the go-to-market or our positioning. And I'll let Ofer describe the changes from an economics perspective.

Yes. So from an economic perspective, there are sort of 2 changes. On the 3P side, it's very simple and straightforward. As we move from exclusivity to preference, we also have updated rev share. We pay Shopify rev share for every dollar that goes to Shopify merchants. And this is -- the new rev share is lower to reflect the change from exclusivity to preference, and this will have a positive impact on our bottom line, which is already reflected in the Q4 guide because it kicked in towards the end of Q3.

In terms of managed markets, it's a bit more complicated. As we are in the V2, the new version, we are utilizing Shopify Payments as the payment processor or the payment gateway for managed market. The structure of our P&L will change soon once the V2 is up and running and we see volumes there. Basically, on the V2, we will recognize only our share of the revenue. Currently, we recognize the entire services revenue. On the fulfillment side, there's no change. But on the service fee side, we will recognize only our share of the revenue.

But at the same time, we currently pay out of our S&M line a rev share to Shopify, and this will disappear from our P&L. So the structure will change a significantly lower service fee take rate. But on the other hand, a large expense would go away.

In terms of bottom line, there won't be a big difference, will be slightly dilutive for us but we don't expect a significant impact there. Just reminding everyone that this currently represents approximately 4% of our GMV, just to put it in context.

All right. Perfect. With that, please join me in thanking Amir and Ofer for all the color today, and we look forward to the exciting development over the next year and the many years ahead. Thank you very much.

Thank you very much, Chris.

Thank you very much.

Thank you, Amir.

Welcome to the Global-E Third Quarter 2025 Earnings Conference Call. This call is being simultaneously webcast on the company's website in the Investors section under News & Events. For opening remarks and introduction, I will now turn the call over to Alan Katz, Global-E's Head of Investor Relations. Please go ahead.

Thank you, and good morning, everyone. With me on the call today are Amir Schlachet, Co-Founder and Chief Executive Officer; Ofer Koren, Chief Financial Officer; and Nir Debbi, Co-Founder and President. Amir will begin with a review of the business results for the third quarter of 2025. Ofer will then review the financial results for the third quarter, followed by the company's outlook for the remainder of 2025. We will then open the call for questions.

Certain statements we make today may constitute forward-looking statements and information within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including, without limitation, statements regarding our future results of operations and financial position, growth strategy and plans and objectives of management for future operations including onboarding new merchants, expanding our offerings and introducing and integrating new solutions are forward-looking statements.

These forward-looking statements reflect our current views with respect to the future events and are not a guarantee of future performance. Actual outcomes may differ materially from the information contained in the forward-looking statements as a result of a number of factors, including those set forth in the section titled Risk Factors in our annual report on Form 20-F filed with the SEC on March 27, 2025 and other documents filed with or furnished to the SEC.

These statements may reflect management's current expectations regarding future events and operating performance and speak only as of the date of this call. You should not put undue reliance on any forward-looking statements. Except as required by applicable law, we undertake no obligation to update or revise publicly any forward-looking statements whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. Please refer to our press release issued today, November 19, 2025, for additional information.

In addition, certain metrics we discuss today are non-GAAP metrics. The presentation of this financial information is not intended to be considered in isolation from as a substitute for or superior to the financial information prepared and presented in accordance with GAAP. We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe that these measures provide useful information about operating results, enhance the overall understanding of past financial performance and future prospects and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making. For more information on these non-GAAP financial measures, please see the reconciliation tables provided in our press release today.

Throughout this call, we'll provide a number of key performance indicators used by our management and often used by competitors in our industry. These and other key performance indicators are discussed in more detail in our press release issued today.

I will now turn the call over to Amir, our Co-Founder and CEO. Amir, please go ahead.

Thanks, Alan, and welcome, everyone, to our third quarter earnings call. We achieved another quarter of very strong results, coming in above the midpoint of our guidance for revenue and adjusted EBITDA and even exceeding the top end of our guidance range on GMV. This strong performance was a result of the entire Global-E team around the world continuing their relentless execution throughout the quarter, developing and providing best-in-class solutions and services to our merchants and their shoppers.

Before we dive into the quarter, in terms of our forward-looking outlook, given what we see in the market today and the overall robustness of trading volumes we have witnessed in Q3 and Q4 to date, we are once again raising our midpoint outlook across all of our guidance metrics for the remainder of the year.

As such, for the full year of 2025, we now expect GMV to be roughly $6.46 billion at the midpoint, representing just over a 33% annual growth rate. We're also raising our revenue and adjusted EBITDA guidance for the full year to $952.1 million and $192.8 million at a respective midpoint, representing 26.5% and 37% growth for the year, respectively.

