Global-e Needs Payments To Be Profitable

SaaS
Written By Rick Watson

Crossborder provider Global-e filed its SEC F1 in middle May 2021. Yes, this is the company that Shopify now owns 5.5% of.

Here are a few notes:

  • The valuation seems to be based on growth of GMV. Who values a company at 4x GMV? Approximately $4B valuation on 750M GMV on $136M revenue. The word "stratospheric" comes to mind.

  • To that point, this is not a super-high margin business - around 30%. Three years ago that was at 22%. Microsoft and Salesforce are at about 67% Gross Margins, which gives you some idea of the difference in these businesses. Historically low-margin Wayfair has 28% gross margins.

  • First recent net profitable year ever was in 2020 at $8M.

  • % Revenue: UK + EU = 65%, America = 33%

  • Because supply chain is a big part of their value proposition, this is a service business primarily, not just a software business.

  • 400 merchants on the platform.

  • I conclude that Global-e needs to become primarily a global payments business going forward to become profitable. Gives you some idea why Shopify / Shop Pay is so interested.

Rick Watson

Rick Watson founded RMW Commerce Consulting after spending 20+ years as a technology entrepreneur and operator exclusively in the eCommerce industry with companies like ChannelAdvisor, BarnesandNoble.com, Merchantry, and Pitney Bowes.

Watson’s work today is centered on supporting investors and management teams incubating and growing direct-to-consumer businesses. Most recently, in partnership with WHP Global, Rick was a critical resource in architecting the WHP+ platform, a new turnkey direct to consumer digital e-commerce platform that powers AnneKlein.com and JosephAbboud.com.

Watson also hosts a weekly podcast, Watson Weekly, where he shares an unbiased, unfiltered expert take on the retail sector’s biggest players.

In the past year alone, Rick has spoken at many in-person and virtual events as well as podcasts on topics ranging from retail/ecom to supply chain/logistics and even digital grocery including CommerceNext IRL, ASCM Connect, and Retail Innovation Conference.

https://www.rmwcommerce.com/
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