20-F 1 zk2431184.htm 20-F Global-E Online Ltd. - 1835963 - 2024
false0001835963FYTechnology, Partnership Agreement, Customer relationships and Trademark's fair values were determined using the income approach. The fair value of the assets above were determined using the income approach. http://fasb.org/us-gaap/2023#UsefulLifeTermOfLeaseMemberLess than 1% Refer to note 8g. As of December 31, 2022 unrecognized tax benefit in amount of $53.7 million was related to Net operating loss carryforwards for which the Company has recognized valuation allowance. 0001835963 2023-12-31 0001835963 2021-01-01 2021-12-31 0001835963 2022-01-01 2022-12-31 0001835963 2022-12-31 0001835963 2023-01-01 2023-12-31 0001835963us-gaap:ComputerEquipmentMember 2022-12-31 0001835963us-gaap:ComputerEquipmentMember 2023-12-31 0001835963us-gaap:FurnitureAndFixturesMember 2022-12-31 0001835963us-gaap:FurnitureAndFixturesMember 2023-12-31 0001835963us-gaap:LeaseholdImprovementsMember 2022-12-31 0001835963us-gaap:LeaseholdImprovementsMember 2023-12-31 0001835963us-gaap:MutualFundMember 2022-12-31 0001835963us-gaap:MutualFundMember 2023-12-31 0001835963us-gaap:USGovernmentDebtSecuritiesMember 2022-12-31 0001835963us-gaap:CorporateDebtSecuritiesMember 2022-12-31 0001835963us-gaap:USGovernmentDebtSecuritiesMember 2023-12-31 0001835963us-gaap:CorporateDebtSecuritiesMember 2023-12-31 0001835963dei:BusinessContactMember 2023-01-01 2023-12-31 0001835963glbe:CommercialAgreementMember 2023-01-01 2023-12-31 0001835963glbe:CommercialAgreementMember 2021-12-31 0001835963glbe:CommercialAgreementMember 2021-01-01 2021-12-31 0001835963glbe:CommercialAgreementMember 2022-12-31 0001835963glbe:CommercialAgreementMember 2023-12-31 0001835963glbe:CommercialAgreementMember 2022-01-01 2022-12-31 0001835963us-gaap:AssetManagementArrangementMember 2021-01-01 2021-12-31 0001835963us-gaap:AssetManagementArrangementMember 2022-01-01 2022-12-31 0001835963us-gaap:AssetManagementArrangementMember 2022-12-31 0001835963us-gaap:AssetManagementArrangementMember 2023-12-31 0001835963us-gaap:AssetManagementArrangementMember 2023-01-01 2023-12-31 0001835963 2024-03-31 0001835963glbe:FlowAcquisitionMember 2022-01-03 0001835963us-gaap:TechnologyServiceMemberglbe:FlowAcquisitionMember 2022-01-01 2022-01-03 0001835963us-gaap:TechnologyServiceMemberglbe:FlowAcquisitionMember 2023-12-31 0001835963glbe:FlowAcquisitionMemberglbe:PartnershipAgreementMember 2023-12-31 0001835963glbe:FlowAcquisitionMemberglbe:PartnershipAgreementMember 2022-01-01 2022-01-03 0001835963glbe:FlowAcquisitionMemberus-gaap:CustomerRelationshipsMember 2023-12-31 0001835963glbe:FlowAcquisitionMemberus-gaap:CustomerRelationshipsMember 2022-01-01 2022-01-03 0001835963glbe:FlowAcquisitionMemberus-gaap:TrademarksMember 2023-12-31 0001835963glbe:FlowAcquisitionMemberus-gaap:TrademarksMember 2022-01-01 2022-01-03 0001835963glbe:FlowAcquisitionMember 2022-01-01 2022-01-03 0001835963us-gaap:TechnologyServiceMemberglbe:BorderfreeAcquisitionMember 2022-07-01 0001835963us-gaap:TechnologyServiceMemberglbe:BorderfreeAcquisitionMember 2022-06-01 2022-07-01 0001835963glbe:BorderfreeAcquisitionMemberus-gaap:CustomerRelationshipsMember 2022-07-01 0001835963glbe:BorderfreeAcquisitionMemberus-gaap:CustomerRelationshipsMember 2022-06-01 2022-07-01 0001835963glbe:BorderfreeAcquisitionMember 2022-07-01 0001835963glbe:BorderfreeAcquisitionMemberglbe:MarketingAssetsMember 2022-07-01 0001835963glbe:BorderfreeAcquisitionMemberglbe:MarketingAssetsMember 2022-06-01 2022-07-01 0001835963glbe:BorderfreeAcquisitionMemberglbe:GtsDutyMember 2022-07-01 0001835963glbe:BorderfreeAcquisitionMemberglbe:GtsDutyMember 2022-06-01 2022-07-01 0001835963glbe:BorderfreeAcquisitionMember 2022-06-01 2022-07-01 0001835963glbe:FlowAcquisitionMember 2021-12-25 2022-01-03 0001835963glbe:BorderfreeAcquisitionMember 2022-12-31 0001835963glbe:BorderfreeAcquisitionMember 2022-07-05 2022-12-31 0001835963glbe:FlowAcquisitionMember 2022-01-02 2022-12-31 0001835963glbe:BorderfreeAcquisitionMember 2023-01-01 2023-12-31 0001835963us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MutualFundMember 2022-12-31 0001835963us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MutualFundMember 2022-12-31 0001835963us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MutualFundMember 2022-12-31 0001835963us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MutualFundMember 2022-12-31 0001835963us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USGovernmentDebtSecuritiesMember 2022-12-31 0001835963us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USGovernmentDebtSecuritiesMember 2022-12-31 0001835963us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USGovernmentDebtSecuritiesMember 2022-12-31 0001835963us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USGovernmentDebtSecuritiesMember 2022-12-31 0001835963us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember 2022-12-31 0001835963us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember 2022-12-31 0001835963us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember 2022-12-31 0001835963us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember 2022-12-31 0001835963us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember 2022-12-31 0001835963us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember 2022-12-31 0001835963us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember 2022-12-31 0001835963us-gaap:FairValueMeasurementsRecurringMember 2022-12-31 0001835963us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MutualFundMember 2023-12-31 0001835963us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MutualFundMember 2023-12-31 0001835963us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MutualFundMember 2023-12-31 0001835963us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MutualFundMember 2023-12-31 0001835963us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USGovernmentDebtSecuritiesMember 2023-12-31 0001835963us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USGovernmentDebtSecuritiesMember 2023-12-31 0001835963us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USGovernmentDebtSecuritiesMember 2023-12-31 0001835963us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember 2023-12-31 0001835963us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember 2023-12-31 0001835963us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember 2023-12-31 0001835963us-gaap:FairValueMeasurementsRecurringMember 2023-12-31 0001835963us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember 2023-12-31 0001835963us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember 2023-12-31 0001835963us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember 2023-12-31 0001835963 2020-12-31 0001835963 2021-12-31 0001835963us-gaap:TechnologyBasedIntangibleAssetsMember 2023-12-31 0001835963us-gaap:CustomerRelationshipsMember 2023-12-31 0001835963glbe:PartnershipAgreementMember 2023-12-31 0001835963us-gaap:MarketingRelatedIntangibleAssetsMember 2023-12-31 0001835963us-gaap:TrademarksMember 2023-12-31 0001835963glbe:GTSDutyCalculatorMember 2023-12-31 0001835963us-gaap:CostOfSalesMember 2023-01-01 2023-12-31 0001835963us-gaap:SellingAndMarketingExpenseMember 2023-01-01 2023-12-31 0001835963us-gaap:TechnologyBasedIntangibleAssetsMember 2022-12-31 0001835963us-gaap:CustomerRelationshipsMember 2022-12-31 0001835963glbe:PartnershipAgreementMember 2022-12-31 0001835963us-gaap:MarketingRelatedIntangibleAssetsMember 2022-12-31 0001835963us-gaap:TrademarksMember 2022-12-31 0001835963glbe:GTSDutyCalculatorMember 2022-12-31 0001835963us-gaap:CostOfSalesMember 2022-01-01 2022-12-31 0001835963us-gaap:SellingAndMarketingExpenseMember 2022-01-01 2022-12-31 0001835963srt:MinimumMemberus-gaap:FurnitureAndFixturesMember 2023-12-31 0001835963srt:MaximumMemberus-gaap:FurnitureAndFixturesMember 2023-12-31 0001835963glbe:ServiceFeesMember 2021-01-01 2021-12-31 0001835963glbe:ServiceFeesMember 2022-01-01 2022-12-31 0001835963glbe:ServiceFeesMember 2023-01-01 2023-12-31 0001835963glbe:FulfillmentServicesMember 2021-01-01 2021-12-31 0001835963glbe:FulfillmentServicesMember 2022-01-01 2022-12-31 0001835963glbe:FulfillmentServicesMember 2023-01-01 2023-12-31 0001835963country:GB 2023-01-01 2023-12-31 0001835963country:GB 2022-01-01 2022-12-31 0001835963country:GB 2021-01-01 2021-12-31 0001835963country:US 2023-01-01 2023-12-31 0001835963country:US 2022-01-01 2022-12-31 0001835963country:US 2021-01-01 2021-12-31 0001835963us-gaap:EuropeanUnionMember 2023-01-01 2023-12-31 0001835963us-gaap:EuropeanUnionMember 2022-01-01 2022-12-31 0001835963us-gaap:EuropeanUnionMember 2021-01-01 2021-12-31 0001835963country:IL 2023-01-01 2023-12-31 0001835963country:IL 2022-01-01 2022-12-31 0001835963country:IL 2021-01-01 2021-12-31 0001835963srt:ReportableGeographicalComponentsMembercountry:IL 2021-12-31 0001835963srt:ReportableGeographicalComponentsMembercountry:IL 2022-12-31 0001835963srt:ReportableGeographicalComponentsMembercountry:IL 2023-12-31 0001835963srt:ReportableGeographicalComponentsMembercountry:GB 2021-12-31 0001835963srt:ReportableGeographicalComponentsMembercountry:GB 2022-12-31 0001835963srt:ReportableGeographicalComponentsMembercountry:GB 2023-12-31 0001835963srt:ReportableGeographicalComponentsMemberglbe:RestOfWorldMember 2021-12-31 0001835963srt:ReportableGeographicalComponentsMemberglbe:RestOfWorldMember 2022-12-31 0001835963srt:ReportableGeographicalComponentsMemberglbe:RestOfWorldMember 2023-12-31 0001835963srt:ReportableGeographicalComponentsMember 2021-12-31 0001835963srt:ReportableGeographicalComponentsMember 2022-12-31 0001835963srt:ReportableGeographicalComponentsMember 2023-12-31 0001835963srt:ReportableGeographicalComponentsMembercountry:US 2023-12-31 0001835963srt:ReportableGeographicalComponentsMembercountry:US 2022-12-31 0001835963srt:ReportableGeographicalComponentsMembercountry:US 2021-12-31 0001835963glbe:OtherCountriesMember 2023-01-01 2023-12-31 0001835963glbe:OtherCountriesMember 2022-01-01 2022-12-31 0001835963glbe:OtherCountriesMember 2021-01-01 2021-12-31 0001835963glbe:LargestCustomerMember 2021-01-01 2021-12-31 0001835963srt:MinimumMemberus-gaap:TechnologyBasedIntangibleAssetsMember 2023-12-31 0001835963srt:MaximumMemberus-gaap:TechnologyBasedIntangibleAssetsMember 2023-12-31 0001835963srt:MinimumMemberus-gaap:CustomerRelationshipsMember 2023-12-31 0001835963srt:MaximumMemberus-gaap:CustomerRelationshipsMember 2023-12-31 0001835963us-gaap:LeaseholdsAndLeaseholdImprovementsMember 2023-12-31 0001835963glbe:CostToFulfillContractMember 2022-12-31 0001835963glbe:CostToFulfillContractMember 2023-01-01 2023-12-31 0001835963glbe:CostToFulfillContractMember 2023-12-31 0001835963srt:ScenarioPreviouslyReportedMember 2022-01-01 2022-12-31 0001835963srt:RestatementAdjustmentMember 2022-01-01 2022-12-31 0001835963srt:RestatementAdjustmentMember 2021-01-01 2021-12-31 0001835963srt:ScenarioPreviouslyReportedMember 2021-01-01 2021-12-31 0001835963us-gaap:EmployeeStockOptionMember 2021-01-01 2021-12-31 0001835963us-gaap:EmployeeStockOptionMember 2022-01-01 2022-12-31 0001835963us-gaap:EmployeeStockOptionMember 2023-01-01 2023-12-31 0001835963glbe:UnvestedRsusMember 2023-01-01 2023-12-31 0001835963glbe:OutstandingWarrantsToOrdinarySharesMember 2023-01-01 2023-12-31 0001835963glbe:OutstandingWarrantsToOrdinarySharesMember 2022-01-01 2022-12-31 0001835963glbe:OutstandingWarrantsToOrdinarySharesMember 2021-01-01 2021-12-31 0001835963glbe:UnvestedRsusMember 2022-01-01 2022-12-31 0001835963glbe:UnvestedRsusMember 2021-01-01 2021-12-31 0001835963us-gaap:ForeignCountryMember 2022-01-01 2022-12-31 0001835963us-gaap:ForeignCountryMember 2021-01-01 2021-12-31 0001835963us-gaap:ForeignCountryMember 2023-01-01 2023-12-31 0001835963country:IL 2023-12-31 0001835963country:GB 2023-12-31 0001835963country:US 2023-12-31 0001835963us-gaap:AdditionalPaidInCapitalMember 2021-01-01 2021-12-31 0001835963us-gaap:RetainedEarningsMember 2020-12-31 0001835963us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-12-31 0001835963us-gaap:AdditionalPaidInCapitalMember 2020-12-31 0001835963us-gaap:CommonStockMember 2020-12-31 0001835963us-gaap:ConvertiblePreferredStockMember 2020-12-31 0001835963us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-01-01 2021-12-31 0001835963us-gaap:RetainedEarningsMember 2021-01-01 2021-12-31 0001835963us-gaap:CommonStockMember 2021-01-01 2021-12-31 0001835963us-gaap:ConvertiblePreferredStockMember 2021-01-01 2021-12-31 0001835963us-gaap:RetainedEarningsMember 2021-12-31 0001835963us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-12-31 0001835963us-gaap:AdditionalPaidInCapitalMember 2021-12-31 0001835963us-gaap:CommonStockMember 2021-12-31 0001835963us-gaap:ConvertiblePreferredStockMember 2021-12-31 0001835963us-gaap:ConvertiblePreferredStockMember 2023-12-31 0001835963us-gaap:CommonStockMember 2023-12-31 0001835963us-gaap:AdditionalPaidInCapitalMember 2023-12-31 0001835963us-gaap:AccumulatedOtherComprehensiveIncomeMember 2023-12-31 0001835963us-gaap:RetainedEarningsMember 2023-12-31 0001835963us-gaap:AdditionalPaidInCapitalMember 2022-01-01 2022-12-31 0001835963us-gaap:CommonStockMember 2022-01-01 2022-12-31 0001835963us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-01-01 2022-12-31 0001835963us-gaap:RetainedEarningsMember 2022-01-01 2022-12-31 0001835963us-gaap:RetainedEarningsMember 2022-12-31 0001835963us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-12-31 0001835963us-gaap:AdditionalPaidInCapitalMember 2022-12-31 0001835963us-gaap:CommonStockMember 2022-12-31 0001835963us-gaap:ConvertiblePreferredStockMember 2022-12-31 0001835963us-gaap:AdditionalPaidInCapitalMember 2023-01-01 2023-12-31 0001835963us-gaap:CommonStockMember 2023-01-01 2023-12-31 0001835963us-gaap:AccumulatedOtherComprehensiveIncomeMember 2023-01-01 2023-12-31 0001835963us-gaap:RetainedEarningsMember 2023-01-01 2023-12-31 0001835963us-gaap:ConvertiblePreferredStockMember 2023-01-01 2023-12-31 0001835963glbe:ShareIncentivePlan2021Member 2022-12-31 0001835963glbe:ShareIncentivePlan2021Member 2022-01-01 2022-12-31 0001835963glbe:ShareIncentivePlan2021Member 2023-01-01 2023-12-31 0001835963glbe:ShareIncentivePlan2021Member 2023-12-31 0001835963glbe:ShareIncentivePlan2013Member 2019-01-01 2019-01-31 0001835963glbe:ShareIncentivePlan2013Member 2019-02-01 2019-02-28 0001835963 2021-03-01 2021-03-21 0001835963us-gaap:CostOfSalesMemberglbe:ShareIncentivePlan2021Member 2021-01-01 2021-12-31 0001835963us-gaap:CostOfSalesMemberglbe:ShareIncentivePlan2021Member 2022-01-01 2022-12-31 0001835963us-gaap:CostOfSalesMemberglbe:ShareIncentivePlan2021Member 2023-01-01 2023-12-31 0001835963us-gaap:ResearchAndDevelopmentExpenseMemberglbe:ShareIncentivePlan2021Member 2021-01-01 2021-12-31 0001835963us-gaap:ResearchAndDevelopmentExpenseMemberglbe:ShareIncentivePlan2021Member 2022-01-01 2022-12-31 0001835963us-gaap:ResearchAndDevelopmentExpenseMemberglbe:ShareIncentivePlan2021Member 2023-01-01 2023-12-31 0001835963us-gaap:SellingAndMarketingExpenseMemberglbe:ShareIncentivePlan2021Member 2021-01-01 2021-12-31 0001835963us-gaap:SellingAndMarketingExpenseMemberglbe:ShareIncentivePlan2021Member 2022-01-01 2022-12-31 0001835963us-gaap:SellingAndMarketingExpenseMemberglbe:ShareIncentivePlan2021Member 2023-01-01 2023-12-31 0001835963us-gaap:GeneralAndAdministrativeExpenseMemberglbe:ShareIncentivePlan2021Member 2021-01-01 2021-12-31 0001835963us-gaap:GeneralAndAdministrativeExpenseMemberglbe:ShareIncentivePlan2021Member 2022-01-01 2022-12-31 0001835963us-gaap:GeneralAndAdministrativeExpenseMemberglbe:ShareIncentivePlan2021Member 2023-01-01 2023-12-31 0001835963glbe:ShareIncentivePlan2021Member 2021-01-01 2021-12-31 0001835963 2021-03-21 0001835963us-gaap:RestrictedStockUnitsRSUMember 2023-01-01 2023-12-31 0001835963us-gaap:RestrictedStockUnitsRSUMember 2022-12-31 0001835963srt:MaximumMemberglbe:ShareIncentivePlan2021Member 2023-01-01 2023-12-31 0001835963us-gaap:RestrictedStockUnitsRSUMember 2023-12-31 0001835963us-gaap:RestrictedStockUnitsRSUMember 2021-12-31 0001835963srt:MinimumMemberglbe:ShareIncentivePlan2021Member 2023-01-01 2023-12-31 0001835963glbe:Warrant2Member 2022-12-31 0001835963glbe:Warrant2Member 2022-01-01 2022-12-31 0001835963glbe:Warrant1Member 2021-12-31 0001835963glbe:Warrant1Member 2021-01-01 2021-12-31 0001835963glbe:Warrant1Member 2022-12-31 0001835963glbe:Warrant1Member 2023-01-01 2023-12-31 0001835963glbe:Warrant3Member 2022-12-31 0001835963us-gaap:RestrictedStockUnitsRSUMember 2021-01-01 2021-12-31 0001835963us-gaap:RestrictedStockUnitsRSUMember 2022-01-01 2022-12-31 0001835963glbe:Warrant1Member 2023-12-31 0001835963glbe:Warrant3Member 2023-12-31 0001835963glbe:Warrant3Member 2023-01-01 2023-12-31 iso4217:ILSxbrli:shares xbrli:pure iso4217:USD iso4217:USDxbrli:shares xbrli:shares
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 20-F
 