As in previous years, in 2025, we once again expect to surpass the full year guidance ranges that we shared with you in the beginning of the year, a testament to the durability of our growth algorithm. We believe this strong performance for 2025 keeps us on track to deliver the multiyear growth and bottom line profitability targets we shared with you during our Investor Day earlier this year.

Back to our quarterly results. We finished Q3 with GMV of $1.51 billion, up 33% year-over-year and revenue of $221 million, up 25.5% year-over-year. In terms of profit, our adjusted gross profit for Q3 was $102 million, up 24% from last year and quarterly adjusted EBITDA was $41.3 million, up 33% compared to the same quarter of last year, resulting in an 18.7% margin, a 100 basis point improvement compared to Q3 of 2024. Our GAAP net profit for the quarter was $13.2 million, and we generated $73.6 million in free cash flow, an increase of almost 250% compared to last year.

Now before I go through the current trading patterns and our Q3 new merchant launches, I want to provide a few broader business updates. First, on several previous calls, we have mentioned our duty drawback offering, a value-added service that we have provided in certain non-U.S. markets for some time now. By use of these value-added service and depending on the sales parameters, merchants can potentially reclaim import duties on goods that are exported outside of their home base as well as on return goods.

Given the recent suspension of the de minimis exemption, we have seen increased interest in this offering also for the U.S. In parallel to other offerings, such as 3 B2C all aimed at helping our brands to navigate the stormy orders of international B2C trade. Within the quarter, we also got the permit to offer import duty drawback to our U.S.-based merchants for their exports out of the U.S., further supporting them in optimizing their cost of trade in times of change.

Second, a quick update on our managed market solution. We've been working in close collaboration with our partners at Shopify, according to our joint plans. Over the past 6 months, most of the development has been completed for a rollout in 2026 and we are currently in beta testing for the new flow. As a matter of fact, new merchants that apply now to managed markets are already going through the new flow. We still have some tweaking to do on the back of what we will learn from the better merchants, but remain on track for the next phase of managed markets, moving to full commercialization.

Third, we continue to make good progress on our borderfree.com offering. During Q3, we added a buy-now capability as well as advanced search functionality, enabling a more streamlined shopper experience and improving sales conversion rates. We also continue to see further growth in shopper sign-ups as well as an increase to the share of merchant sales attributable to the borderfree.com channel which now stands at over 4.5%, representing an increasingly valuable demand generation channel for merchants on the program.

Lastly, during the quarter, we announced the authorization of a $200 million share repurchase program by our Board. Global-E is a highly cash-generative business. And given our strong balance sheet and our track record of generating sustainable cash flows, we see a share buyback plan as a logical use of cash, especially at the current market valuation. Given the blackout periods that we are subject to in Q3, we have not yet begun buying back shares but we expect to do so starting in the coming days. We will employ a thoughtful approach here to take advantage of any disconnect we see between our performance and outlook and the market valuation of our shares.

I also want to spend a few minutes on how we are strategically approaching AI in general and agentic e-commerce, in particular, and what we are doing to make sure we are well positioned to capitalize on this upcoming market opportunity. Throughout this year, we've already been seeing some traffic to our merchant sites being initiated from ChatGPT and resulting in successful transactions processed by Global-E as well as agent-assisted in-chat checkout transactions. While both still represent a very small share of sales for our merchants, we believe these are exciting potential new sales channels for them.

As brands focus more on selling within these third-party channels, we will continue to provide the same best-in-class support and service that we provide across all of our sales channels. Irrespective of the sales channel, the value of our expertise and capabilities do not change. We meet our brands wherever they spend online and provide support for them to transact internationally regardless of the source of traffic.

Furthermore, we have deployed AI-powered use cases throughout the buying journey from demand generation, utilizing AI, both for brands using our agency services and for our own B2B marketing through to different aspects of trade and post-purchase support from classification, down to customer care. In parallel, we also have an internal team focused on making sure that our solutions will be positioned to work seamlessly across the agentic commerce platforms for Instant Checkout from both a merchant and a consumer perspective when such platforms are introduced to the market.

As our partners look to work with agentic technologies to provide instant checkout capabilities, we will be there to provide a seamless, effective and compliant end-to-end international experience. This is all obviously very early in the life cycle. But as always, we will keep doing what it takes to remain at the forefront of Global-E commerce, and we utilize the advantages of our scale, know-how and sophistication to emerge a share gainer. By focusing on this early and engaging with key players in the space, we are aiming to maintain our [indiscernible] position for the enablement of seamless cross-border commerce within AI-led transactions in the future.

Now let's move on to the broader business performance in the third quarter and what we're currently seeing in Q4. As I already mentioned, we saw consumer discretionary spending holding up during Q3 and Q4 to date. And we continue to see strong market traction with our largest merchants across different destination markets. The trading patterns we have seen in Q3 and the first half of Q4 give us confidence that we will end the year strong.

