Global-E Online Files For $100 Million IPO

Summary

• Global-E Online has filed to raise $100 million in an IPO, although the final figure may differ.
• The firm provides a cross-border e-commerce platform for enterprises.
• GLBE has performed impressively during the pandemic, growing sharply across major metrics.
• Looking for more investing ideas like this one? Get them exclusively at IPO Edge. Learn More »

Photo by ipopba/iStock via Getty Images

Quick Take

Global-E Online (NASDAQ:GLBE) has filed to raise $100 million in an IPO of its ordinary shares, according to an F-1 registration statement.

The firm provides a border neutral e-commerce solution for merchants seeking to sell direct-to-consumer [D2C].

GLBE has produced strong financial results across major metrics during the pandemic.

I'll provide a final opinion when we learn more about the IPO from management.

Company & Technology

Petah Tikva, Israel-based Global-E was founded to develop a cross-border e-commerce platform that makes it easier for merchants to sell their products internationally.

Management is headed by co-founder and CEO Amir Schlachet, who was previously SVP and strategic advisor to Bank Hapoalim.

Below is a brief overview video of the firm:

Source: Global-e

The company's primary offerings include:

• Localized languages

• Support for over 100 currencies

• 150 Payment methods

• Pre-calculate & remit duties

• 20 shipping carriers

• Multi-lingual after-sale support & returns

Global-E has received at least $120 million from investors including Red Dot Capital, Deutsche Post Beteiligungen, Goor Holdco and Cross Ship.

Customer Acquisition

The firm seeks customer relationships through direct sales, inbound prospect leads and through channel partnerships.

A typical sales cycle can take from three weeks to six months and implementation can require up to 16 weeks for large merchants or 3 - 6 weeks for smaller businesses.

Sales and Marketing expenses as a percentage of total revenue have remained stable as revenues have increased sharply, as the figures below indicate:

Sales & Marketing	Expenses vs. Revenue
Period	Percentage
2020	7.1%
2019	7.0%

Click to enlarge

Source: Company registration statement

The Sales and Marketing efficiency rate, defined as how many dollars of additional new revenue are generated by each dollar of Sales and Marketing spend, was a strong 7.3x in the most recent reporting period.

GLBE has produced a net dollar retention rate of 172% for the calendar year 2020, an extremely high rate. It indicates high product market fit, growing revenue from its existing cohort of customers, and efficient sales and marketing efforts.

Market & Competition

According to a 2020 market research report by Grand View Research, the global e-commerce market was an estimated $9.1 trillion in 2019 and is expected to reach $27 trillion by 2027.

This represents a forecast CAGR of 14.7% from 2020 to 2027.

The main drivers for this expected growth are an increasing acceptance of technology as a means to purchase all manner of goods and a growing middle-class population worldwide.

Also, the chart below shows the 2019 e-commerce market share by model type:

Major competitive or other industry participants include:

• In-House D2C online stores

• Alternative platforms

• Legacy Players

• Local Distributors

• Non-D2C online channels

Financial Performance

Global-E's recent financial results can be summarized as follows:

• Sharply growing topline revenue

• Increasing gross profit and gross margin

• A swing to operating profit and net income

• A strong increase in cash flow from operations

Below are relevant financial results derived from the firm's registration statement:

Total Revenue
Period	Total Revenue	% Variance vs. Prior
2020	$ 136,375,000	107.1%
2019	$ 65,852,000
Gross Profit (Loss)
Period	Gross Profit (Loss)	% Variance vs. Prior
2020	$ 43,473,000	132.9%
2019	$ 18,664,000
Gross Margin
Period	Gross Margin
2020	31.88%
2019	28.34%
Operating Profit (Loss)
Period	Operating Profit (Loss)	Operating Margin
2020	$ 9,023,000	6.6%
2019	$ (4,951,000)	-7.5%
Net Income (Loss)
Period	Net Income (Loss)
2020	$ 7,891,000
2019	$ (7,544,000)
Cash Flow From Operations
Period	Cash Flow From Operations
2020	$ 29,350,000
2019	$ 7,028,000
(Glossary Of Terms)

Click to enlarge

Source: Company registration statement

As of December 31, 2020, Global-E had $68.6 million in cash and $89.9 million in total liabilities.

Free cash flow during the twelve months ended December 31, 2020, was $29 million.

IPO Details

Global-E intends to raise $100 million in gross proceeds from an IPO of its ordinary shares, although the final figure may vary.

No existing shareholders have indicated an interest to purchase shares at the IPO price.

Management says it will use the net proceeds from the IPO as follows:

The principal purposes of this offering are to obtain additional working capital, to create a public market for our ordinary shares and to facilitate our future access to the public equity markets. We intend to use the net proceeds from this offering for general corporate purposes, including advertising and marketing, technology development, working capital, operating expenses and capital expenditures.

Management's presentation of the company roadshow is not available.

Listed bookrunners of the IPO are Goldman Sachs, Morgan Stanley, Jefferies, Piper Sandler, JMP Securities, KeyBanc Capital Markets and Raymond James.

Commentary

Global-E is seeking U.S. public capital investment to fuel its growth ambitions as sales have increased markedly during the pandemic.

The firm's financials show strong financial growth results across all major metrics.

Free cash flow for 2020 was a healthy $29 million.

Sales and Marketing expenses as a percentage of total revenue dropped as revenues grew; its Sales and Marketing efficiency rate was a very strong 7.3x during 2020.

The firm's net dollar retention rate was a very high 172% in 2020. This indicates strong product market fit and efficient sales & marketing efforts.

The market opportunity for providing international e-commerce services is large and expected to grow substantially as part of the overall e-commerce market.

Goldman Sachs is the lead left underwriter and IPOs led by the firm over the last 12-month period have generated an average return of 47.3% since their IPO. This is a mid-tier performance for all major underwriters during the period.

The primary risk to the company's outlook would be numerous competitors from large e-commerce players as well as companies building their own in-house operations.

GLBE takes care of a big pain point for firms seeking to grow their business by automating many of the localization functions required to operate in various jurisdictions.

When we learn more about the company's pricing and valuation assumptions, I'll provide a final opinion.

Expected IPO Pricing Date: To be announced.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.