(Mark One)
 
☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR SECTION 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
 
OR
 
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  
 
For the fiscal year ended December 31, 2023
 
OR
 
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from      to
 
OR
 
☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
Date of event requiring this shell company report
 
Commission File Number 001-40408
 
image0.jpg
 
Global-E Online Ltd.
(Exact Name of Registrant as Specified in Its Charter)
 
Not Applicable
(Translation of Registrant’s Name Into English)
 
State of Israel
(Jurisdiction of Incorporation or Organization)
 
9 HaPsagot Street,
Petah Tikva 4951041, Israel
 (Address of Principal Executive Offices)
 
Amir Schlachet
Chief Executive Officer
Telephone: +972-73-2605078
Email: amir@global-e.com
Global-E Online Ltd.
9 HaPsagot Street
Petah Tikva 4951041, Israel
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
 
Securities registered or to be registered, pursuant to Section 12(b) of the Act.
 
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Ordinary shares, no par value
 
GLBE
 
The Nasdaq Global Select Market
 
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
 
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
 
Indicate the number of outstanding shares of each of the issuer’s classes of capital stock or common stock as of the close of the period covered by the annual report. As of December 31, 2023, the issuer had outstanding 165,773,914 ordinary shares.
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
 
Yes ☒   No ☐
 
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
 
Yes ☐   No ☒
 
Note-Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
 
Yes ☒   No ☐
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
 
Yes ☒   No ☐
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
☒ Large accelerated filer
☐ Accelerated filer
☐ Non-accelerated filer
☐ Emerging growth company
 
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
 
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☒
 
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
 
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
 
☒ U.S. GAAP
☐ International Financial Reporting Standards as issued by the International Accounting Standards Board
☐ Other
 
If “Other” has been checked in response to the previous question indicate by check mark which financial statement item the registrant has elected to follow.
 
Item 17 ☐   Item 18 ☐
 
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 
Yes ☐   No ☒
 

CONTENTS
 
1
 
1
 
3
 
6
 
6
 
6
 
6
 
A. [RESERVED]
 6
 
B. Capitalization and Indebtedness
 6
 
C. Reasons for the Offer and Use of Proceeds
 7
 
D. Risk Factors
 7
 
50
 
A. History and Development of the Company
 50
 
B. Business Overview
 51
 
C. Organizational Structure
 71
 
D. Property, Plants and Equipment
 73
 
73
 
73
 
A. Operating Results
 80
 
B. Liquidity and Capital Resources
 83
 
C. Research and Development, Patents and Licenses, Etc.
 85
 
D. Trend Information
 86
 
E. Critical Accounting Estimates
 86
 
89
 
A. Directors and Senior Management
 89
 
B. Compensation
 92
 
C. Board Practices
 96
 
D. Employees
 108
 
E. Share Ownership
 109
 
F. Disclosure of A Registrant’s Action to Recover Erroneously Awarded Compensation
 109
 
109
 
A. Major Shareholders
 109
 
B. Related Party Transactions
 112
 
C. Interests of Experts and Counsel
 115


115
 
A. Consolidated Statements and Other Financial Information
 115
 
B. Significant Changes
 116
 
116
 
A. Offer and Listing Details
 116
 
B. Plan of Distribution
 116
 
C. Markets
 116
 
D. Selling Shareholders
 116
 
E. Dilution
 116
 
F. Expenses of the Issue
 116
 
117
 
A. Share Capital
 117
 
B. Memorandum and Articles of Association
 117
 
C. Material Contracts
 117
 
D. Exchange Controls
 117
 
E. Taxation
 117
 
F. Dividends and Paying Agents
 124
 
G. Statement by Experts
 124
 
H. Documents on Display
 124
 
I. Subsidiary Information
 125
 
J. Annual Report to Security Holders
 125
 
125
 
126
 
126
 
126
 
126
 
126
 
127
 
127
 
127
 
128
 
129


129
 
129
 
129
 
130
 
130
 
130
 
130
 
131
 
131
 
131
 
132
 
133
 
F-1

ABOUT THIS ANNUAL REPORT
 
As used in this Annual Report, except where the context otherwise requires or where otherwise indicated, references to “Global-e,” the “Company,” “we,” “us,” “our,” “our company” and similar references refer to Global-E Online Ltd., together with its consolidated subsidiaries as a consolidated entity.
 
All references in this Annual Report to “Israeli currency” and “NIS” refer to New Israeli Shekels, the terms “dollar,” “USD” or “$” refer to U.S. dollars and the terms “€” or “euro” refer to the currency introduced at the start of the third stage of European economic and monetary union pursuant to the treaty establishing the European Community, as amended.
 
BASIS OF PRESENTATION
 
Our financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). We present our consolidated financial statements in U.S. dollars.
 
Our fiscal year ends on December 31 of each year. Our most recent fiscal year ended on December 31, 2023.
 
Certain monetary amounts, percentages and other figures included elsewhere in this Annual Report have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables or charts may not be the arithmetic aggregation of the figures that precede them, and figures expressed as percentages in the text may not total 100% or, as applicable, when aggregated may not be the arithmetic aggregation of the percentages that precede them.
 
1
Key Performance Indicators and Non-GAAP Financial Measures Used in this Annual Report
 
Throughout this Annual Report, we provide a number of key performance indicators and non-GAAP financial measures used by our management and often by others in our industry. These are discussed in more detail in the section entitled “Operating and Financial Review and Prospects- Key Performance Indicators and Other Operating Metrics” which also includes a reconciliation of our non-GAAP financial measures to the most directly comparable U.S. GAAP metric. We define these key performance indicators and non-GAAP financial measures as follows:
 
•
“Gross Merchandise Value” or “GMV” is defined as the combined amount we collect from the shopper and the merchant for all components of a given transaction, including products, duties and taxes and shipping;
 
•
“Adjusted EBITDA” is a non-GAAP financial measure and is defined as operating profit (loss) adjusted for stock based compensation expenses, depreciation and amortization, commercial agreements amortization, amortization of acquired intangibles, merger related contingent consideration, and acquisition related expenses and secondary offering costs. Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by revenues;
 
•
“Non-GAAP Gross Profit” is a non-GAAP financial measure and is defined as gross profit adjusted for amortization of acquired intangibles. “Non-GAAP gross margin” is calculated as Non-GAAP gross profit divided by revenues;
 
•
“Net Dollar Retention Rate” for a given period is calculated by dividing the GMV in that period by the GMV in the comparable period in the prior year, in each case, from merchants that processed transactions on our platforms in the earlier of the two periods. Our Net Dollar Retention in 2023 excludes Borderfree Inc. and affiliated companies (“Borderfree”) that were acquired in 2022, as it is based on annual GMV figures, and Borderfree’s financials were consolidated into the Company’s financials in July 2022; therefore, GMV was not recorded for the full year in 2022; and
 
•
“Gross Dollar Retention Rate” is a key performance indicator and in order to calculate it for a particular quarter, we first calculate the total seasonality adjusted annualized GMV for that quarter. We then calculate the value of GMV from any merchants who discontinued their use of our platforms during that quarter, or churned, based on their total GMV from the four quarters preceding such quarter, which we refer to as churned GMV. We then divide (a) the churned GMV by (b) the total seasonality adjusted annualized GMV to calculate the percentage churn for that quarter. Gross Dollar Retention Rate for a particular year is calculated by aggregating the percentage churn of the four quarters within that year and subtracting the result from 100%.
 
The aforementioned key performance indicators and non-GAAP financial measures are used by management and our board of directors to assess our performance, for financial and operational decision-making, and as a means to evaluate period-to-period comparisons. These measures are frequently used by analysts, investors and other interested parties to evaluate companies in our industry. We believe that these non-GAAP financial measures are appropriate measures of operating performance because they remove the impact of certain items that we believe do not directly reflect our core operations, and permit investors to view performance using the same tools that we use to budget, forecast, make operating and strategic decisions, and evaluate historical performance.
 
Market and Industry Data
 
Unless otherwise indicated, information in this Annual Report concerning economic conditions, our industry, our markets and our competitive position is based on a variety of sources, including statistical, market and industry data and forecasts, that we obtained from publicly available information and independent industry publications and reports that we believe to be reliable sources. These publicly available industry publications and reports generally state that they obtain their information from sources that they believe to be reliable, but they do not guarantee the accuracy or completeness of the information. Although we believe that these sources are reliable, we have not independently verified the information contained in such publications. Certain estimates and forecasts involve uncertainties and risks and are subject to change based on various factors, including those discussed under the headings “Cautionary Statement Regarding Forward-Looking Statements” and “Item 3.D. Risk Factors” in this Annual Report.
2
 
Our estimates are derived from publicly available information released by third-party sources, as well as data from our internal research, which we believe to be reasonable. None of the independent industry publications used in this Annual Report were prepared on our behalf.
 
Certain estimates of market opportunity and forecasts of market growth included in this Annual Report may prove to be inaccurate. The market for e-commerce solutions is relatively new and will experience changes over time. E-commerce market estimates and growth forecasts, whether obtained from third-party sources or developed internally, are uncertain and based on assumptions and estimates that may prove to be inaccurate. The estimates and forecasts in this Annual Report relating to the size of our target market, market demand and adoption, capacity to address this demand and pricing may prove to be inaccurate. The addressable market we estimate may not materialize for many years, if ever, and even if the markets in which we compete meet the size estimates in this Annual Report, our business could fail to grow at similar rates, if at all.
 
Trademarks
 
We or our licensors have proprietary rights to trademarks used in this Annual Report. Solely for convenience, trademarks and trade names referred to in this Annual Report may appear without the “®” or “™” symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent possible under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other companies’ trademarks, trade names or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies. Each trademark, trade name or service mark of any other company appearing in this Annual Report is the property of its respective holder.
 
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
 
This Annual Report contains estimates and forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements as contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements contained in this Annual Report 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, among others, expansion in new and existing markets, are forward-looking statements. as the words “may,” “might,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “target,” “seek,” “believe,” “estimate,” “predict,” “potential,” “continue,” “contemplate,” “possible” or the negative of these terms or other similar expressions are intended to identify forward-looking statements, though not all forward-looking statements use these words or expressions. These forward-looking statements are contained principally in the sections entitled Item 3.D. “Key Information-Risk Factors,” Item 4. “Information on the Company,” and Item 5. “Operating and Financial Review and Prospects.”
 
Our estimates and forward-looking statements are based on our current expectations and estimates of future events and trends which affect or may affect our business, operations and industry. Although we believe that these estimates and forward-looking statements are based upon reasonable assumptions, they are subject to numerous risks and uncertainties including, but not limited to, the risks described in Item 3.D “Key Information-Risk Factors” and elsewhere in this Annual Report.
 
You should not rely on forward-looking statements as predictions of future events. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Annual Report. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.
3
 
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Annual Report. While we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements. We may also provide information herein that is not necessarily “material” under the federal securities laws for SEC reporting purposes, including information that is informed by various ESG standards and frameworks (including standards for the measurement of underlying data), and the interests of various stakeholders. Much of this information is subject to assumptions, estimates or third-party information that is still evolving and subject to change. For example, our disclosures based on any standards may change due to revisions in framework requirements, availability of information, changes in our business or applicable government policies, or other factors, some of which may be beyond our control.
 
The forward-looking statements made in this Annual Report relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Annual Report to reflect events or circumstances after the date of this Annual Report or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements.
 
SUMMARY OF RISK FACTORS
 
Our business is subject to numerous risks and uncertainties, including those described in Item 3. “Key Information - D. Risk Factors.” You should carefully consider these risks and uncertainties when investing in our ordinary shares. Principal risks and uncertainties affecting our business include the following:
 
•
our rapid growth and growth rates in recent periods may not be indicative of future growth;
   
•
our ability to retain existing, and attract new, merchants;
   
•
our business acquisitions and ability to effectively integrate acquired businesses;
   
•
our ability to anticipate merchant needs or develop or acquire new functionality or enhance our existing platforms to meet those needs; 
   
•
our ability to implement and use artificial intelligence and machine learning technologies successfully;
   
•
our ability to compete in our industry;
   
•
our reliance on third-parties, including our ability to realize the benefits of any strategic alliances, joint ventures, or partnership arrangements and to integrate our platforms with third-party platforms;
   
•
our ability to develop or maintain the functionality of our platforms, including real or perceived errors, failures, vulnerabilities, or bugs in our platforms;
   
•
our history of net losses;

4

•
our ability to manage our growth and manage expansion into additional markets;
   
•
increased attention to ESG matters and our ability to manage such matters;
   
•
our ability to accommodate increased volumes during peak seasons and events;
   
•
our ability to effectively expand our marketing and sales capabilities;
   
•
our expectations regarding our revenue, expenses and operations;
   
•
our ability to operate internationally;
   
•
our reliance on third-party services, including third-party providers of cross-docking services and third-party data centers, in our platforms and services and harm to our reputation by our merchants’ or third-party service providers’ unethical business practices;
   
•
Our ability to adapt to changes in mobile devices, systems, applications, or web browsers that may degrade the functionality of our platforms;
   
•
our operation as a merchant of record for sales conducted using our platform;
   
•
regulatory requirements and additional fees related to payment transactions through our e-commerce platforms could be costly and difficult to comply with;
   
•
compliance and third-party risks related to anti-money laundering, anti-corruption, anti-bribery, regulations, economic sanctions and export control laws and import regulations and restrictions;
   
•
our business’s reliance on the personal importation model;
   
•
our ability to securely store personal information of merchants and shoppers;
   
•
increases in shipping rates;
   
•
fluctuations in the exchange rate of foreign currencies has impacted and could continue to impact our results of operations;
   
•
our ability to offer high quality support;
   
•
our ability to expand the number of merchants using our platforms and increase our GMV and to enhance our reputation and awareness of our platforms;
   
•
our dependency on the continued use of the internet for commerce;
   
•
our ability to adapt to emerging or evolving regulatory developments, changing laws, regulations, standards and technological changes related to privacy, data protection, data security and machine learning technology and generative artificial intelligence evolves;
   
•
the effect of the situation in Ukraine on our business, financial condition and results of operations;
   
•
our role in the fulfilment chain of the merchants, which may cause third parties to confuse us with the merchants;
   
•
our ability to establish and protect intellectual property rights; and our use of open-source software which may pose particular risks to our proprietary software technologies;

5

•
our dependency on our executive officers and other key employees and our ability to hire and retain skilled key personnel, including our ability to enforce non-compete agreements we enter into with our employees;
   
•
litigation for a variety of claims which we may be subject to;
   
•
the adoption by merchants of a D2C model;
   
•
our anticipated cash needs and our estimates regarding our capital requirements and our needs for additional financing;
   
•
our ability to maintain our corporate culture;
   
•
our ability to maintain an effective system of disclosure controls and internal control over financial reporting;
   
•
our ability to accurately estimate judgments relating to our critical accounting policies;
   
•
changes in tax laws or regulations to which we are subject, including the enactment of legislation implementing changes in taxation of international business activities and the adoption of other corporate tax reform policies;
   
•
requirements to collect sales or other taxes relating to the use of our platforms and services in jurisdictions where we have not historically done so;
   
•
global events such as war, health pandemics, climate change, macroeconomic events and the recent economic slowdown;
   
•
risks relating to our ordinary shares, including our share price, the concentration of our share ownership with insiders, our status as a foreign private issuer, provisions of Israeli law and our amended and restated articles of association and actions of activist shareholders;
   
•
risks related to our incorporation and location in Israel, including risks related to the ongoing war and related hostilities; and
   
•
other statements described in this Annual Report under “Risk Factors,” “Operating and Financial Review and Prospects,” and “Business.”
 