In terms of new merchant launches within Q3, we continue to grow across geographies and within our cohort of merchants. We experienced continued strong demand for our services across different markets as a large number of brands went live with Global-E during the quarter. This included multiple brands that went live with us in the U.S., such as Everlane, the renowned high street online U.S. clothing retailer that recently moved to Shopify, chose Global-E to accelerate its international growth and Ashford, the luxury U.S. watch brand.

In Canada, we launched with the online shop of Drakes fashion brand, October's Very Own, as well as Aritzia, the fast-growing clothing company which has shown a quick ramp-up of their conversion rates and international sales post launch with Global-E, as they mentioned in their current -- in their recent quarterly earnings call.

In the U.K., we launched a renowned luxury brand Coach which is part of the Tapestry group of brands; with Browns Fashion formerly part of Farfetch; and with the Jewelry brand, Regal Rose. I'm also pleased to say that U.K.'s Marks & Spencer is back online as of October and their trading is back to normal patterns.

In France, we launched with Chloe, the renowned luxury fashion brand, thereby extending our partnership with [indiscernible]. We also launched with [indiscernible], the classic French sportswear brand and with the fashion brand Hartford. Across other European markets, we launched a Sleeper brand, Kalida and dog wear brand CLOUD7 in Germany, and with D1 Milano watches in Italy, among others.

In Asia Pacific, we launched Bandai Spirits, the famous Japanese toy and collectible company, as well as Japanese designer fashion brand, Mihara Yasuhiro, and Posse, the high-end Australian fashion brand. We also launched Beauty of Joseon, a Korean skin care company; and Paper Shoot, a consumer electronics brand, which is also the first Taiwanese brand to sign with us. Another exciting launch in the region during Q3 was that of Blackbough Swimwear, our first brand out of the Philippines.

Within the sporting goods vertical, golfers around the world can now buy their [indiscernible] from Tacoma Grove, the finished D2C Golf brand, which went live with us during Q3. During the quarter, we also went live with Live Sports, a U.K.-based sports equipment brand and with Luke [indiscernible] a Scandinavian fly fishing gear company, which is also the first to integrate our services on a headless [indiscernible].

Besides many new merchant launches, during Q3, we also expanded our scope of business with quite a few existing merchants, such as FIGS where we expanded into South Korea in a number of Latin American markets. Helmut Lang, the New York-based fashion brand and the merchandise division of JYP Entertainment, one of the largest K-Pop labels and production companies which both expanded into Japan. Bang & Olufsen and Tom Ford, which both opened a number of new European markets with us in the quarter. Australian fashion brand Zimmerman, which went live with us with its [indiscernible] serving the APAC region and fashion brand Theory, which added support for several GCC countries out of its new U.K. [indiscernible] integration.

Both Burberry and [indiscernible] Eyewear, who we worked with to expand into Mexico. Bach, we expanded with us into Norway and [indiscernible] which added more than 10 new countries, including Japan, Italy, Spain and several Nordic countries.

Furthermore, as I mentioned earlier, in the face of higher tariffs and the suspension of the de minimis exemption in the U.S., we have seen heightened interest in our 3 B2C and multi-local solutions as well as our duty drawback value-added services. More and more merchants, both existing and new, continue to pivot to utilizing these advanced capabilities in order to mitigate as much as possible the effects of the new duty regimes on their business.

The launch of new merchants and the continued expansion with existing merchants as well as our current pipeline, give us confidence that we are well positioned in terms of both our near-term and our long-term targets. We have good visibility to durable, profitable growth and a strong pipeline of cash flows into the future. Our results year-to-date would be impressive in any environment. But considering the uncertainty that the global e-commerce market faced at the start of 2025, I believe these results really showcase the resiliency of our business model and the value that we create for our merchants.

I will now hand it over to Ofer to take us through the quarterly numbers in more depth and our increased 2025 guidance in Q4.

Thank you, Amir, and thanks, everyone, for joining us today for our earnings call. As Amir just highlighted, we achieved another strong quarter of growth for globally. We delivered results at or above the top end of our guidance ranges for GMV, revenue and adjusted EBITDA, generated strong free cash flow and had another quarter that landed well above the Rule of 40.

Before I go into the details of the quarter, I'd like to remind everyone again that in addition to our GAAP results, I'll also be discussing certain non-GAAP results. Our GAAP financial results, along with the reconciliation between GAAP and non-GAAP results can be found in our earnings release issued today.

GMV in Q3 was $1.512 billion, up 33% year-over-year, 3% above the midpoint of our range for Q3. Trading volumes remained resilient in the third quarter despite some uncertainty due to ongoing changes in tariffs. As Amir discussed, we have also seen solid trading volumes through the first half of Q4, including significant contribution from some of the newly launched brands. The holiday shopping season is just getting underway, and we have seen initial sales volumes in line with expectations so far.