PART I
 
Item 1. Identity of Directors, Senior Management and Advisers
 
Not applicable.
 
Item 2. Offer Statistics and Expected Timetable
 
Not applicable.
 
Item 3. Key Information
 
A.
[RESERVED]
 
B.
Capitalization and Indebtedness 

Not applicable.
 
6
 
C.
Reasons for the Offer and Use of Proceeds

Not applicable.
 
D.
Risk Factors
 
 You should carefully consider the risks and uncertainties described below and the other information in this Annual Report before making a decision to invest in our ordinary shares. Our business, financial condition, results of operations, or strategic objectives could be materially and adversely affected by any of these risks and uncertainties. The trading price and value of our ordinary shares could decline due to any of these risks and uncertainties, and you may lose all or part of your investment. This Annual Report also contains forward-looking statements that involve risks and uncertainties. See “Cautionary Statement Regarding Forward-Looking Statements.” Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks and uncertainties faced by us described below and elsewhere in this Annual Report.
 
Risks Relating to our Business and Industry
 
We have experienced rapid growth in recent periods and our recent growth rates may not be indicative of our future growth.
 
We have experienced rapid growth in recent periods. Our revenue was $245.3 million, $409.0 million and $569.9 million for the years ended December 31, 2021, 2022 and 2023, respectively, representing an annual growth of 66.8% and 39.3% for the years ended December 31, 2022 and 2023, respectively. GMV processed through our platforms during the years ended December 31, 2021, 2022 and 2023 was $1,449 million, $2,450 million and $3,557 million, respectively, representing an annual growth of 69% and 45% for the years ended December 31, 2022 and 2023 respectively. In future periods, we may not be able to sustain revenue or GMV growth consistent with recent history, or at all.
 
We believe our revenue and GMV growth depends on a number of factors, including, but not limited to, our ability to: 
 
•
increase the overall sales volume facilitated by our platforms;
   
•
maintain merchant retention rates;
   
•
increase merchants’ e-commerce sales conversion rates;
   
•
successfully expand our merchants into new geographies;
   
•
attract new merchants to our platforms in existing and new geographies, segments and verticals;
   
•
 
successfully integrating or maintaining the technologies, platforms and business propositions, modalities or offerings of business we have acquired, including successfully execute and grow the Shopify Markets Pro offering and the technologies and e-commerce solutions of Borderfree, and other businesses we may acquire in the future, into our existing platforms;
   
•
successfully realize all the benefits from our third party partnerships and collaborations;
   
•
provide integration with our merchants’ online e-commerce web-stores;

7

•
maintain the security, reliability and integrity of our platforms;
   
•
maintain compliance with existing and comply with new applicable laws and regulations, including new tax rates and tariffs;
   
•
price our platforms effectively so that we are able to attract and retain merchants;
   
•
successfully compete against our current and future competition and competing solutions; and
   
•
maintain service levels and consistent quality of our platforms.

We have also encountered in the past, and expect to encounter in the future, risks and uncertainties frequently experienced by growing companies in rapidly evolving industries. If our assumptions regarding these risks and uncertainties, which we use to plan and operate our business, are incorrect or change, or if we do not address these risks successfully, our growth rates may slow and our business could suffer. Further, our rapid growth may make it difficult to evaluate our future prospects. In addition, a portion of our growth in recent or past periods may be attributed to trends and there is no assurance these trends will continue.

If we are unable to retain our existing merchants, or the GMV generated by merchants on our platforms declines or does not increase, our business, operating results and financial condition could be adversely affected.
 
Our revenues are closely correlated with the level of GMV that is processed through our platforms and we expect our future revenue growth to be partially driven by increases to our existing merchants’  GMV. We aim to sign contracts with merchants for a minimum term of 12 months and with a minimum committed monthly volume, but our merchants typically have the right to terminate their agreements for convenience by providing prior written notice, and have no obligation to renew their agreements with us after their terms expire. Even if our agreements with the merchants are renewed or not terminated, they may not be renewed on the same or as profitable terms, and may exclude utilization of our shipping services which may reduce our revenues, or may reduce the markets in which we provide them our services (including by way of localizing their fulfilment and distribution model). Although we typically maintain minimum fee arrangements with the merchants, we cannot guarantee that such minimum fees will commensurate with revenues earned in previous periods. As a result, if existing merchants terminate their agreements with us, renew them on less favorable terms, or otherwise reduce the scope of their activity through our platforms, our operating results and financial condition could suffer. In addition, we may not be able achieve successful or full migration and transition of some merchants from one of our platforms to another. For example, we may not be able to migrate merchants who have historically and currently been using the Borderfree platform to the Global-e platform, or such migration may not be on the same or as profitable terms, or may exclude the utilization of our shipping services which may reduce our revenues, or may reduce the number of markets in which we provide them our services, or even result in discontinuation of all or parts of our services.
 
The growth of our business depends on our ability to attract new merchants and increase the GMV processed on our platforms.
 
Our growth strategies include attracting new merchants to our platforms and increasing the GMV processed through our platforms. There is no guarantee that we can sustain our historical merchant acquisition rates and if we do, that such new merchants will lead to an increase of the GMV processed through our platforms or to an increase in our revenues. Our ability to attract new merchants depends on the success of our platforms with existing merchants and the success of our sales and marketing efforts, which may not be successful. Merchants who are not currently engaged in cross-border e-commerce may not be familiar with our solutions and those currently engaged in cross-border e-commerce may use other products or services for their cross-border e-commerce needs. In addition, merchants may develop their own solutions to address their cross-border e-commerce needs, purchase competitive product offerings, or engage third-party providers of services and solutions that do not or will not enable the use of our platforms and services. It may be difficult to engage and market to merchants who either do not currently have cross-border e-commerce needs, are unfamiliar with our platforms and services, or utilize competing solutions and services for their e-commerce needs. This requires us to spend substantial time, effort and resources assisting merchants in evaluating our platforms and services, including providing demonstrations, conducting gap analyses and substantiating the value of our platforms and services. Furthermore, engaging and marketing to merchants in segments, verticals or new regions where we do not have a presence or where we have only recently established our presence may also require effort and resources and may not result in the acquisition of new merchants or in increase of GMV. If merchants do not perceive our offerings to be of sufficiently high value and quality, we may not be able to attract new merchants or increase our GMV and our business, operating results and financial condition could be adversely affected.
8
 
Additionally, even if we are successful in attracting new merchants, they may not generate GMV or revenue at the same rate or scale as our current or historical merchants. If new merchants that we acquire fail to use our platforms to the same extent that our existing merchants do, it would reduce the GMV processed on our platforms and therefore our revenue, which could materially adversely affect our operating results and our growth.
 
We have acquired, and may acquire in the future, other businesses. Acquisitions divert a substantial part of our resources and management attention and if we are unable to effectively integrate acquired business, our operating results may materially suffer.
 
We have acquired and may in the future acquire complementary solutions, functionalities, technologies or businesses. For example, we acquired Borderfree from Pitney Bowes in July 2022 (the “Borderfree Acquisition”). Seeking and negotiating potential acquisitions diverts our management’s attention from other business concerns to a certain extent and is expensive and time-consuming. Acquisitions expose us and our business to unforeseen liabilities or risks associated with the business or assets acquired or with entering new markets. Through the acquisition of Borderfree we aim to enhance the value that our business brings to global brands by providing them with traffic generation services, thereby the ability to attract international shoppers to their web store, by using both an e-mail based direct marketing offering and a portal-like affiliation platform. If we are unable to successfully integrate Borderfree, or effectively integrate other acquired businesses, we may not be successful in developing and marketing our offerings and our operating results will materially suffer and the potential benefits of the Borderfree Acquisition or other potential acquisitions may not be realized to the full extent, in a timely fashion or at all. In addition, if the integrated platforms and solutions we offer do not achieve acceptance by the marketplace, our operating results will materially suffer.
 
If we fail to develop or acquire new functionality (and if acquired, to integrate it) or enhance our platforms to meet the needs of our current and future merchants, or if we fail to estimate the impact of developing and introducing new functionality or enhanced solutions in response to rapid market or technological changes, our revenue could decline and our expenditures could increase significantly.
 
The e-commerce market is characterized by rapid technological changes, evolving operational and omnichannel modalities, frequent new product and service introductions, evolving industry standards and regulations and changing merchant and shopper preferences. To keep pace with technological and regulatory developments, satisfy increasingly sophisticated merchant and shopper needs, achieve market acceptance and maintain the performance and security of our platforms, we must continue to adapt, enhance, integrate and improve our platforms and existing services and we must also continue to introduce new functionality to our platforms. Any new solutions or functionality we develop or acquire (and subsequently, integrate) may not be introduced in a timely manner and may not achieve the broad market acceptance necessary to generate significant revenue. If we are unable to successfully develop or acquire (and subsequently, integrate) new solutions or enhance our existing solutions, our business, operating results and financial condition could be adversely affected.
 
We expect to incur significant expenses to develop, integrate and implement additional solutions and functionalities and to integrate any acquired solutions or functionalities into our existing platforms to maintain our competitive position. These efforts may not result in commercially viable solutions. We may experience difficulties with software development, industry standards, threats to the security and integrity of our technological infrastructure, design, manufacturing or marketing that could delay or prevent our development, introduction or implementation of new solutions and enhancements. If we do not receive significant revenue from these investments, our business, operating results and financial condition could be adversely affected. Merchants may require customized integrations, or features and functions that we do not yet offer or do not intend to offer, or which we have yet fully integrated or implemented, any of which may cause them to choose a competing solution. If we fail to develop solutions that satisfy merchant and shoppers’ preferences in a timely and cost-effective manner, our ability to renew our contracts with existing merchants and our ability to create or increase demand for our platforms could be harmed, and our business, operating results and financial condition could be materially adversely affected. The integration of Borderfree and the migration of merchants who have historically and currently been using the Borderfree platform to the Global-e platform, or the execution of Shopify Markets Pro, as well as any other future acquisitions, may result in difficulties and delays, require additional investment and costs, and even if completed, may not achieve the economic or market results in terms of revenue creation and improved technological solutions that we have expected or anticipated.
9
 
There is a risk that the technology we invest in may not achieve the expected level of success or widespread market adoption. Market dynamics, competitive forces, regulatory changes, or unforeseen challenges may impede the successful integration and acceptance of our new solutions. For example, in January 2022 we acquired Flow (the “Flow Merger”), and entered into an Amended and Restated Master Services Agreement with Flow and Shopify Inc. and its affiliates (“Shopify”) (the “2022 Shopify Agreement”), making our platform and services and the Flow platform and services, respectively, available to certain Shopify merchants through Shopify’s e-commerce platform. As part of the 2022 Shopify Agreement, in September 2023, Shopify launched “Shopify Markets Pro”, a white-label cross-border MoR offering, powered by Global-e, currently available to Shopify US-based merchants. Shopify Markets Pro is based on the Flow platform, leveraging its API-based technology, and enables merchants of diverse scales, encompassing small and emerging businesses, to extend their brand offerings globally with streamlined integration efforts. The success of Shopify Markets Pro is contingent upon widespread acceptance and adoption in the market. Factors such as evolving merchants' preferences, competitive landscape dynamics, and unforeseen market challenges may impact the rate at which customers embrace Shopify Markets Pro. Such variations may lead to financial losses, a weakened competitive position, and possible setbacks in achieving our strategic objectives.
 
Our implementation and use of artificial intelligence and machine learning technologies may not be successful, which may impair our ability to compete effectively, result in reputational harm and have an adverse effect on our business.
 
We use machine learning, artificial intelligence and automated decision-making technologies (“AI Technologies”) throughout our business, and are making significant investments to continuously improve our use of such technologies. For example, we use machine learning and artificial intelligence technologies to support our merchant and customer service inquires and to assist in the research and development of our solutions. As with many technological innovations, there are significant risks and challenges involved in developing, maintaining and deploying these technologies and there can be no assurance that the usage of such technologies will always enhance our solutions or be beneficial to our business, including our efficiency or profitability.
 
Further, changes and ongoing development in how we use artificial intelligence and machine learning technologies and how we train our models, in particular if those artificial intelligence or machine learning models are (i) incorrectly designed or implemented; (ii) trained or reliant on incomplete, inadequate, inaccurate, biased or otherwise poor quality data; and/ or on data to which we do not have sufficient rights or in relation to which we and/or the providers of such data have not implemented sufficient legal compliance measures; or (iii) are adversely impacted by unforeseen defects, technical challenges, cybersecurity threats or material performance issues, the performance of our platforms and business, as well as our reputation and the reputations of our merchants, suppliers and business partners could suffer or we could incur liability through the violation of laws or contracts to which we are a party or through civil claims.
10
 
The market for artificial intelligence and machine learning technologies is rapidly evolving and remains unproven in many industries, including our own. We cannot be sure that the market will continue to grow or that it will grow in ways we anticipate. We are in varying stages of development in relation to our products or services which utilize proprietary artificial intelligence and machine learning technologies, and we may not be successful in our ongoing development of these technologies in the face of novel and evolving technical, reputational and market factors. Our failure to successfully develop and commercialize our platforms or services which utilize proprietary machine learning and artificial intelligence technologies could depress the market price of our stock and impair our ability to (i) raise capital; (ii) expand our business; (iii) provide, improve and diversify our product offerings; (iv) continue our operations and efficiently manage our operating expenses; and (v) respond effectively to competitive developments.
 
The continuous development, maintenance and operation of our artificial intelligence and machine learning technologies is expensive and complex, and may involve unforeseen difficulties including material performance problems, undetected defects or errors. We may encounter technical obstacles, and it is possible that we may discover additional problems that may prevent our proprietary technologies from operating properly, which could adversely affect our business, relationships and reputation. In particular, we incorporate generative artificial intelligence technologies (i.e. artificial intelligence models that can produce and output new content, software code, data and information) into our solutions and internal business practices. There is a risk that generative artificial intelligence could produce inaccurate or misleading content or other discriminatory or unexpected results or behaviors, such as hallucinatory behavior that can generate irrelevant, nonsensical, or factually incorrect results, all of which could harm our reputation, business, or customer relationships. While we take measures designated to ensure the accuracy of such artificial intelligence generated content, those measures may not always be successful, and in some cases, we may need to rely on end users to report such inaccuracies. To the extent a third party is successful in a claim against one of our customers based on such inaccuracies, we could also incur liability, and this could also affect our business, relationships and reputation. Generative AI technologies may also be used to produce content that violates existing intellectual property laws and laws concerning rights of privacy and publicity and new related laws and regulations are currently under consideration. The law is also uncertain across jurisdictions regarding the copyright ownership of content that is produced in whole or in party by generative AI tools. Therefore, incorporating AI technologies from external sources into our products could lead to allegations of bias, discrimination, legal and regulatory violations, or violating copyright or other intellectual property rights and could require us to modify our solutions incorporating Generative AI technology or otherwise engage in efforts to remain in compliance with the law and require us to incur additional expenditures.
 
Furthermore, we use artificial intelligence and machine learning technologies licensed from third parties in our technologies and our ability to continue to use such technologies at the scale we need may be dependent on access to specific third-party software and infrastructure. We cannot control the availability or pricing of such third-party technologies, especially in a highly competitive environment, and we may be unable to negotiate favorable economic terms with the applicable providers. If any such third-party technologies become incompatible with our solutions, become unavailable for use, or the providers of such models unfavorably change the terms on which their technologies are offered or terminate their relationship with us, our solutions may become less appealing to our customers and our business will be harmed. In addition, to the extent any third party artificial intelligence or machine learning technologies are used as a hosted service, any disruption, outage, or loss of information through such hosted services could disrupt our operations or solutions, damage our reputation, cause a loss of confidence in our solutions, or result in legal claims or proceedings, for which we may be unable to recover damages from the affected provider.
 
We face competition from other companies in our industry in relation to the development and deployment of artificial intelligence and machine learning technologies. Those other companies may develop artificial intelligence technologies that are similar or superior to ours and/or are more cost-effective and/or quicker to develop and deploy. If we cannot develop, offer or deploy new artificial intelligence or machine learning technologies as effectively, as quickly and/ or as cost-efficiently as our competitors, we could experience a material adverse effect on our operating results of operation, customer relationships and growth.
11
 
We may not be able to successfully compete against current and future competition or other competing solutions, and we may need to change our pricing and model to remain competitive.
 