In Q3, we generated total revenue of $220.8 million, up 25% year-over-year and 2% above the midpoint of our guidance range. Service fee revenue for the quarter was $103.5 million, and fulfillment services revenue for the quarter was $117.3 million. Service fee take rate was slightly lower than Q2 and in line with the first quarter, driven by mix, while fulfillment take rate was similar to last quarter and as expected, lower compared to the first quarter given the planned shift of certain volumes to multi-local and our growth within verticals that are multi-local by nature.

Progressing through the income statement, non-GAAP gross profit was $102.1 million, up 24% year-over-year representing a gross margin of 46.3% compared to 46.7% in the same period last year. GAAP gross profit was $99.6 million, representing a margin of 45.1%.

Moving on to operational expenses. In Q3, we continued to invest in the enhancement of our platform to further expand our offerings and add value for our merchants while leveraging our scale and AI tools and agents to gain efficiencies. R&D expense in Q3, excluding stock-based compensation, was $26.1 million or 11.8% of revenue compared to $22.8 million or 13% of revenue in the same period last year. Total R&D spend in Q3 was $30.8 million.

We also continued to invest for growth within our sales and marketing organization, while remaining focused on cost and efficiency including by the growing use of AI-powered tools across our sales and marketing activities, such as demand generation, lead qualification and outreach.

Sales and marketing expense, excluding Shopify-related amortization expenses, stock-based compensation and acquisition-related intangibles amortization, was $26.4 million or 12% of revenue compared to $21.5 million or 12.2% of revenue in the same period last year. Shopify warrant-related amortization expense was $8 million in the quarter, down from $37.4 million in Q3 '24. As I've discussed in the past several quarters, we expect this expense to remain at the same level for the remainder of the year and to be completely gone at the beginning of 2026.

Total sales and marketing spend for the quarter was $38.4 million, down from $62.7 million in the same quarter last year. General and administrative expenses, excluding stock-based compensation, acquisition-related expenses and acquisition-related contingent consideration were $9.2 million or 4.2% of revenue compared to $7.7 million or 4.4% of revenue in Q3 of last year.

Total G&A spend in the quarter was $13.4 million. Adjusted EBITDA was $41.3 million, up 33% from Q3 2024 and 5% above the midpoint of our guidance range. Adjusted EBITDA margin was 18.7% versus a 17.7% margin in Q3 2024, driven by lower operating expenses as a percent of revenue leveraging our scale and cost efficiencies. In Q3, our GAAP net profit was $13.2 million compared to a net loss of $22.6 million in the year ago period. The positive net profit was driven mainly by the reduced amortization expenses related to the Shopify warrants as well as our continued business growth and our growing efficiencies.

Moving on to the balance sheet and cash flow statements. We ended the quarter with $552 million in cash and cash equivalents, including short-term deposits and marketable securities. Q3 was a strong quarter of cash generation with free cash flow of $73.6 million in the quarter, an increase of 245% compared with Q3 of 2024. We believe that our free cash flow margin adjusted for seasonality will continue to be strong in the coming quarters.

As Amir highlighted, we expect to begin utilizing a portion of this cash to repurchase outstanding shares in the coming quarters in accordance with the Board authorization. We plan to start executing upon our buyback program in Q4, subject to market conditions and other applicable factors. We have a strong track record of cash generation and see an opportunity to return capital to shareholders to drive long-term value creation. We will also continue to look for opportunistic tuck-in acquisition opportunities to enhance our platform or offerings.

Now let's go through our guidance for the remainder of the year. For Q4 2025, we're expecting GMV to be in the range of $2.195 billion to $2.315 billion. At the midpoint of the range, this represents a growth rate of 32% versus Q4 of 2024. We expect Q4 revenue to be in the range of $318.5 million to $334.5 million, representing a year-over-year growth rate of 24% at the midpoint. For adjusted EBITDA, we're expecting profit to be in the range of $74.3 million to $88.7 million or a margin of 25% at the midpoint. For the full year of 2025, this implies GMV to be in the range of $6.404 billion to $6.524 billion, representing a 33% annual growth rate at the midpoint of the range, an increase of 2% from our guidance in the start of the year.

Revenue is expected to be in the range of $944.1 million to $960.1 million, representing a growth rate of 26.5% in the midpoint of the range, an increase of 1% from our initial guidance. And for adjusted EBITDA, we are expecting a range of $185.6 million to $200 million an increase of 37% versus 2024 at the midpoint and up 2% versus our initial guidance. We are excited by our guidance for Q4 and the full year of 2025 which reflects a strengthened outlook across all parameters. Furthermore, 2025 is expected to be our first GAAP profitable year as a public company. Our upward revised full year 2025 numbers demonstrate and reinforce our path to meet the medium-term targets that we provided at our Investor Day in March.

To summarize, we believe the current environment represents exciting opportunities for Global-E to create value for our merchants by growing their sales while optimizing their costs and to continue growing at a fast pace for the foreseeable future. Given the increasingly complicated global e-commerce environment, we believe our services are becoming more and more integral to merchants every day. The market opportunity in front of us remains massive, and we plan to continue on our path to support merchants worldwide in expanding their direct-to-consumer business.

And with that, Amir, Nir, Alan and I are happy to answer questions you may have. Operator?

[Operator Instructions] Your first question comes from Will Nance with Goldman Sachs.

[indiscernible]. I wanted to maybe touch a little bit on the commentary around the [indiscernible] product? It seems like you guys have continued to flag the function of the market with [indiscernible]. And maybe if you could talk more [indiscernible] the opportunity for the [indiscernible] services and any changes in how you're thinking about the longer-term trajectory of additional products [indiscernible]?

Will, thank you for your question. It's Nir. Well, very excited with the developments we've seen obtaining -- updating the permission to offer duties or drawback in more jurisdictions to our clients. As the market becomes more complex for merchants, duty burden globally is rising. We've seen the changes already implemented on U.S. import [indiscernible]. We've seen some changes in the Canadian regulation. We are aware of the upcoming removal of de minimis also for EU that is expected sometime in the back half of 2026 for the entire European community.

So the increase of -- in importance of duty drawback is clear because typically in e-commerce out of 100% that is being sold, you would see 10% to 15% that are coming back. Without duty drawback, it means that it's a loss of the duties on those sales, which typically account to 2% to 4%. So this is money that we can actually bring back home for our merchants, streamlining the cost effectiveness and in the current and foreseeable environment, that's a critical component to the trading.

That's great. It makes a lot of sense. And then, I guess, just separately, I was wondering if you could maybe speak to pipelines. I realize we're kind of done with implementation for this year heading into the holiday season. Was wondering if you could give some incremental color on just how pipelines heading into next year compared to this year, both in terms of the size and geography of merchants and just how you're seeing the [indiscernible]?

Sure, Will. We continue to see high demand for new services supporting merchants doing 3 B2C, multi-local and other value-added services we deployed. Furthermore, there are multiple opportunities that we are seeing in global e-commerce as it becomes more complex. It's driven by what we spoke about just now from the extra complexity on duties, it's driven from other factors of complexity and cost structure aligning shipping, wanting to do a multi-local efficiently across geos, et cetera. So all in all, we are quite optimistic. We see development across the different stages of our funnel. We've seen it deployed into our Q4, which is part of the confidence we have in the guidance we gave. So all in all, we're quite optimistic going into 2026.

And the next question comes from James Faucette with Morgan Stanley.

It's Michael Fontan on for James. I wanted to ask on service fee take rates. How much of that sequential take rate decel is just due to the fact that you're continuing to win with larger merchants? And as you think about the path forward with some of the renewal impacts beginning to show up in Q4, how are you thinking about the path for service fee take rates from here if there are case-by-case pricing concessions that are made with those concessions presumably being absorbed in the P&L via some of those improvements in unit economics that you referred to in the past?

Yes. So thank you for that, Michael. Regarding the first 9 months of the year, it has been slightly volatile, and it's mainly due to mix. So there are some mix shift between quarters. And in addition to that, as you mentioned, we see larger enterprise merchants, a higher share of larger enterprise merchants, which also have a certain impact. So when you look at Q3, similar levels to Q1, lower levels compared to Q2. And as we mentioned in Q2, we had some positive mix impact, that's on the service fee side.

Going forward, as we mentioned in the past, we don't see any significant wide change we do see from time to time, we might reprice on specifications. But -- but we are not -- we do not expect a significant change on service fee take rate. On the overall take rate picture, what we have been doing for the last few years and in the last quarter as well, is expanding our TAM by developing new business models that allows us to further serve new and existing merchants. And our main financial focus in these efforts has been driving profit, both from a margin and reported dollar perspective, and some of these models by nature, have lower take rates.

For example, as you know, multi-local is a good example for that. But important for us to note that they all meet our long-term profitability and support our long-term profitability goals. So on the fulfillment take rate side, we have seen some decrease over time. For the near future, we expect it to be around the levels that you've seen this quarter.

Very helpful. And then just secondly, on managed markets. I know you've spoken in the past about harmonizing the domestic and international experiences. But can you just talk about what mechanically has sort of changed versus the prior implementation and what you expect to learn in the beta and perhaps how you're thinking about a little bit more of a material merchant push into next year post that beta testing?