We face competition in the market of global e-commerce, and such competition and alternative and competing solutions likely continue and could increase in the future. Competition could lead to a decrease in the GMV processed through our platforms and could reduce our revenue or margins, any of which could negatively affect our business, financial condition and results of operations. A number of competitive factors could cause merchants to cease using or decline to use our platforms and services, or could reduce the transaction volume that they process through our platform, including, among others:
 
•
merchants may choose to develop global e-commerce capabilities internally or choose competing solutions;
   
•
merchants may merge with or be acquired by companies using a competing solution or an internally developed solution;
   
•
competing solutions may be offered as part of a bundle of e-commerce services;
   
•
 
current or potential global or regional competition and competing solutions, both in geographies where we already operate, and in geographies where we do not operate, may adopt more aggressive pricing policies, offer more attractive sales terms, adapt more quickly to new technologies and changes in merchant requirements or devote greater resources to the promotion and sale of their products and solutions than we can; and
   
•
current and potential competition may merge or establish cooperative relationships among themselves or with third parties to enhance their products, solutions and expand their markets (or in new markets), forming alliances that rapidly acquire significant market share.

We cannot assure that we will be able to compete successfully against current and future competition or competing solutions. If we cannot compete successfully against our current and future competition or such competing solutions, our business, operating results and financial condition could be materially and negatively impacted.
 
In addition, as new or existing competing solutions may be offered in competitive prices, we may be unable to retain existing merchants or attract new merchants. Mid-market and large enterprise merchants may demand substantial price discounts as part of the negotiation of contracts. As a result, we could be required to choose either to reduce our prices or otherwise change our pricing model, or both, which could adversely affect our business, operating results, and financial condition. 
 
We cannot be certain that we will realize the benefits of strategic alliances, joint ventures or partnership arrangements, including with third-party e-commerce platforms. Any failure to manage such strategic alliances, partnerships or joint ventures, or to integrate them with our existing or future business, could have a material adverse effect on us.
 
We have entered into partnership arrangements, and in the future may consider opportunities to enter into additional arrangements or strategic alliances that may be beneficial for our operations and the growth of our platform. Our ability to grow through these types of partnerships is subject to a number of risks, including unanticipated costs associated with strategic alliances, issues conforming to standards, procedures and contractual requirements, and diversion of management’s attention from our existing business. For example, we have entered into a Services and Partnership Agreement with Shopify, dated April 12, 2021 (the “2021 Shopify Agreement”), and concurrently with the Flow Merger, we entered into the “2022 Shopify Agreement (together with the 2021 Shopify Agreement, the “Shopify Agreements”), making our platform and services and the Flow platform and services, respectively, available to certain Shopify merchants through Shopify’s e-commerce platform.
 
Entering into such relationship with Shopify has required and may continue to require us to incur certain charges, significantly increasing our near and long-term expenditures. In addition, the 2021 Shopify Agreement requires us to pay Shopify fee equal to a percentage of the GMV for all transactions processed through the respective platforms for applicable Shopify merchants, which has an impact on our margins. In connection with entering into the Shopify Agreements, we issued securities to Shopify which diluted, and may continue to dilute, our shareholders. The potential benefits of our relationship with Shopify are hard to estimate or quantify at this time, and we cannot be certain that our arrangement with Shopify will provide the revenue or net income that justifies such transaction.
12
 
Each of the Shopify Agreements is terminable by either party immediately upon notice of certain events, subject to applicable cure periods, or without cause upon prior notice. Any termination of each of the Shopify Agreements could have a material adverse effect on our business, financial condition or results of operations. These risks could apply to any similar arrangement we may enter into in the future, and any potential future collaborations may be similarly terminable by our partners.
 
The success of our business model is reliant on our ability to integrate our platforms with third-party e-commerce platforms, our ability to operate according to such third parties’ terms of use and integration requirements, and our ability to maintain any partnership that we have entered into or may enter into with such third parties. Inability or failure to do so would reduce the attractiveness of our solutions for use by current and future merchants.
 
Merchants typically carry out e-commerce activity through third-party e-commerce platforms, such as Salesforce Commerce Cloud, Shopify, BigCommerce, Adobe Magento, SAP/Hybris, WooCommerce, PrestaShop, Workarea, Wshop, and others. Our ability to attract merchants that utilize such platforms to conduct their e-commerce activity is contingent on our ability to integrate our solutions into the e-commerce platforms they use. Each of the companies that operates these e-commerce platforms dictates the terms of use of its respective platform, including the manner and procedure by which we integrate to its platform. To the extent any such operators offer or promote alternative products or solutions or would limit or prevent merchants from utilizing our platform, our business, financial condition or results of operations could be materially and adversely affected.
 
Some of these companies also demand that certain certification processes are satisfied prior to implementing an integration into the e-commerce platform they operate. Compliance with such terms may subject us to waiting periods due to certification and onboarding processes and may require us to modify aspects of our platforms’ functionality in order to fit applicable technical standards. While we exert substantial efforts to maintain compliance, and although notice of changes and instructions are typically provided in advance, the terms of use and requirements may change unilaterally at the discretion of the e-commerce platform, and none of our efforts as a result would be sufficient. If we fail to maintain certification or compliance, the willingness of merchants to adopt or continue to use our solutions may be reduced.
 
In addition, in the event that our solutions do not integrate optimally with third-party e-commerce platforms, leading to errors, defects, disruption or other performance problems, shoppers’ experience will be adversely affected, our reputation may be harmed and our ability to achieve and maintain growth among merchants on the e-commerce platforms would be adversely affected.
 
For example, if we are unable to perform under the Shopify Agreements, fail to maintain our relationship with Shopify, or the Shopify Agreements are otherwise terminated for any reason, our business, financial condition and results of operation could be materially and adversely effected.
 
If we are not successful in developing or maintaining the functionality of our platforms or if we experience real or perceived errors, failures, vulnerabilities, or bugs in our platforms, our business, results of operations, and financial condition could be adversely affected.
 
Any errors, defects, or disruptions in our platforms, or other performance problems with our platforms could harm our reputation and may damage the businesses of our merchants. Our platforms could contain undetected errors, “bugs” or misconfigurations that could adversely affect their performance. Additionally, we regularly update and enhance our platforms and introduce new versions of our platforms and service. These updates may contain undetected errors when introduced or released, which may cause disruptions in our services and may reduce merchants and shoppers satisfaction. Our continued growth depends in part on our ability to maintain the existing functionality of our platforms and services (and implementing the functionality of our acquired platforms), meet our service levels, prevent down time and degradation of services on our platforms for both merchants and shoppers. Failure to do so may result in damage to our reputation which may have an adverse effect on our business and results of operation.
13
 
We have experienced in the past and may in the future experience, disruptions, data loss, outages, and other performance problems with our infrastructure due to a variety of factors, including infrastructure changes, introductions of new functionality, human or software errors, capacity constraints, denial-of-service attacks, ransomware attacks, or other security-related incidents. In some instances, we may not be able to identify the cause or causes of these performance problems immediately or in short order. We may not be able to maintain the level of service uptime and performance required by merchants, especially during peak usage times as traffic and volumes increase. Since our merchants rely on our platforms to carry out global e-commerce on an ongoing basis, any outage on our platforms would have a direct adverse impact on our merchants business. Our merchants may seek compensation from us for any losses they suffer or cease conducting business with us altogether. Further, a merchant could share information about bad experiences, which could result in damage to our reputation and loss of current and future sales. There can be no assurance that provisions typically included in our contracts with our merchants that attempt to limit our exposure to claims would be enforceable or adequate or would otherwise protect us from liabilities or damages with respect to any particular claim. Even if not successful, a claim brought against us by any of our merchants would likely be time-consuming and costly to defend and could seriously damage our reputation and harm our ability to attract new merchants to our platforms.
 
We have a history of net losses, we anticipate increasing operating expenses in the future, and we may not be able to achieve profitability.
 
We incurred significant net losses of $195.4 million and $133.8 million for the years ended December 31, 2022 and 2023, respectively. Because the market for our platforms and services is rapidly evolving, it is difficult for us to predict our future results of operations or the limits of our market opportunity. As a result of our entry into the Shopify Agreements and the related issuance of warrants to purchase ordinary shares to Shopify, we recognize commercial agreement assets which are recognized upon the vesting of the warrants, and are amortized over time. This results in increased sales and marketing expenses and the reporting of a net loss for the year ended December 31, 2023 and we expect this will continue to result in increased sales and marketing expenses in future periods and the reporting of net losses for such periods. In addition, as a result of the Flow Merger and the Borderfree Acquisition, we recognized, and will continue to recognize, an intangible assets amortization expense over the next several years. We expect our operating expenses to continue to increase over the next several years as we hire additional personnel, expand into new geographies or invest in expanding our operations in existing geographies, expand our partnerships, operations and infrastructure, continue to enhance our platforms, develop and expand their features, integrations and capabilities, expand and improve our service offering and increase our spending on sales and marketing. We intend to continue to build and enhance our platforms through internal research and development and we may also selectively pursue acquisitions. In addition, as a public company, we will continue to incur additional significant legal, accounting, and other expenses that we did not incur as a private company. If we are unable to maintain revenues high enough to offset the expected increases in our operating expenses, we will not be profitable in future periods.
 
If we fail to manage our growth effectively, we may be unable to execute our business plan or maintain high levels of service and merchant satisfaction.
 
We have experienced, and expect to continue to experience, rapid growth, which has placed, and may continue to place, significant demands on our management and our technological, operational and financial resources. We have established international offices, including offices in Israel, the U.S., the UK, Europe, Japan, Australia, Singapore and the United Arab Emirates, and we plan to continue to expand our international operations into other countries in the future. We have also experienced significant growth in both the number of merchants and the number of transactions facilitated by our platforms. For example, during the year ended December 31, 2023, our platforms generated in the aggregate $3,557 million of GMV, representing an increase of 45% relative to the GMV for the year ended December 31, 2022. Additionally, our organizational structure is becoming more complex as we scale our technological, operational, financial and management controls as well as our reporting systems and procedures.
14
 
To manage growth in our operations and personnel, we will need to continue to grow and improve our operational, financial, and management controls and our reporting systems and procedures. We will require significant capital expenditures and the allocation of valuable management resources to grow and adapt to our developing needs in these areas without undermining our culture, which has been central to our growth so far. If we fail to manage our anticipated growth and change in a manner that preserves the key aspects of our corporate culture, the quality of our platforms and services may suffer, which could negatively affect merchants and shoppers and as a result our reputation.
 
The increasing focus and scrutiny of, and evolving expectations regarding, environmental, social, governance and other sustainability practices could increase our costs, harm our reputation or customer acquisition and retention, our access to capital and employee retention or otherwise adversely impact our financial results.
 
There has been increasing focus by a variety of stakeholders on companies’ environmental, social and governance, or ESG, and other sustainability matters. Expectations regarding voluntary ESG initiatives and disclosures may result in increased costs (including but not limited to increased costs related to compliance, stakeholder engagement, contracting and insurance), changes in demand for certain products, enhanced compliance or disclosure obligations, or other adverse impacts to our business, financial condition, or results of operations.
 
While we may at times engage in voluntary initiatives (such as voluntary disclosures, certifications, or goals, among others) to improve the ESG profile of our company or to respond to stakeholder expectations, such initiatives may be costly and may not have the desired effect. Expectations around companies’ management of ESG matters continues to evolve rapidly, in many instances due to factors that are out of our control. For example, we may ultimately be unable to complete certain initiatives or targets, either on the timelines initially announced or at all, due to technological, cost, or other constraints, which may be within or outside of our control. Moreover, actions or statements that we may take based on expectations, assumptions, other methodological considerations, or third-party information that we currently believe to be reasonable may subsequently be determined to be erroneous or be subject to misinterpretation.
 
It is possible that our ESG reporting may not satisfy stakeholders, or that our ESG practices, including the timeline and manner of our initiatives or achieving or goals, will be perceived to not be adopted at a sufficient pace. If our ESG practices, reporting and disclosures do not meet the expectations of investors, customers, or employees, which continue to evolve, our brand, reputation, and customer retention may be negatively impacted, and we may be subject to stakeholder engagement and/or litigation, even if such initiatives are currently voluntary. If we are not effective in addressing ESG matters affecting our business, or setting and meeting relevant goals, our reputation and financial results may suffer. For example, as mentioned above, the generative artificial intelligence technologies we incorporate into our business may result in unanticipated environmental or social impacts, including discriminatory results, which could harm our business or reputation. In addition, we may experience increased costs and devote additional resources in order to develop, monitor, report, implement or maintain various ESG practices, controls or measures, and execute upon our goals and measure achievement of those goals, which could have an adverse impact on our business and financial condition. If we are lagging or unsuccessful, or perceived to be lagging or unsuccessful, in each case to meet the ESG standards or the expectations of our various stakeholders, it could negatively impact our reputation, customer acquisition and retention, and access to capital and employees.
 
In addition, investors may focus on ESG business practices and sustainability scores when making investments and may consider negative or low ESG or sustainability scores as a reputational or other factor in making an investment decision. Investors may use such ESG scores to measure or benchmark our company against our peers and if we exhibit lower or inadequate rating, these investors may require us to improve our ESG performance and disclosure and may also make investment or voting decisions on that basis. To the extent ESG matters negatively impact our reputation, it may also impede our ability to compete as effectively to attract and retain employees, customers, or business partners, which may adversely impact our operations. In addition, we expect there will likely be increasing levels of regulation, disclosure-related and otherwise, with respect to ESG matters. For example, the SEC very recently adopted rules that will require companies to provide certain climate-related disclosures. While we are still assessing the scope and impact of this rule given how recently it was adopted, we anticipate that this rule, as well as other ESG and sustainability-related regulation and legislation, may require us to incur significant additional costs to comply, including the implementation of significant additional internal controls, processes and procedures regarding matters that have not been subject to such controls in the past, and impose increased oversight obligations on our management and board of directors. These and other stakeholder expectations will likely lead to increased costs as well as scrutiny that could heighten all of the risks identified in this risk factor. Additionally, many of our suppliers and business partners may be subject to similar expectations, which may augment or create additional risks, including risks that may not be known to us.
15
 
Focus on long-term ESG performance and meeting our goals and values may adversely affect our short-term performance.
 
ESG goals and performance could affect the way we operate and require us to take certain actions, long-term initiatives or goals or implement and maintain certain processes. We may therefore action in certain ways that we believe will benefit our company, business and customers in the long-term or over a period of time, even if such actions may not adhere to or maximize shorter-term operational or financial results. We may amend or adapt our policies in ways that we believe will be beneficial to our customers, employees or investors in the long term even though the changes may be perceived unfavorably in the shorter-term. Moreover, we may fail to meet longer-term goals or achieve benefits derived from such goals, or benefits may not materialize as and when we expected or at all.
 
We are subject to a series of risks regarding climate change.
 
There are inherent climate-related risks wherever business is conducted. Certain of our facilities, as well as our and third-party infrastructure on which we rely, are or may be located in areas that have experienced, and are projected to or may continue to experience, various meteorological phenomena (such as drought, heatwaves, wildfire, storms, and flooding, among others) or other catastrophic events that may disrupt our or our merchant or vendors’ operations, require us to incur additional operating or capital expenditures including costs associated with energy and water, or otherwise adversely impact our business, financial condition, or results of operations. Climate change may increase the frequency and/or intensity of such events. Climate change may also contribute to various chronic changes in the physical environment, such as sea-level rise or changes in ambient temperature or precipitation patterns, which may also adversely impact our or our suppliers’ operations. While we consider and may take various actions to mitigate our business risks associated with climate change, this may require us to incur substantial costs and may not be successful, due to, among other things, the uncertainty associated with the longer-term projections associated with managing climate risk. For example, to the extent catastrophic events become more frequent, it may adversely impact the availability or cost of insurance.
 
Additionally, we expect to be subject to risks associated with societal efforts to mitigate or otherwise respond to climate change, including but not limited to increased regulations, evolving stakeholder expectations, and changes in market demand. For more information, please see our risk factor titled “The increasing focus and scrutiny of, and evolving expectations regarding, environmental, social, governance and other sustainability practices could increase our costs, harm our reputation or customer acquisition and retention, our access to capital and employee retention or otherwise adversely impact our financial results.” Changing market dynamics, global and domestic policy developments, and the increasing frequency and impact of meteorological phenomena have the potential to disrupt our business, the business of our suppliers and/or customers, or otherwise adversely impact our business, financial condition, or results of operations.
16
 
Our operations are subject to seasonal fluctuations. If we fail to accommodate increased volumes during peak seasons and events, our results of operations may be adversely affected.
 
Our business is seasonal in nature and the fourth quarter is a significant period for our operating results. Our revenue is closely correlated with the level of GMV that our merchants generate through our platform, and our merchants typically process additional GMV in the fourth quarter, which includes Black Friday, Cyber Monday and the holiday season and other peak events included in the e-commerce calendar, such as Chinese Singles’ Day and Thanksgiving. In the years ended December 31, 2021, 2022 and 2023, fourth quarter GMV represented approximately 35%, 34% and 33%, respectively, of our total GMV. As a result, GMV and accordingly our revenue has previously and we expect will continue to generally decline in the first quarter of each year relative to the fourth quarter of the previous year.
 
Any disruption in our ability to process and ship orders, especially during the fourth quarter, could have a negative effect on our quarterly and annual operating results. Surges in volumes during peak periods may strain our technological infrastructure, logistics channels, shopper and merchant support activities as well as our third-party service providers. Inability of any of these components to process increased volumes may prevent us from efficiently processing and shipping orders, which may reduce our GMV and the attractiveness of our platform.
 
Any disruption to our operations or the operations of our merchants, our shipping and logistics partners, or other service providers could lead to a material decrease in GMV or revenues relative to our expectations for the fourth quarter which could result in a significant shortfall in revenue and operating cash flows for the full year.
 