Sure. Thanks, Michael. It's Amir. So as we mentioned already, we've been making great progress on the rollout of the new managed markets, the new flow. The main change there, there are a few updates to the service, but I think the main cornerstone is that we've shifted the flows to work through Shopify payments, [indiscernible] through the dedicated payment infrastructure that we had in the previous iteration. And what that is expected to allow us is for, as you mentioned, a much more streamlined experience for the merchants in minimal change, if any, from how they're used to managing their store today. So that should be the, I would say, the great benefit of this new build.

And together with Shopify, we've done most of the development. It's pretty much ready for rollout in 2026. And we are already the -- better merchants that we mentioned, they're kind of live merchants because they're -- every new merchant as of the third quarter when we had the build in place, every new merchant that is signing up for a managed market is actually going through this new flow. So we are getting an increased volume of merchants and transactions. And this is serving as the kind of the better testing for this new flow. We use the learning from that to make some final refinements and we'll be ready for a full rollout next year.

And the next question comes from Brian Peterson with Raymond James.

So maybe high level, can we talk about post some of the changes in tariffs and everything else? Like what are you seeing in terms of the top of the funnel in kind of that white space or new merchants? Any update there in terms of the top of the funnel in terms of that progress?

Brian, it's Nir. So all in all, I think that in line with our expectation, we have seen some effect on same-store sales, especially on the inbound U.S. corridor, where we've seen some weakness and also on the corridors between U.S. and Canada. However, on a global perspective, trading holds strong and resilient. So we're quite optimistic there. Taking it into what we forecasted in our pipeline and the [indiscernible] midterm onwards, we start to see it materializing as global trading becomes more complex, our funnel is actually being built up quicker than before, and we are quite optimistic that the extra complexities with the solutions and capability we built around duty drawback, import duty drawback, 3 B2C multi-local split shipments, et cetera, would create a sustainable business growth of new business in the coming quarters.

Good to hear. And maybe just following up. For the ReturnGo acquisition, anything we should be thinking about in terms of contributions to revenue or expenses in the fourth quarter?

Yes. So for now, ReturnGo doesn't have a significant impact. It will contribute up to $1 million of revenue in Q4. And it will have a slight negative impact on adjusted EBITDA, nothing worth mentioning. We are very optimistic about return go because since we acquired the company, we have been started to implement the ReturnGo solution into Global-E. It's early days, but we see good interest and traction from merchants. And we see some upside potential as it is still insignificant as I mentioned, but the run rate of revenue since we acquired the company has significantly grown and we are quite optimistic going into 2026.

Good to hear. Congrats on the quarter.

And the next question comes from Mark Zgutowicz with Benchmark.

Nir, I was just hoping maybe you can round out the commentary around same-store sales in terms of second half NDR trends sort of year-over-year and how you're thinking about first half next year and maybe also balancing that with just new deal pipeline growth?

Thanks for the question. So as noted, same-store sales growth has been relatively stable throughout the year. And it continued despite the global tariff changes we've seen and the effect on key corridors. As I indicated, there was a slight weakness of the corridor of imports into the U.S. versus how other lanes are trading as well as some weakness between the Canada and the U.S. with imports into Canada. However, overall, it looks stable, and we do see some realization that started late Q3 in terms of, I would say, some adjustment of consumer behavior, maybe and merchants pricing to the new environment. So we expect it to stabilize also on those corridors going into 2026.

In terms of the funnel, as I noted, we are quite optimistic. As we stated in the last quarter discussion, this year, indeed, we didn't have mega clients launching at the back half of the year. However, this was compensated and we expected it to be compensated with multiple smaller merchants launches that are trading very, very well. So -- and this is, of course, embedded into the numbers that you see that show our confidence in the growth that would come from new merchants.

Got it. That's helpful. And on Borderfree, just curious, it sounds like things are progressing there quite nicely. If you can maybe talk about trajectory into next year in terms of monetization? Is that perhaps more of a first half or a second half type modest inflection there on the monetization front, that would be helpful?

We are very excited with the opportunity of borderfree.com. I think that when we set up acquiring Borderfree 2.5 years ago and then the building we did to the platform, our goal was to allow our merchants to have an effective brand awareness at a guaranteed ROI because we've seen the changes with back then with Google Cookie Policy, Apple iOS changes that actually made attribution harder on their media spend and actually cost of driving new traffic to our site was expensive and getting more expensive. This is even further accelerated with a lot of the eyeballs moving into ChatGPT, Gemini and others, which take -- again reduces the contribution and the attribution of paid media. And that further strengthen the model behind Borderfree. So we are very excited.

We see continued adoption of new merchants. We see more and more returning customers using borderfree.com. We expect that with investments we're making now into a direct to checkout solution, optimizing traffic journeys through the site, the new cart that we just launched just a couple of weeks ago, allowing you to buy more than one product out of borderfree.com, et cetera. We will see much more conversion out of there. It's already increasing in its share of demand generation to participate in brands, and we expect it to continue to accelerate 2026.

I'm not -- I don't see a material contribution to direct revenue, especially not in the first half of 2026. But if we meet our plans, I believe that over time, it will hold outside the direct revenue much more stickiness with our clients and even faster growth to their own same-store sales.

And the next question comes from Samad Samana with Jefferies.

This is Jeremy on for Samad. Congrats on the strong results. I guess, first, can you please give the FX impact on 3Q GMV and total revenue? And what FX impact are you baking into the 4Q guidance?

So FX was much more stable in Q3 compared to Q2. We haven't seen any significant impact or on the top line and on the bottom line. And at least for now, it seems pretty stable in Q4 as well. So no big shifts and we don't expect any significant or material impact on [indiscernible] this quarter.

Okay. And then on the enterprise integration with Shopify, have you seen any change to the competitive dynamics or any key learnings or takeaways from shifting to the new partnership? And then maybe can you help us size the uplift transitioning to preferred economics that you're expecting going forward?

Samad, its Nir. In general, we haven't seen any material changes in the competitive environment. Over the last few quarters, we continue to clearly lead the market in the robustness, capabilities and offering of our platform and services. On Shopify specifically, we haven't seen notable changes since we signed a new agreement and transferred to the preferred status.

Looking at the enterprise side, we don't see no one competes with us in a meaningful way today. There is another [indiscernible] provider that supports enterprise brands, however, the traction is low outside Shopify, and we expect it to be even lower within Shopify.

On the smaller players, that are working on Shopify, those have been selling a [indiscernible] solution or point solutions even before the change and they haven't managed to take any enterprise merchants and only, I would say, very low traction within the smaller ones. So we haven't seen any material change to the dynamic.

In terms of the Shopify rev share, it has the improved economics from the new contract began towards the end of Q3 and the full impact is reflected in the Q4 guidance.

The next question comes from Patrick Walravens with Citizens Bank.

Great. At a high level, can you guys just explain how the duty drawback works like very simply for people who don't quite get it? And then also what you need to do in order to roll it out in a new country?

Yes. So let's take into -- an example, a sale of a U.S. merchant to a Canadian shopper. Let's assume that the goods that were bought were USD 200. Once they hit the Canadian borders duty and tax applied, whether if they were paid in advance, paid at the border, duty and tax applies. The average duty rate, let's put it at 15%, would be another $30 that are paid on that -- on those goods and another 5% for sales tax, and you get $40 that are levied on this $20 or $200 parcel. Overall, this $40 are paid by the merchant or by the shopper, but they are part of what the merchant build into his pricing when he saw the goods.

However, if I stated 10% of the goods are coming back or 15% even, it means that out of those $40 checks, on average, $4 to $6 are represented by returned goods. And actually, those dollars are lost today. With Global-E, for example, in Canada, where we have a CBSA approved credit program for our brands, we are actually able to reclaim those $4 to $6 for our brand, actually optimizing the cost structure selling into Canada around 2% for each transaction.

All right. That's great. Okay. So you shouldn't have to pay on the things you return. Got it. And then Ofer a follow-up for you. As I look at your 4-year plan versus where you are now, everything seems to make a lot of sense, except maybe the non-GAAP gross margins, your fiscal '25 to '28, guidance is high 40s and you are 46 this quarter, right? So I don't think that's high. So can we just address that a little bit?

Yes. So I think that as we've mentioned in the Investor Day, we did not expect gross margins to increase over the levels that we have been able to reach. Basically, what we solve for is bottom line is cash generation and adjusted EBITDA that is more or less correlated to it. And as I mentioned, there are -- we have developed different models over time with different profiles that have some impact, different impact on [indiscernible].

So I think that we're actually, from our angle, we are on track to reach that target. We believe that we will be in the high 40s for gross margin. We're in that neighborhood now. And over time, we think that we can stay in similar levels, maybe likely improve over the term of the plan that we presented.

The next question comes from Koji Ikeda with Bank of America.

I wanted to ask about agenetic commerce. And can you talk a little bit about how Global-E will help with the data flow to power agentic commerce? I mean do you envision globally plugging directly into the ChatGPT type agentic commerce experiences? And how, if at all, is agentic commerce changing sales cycles right now?

Sure, Koji, it's Amir. Thanks for your question. Again, I touched upon it a bit in the prepared remarks. We do believe that a agentic commerce is going to affect the entire value chain of e-commerce. And we're already starting to see signs of that today. As I mentioned, mean starting from the top of the funnel, kind of demand generation is being done today more with AI-enabled technologies, including marketing campaigns, even campaigns that we ourselves are doing for B2C. They are using the Meta Advantage Plus tools that are AI-driven and we're building custom generative AI-based tools to streamline many functions across the funnel from consumer support and [indiscernible] scoping and in targeting and outreach to merchants.