The recent growth of our company and macroeconomic events and their impact on consumer behavior make it difficult to forecast our revenue and evaluate our business and future prospects.
 
We launched our operations in 2013 and our growth has occurred primarily in recent periods. As a result of our limited operating history as a public company, our ability to forecast our future results of operations and plan for and model future growth is limited and subject to a number of uncertainties. We have encountered and expect to continue to encounter risks and uncertainties frequently experienced by growing companies in rapidly evolving industries, such as the risks and uncertainties described herein.
 
Accordingly, we may be unable to prepare accurate internal financial forecasts or replace anticipated revenue that we do not receive as a result of these factors. If we do not address these risks successfully, our results of operations could differ materially from our estimates and forecasts or the expectations of investors, causing our business to suffer and our ordinary share price to decline.
 
In addition, market-wide events including global health crises and pandemics, increases in interest rates, inflation, political uncertainty or instability, regional and global conflicts and military hostilities, any of which are outside of our control, could impact our revenue and operating results and makes it difficult to forecast our revenue and evaluate our business and future prospects. For example, inflationary pressures and rising interest rates in key markets have influenced and in the future may influence consumer sentiment and could have a negative effect on consumer spend.
 
Failure to effectively expand our marketing and sales capabilities could harm our ability to increase our merchant base and achieve broader market acceptance of our platform.
 
Our ability to increase our merchant base and achieve broader market acceptance of our platforms will depend on our ability to expand our marketing and sales operations. We plan to continue expanding our sales force and our reliance on strategic partners. We also plan to dedicate significant resources to sales and marketing programs, including search engines and online advertising. Our business and operating results will be harmed if our sales and marketing efforts do not generate a corresponding increase in GMV and revenue. We may not achieve anticipated GMV and revenue growth from expanding our sales force if we are unable to hire, develop, and retain talented sales personnel, if our new sales personnel are unable to achieve desired productivity levels in a reasonable period of time, or if our sales and marketing programs are not effective. Furthermore, if the cost of marketing our platforms increases, our business and operating results could be adversely affected.
17
 
Lengthy sales cycles with enterprise merchants make it difficult to predict our future revenue and cause variability in our operating results.
 
Our sales cycle can vary substantially from merchant to merchant, but with enterprise merchants it typically requires 12 to 16 weeks on average. Our ability to accurately forecast revenue is affected by our ability to forecast new merchant acquisition. Lengthy sales cycles make it difficult to predict the quarter in which revenue from a new merchant may first be recognized. If we overestimate new merchant growth, our revenue will not grow as quickly as our estimates, our costs and expenses may continue to exceed our revenue and our ability to become profitable will be harmed. In addition, we plan our operating expenses, including sales and marketing expenses, and our hiring needs in part on our forecasts of new merchant growth and future revenue. If new merchant growth or revenue for a particular period is lower than expected, we may not be able to proportionately reduce our operating expenses for that period, which could harm our operating results for that period. Delays in our sales cycles could cause significant variability in our revenue and operating results for any particular period.
 
Our long-term success depends on our ability to operate internationally, making us susceptible to risks associated with global sales and operations.
 
We currently support global transactions of merchants in multiple countries of origin to shoppers in over 200 destinations markets and territories and settle transactions in more than 100 currencies. Our services and platforms are available to merchants in over 30 countries, and we aim to expand our operations and workforce to support more outbound countries, and reach new markets and geographies. Conducting international operations subjects us to risks and burdens which include:
 
•
the need to localize our solutions, including product customizations and adaptation for local practices and regulatory requirements; 
   
•
 
lack of familiarity and burdens of ongoing compliance with local laws, legal standards, regulatory requirements, tariffs, local tax regimes and customs formalities and other barriers, including restrictions on advertising practices, regulations governing online services, restrictions on importation or shipping of specified or proscribed items, importation quotas, shopper protection laws, enforcement of intellectual property rights, laws dealing with shopper and data protection, privacy, encryption, denied parties and sanctions, and restrictions on pricing or discounts; 
   
•
heightened exposure to fraud;
   
•
legal uncertainty in foreign countries with less developed legal systems;
   
•
potentially greater difficulty to execute and enforce contracts, including our terms of service and other agreements despite our efforts to adjust our contracts and service terms to local laws and regulations;
   
•
increasing scrutiny and disclosure requirements regarding ESG policies, practices, measures and initiatives;
   
•
unexpected changes in regulatory requirements, taxes, trade laws, tariffs, export quotas, custom duties or customs formalities, embargoes, exchange controls, government controls or other trade restrictions;
   
•
differing technology standards;
   
•
difficulties in managing and staffing international operations and differing employer/employee relationships;
   
•
fluctuations in exchange rates that may increase our foreign exchange exposure;
   
•
potentially adverse tax consequences, including the complexities of foreign tax laws (including with respect to value added taxes) and restrictions on the repatriation of earnings;

18

•
increased likelihood of potential or actual violations of domestic and international anti-money laundering laws and anticorruption laws, such as the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act;
   
•
uncertain political, national and economic climates in foreign markets;
   
•
 
geo-political or national conflicts and situations, including the ongoing Russia/Ukraine conflict and the recent attack by Hamas and Israel’s war against it, the military tension between Israel and the Hezbollah organization on the northern border of Israel as well as other hostile forces in the region, and heightened rates of inflation and recessionary pressures in various countries, that directly (e.g. by virtue of war zones not being serviceable at all) or indirectly affect our operations, consumer sentiment or e-commerce activities in general;
   
•
rapidly rising inflation across the U.S. and global economy, driving up the costs of goods and services; 
   
•
managing and staffing operations over a broader geographic area with varying cultural norms and customs;
   
•
varying levels of internet, e-commerce and mobile technology adoption and infrastructure;
   
•
reduced or varied protection for intellectual property rights in some countries;
   
•
new and different sources of competition;
   
•
costs and liabilities related to compliance with the numerous and ever-growing landscape of international data privacy and cybersecurity regimes, many of which involve disparate standards and enforcement approaches; and
   
•
data privacy and data protection laws which may require that merchant and/or shopper data be processed and stored in a designated territory.
 
These factors may require significant management attention and financial resources. Any negative impact from our international business efforts could adversely affect our business, results of operations and financial condition.
 
We rely on third-party services, such as shipping partners and payment providers, in our platforms and services.
 
We rely on third parties, such as our shipping partners, to deliver products from the merchants to the shoppers. Shortages of transportation vessels, transportation disruptions or other adverse conditions in the transportation industry due to shortages of pilots and truck drivers, strikes, slowdowns, piracy, terrorism, disruptions in rail service, closures of shipping routes, unavailability of ports and port service for other reasons, increases in fuel prices and adverse weather conditions, or other adverse changes related to such third-party services, including as a result of pandemics or the measures attempting to contain and mitigate the effects thereof, could increase our costs and disrupt our operations and our ability to deliver products from the merchants to our shoppers on the timing they expect or at all. The failure of our shipping partners to provide quality customer service when delivering products to shoppers would adversely affect the merchants and our relationships with the merchants which in turn could negatively impact our business and operating results. Furthermore, we rely on third parties to process payments and we cannot guarantee that such providers will perform adequately. Errors made by, or delays in service from, such third-party providers could adversely affect our ability to process payments and process purchases by shoppers on our platforms in a timely manner or at all, which could adversely affect our business, operating results and financial condition.
 
Our success will depend on our ability to build and maintain relationships with these and other third-party service providers on commercially reasonable terms. If we are unable to build and maintain such relationships on commercially reasonable terms, we may have to suspend or cease operations. Even if we are able to build and maintain such relationships, if these third parties are unable to deliver their services on a timely basis, shoppers could become dissatisfied and decline to make future purchases from the merchants, which would adversely affect our revenue. If the merchants become dissatisfied with the services provided by these third parties, our reputation and our business could suffer.
19
 
Our provision of shipping services is dependent on third-party providers of cross-docking services for which we have limited redundancy. To the extent that we may be unable to secure comparable services in the countries in which we operate, the ongoing operation of our business may be adversely affected.
 
In some countries in which we operate, we rely on third-party providers of “cross-docking services” to collect, sort and prepare for cross-border shipping the products sold by merchants through our platforms. We generally employ a single provider of cross-docking services in such outbound markets due to a paucity of providers and minimum volume requirements imposed by such providers. Our ability to ship products in a timely manner is dependent on our ability to secure cross-docking services and in the event that we cannot secure them in specific geographies, or are unable to secure them at competitive prices or with adequate service reliability and availability, our operations may be adversely affected. Moreover, if a cross-docking service provider fails to provide the service, our operations will be adversely affected until such time that we are able to shift to an alternative provider.
 
Operating as merchant of record for sales conducted using our platforms imposes certain obligations and subjects us to certain risks applicable to actors that make available or place products in the market such as product liability, shipping compliance, and waste and packaging compliance.
 
Our business model and activities are predicated upon our operating as the merchant of record (“MoR”) of the products sold through our platforms. As a result of us being identified as a seller rather than the merchants, we could bear responsibility for the products and may be liable for product liability claims brought by our shoppers or other third parties, and we may be subject to various regulatory compliance requirements, such as waste and packaging compliance. Although we have policies in place crafted to ensure compliance and reduce risk of such liabilities, for example by avoiding the sale of products that we determine to be “high risk” or by making proper disclosures in our ‘terms of sale’ and although our commercial arrangements with the merchants typically require the merchants to cover such liabilities, it is possible that we may be subject to product liability or other compliance or similar regulations or litigation and may incur various related costs which may or may not be fully covered by our contractual arrangements or insurance coverage. Furthermore, any actual or alleged non-compliance on our part in a specific geography may not be treated by local authorities as an isolated event. Heightened scrutiny by local authorities in a specific geography could impede our local activities irrespective of the product vertical or merchant from which the products originated.
 
As MoR, we could be adversely affected if the packages provided by the merchants do not contain the correct articles ordered by the shopper, or if articles and the packages provided by the merchants are not shipped in compliance with applicable rules or do not contain all requisite documentation for cross-border shipping. Failure to ensure such compliance may result in shipping delays or diminished shopper satisfaction, result in confiscation or destruction of articles and payment of additional costs, fines or assessments from our fulfillment partners and other third parties, which in turn may adversely affect our results of operations.
 
While merchandise is in our possession, we bear the risk of loss. While the majority of merchants are responsible for transporting the goods to our facilities, certain of our merchant agreements require us to take possession of products for an extended period of time. To the extent that products are damaged, lost or stolen during the period in which we bear the risk of loss, our business may be adversely affected.
20
 
Payment transactions through our e-commerce platforms subject us to regulatory requirements, additional fees, and other risks that could be costly and difficult to comply with or that could harm our business. 
 
Our business depends on our ability to process a wide range of payment methods, including credit and debit cards, as well as other alternative payment methods and this ability is facilitated by the payment card and alternative payment networks. We do not directly acquire the payment card networks that enable our acceptance of payment cards and alternative payment methods. As a result, we must rely on banks, acquiring processors and other third-party payment processors to process transactions on our behalf. These third parties perform the card processing, currency exchange, identity verification and fraud analysis services. These third parties may fail or refuse to process transactions adequately, may breach their agreements with us, or may refuse to renegotiate or renew these agreements on terms that are favorable or commercially reasonable. They might also take actions that degrade the functionality of our services, impose additional costs or requirements on us, or give preferential treatment to competitive competing services, including their own services. If we are unsuccessful in establishing, renegotiating or maintaining mutually beneficial relationships with these payment card networks, banks and acquiring processors, our business may be harmed.
 
We are required by our third-party payment processors to comply with payment card network operating rules, including the Payment Card Industry Data Security Standard (“PCI DSS”), and we have agreed to reimburse our payment processors for any fees or fines that they are assessed by payment card networks as a result of any rule violations by us or our merchants. The payment card schemes have discretion to determine, change and interpret the card rules, and our third-party payment processors are required to assess our compliance with the card scheme rules, and may make assessments or determinations that are unfavorable to our business model. In past assessments of us operating as MoR, we demonstrated our compliance with MoR operating rules and demonstrated that we should not be subject to compliance with other operating rules (e.g. such as those applicable to “payment facilitators”). There is no assurance that the third-party payment processors or their payment card networks will not re-evaluate that conclusion, or   make a different determination in the future. If such third-party payment processors or their payment card networks were to determine that we must comply with other operating rules, we may be subject to additional regulations, might incur higher compliance costs, and may be required to modify certain aspects of our platforms and service offering in order to maintain compliance, which may have an adverse impact on our business.
 
If we fail to comply with the payment card network rules, we would be in breach of our contractual obligations to our third-party payment processors, financial institutions, partners and merchants. Such failure to comply may subject us to fines, penalties, damages, higher transaction fees and civil liability, and could eventually prevent us from processing or accepting payment methods or could lead to a loss of a third-party payment processor. Further, there is no guarantee that, even if we are in compliance with such rules or requirements, such compliance will prevent illegal or improper use of our payment systems or the theft, loss, or misuse of data pertaining to credit and debit cards, credit and debit card holders, and credit and debit card transactions.
 
In addition, we face the risk that one or more payment card networks or other third-party payment processors may, at any time, assess penalties against us or our merchants, or terminate our ability to accept credit card payments or other forms of online payments from shoppers, which would have an adverse effect on our business, financial condition and operating results.
 
We are subject to anti-money laundering regulations and related compliance costs and third-party risks.
 
We are or may be subject to anti-money laundering laws and regulations that prohibit, among other things, involvement in receiving and/or transferring the proceeds of criminal activities, or doing business with, or rendering service to, certain individuals or organizations, and impose obligations on us to identify such persons (or their ultimate beneficiaries) or users and request certain information and documentation that, in certain circumstances, must be shared with third-party payment card networks or other third-party payment processors or by other third parties such as Shopify or other platforms, or with government or regulators institutions. Because laws and regulations differ in each of the jurisdictions where we operate, and because some requirements may be imposed by the card scheme or the payment processors in other countries, additional verification and reporting requirements could apply. These regulations requirements, as well as any future regulation and any additional restrictions imposed by credit card associations, could raise our costs significantly and reduce the attractiveness of our services or platform. Failure to comply with anti-money laundering laws could result in significant criminal and civil lawsuits, penalties, and forfeiture of significant assets.
21
 
We may be required by our third-party payment card networks or other third-party payment processors or by other third parties such as Shopify or other platforms to check, confirm and assure the identity of beneficial owners of our merchants, or to determine they are duly and legally organized, or perform other compliancy assessments, generally known and referred to as ‘know your customer’ or ‘KYC’ or ‘know your business’ or ‘KYB’. Certain e-commerce platforms may offer qualifying merchants to operate a D2C e-commerce store on such platforms, for example Shopify Markets Pro. Merchants using such platforms may onboard directly through the platform operator (e.g. Shopify), and we may not collect the information required to perform KYC or KYB directly. While we have effected internal control processes to perform compliancy assessments, if we are unable to collect the information required to properly perform KYC or KYB, or if we are unable to obtain such collected information, or if we collect or obtain such KYC/KYB data and are unable to conduct a proper assessment and validation, or if we have properly conducted an assessment but failed to take action as needed, we face the risk that one or more payment card networks or other third-party payment processors may, at any time, assess penalties against us or our merchants, or terminate our ability to accept credit card payments or other forms of online payments from shoppers, which would have an adverse effect on our business, financial condition and operating results.
 
We are subject to governmental sanctions and export controls that may subject us to liability if we are not in full compliance with applicable economic sanctions and export control laws.
 
Our activities are subject to certain economic sanctions and export control laws and regulations that prohibit or restrict transactions or dealings with certain countries, regions, governments and persons targeted by U.S., Israel, E.U. or other applicable jurisdictions’ embargoes or sanctions. As a result, we bear the responsibility for ensuring that transactions processed through our platforms are conducted in compliance with such laws and regulations. U.S., Israel and E.U. sanctions may change from time to time, and the countries, regions, governments and persons that are sanctioned by each jurisdiction may be different. Ensuring compliance with applicable export control laws and regulations requires ongoing efforts and resources. Identifying commerce with, or sales made to, sanctioned countries or denied parties and obtaining export licenses or other authorizations for a particular product sale may be time-consuming and may result in the delay or loss of sales opportunities even if the export license ultimately may be granted. We generally apply precautions to prevent sales to sanctioned countries and denied parties, such as screening against listed denied parties and blocking sales at the point of checkout; however, we cannot guarantee that the precautions we take will prevent all violations of applicable export control and sanctions laws. We are aware that certain sales of immaterial value and volume made by certain of our non-Israeli merchants through our platforms, operated by one or more of our non-Israeli subsidiaries, to a specific country (not sanctioned under U.S. or E.U. laws), as to which country we apply the foregoing precautions, are not in compliance with certain Israeli export laws. Violations of U.S., Israeli or E.U. sanctions or export control laws may result in penalties and significant fines and possible incarceration of responsible employees and managers could be imposed for criminal violations of these laws.
 
If our carriers and brokers fail to file or obtain appropriate import, export or re-export declarations, licenses or permits, we may also be adversely affected, through reputational harm as well as other negative consequences, including government investigations and penalties. We presently incorporate export control compliance requirements into our strategic partner agreements; however, no assurance can be given that our partners will comply with such requirements.
 