So we think that the -- especially the high growth kind of D2C brands, they're probably the best position to work to leverage AI integrations and remove barriers that currently exist in marketing and selling and advertising and creating traffic from markets where previously it was very complex for them to create brand awareness with manual processes.

So we're looking -- we're constantly looking at the new developments in the field. We're very impressed by what AI-supported platforms have been able to achieve in the relatively short time. And we're already seeing some transactions, not directly through kind of instant checkout, but transactions that are already initiated from ChatGPT and from agent-assisted in-chat checkout. And we believe this will grow in the future.

In any case, given our expertise, given our unique know-how and our scale of data and capabilities, we believe we are best positioned to provide the kind of international and the cross-border layers that are required in order to enable these AI-powered transactions in the future.

Got it. And maybe a follow-up here. I look at the third quarter GMV growth, looks really strong and the 2025 GMV guide, that's really good, too. And so last year on the third quarter call, you did give some early look GMV growth color for 2025 of 30%. And clearly, the guide today implies that you're going to achieve that. So is there anything you can share today for 2026 GMV growth assumptions?

Yes. We are very happy with the Q3 results and the growth trajectory we are seeing into Q4, and this will also support us going into 2026. As mentioned in the prepared remarks, we have seen very successful merchant launches in recent months and they're also trading very well. So we believe that this will provide us some tailwind going into '26. Generally speaking, we believe that we are on path to achieve our midterm targets. And I think this is sort of the framework that we are looking at going into '26.

And the next question comes from Rob Wildhack with Autonomous Research.

To start on the repurchase, could you just give us some additional thoughts on your approach to like a time frame around the $200 million?

So as we mentioned on the call, we have been in a closed window up till now, and we plan to start executing on the plan soon. The pace will depend on the market conditions and another aspect. But we do expect to start executing very soon and start to buy some of this plan in the coming months.

Okay. And then bigger picture, could you just remind us about how you're thinking about the bridge between adjusted EBITDA and free cash flow, both as it relates to the guidance, but also in the context of the longer-term target? Any numbers that you could put to the free cash generation maybe between 2020 -- the bridge between 2026 and that longer-term target for, I think, mid- to high 20% margins?

Yes. So generally speaking, when we look at the full year, because we have seasonality for cash flow and free cash flow -- but when you look at the full year, it typically correlates with adjusted EBITDA, but it's higher. If you look at the previous years, and we expect it to continue to be somewhat higher compared to adjusted EBITDA. And this is supported mainly by working capital as long as we grow, this gives us some tailwind. And we expect it to continue on that path in the coming years as well.

I think -- also important to note, as we guided on the longer-term targets, we do have efficiencies of scale as we continue to grow. You can see it on the long-term trajectory of improvement in our EBITDA and of course, out of it, you will see also the improvement coming on our free cash flow that is trading even slightly better.

And the next question comes from Chris Zang with UBS.

And I just have a question on the regional trends you've seen so far, and I'm talking about the merchant outbound region. And it looks like there's some softness in the U.S. that was offset by U.K. and European Union, even if you adjusted for [indiscernible] for U.K., can you maybe just comment on some of the regional trends versus the prior quarters and what are [indiscernible]?

I think what you referred to is the fact that the share of the U.S. outbound was slightly lower this quarter. I don't think that it reflects a weakness on the U.S. trading outbound. It's much more reflects the mix of our new launches that is coming from additional origins, such as our great success in APAC and also some growth in Continental Europe that in share grew faster than the launches we had in U.K. And also some of the merchants have traded even better. But the combination of both yielded this result. It's not that we expect it to, over time, be consistent. So I wouldn't use the [indiscernible].

And that concludes our question-and-answer session. I'll hand it back to Global-E CEO, Amir for closing remarks.

Thank you. And on behalf of the entire global team, I would like to thank everyone for joining us today and for your ongoing support. Despite the uncertainty that the global commerce markets faced at the start of the year, we've continued to outperform every step of the way. Our outlook and market positioning is as strong as it's ever been, and we're excited to demonstrate continued performance for the remainder of 2025 and for years to come. We see tremendous opportunity within the market for our platform and services.

As we grow in both new and existing merchants, our confidence in the value that Global-E is bringing to the e-commerce market remains reinforced. With a long runway of innovation and growth here at Global-E and by leaning into the opportunities ahead of us, we remain confident in our ability to achieve our growth targets across our key metrics for the foreseeable future.

We look forward to speaking with many of you during the quarter and updating you on our future earnings calls. Until then, goodbye and take care.

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may now disconnect.