Trade Controls by the U.S. and other governments enacted due to geopolitics or otherwise (for example, the war in Ukraine has prompted the U.S. and other governments to impose new Trade Controls and sanctions on Russia, among other countries), and any counter-sanctions enacted in response, could continue to disrupt international commerce and the global economy, and could restrict our ability to operate, generate or collect revenue in certain other countries, which could adversely affect our business. While, we do not have operations or a material customer base in either Russia or Ukraine, an escalation of the conflict or expansion of sanctions could further disrupt global supply chains, broaden inflationary costs, and have a material adverse effect on our customers, vendors and financial markets. 
22
 
We are subject to the import regulations and restrictions of each country to which we ship merchandise and non-compliance with such regulations may subject us to liability and may impede our ability to provide services in specific geographies in the future.
 
Import and export regulations and restrictions vary by country, product and quantity and require costly resources in order to ensure compliance. While we take precautions in order to avoid non-compliance with these restrictions, including focusing on products that carry lower inherent risk of being subject to import/export restrictions and avoiding highly regulated industries, some of the products offered using our platforms may be subject to such restrictions. For example, the United States Food and Drug Administration regulates the import of sunglasses as medical devices, and the Australian Department of Agriculture regulates the import of timber, wood articles or bamboo related products. Non-compliance with the local import rules and restrictions applicable to such products may cause our products to be detained, confiscated, or destroyed at the port of entry.
 
Additionally, there are increasing expectations in various jurisdictions that companies monitor the environmental and social performance of their suppliers, including compliance with a variety of labor practices, as well as consider a wider range of potential environmental and social matters, including ecolabelling or the end of life considerations for products. Compliance can be costly, require us to establish or augment programs to diligence or monitor certain third parties. Failure to comply with such regulations can result in fines, reputational damage, import ineligibility for products, or otherwise adversely impact our business or the business of our merchants.
 
In addition, because we operate as MoR, in the event that we are flagged by a specific country due to non-compliance with import restrictions applicable to a specific product or vertical our ability to continue to import such product in the future may be impeded, regardless of the identity of the merchant from which the product originates. If our service offerings are curtailed to exclude the import of whole verticals to specific countries, or if we are barred from importing products of any vertical to specific countries, our GMV attributable to such destination markets may decrease, our reputation will be harmed, and our platforms will become less attractive to our current and future merchants.
 
Our business relies on the personal importation model and its applicability to the products provided to shoppers. Any modification of the rules, requirements or applicability of this model may adversely affect our business.
 
The products provided by the merchants to shoppers are shipped to and imported by the shopper for personal rather than commercial use. Each country determines its own rules and criteria for an import to qualify as importation for personal use, and determines which, if any, licenses, certifications, registrations, fees, quantity limitations and obligations apply to such an import. In the event that certain countries modify their personal importation rules, or impose additional compliance requirements or limitations related to this form of import, it could have an adverse effect on the cross-border e-commerce market as a whole, and may reduce the demand for cross-border e-commerce purchases. This in turn would reduce the demand for our platforms and services and have an adverse effect on our business and result of operations.
 
Additionally, we are witnessing an evolving and developing regulatory trend whereby the burden to adhere to certain legislations and regulatory requirements shifts to or is shared by the distributors, platform providers and other parties involved in the fulfilment chain of products (in addition to manufacturers), even if such parties are not established in the country of importation and where the import is carried out by the shopper as a personal-import. For example, the EU has recently enacted a new Product Safety Regulation that will impose certain additional requirements on our merchants and on us. In the event that such regulations would nonetheless apply to personal importation rules, it could have an adverse effect on the cross-border e-commerce market as a whole, and may reduce the offering of cross-border e-commerce products to such regulated destinations. This in turn would reduce the demand for our platforms and services and have an adverse effect on our business and result of operations.
23
 
We store personal information of merchants and shoppers. To the extent our security measures are compromised, our platforms may be perceived as not being secure. This may result in merchants curtailing or ceasing their use of our platforms, our reputation being harmed, our incurring of significant regulatory and monetary liabilities, and adverse effects on our results of operations and growth prospects.
 
Our operations involve the storage and transmission of data, including personal information and other confidential information of our third-party providers, merchants and shoppers, on our systems and the systems of third-party service providers we rely on. Third-party applications that we rely on for provision of certain services, such as acquiring processors also store personal information, payment card information, and other confidential information. We have experienced and expect to continue to experience actual and attempted cyber-attacks in varying degrees of our IT networks, such as through phishing scams and ransomware. Although none of these actual or attempted cyber-attacks has had a material adverse impact on our operations or financial condition, we cannot guarantee that such incidents will not have such an impact in the future. We face numerous and evolving cybersecurity risks that threaten the confidentiality, integrity and availability of our systems and information. Cyberattacks and other malicious internet-based activity continue to increase globally in frequency and magnitude, and cloud-based platform providers of services are expected to continue to be targeted. Threats include traditional computer “hackers,” malicious code (such as viruses, ransomware and worms), social engineering/phishing, employee malfeasance or misuse, human or technological error, as a result of bugs, misconfigurations or exploited vulnerabilities in software or hardware and denial-of-service attacks. Sophisticated nation-states and nation-state-supported actors now engage in such attacks, including advanced persistent threat intrusions. Although we do not store payment card information, hackers and adverse third parties may mistake us for the merchants, causing them to target us in order to obtain payment card information.
 
We have implemented a variety of security protocols, network protection mechanisms and other security measures into our internal systems, networks and physical facilities designed to protect confidentiality, integrity and availability of our systems and information. However, there is no assurance that such measures will be adequate to prevent or detect service interruption, system failure, data loss or theft, or other material adverse consequences, directly or through our vendors or that such measures will be fully implemented, complied with at all times. Despite efforts to create security barriers to such threats, it is virtually impossible for us to entirely mitigate these risks. If our security measures are compromised as a result of third-party action, human error, malfeasance, stolen or fraudulently obtained log-in credentials, technical malfunction or otherwise, our reputation could be damaged, our business may be harmed, and we could incur significant liability (including, but not limited to, fines imposed by data privacy authorities and costs related to litigation).
 
Because the techniques used to obtain unauthorized access or sabotage systems change frequently and generally are not identified until they are launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. Threat actors are also increasingly using sophisticated tools – including artificial intelligence – designed to circumvent security controls, evade detection and remove forensic evidence. Therefore, the measures we take or the controls, policies, procedures and personnel we have in place may not be enough to detect, prevent, and overcome such attacks. Additionally, because we rely on third-party and public-cloud infrastructure, we are reliant in part on third-party security measures to protect against unauthorized access, cyberattacks, and the mishandling of shopper and merchant data. Even if such a data breach did not arise out of our action or inaction, or if it were to affect our competition rather than us, the resulting concern could negatively affect merchants, shoppers and our business. Because our products and services are integrated with our merchants’ systems and processes, any circumvention or failure of our cybersecurity defenses or measures could compromise the confidentiality, integrity, and availability of our merchants’ own systems and/or our merchants’ proprietary or other sensitive information. Concerns regarding data privacy and security may cause some of our merchants to stop using our platforms and fail to renew their agreements with us. In addition, failures to meet merchants’ or shoppers’ expectations with respect to security and confidentiality of their data and information could damage our reputation and affect our ability to retain merchants, attract new merchants, and grow our business. Furthermore, failure to comply with legal or contractual requirements around the security of personal information could lead to significant fines and penalties, as well as claims by merchants and shoppers. Regardless of merit, these proceedings or violations could force us to spend money in defense or settlement of these proceedings, result in the imposition of monetary liability or injunctive relief, divert management’s time and attention, increase our costs of doing business, and materially adversely affect our reputation and the demand for our platform.
24
 
A cybersecurity event could have significant costs and adversely harm our business, including regulatory investigations and enforcement actions, litigation (including class action), litigation indemnity obligations, remediation costs, including incident response, system restoration or remediation and future compliance costs, network downtime, loss of existing and future customers, increases in insurance premiums, and reputational damage. We cannot guarantee that any costs and liabilities incurred in relation to an attack or incident will be covered by our existing insurance policies or that applicable insurance will be available to us in the future on economically reasonable terms or at all. If we experience, or are perceived to experience in the future, security incidents that impair the performance of our platforms or create availability problems or the loss, compromise or unauthorized disclosure of personal data or other sensitive information, or if we fail to respond appropriately to any security incidents that we may experience, or are perceived to do so, merchants may become unwilling to provide us the information necessary to set up an account with us. Existing merchants may also stop utilizing our platforms, and shoppers may decrease their purchases, or close their accounts with us altogether. Any of these results could harm our growth prospects, our business, and our reputation for maintaining a trusted e-commerce platform.
 
Interruptions or delays in the services provided by third-party data centers or internet service providers could impair our platforms and our business could suffer.
 
We rely on the internet and, accordingly, depend upon the continuous, reliable, and secure operation of internet servers, related hardware and software, and network infrastructure. Any damage to, failure or delay of our systems would prevent us from operating our business.
 
We host our platforms using third-party data centers and providers of cloud infrastructure services. We currently use one third-party provider for these data and cloud services. Our operations depend on protecting the virtual cloud infrastructure hosted by this cloud services provider by maintaining its configuration, architecture, and interconnection specifications, as well as the information stored in these virtual data centers and transmitted by third-party internet service providers. Furthermore, we have no physical access to or control over the services provided by our cloud services provider. Although we have disaster recovery plans that utilize multiple locations, the data centers that we use are vulnerable to damage or interruption from human error, intentional bad acts, earthquakes, floods, fires, severe storms, war, terrorist attacks, power losses, hardware failures, systems failures, telecommunications failures, and similar events, many of which are beyond our control, any of which could disrupt our service, destroy our data, or prevent us from being able to continuously back up or record changes in our platforms. Certain of these events may become more frequent or intense as a result of climate change. For more information, see our risk factor titled “We are subject to a series of risks regarding climate change.” In the event of significant physical damage to one of these data centers, it may take a significant period of time to achieve full resumption of our services, we may incur data loss during the service resumption process and our disaster recovery planning may not account for all eventualities. Further, a prolonged service disruption to our cloud services provider, affecting our platforms for any of the foregoing reasons could damage our reputation with current and potential organizations, expose us to liability, cause us to lose merchants and shoppers, or otherwise harm our business. We may also incur significant costs for using alternative equipment or taking other actions in preparation for, or in reaction to, events that damage the systems we use. Damage or interruptions to these data centers could harm our business. Moreover, negative publicity arising from these types of disruptions could damage our reputation and may adversely impact use of our solutions and platform. We may not carry sufficient business interruption insurance to compensate us for losses that may occur as a result of any events that cause interruptions in our service. Further, the contractual commitments that we provide to merchants on our platforms as well as our third-party providers with regard to data privacy and security are limited by the commitments that our third-party cloud infrastructure services provider has provided us and these measures may not fully address the risks associated with the third-party processing, storage and transmission of such information. Any violation of data or security laws by our third party providers could adversely impact our business.
25
 
Our cloud services providers enable us to order and reserve server capacity in varying amounts and sizes distributed across multiple regions. In addition, our cloud services providers provide us with computing and storage capacity pursuant to terms of service that continue until terminated by either party. If we do not accurately predict our infrastructure capacity requirements, merchants could experience service shortfalls which could interrupt the performance of our platforms, which could adversely affect the perception of its reliability and our revenue and harm the sales and business of our merchants. We may also be unable to effectively address capacity constraints, upgrade our systems as needed and continually develop our technology and network architecture to accommodate actual and anticipated changes in technology.
 
Our platforms are utilized by a large number of merchants, and as we continue to expand the number of merchants and shoppers, we may not be able to scale our technology to accommodate the increased capacity requirements, which may result in interruptions or delays in service. Merchants often draw significant numbers of shoppers over short periods of time (typically during events such as new product releases, holiday shopping season and flash sales). In the event that merchants conduct a high volume of sales in a short period of time, we may not be capable of securing the then-necessary capacity for such traffic which may cause a degradation in the quality of our platforms and services. Furthermore, if we are incapable of anticipating high traffic levels and reserving server capacity accordingly, our platforms and services may be adversely affected. In addition, the failure of our cloud services provider’s data centers or third-party internet service providers to meet our capacity requirements could impede our ability to scale our operations. In some cases, our cloud services providers may terminate the agreement upon 30 days’ notice. Termination of the agreement may harm our ability to access data centers we need to host our platforms or to do so on terms as favorable as those we currently have in place. We currently rely exclusively on one cloud services provider for our cloud infrastructures and therefore a transition to an alternative provider may take time, cause us to incur additional costs and reduce the quality and functionality of our platforms.
 
Increases in shipping rates could negatively impact our profits generated through shipping services.
 
Shipping rates and surcharges are volatile and subject to market fluctuations. A portion of our revenues is generated through shipping services provided through our shipping and logistics partners. Therefore, a substantial increase in shipping rates may reduce our margins from shipping services. Although some of such cost would be borne by merchants and shoppers, significant increases of costs may diminish demand for cross-border e-commerce, reduce the attractiveness of our service among merchants and adversely affect our results of operations.
 
Fluctuations in the exchange rate of foreign currencies have adversely impacted and in the future could continue to impact our results of operations.
 
A majority of our purchase and sale transactions are carried out in different currencies and we bear the risk of diminution in value of the shopper’s purchasing currency in the interim periods between the transaction stages (e.g. placement/payment and returns/refund). We may incur additional costs and experience losses resulting from fluctuations in exchange rates.
 
While our financial reporting currency is U.S. Dollars, a significant share of our revenues is denominated in foreign currencies, including Pounds Sterling and Euros, and may in the future have significant sales denominated in the currencies of additional countries, which may negatively impact our reported revenues as a result of fluctuations in currency exchange rates vis-à-vis the U.S. Dollar. In addition, we incur a substantial portion of our operating expenses in New Israeli Shekels, Pounds Sterling and U.S. Dollars, and to a lesser extent, other foreign currencies. We may incur additional costs and experience losses resulting from fluctuations in exchange rates for revenues in foreign currencies or upon translation of New Israeli Shekels expenses incurred in Israel, Euros expenses incurred in Europe or Pounds Sterling expenses incurred in the United Kingdom, to U.S. Dollars which may negatively impact our operating results.
26
 
If we fail to offer high quality support, our business and reputation could suffer.
 
Merchants rely on our personnel for support related to our platforms and services. High-quality support is important for maintaining, renewing and expanding our agreements with existing merchants and maintaining our reputation among merchants. As we expand our business and pursue engagements with new merchants, the importance of high-quality support will increase, and we expect to incur additional support related costs in order to meet the requirements of our new and future merchants. If we do not help merchants and shoppers quickly to resolve issues and provide effective ongoing support, our ability to retain existing merchants and attract new merchants could suffer and our reputation could be harmed.
 
If we fail to enhance our reputation and awareness of our platforms, our ability to expand the number of merchants using our platforms and increase our GMV will be impaired, our reputation may be harmed, and our business, results of operations, and financial condition may suffer.
 
We believe that developing and maintaining awareness and a favorable reputation is critical to achieving widespread acceptance of our platforms and services and is an important element in attracting new merchants to our platforms, and retaining existing merchants. Furthermore, we believe that the importance of brand recognition will increase as competition in our market increases. Our ability to increase awareness will depend largely on the effectiveness of our marketing efforts, our ability to ensure that our platforms and services remain of high quality, reliable, and useful at competitive prices, our ability to maintain our merchants’ trust, our ability to continue to develop new functionality and solutions, and our ability to successfully differentiate our platforms.
 
Efforts to increase awareness may not yield increased revenue, and even if they do, any increased revenue may not offset the expenses we incur. In addition, we may fail to successfully integrate or retain the acquired personnel, operations and technologies or effectively manage the combined business following the completion of acquisitions, such as the Flow Merger or Borderfree Acquisition, or fail to fully achieve the expected benefits of such acquisitions or fail to retain merchants operating on such acquired platforms. If we fail to successfully promote our platforms, incur substantial expenses in an unsuccessful attempt to promote our platforms, or fail to successfully transition, execute and grow the offerings derived from our newly acquired platforms into our business (for example, the Shopify Markets Pro offering), we may fail to attract new merchants, retain existing merchants or grow or maintain the volume of sales facilitated by our platforms to the extent necessary to realize a sufficient return on our marketing efforts, and our business, results of operations, and financial condition could suffer.
 
Our reputation may be harmed by our merchants’ or third-party service providers’ unethical business practices.
 
Our emphasis on our values makes our reputation particularly sensitive to allegations of unethical business practices by our merchants or third-party service providers. Our policies promote legal and ethical business practices. However, we do not control our merchants or third-party service providers or their business practices and cannot ensure that they comply with our policies. If our merchants or third-party service providers engage in illegal or unethical business practices or are perceived to do so, we may receive negative publicity and our reputation may be harmed.
 
27
Mobile devices are very commonly used to conduct e-commerce transactions, and if our platforms and services do not operate as effectively when the merchants’ sites and checkout pages are accessed through these devices, the merchants’ experience will be negatively impacted, reducing merchant satisfaction with our platforms and services.
 
We are dependent on the interoperability of our platforms with third-party mobile devices, merchants’ mobile applications and mobile operating systems as well as web browsers. Changes in such devices, systems, applications or web browsers that degrade the functionality of our platforms could adversely affect adoption and usage of our platforms and services. For example, we provide our merchants with development libraries which allow for easy implementation of our platforms as well as bug and error fixes. Our merchants’ ability to timely utilize such libraries in order to fix bugs and errors is contingent on application stores (such as Google Play and Apple App Store) approving our software development kit and libraries. If such approval is not obtained in a timely manner, merchant may be delayed in fixing bugs and errors relating to the use of our platforms and may forgo the use of our solutions until an applicable error or bug fix is available. Mobile e-commerce and effective mobile functionality are integral both to our merchants and to our long-term growth strategy. If the functionality of our platforms is inhibited when access to our merchants’ stores is done through mobile devices, our business and operating results could be adversely affected.
 
We are dependent upon the continued use of the internet for commerce.
 
Our success depends upon the general public’s continued willingness to use the internet as a means to pay for purchases, communicate, access social media, research and conduct commercial transactions, including through mobile devices. Federal, state, or foreign government bodies or agencies have in the past adopted, and may in the future adopt, laws or regulations affecting the use of the internet as a commercial medium. The adoption of any laws or regulations that could reduce the growth, popularity, or use of the internet, including laws or practices limiting internet neutrality, could decrease the demand for, or the usage of, our platforms and services, increase our cost of doing business and harm our results of operations. Changes in these laws or regulations could require us to modify our platform, or certain aspects of it, in order to comply with these changes. In addition, government agencies or private organizations have imposed and may impose additional taxes, fees, or other charges for accessing the internet or commerce conducted via the internet. These laws or charges could limit the growth of internet-related commerce or communications generally, or result in reductions in the demand for internet-based platforms such as ours. In addition, the use of the internet could be harmed due to delays in the development or adoption of new standards and protocols to handle increased demands of internet activity, security, reliability, cost, ease-of-use, accessibility, and quality of service. Further, demand for our platforms depends on the quality of shoppers’ access to the internet. Certain features of our platforms may require significant bandwidth and fidelity to work effectively. Internet access is frequently provided by companies that have significant market power that could take actions that degrade, disrupt or increase the cost of access to our platforms, which would negatively impact our business. The performance of the internet and its acceptance as a commerce tool has been harmed by “viruses,” “worms” and similar malicious programs and the internet has experienced a variety of outages and other delays as a result of damage to portions of its infrastructure. If the use of the internet is adversely affected by these issues, demand for our platforms and services could decline. Additionally, if merchants or shoppers become unwilling or less willing to use the internet for commerce for any other reason, including lack of access to high-speed communications equipment, congestion of traffic on the internet, internet outages or delays, disruptions or other damage to merchants’ and shoppers computers, increases in the cost of accessing the internet and security and privacy risks or the perception of such risks, our business could be adversely affected. Finally, our success depends upon merchants continuing to pursue D2C sales as they seek to take advantage of e-commerce trends and gain ownership and knowledge of their international customers. If merchants cease to pursue D2C sales for any reason, including if such merchants prefer to sell their products on e-commerce marketplaces, our business could be adversely affected.
 
We are subject to stringent and changing laws, regulations, standards, and contractual obligations related to privacy, data protection, and data security. Our actual or perceived failure to comply with such obligations could harm our business.
 
We receive, collect, store, process, share, transfer, disclose, and use personal data and other data relating to shoppers, customers, candidates, employees, website users, contractors and other persons. We are subject to numerous federal, state, local, and international laws, directives, and regulations regarding privacy, data protection, and data security and the collection, storing, sharing, use, processing, transfer, disclosure, and protection of personal data, the scope of which are changing, subject to differing interpretations, and may be inconsistent among jurisdictions or conflict with other legal and regulatory requirements. For example, the Israeli Privacy Protection Law 5741-1981 and its regulations, or the PPL, the EU’s General Data Protection Regulation, or the GDPR, the California Consumer Privacy Act, or the CCPA, as amended by the California Privacy Rights Act, and the data protection and security laws of other states and countries impose additional requirements with respect to disclosure and deletion of personal information of their residents, imposing penalties for violations and, in some cases, private right of action for data breaches. These laws, and similar legislation in other states and countries that are developing or have been recently enacted, impose transparency and other obligations with respect to personal data of their respective residents and provide residents with similar rights for certain types of data breaches. We are also subject to certain contractual obligations related to privacy, data protection and data security. We strive to comply with our policies and applicable laws, regulations, contractual obligations, and other legal obligations relating to privacy, data protection, and data security to the extent possible. However, the regulatory framework for privacy, data protection and data security worldwide is, and is likely to remain for the foreseeable future, uncertain and complex, and it is possible that these or other actual or alleged obligations may be interpreted and applied in a manner that we do not anticipate or that is inconsistent from one jurisdiction to another, including across the various jurisdictions in which we operate remotely and may conflict with our other legal obligations or our practices. Further, any significant change to applicable laws, regulations or industry practices regarding the collection, use, processing, storage, sharing, transferring, security or disclosure of data, or their interpretation, or any changes regarding the manner in which the consent of shoppers or other data subjects for the collection, use, processing, storage, sharing, transferring, or disclosure of such data must be obtained, could increase our costs and require us to modify our services and features, possibly in a material manner, which we may be unable to complete, and may limit our ability to collect, use, process, store, share, transfer, or disclose shopper data or develop new services and features.
28
 
Certain data privacy legislation restricts the cross-border transfer of personal data and some countries introduced data localization into their laws. Specifically, regulations and laws such as the GDPR and other European and UK data protection laws generally prohibit the transfer of personal data to third countries, unless the transfer is to a country deemed to provide adequate protection (such as Israel, as the EU Commission has issued a decision on the adequacy of the level of protection of personal data in Israel) or the parties to the transfer have implemented specific safeguards to protect the transferred personal data. At the same time, European case law and guidance have imposed additional onerous requirements in relation to data transfers. Other jurisdictions such as Israel and China impose their own requirements to transfer personal data internationally, and regulators continue to propose new rules and guidance on the topic. We expect the existing legal complexity and uncertainty regarding international personal data transfers to continue in Europe and globally. If we do not implement the relevant transfer mechanism to transfer personal data or otherwise adequately comply with regulations and laws on international data transfers, we may violate or infringe data privacy legislation requirements, and we may be exposed to regulatory proceedings or litigation and increased exposure to fines, penalties, or commercial liabilities, as well as reputational damages.
 
Any failure or perceived failure by us to comply with our posted privacy policies, our privacy-related obligations to merchants or other third parties, or any other legal obligations or regulatory requirements relating to privacy, data protection, or data security, may result in governmental investigations or enforcement actions, litigation, claims, or public statements against us by consumer advocacy groups or others and could result in significant liability, cause our merchants to lose trust in us, and otherwise materially and adversely affect our reputation and business. Furthermore, the costs of compliance with, and other burdens imposed by, the laws, regulations, other obligations, and policies that are applicable to the businesses of our merchants may limit the adoption and use of, and reduce the overall demand for, our platform. In addition, if a breach of data security were to occur or to be alleged to have occurred, if any violation of laws and regulations relating to privacy, data protection or data security were to be alleged, or if we had any actual or alleged defect in our safeguards or practices relating to privacy, data protection, or data security, our platforms and services may be perceived as less desirable and our business, prospects, financial condition, and results of operations could be materially and adversely affected. Additionally, if third parties we work with violate applicable laws, regulations or contractual obligations, such violations may put our data at risk, could result in governmental investigations or enforcement actions, fines, litigation, claims, or public statements against us by consumer advocacy groups or others and could result in significant liability, cause our merchants to lose trust in us, and otherwise materially and adversely affect our reputation and business. Lastly, public scrutiny of, or complaints about, technology companies or their data handling or data protection practices, even if unrelated to our business, industry or operations, may lead to increased scrutiny of technology companies, including us, and may cause government agencies to enact additional regulatory requirements, or to modify their enforcement or investigation activities, which may increase our costs and risks.
29
 
As the regulatory framework for machine learning technology and generative artificial intelligence evolves, including with respect to unintentional bias and discrimination, our business, financial condition, and results of operations may be adversely affected.
 
Our business increasingly relies on artificial intelligence, machine learning and automated decision making. The regulatory framework for this technology is rapidly evolving, and we may not always be able to anticipate how to respond to these laws or regulations. Many federal, state and foreign government bodies and agencies have introduced or are currently considering additional laws and regulations governing the use of such technologies. There is also an increase in litigation in a number of jurisdictions, including the United States, relating to the development, security and use of artificial intelligence. In October 2023, President Biden issued the Executive Order on Safe, Secure and Trustworthy Artificial Intelligence (“The Order”) with the goal of promoting the “safe, secure, and trustworthy development and use of artificial intelligence in the United States.” The Order has established certain new standards for the training, testing and cybersecurity of sophisticated artificial intelligence models, and the Order has also instructed other federal agencies to promulgate additional regulations within certain timeframes from the date of the Order. Federal artificial intelligence legislation has also been introduced in the U.S. Senate. Such additional regulations may impact our ability to develop, use and commercialize artificial intelligence and machine learning technologies in the future. Additionally, in December 2023, new laws regulating artificial intelligence have been enacted in China, and the European Parliament and Council reached a political agreement on the European Union's Artificial Intelligence Act (the “EU AI Act”), which seeks to create a comprehensive legal framework for the regulation of artificial intelligence systems across the EU. The final text of the EU AI Act is expected to be published in early 2024 with the majority of obligations expected to take effect by 2026, including requirements around transparency, conformity assessments and monitoring, risk assessments, human oversight, security, accuracy, general purpose artificial intelligence and foundation models, and fines for breach of up to 7% of worldwide annual turnover. Once fully applicable, the EU AI Act will have a material impact on the way artificial intelligence is regulated in the EU, including requirements around transparency, conformity assessments and monitoring, risk assessments, human oversight, security, accuracy, general purpose artificial intelligence and foundation models, and fines for breach of up to 7% of worldwide annual turnover. In 2022 and 2023, China implemented a number of regulations to govern generative artificial intelligence, algorithmic recommendation and deep synthesis technologies, namely the Interim Provisions on Management of Generative Artificial Intelligence Services, Administrative Provisions on Algorithm Recommendation for Internet Information Services and Provisions on Management of Deep Synthesis in Internet Information Service, respectively. Such regulations impose strict obligations on service providers, among other entities, with respect to their provision and use of generative artificial intelligence, algorithmic recommendation and deep synthesis technologies. For example, service providers must file the algorithms used and complete a security assessment with the local CAC before the provision of the service. The regulatory framework in China is expected to have a material impact on the way artificial intelligence is regulated in China, and together with developing guidance and/or decisions in this area, may affect our use of artificial intelligence and our ability to provide and to improve our services, require additional compliance measures and changes to our operations and processes, result in increased compliance costs and potential increases in civil claims against us, and could adversely affect our business, operations and financial condition. It is possible that the EU AI Act and the US artificial intelligence framework, along with the adoption of new laws and regulations in other jurisdictions, or the interpretation of existing laws and regulations, may affect the operation of our e-commerce risk intelligence platform and the way in which we use artificial intelligence and machine learning technology, including with respect to how we train our models, unintentional bias and discrimination. Failure to comply with such laws or regulations could subject us to legal or regulatory liability. Further, the cost to comply with such laws or regulations could be significant and would increase our operating expenses, which could adversely affect our business, financial condition and results of operations.
30
 
The situation in Ukraine could materially adversely affect our business, financial condition and results of operations.
 
In late February 2022, Russian military forces launched military action against Ukraine, and sustained conflict and disruption in the region is likely. The impact to Ukraine, as well as actions taken by other countries, including new and stricter sanctions by Canada, the United Kingdom, the European Union, the U.S. and other countries and organizations against officials, individuals, regions, and industries, and each potential response to such sanctions, tensions, and military actions, could lead to disruption, instability and volatility in global markets and industries that could have a material adverse effect on our operations. As a result of this situation, our services into Ukraine and Russia were suspended until further notice. While our direct business exposure to Ukraine and Russia is immaterial (in a typical year less than 2% of our GMV is generated by Ukraine and Russia combined), there may nevertheless be additional implications of such military conflict on macro-economics, consumer sentiment and buying patterns in other markets, including Eastern and Western Europe (in which we have experienced certain reductions in purchases since the commencement of the military conflict), which may have an adverse effect on our results.
 
In addition, some of our Research and Development team members are located in several cities in Ukraine which have been disrupted by the outbreak of war. The conflict has impaired and may continue to impair their ability to work, thereby adversely affecting our research and development and merchant support capacities. Due to this disruption, the human cost to our employees as well as the potential for broader, adverse impacts of this war, including heightened operating risks in Ukraine and Europe, additional sanctions or counter-sanctions, heightened inflation, cyber-attacks, higher energy costs and higher supply chain costs, as well as broader impact on global and regional economies, is difficult to measure, and the ultimate impact of such events on our business is difficult to predict. Any disruption in the businesses of our customers or partners could have a significant adverse impact on our results. All of the aforementioned risks may be further increased if our disaster recovery plans or those of our customers or partners prove to be inadequate.
 
We are subject to anti-corruption, anti-bribery, anti-money laundering and similar laws, and non-compliance with such laws can subject us to criminal penalties or significant fines and harm our business and reputation.
 
We are subject to anti-corruption and anti-bribery and similar laws, such as the U.S. Foreign Corrupt Practices Act of 1977, as amended, or the FCPA, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, U.S. Travel Act, the USA PATRIOT Act, the U.K. Bribery Act 2010, the Proceeds of Crime Act 2002, Chapter 9 (sub-chapter 5) of the Israeli Penal Law, 57373-1977, the Israeli Prohibition on Money Laundering Law, 5760-2000 and other anti-corruption, anti-bribery and anti-money laundering laws in countries in which we conduct activities. Anti-corruption and anti-bribery laws have been enforced aggressively in recent years and are interpreted broadly and prohibit companies and their employees and agents from promising, authorizing, making, or offering improper payments or other benefits to government officials and others in the private sector. As we increase our international sales and business, our risks under these laws may increase.
 
In addition, we use, and may continue to use, third parties to sell access to our platforms and conduct business on our behalf abroad, in particular carriers and other freight forwarders who perform customs-clearance and related services and functions as our service providers, and in our own name and instructions. We or such current and future third-party intermediaries may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities, and we can be held liable for the corrupt or other illegal activities of such third-party intermediaries, and our employees, representatives, contractors, partners, and agents, even if we do not explicitly authorize such activities. We have implemented an anti-corruption compliance program but cannot assure you that all our employees and agents, as well as those companies to which we outsource certain of our business operations, will not take actions in violation of our policies and applicable law, for which we may be ultimately held responsible. Noncompliance with these laws could subject us to investigations, sanctions, settlements, prosecution, other enforcement actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions, adverse media coverage, and other consequences. Any investigations, actions or sanctions could harm our business, results of operations, and financial condition.
31
 
We act as a service provider and take certain part of the fulfilment chain of the merchants, and while our legal and functional roles are defined, third parties may confuse us with the merchants resulting in claims and liabilities relating to the merchants’ activities.
 
We operate largely as a “white label” solution which enables the merchants to offer their products through our platform, while maintaining their own brand experience. Due to our nearly transparent integration with such merchants’ shopper experience, claims arising from the actions of the merchants may be unduly addressed to us by virtue of our perceived affiliation with the merchants and our role in the shopper experience. To the extent that we are not successful in demonstrating that we are distinct from such merchants, we may be subject to misdirected claims and associated liabilities. Although we include indemnification provisions in the merchant agreements, such provisions may not be enforced in certain circumstances, certain jurisdictions or may not be sufficient to fully cover potential liabilities arising from such claims.
 
If we fail to adequately maintain, protect or enforce our intellectual property rights, our competitive position could be impaired and we may lose valuable assets, generate reduced revenue, and incur costly litigation to protect our rights.
 
Our success is dependent, in part, upon protecting our intellectual property rights, including those in our know-how and proprietary technology. We rely on a combination of copyrights, trade secret and other intellectual property laws and contractual restrictions to establish and protect our intellectual property rights. While it is our policy to protect and defend our rights to our intellectual property, we cannot predict whether steps taken by us will be adequate to prevent infringement, misappropriation or other violation of our intellectual property rights.
 
Policing unauthorized use of our know-how, technology and intellectual property is difficult and may not be effective. We will not be able to protect our intellectual property if we are unable to enforce our rights or if we do not detect unauthorized use of our intellectual property. Despite our precautions, it may be possible for unauthorized third parties to copy our platforms or technology and use information that we regard as proprietary to create products or services that compete with our offerings. Some of the provisions of our service agreements that protect us against unauthorized use, copying, transfer, and disclosure of our platforms, may be unenforceable under the laws of certain jurisdictions and foreign countries. Further, the laws of some countries do not protect intellectual property to the same extent as the laws of the United States, and mechanisms for enforcement of intellectual property rights in some foreign countries may be inadequate. To the extent we expand our international activities, our exposure to unauthorized copying and use of our platforms and proprietary information may increase. Further, our competition, foreign governments, foreign government-backed actors, criminals, or other third parties may gain unauthorized access to our confidential information and technology. Accordingly, despite our efforts, we may be unable to prevent third parties from infringing upon or misappropriating our intellectual property rights. If we are unable to protect our intellectual property rights or prevent unauthorized use, infringement or misappropriation thereof by third parties, the value of our intellectual property and intellectual property rights may be diminished, and our competition may be able to more effectively mimic our offerings and service. In addition, our know-how is derived in part from insights we obtain from the historical individual and aggregate transactions that take place on our platform. If the availability, security or integrity of such data is lost or compromised due to a technology failure, cyberattack or similar event, our know-how could be lost or diminished, and this could materially adversely affect our ability to serve our merchants. For more information, see “Risk Factors-Risks Relating to our Business and Industry- We store personal information of merchants and shoppers. To the extent our security measures are compromised, our platforms may be perceived as not being secure. This may result in merchants curtailing or ceasing their use of our platform, our reputation being harmed, our incurring of significant regulatory and monetary liabilities and adverse effects on our results of operations and growth prospects.”
32
 
While software and other of our proprietary works may be protected under copyright law, we have not registered any copyrights in these works, and instead, primarily rely on protecting our software as a trade secret. In order to bring a copyright infringement lawsuit in the United States, the copyright must be registered. Accordingly, the remedies and damages available to us for unauthorized use of our software may be limited.
 
Although we attempt to protect our intellectual property, technology and confidential information by entering into confidentiality and invention assignment agreements with our employees and consultants and entering into confidentiality agreements with the parties with whom we have strategic relationships and business alliances, these agreements may not effectively grant all necessary rights to any inventions that may have been developed by the employees or consultants party thereto, and may not be effective in controlling access to and distribution of our platforms, technology and confidential information or provide an adequate remedy in the event of unauthorized use of our platforms or technology or unauthorized access, use or disclosure of our confidential information. Additionally, employees and consultants may choose to violate the terms of their confidentiality agreements.
 
Further, these agreements do not prevent our competitors from independently developing technologies that are substantially equivalent or superior to ours. We cannot guarantee that others will not independently develop technology with the same or similar functions to any proprietary technology we rely on to conduct our business and differentiate ourselves from our competitors.
 
We may be required to spend significant resources to monitor and protect our intellectual property rights, and we may or may not be able to detect infringement, misappropriation or other violation of our intellectual property rights by third parties. Litigation may be necessary in the future to enforce our intellectual property rights and to protect our trade secrets. Such litigation could be costly, time consuming, and distracting to management and could result in the impairment or loss of portions of our intellectual property. Furthermore, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims, and countersuits attacking the validity and enforceability of our intellectual property rights. Our inability to protect our proprietary technology against unauthorized copying or use, as well as any costly litigation or diversion of our management’s attention and resources, could delay further sales or the implementation of our platforms, impair their functionality, delay introductions of new features, integrations, and capabilities, result in our substituting inferior or more costly technologies into our platforms, or injure our reputation. In addition, we may be required to license additional technology from third parties to develop and market new features, integrations, and capabilities, and we cannot assure you that we could license that technology on commercially reasonable terms or at all, and our inability to license this technology could harm our ability to compete. Any one or more of the foregoing could harm our business, results of operations, and financial condition.
 
In addition, we may experience difficulties in enforcing the intellectual property rights in output generated by generative artificial intelligence technologies. The United States Copyright Office has previously denied copyright protection for content generated by artificial intelligence technologies, and the United States Patent and Trademark Office has similarly stated that an artificial intelligence tool cannot be an “inventor” of a patent, rendering it impossible to obtain patent protection for inventions created solely by artificial intelligence. The Supreme Court of the United Kingdom has reached a similar conclusion, stating that artificial intelligence systems cannot be named as an “inventor” for UK patent law purposes.
33
 
We may incur costs to defend against, face liability for or be vulnerable to intellectual property infringement claims brought against us by others.
 
There is considerable intellectual property development and enforcement activity in our industry. We expect that software developers in our industry will increasingly be subject to infringement claims as the number of competing solutions grows and the functionality of platforms and services in different industries overlap. Our future success depends in part on not infringing upon or misappropriating the intellectual property rights of others. There is a risk that our operations, platforms and services may infringe or otherwise violate, or be alleged to infringe or otherwise violate, the intellectual property rights of third parties. Other companies have claimed in the past, and may claim in the future, that we infringe upon or otherwise violate their intellectual property rights. A claim may also be made relating to technology or intellectual property that we acquire or license from third parties. If we were subject to a claim of infringement, regardless of the merit of the claim or our defenses, the claim could:
 
•
require costly litigation to resolve and the payment of substantial royalty or license fees, lost profits or other damages; 
   
•
require and divert significant management time;
   
•
cause us to enter into unfavorable royalty or license agreements;
   
•
require us to discontinue some or all of the features, integrations, and capabilities available on our platforms; 
   
•
require us to indemnify our merchants or third-party service providers; and/or
   
•
require us to expend additional development resources to redesign our platforms.
 
Any one or more of the above could harm our business, results of operations, and financial condition.

We use open source software, which may pose particular risks to our proprietary software, technologies, products and services in a manner that could negatively affect our business.
 
We use open source software in our platforms and expect to use more open source software in the future. From time to time, there have been claims challenging both the ownership of open source software against companies that incorporate open source software into their products and whether such incorporation is permissible under various open source licenses. There is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to commercialize our platforms. As a result, we could be subject to lawsuits by parties claiming ownership of what we believe to be open source software, or breach of open source licenses. Litigation could be costly for us to defend, have a negative effect on our business, results of operations, and financial condition, or require us to devote additional research and development resources to change our platforms. In addition, if we were to combine our proprietary source code or software with open source software in a certain manner, we could, under certain open source licenses, be required to release the source code of our proprietary software to the public. This would allow our competition to create similar products with less development effort and time. If we inappropriately use open source software, or if the license terms for open source software that we use change, we may be required to re-engineer our platforms, or certain aspects of it, incur additional costs, discontinue the availability of certain features, or take other remedial actions.
 
In addition to risks related to license requirements, usage of open source software can lead to greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties support, indemnification, assurance of title or controls on origin of the software or other contractual protections regarding infringement claims or the quality of the code. In addition, many of the risks associated with usage of open source software, such as the lack of warranties or assurances of title, cannot be eliminated, and could, if not properly addressed, negatively affect our business. We have established processes to help alleviate these risks, but we cannot be sure that all of our use of open source software is in a manner that is consistent with our current policies and procedures, or will not subject us to liability.
 
In addition, open source libraries incorporated in our platforms must be constantly updated in order to avoid security vulnerabilities that may be present in an outdated version of the software. Updating the open source libraries we use in a timely manner requires ongoing development efforts, and any delay relating to this process may expose us to risk of security breach. To the extent that our platforms depend upon the successful operation of open source software, any undetected errors or defects in this open source software could prevent the deployment or impair the functionality of our platforms, delay new solutions introductions, result in a failure of our platforms, and injure our reputation. For example, undetected errors or defects in open source software could render it vulnerable to breaches or security attacks, and, in conjunction, make our systems more vulnerable to data breaches. In addition, the public availability of such software may make it easier for others to compromise our platforms.
34
 
We depend on our executive officers and other key employees, and the loss of one or more of these employees could harm our business.
 
Our success depends largely upon the continued services of our executive officers and other key employees. From time to time, there may be changes in our executive management team resulting from the hiring or departure of executives, which could disrupt our business. We do not have employment agreements with our executive officers or other key personnel that require them to continue to work for us for any specified period and, therefore, they could terminate their employment with us at any time subject only to the notice periods prescribed by their respective executive agreements. The loss of one or more of our executive officers, or key employees could harm our business.
 
Inability to attract and retain other highly skilled employees could harm our business.
 
To execute our growth plan, we must attract and retain highly qualified personnel. Competition where we maintain offices is intense, especially for engineers experienced in designing and developing software and experienced sales professionals. We have from time to time experienced, and we expect to continue to experience, difficulty in hiring and retaining employees with appropriate qualifications. Many of the companies with which we compete for experienced personnel have significant resources. In addition, certain domestic immigration laws restrict or limit our ability to recruit internationally. Any changes to Israeli, United Kingdom, European, the U.S. or other immigration policies that restrain the flow of technical and professional talent may inhibit our ability to recruit and retain highly qualified employees.
 
In addition, job candidates and existing employees often consider the value of the equity awards they receive in connection with their employment. If the perceived value of our equity awards declines, it may harm our ability to recruit and retain highly skilled employees.
 
Volatility or lack of appreciation in the price of our ordinary shares may also affect our ability to attract and retain our key employees. Many of our senior personnel and other key employees have become, or will soon become, vested in a substantial number of equity awards such as options or restricted share units. Employees may be more likely to leave us if the equity awards they own or the shares underlying their vested options or restricted share units have significantly appreciated in value relative to the original purchase price of the shares or the exercise price of the options, or conversely, if the exercise price of the options that they hold are significantly above the market price of our ordinary shares.
 
While we may not be able to enforce non-compete agreements we enter into with our employees, our current and future competition may attempt to enforce similar agreements with individuals we recruit or attempt to recruit.
 
We generally enter into agreements with our employees which prohibit our employees, if they cease working for us, from competing directly with us or working for our current and future competition for a limited period. However, we may be unable to enforce these agreements under the laws of the jurisdictions in which our employees work, and it may be difficult for us to restrict our current and future competition from benefiting from the expertise our former employees developed while working for us. For example, Israeli labor courts have required employers seeking to enforce non-compete undertakings of a former employee to demonstrate that the competitive activities of the former employee will harm one of a limited number of material interests of the employer that have been recognized by the courts, such as the protection of a company’s trade secrets or other intellectual property.
35
 
If we hire employees from our current and future competition or other companies, their former employers may attempt to assert that these employees or we have breached their legal obligations, resulting in a diversion of our time and resources. In a similar manner, should our current and future competition succeed in hiring some of our employees and executives, and should some of these employees or executives breach their legal obligations and divulge commercially sensitive information to our current and future competition, our ability to successfully compete with our current and future competition may be hindered.
 
We may be subject to litigation for a variety of claims, which could harm our reputation and adversely affect our business, results of operations, and financial condition.
 
In the ordinary course of business, we may be involved in and subject to litigation for a variety of claims or disputes and receive regulatory inquiries. These claims, lawsuits, and proceedings could include labor and employment, wage and hour, commercial, antitrust, alleged securities law violations or other investor claims, and other matters. The number and significance of these potential claims and disputes may increase as our business expands. Further, our general liability insurance may not cover all potential claims made against us or be sufficient to indemnify us for all liability that may be imposed. Any claim against us, regardless of its merit, could be costly, divert management’s attention and operational resources, and harm our reputation. As litigation is inherently unpredictable, we cannot assure you that any potential claims or disputes will not have a material adverse effect on our business, results of operations, and financial condition.
 
Contractual arrangements between merchants and local distributors, as well as merchants’ operating preferences, may impede the adoption by merchants of a D2C model and diminish the adoption of our platforms and services as a result.
 
A significant segment of our merchants are international brands with a strategic focus on transitioning to a D2C model through the use of e-commerce. Despite making this transition, some brands maintain contractual relationships with distributors of their products such as wholesalers, local webstore operators, marketplaces and franchises in various geographies which our platforms make accessible for D2C sales. Contractual arrangements between brands and their local distributors that provide for exclusivity terms, volume restrictions on alternate distribution channels or most favored client pricing may slow or restrict adoption of our platforms and services. Even absent such contractual obligations, local distributors may still petition the brand to cease its operations through our platforms if the brand’s D2C sales adversely impact their local distributor sales. Although we believe that our platforms and services provide functionality, tools and advantages that match or outweigh the local distributor model and therefore justify their use on a standalone or supplemental basis, resistance on behalf of such distributors and the resulting friction may slow or restrict adoption of our platforms and services by such brands in certain locations and diminish our growth in this segment.
 
In addition, while we believe our platforms and services provide flexible and cost-effective means for merchants to transact globally, as our merchants grow their international activity through the use of our services, or as market trends change, they may decide that our platforms are too costly, or that they can utilize other modalities or operational flows, and transition some, or even all of their activity, into one in which they transact directly with shoppers, rather than through us, and therefore do not need to pay our service fees, e.g. by means or setting up and operating dedicated localized web stores for certain geographies. Such transitions, should they occur, will negatively impact our financial condition and results of operations.
36
 
Our failure to raise additional capital or generate cash flows necessary to expand our operations and invest in new technologies in the future could reduce our ability to compete successfully and harm our results of operations.
 
Historically, we have funded our operations and capital expenditures primarily through equity issuances and cash generated from our operations. Although we believe that the aggregation of our existing cash and cash equivalents, short-term bank deposits and investments in marketable securities, together with cash flow from operations, will be sufficient to meet our business needs for at least the next 12 months, we may require additional financing, and we may not be able to obtain debt or equity financing on favorable terms, if at all. If we raise equity financing to fund operations or on an opportunistic basis, our shareholders may experience significant dilution of their ownership interests. If we need additional capital and cannot raise it on acceptable terms, or at all, we may not be able to, among other things:
 
•
develop new features, integrations, capabilities, and enhancements;
   
•
continue to expand our product development, sales, and marketing organizations;
   
•
respond to competitive pressures or unanticipated working capital requirements; or 
   
•
pursue acquisition opportunities.
 
Furthermore, the Company maintains the majority of its cash and cash equivalents in accounts with major and highly rated multi-national or local financial institutions, and our deposits at certain of these institutions significantly exceed insured limits. Market conditions can impact the viability of these institutions. In the event of failure of any of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we would be able to access uninsured funds in a timely manner or at all. Any inability to access or delay in accessing these funds could adversely affect our business and financial position.
 
Our corporate culture has contributed to our success, and if we cannot maintain this culture as we grow, we could lose the innovative approach, creativity, and teamwork fostered by our culture and our business could be harmed.
 
We believe that an important contributor to our success has been our corporate culture, which we believe creates an environment that drives and perpetuates our strategy to create a better, more productive way to work and focuses on driving success for our customers. As we continue to grow, including geographically, and continue to develop the infrastructure of a public company, we may find it difficult to maintain our corporate culture. If we do not maintain and continue to develop our corporate culture as we grow and evolve, it could harm our ability to foster the innovation, craftsmanship, teamwork, curiosity, and diversity, we believe that we need to support our growth. Any failure to preserve our culture could also harm our ability to retain and recruit personnel, innovate and operate effectively, and execute on our business strategy.
 
If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired, which may adversely affect our stock price and our business.
 
The Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will file with the SEC is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers as appropriate to allow timely decisions regarding required disclosure. If we are unable to continue to maintain effective internal control, we may not have adequate, accurate or timely financial information, and we may be unable to meet our reporting obligations as a publicly traded company or to comply with the requirements of the SEC or the Sarbanes-Oxley Act. This could result in a restatement of our financial statements, the imposition of sanctions, or investigation by regulatory authorities. Any such action or other negative results caused by our inability to meet our internal control and financial reporting requirements or to comply with legal and regulatory requirements could adversely affect our business and the trading price of our common shares. Material weaknesses in our internal control over financial reporting could also reduce our ability to obtain financing or could increase the cost of any financing we obtain.
37
 
As part of our growth strategy, we may decide to make additional acquisitions of privately held businesses. Prior to becoming part of our consolidated company, the acquired businesses would not be required to implement or maintain the disclosure controls and procedures or internal control over financial reporting that are required of public companies. We are required to integrate the acquired businesses into our consolidated company’s system of disclosure controls and procedures and internal control over financial reporting, but we cannot provide assurance as to how long the integration process may take.
 
In addition to our results determined in accordance with GAAP, we believe certain non-GAAP measures and key metrics may be useful in evaluating our operating performance. We present certain non-GAAP financial measures and key metrics in this Annual Report and intend to continue to present certain non-GAAP financial measures and key metrics in future filings with the SEC and other public statements. Any failure to accurately report and present our non-GAAP financial measures and key metrics could cause investors to lose confidence in our reported financial and other information, which could have a negative effect on the trading price of our ordinary shares.
 
 If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our results of operations could be adversely affected.
 
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Significant items subject to such estimates and assumptions include, but are not limited to, the allocation of transaction price among various performance obligations, the estimated customer life on deferred contract acquisition costs, the allowance for credit losses, the fair value of financial assets and liabilities; including accounting and fair value of derivatives, the fair value of acquired intangible assets and goodwill, the useful lives of acquired intangible assets and property and equipment, share-based compensation, until the Company’s IPO including the determination of the fair value of the Company’s Ordinary Shares, and the valuation of deferred tax assets and uncertain tax positions. The Company bases these estimates on historical and anticipated results, trends and various other assumptions that it believes are reasonable under the circumstances, including assumptions as to future events. Actual results could differ from those estimates.
 
Changes in tax laws or regulations to which we are subject could have an adverse effect on us, our merchants or their shoppers and could increase the costs and reduce the attractiveness of our platforms and harm our business.
 
New income, sales, use or other tax laws, regulations, or ordinances could be enacted and new interpretations of existing tax laws, regulations or ordinances could be adopted at any time. Those changes could adversely affect our domestic and international business operations, and our business, results of operations, and financial condition. These events could require us, our merchants or the shoppers to pay additional tax amounts on a prospective or retroactive basis, as well as require us, our merchants or the shoppers to pay fines and/or penalties and interest for past amounts deemed to be due. If we are required to collect such additional tax amounts from either our merchants or the shoppers and are unsuccessful in collecting such taxes due from our merchants or the shoppers, we could be held liable for such costs, thereby adversely affecting our results of operations and harming our business. If we raise our prices to offset the costs of these changes, merchants may elect not to use our platforms and services in the future. Additionally, new, changed, modified, or newly interpreted or applied tax laws could increase our merchants’, our shoppers’ and our compliance, operating, and other costs. Further, these events could decrease the capital we have available to operate our business. Any or all of these events could harm our business, results of operations, and financial condition. Compliance with these new reporting requirements as well as the newly introduced VAT rules required and will continue to require significant resources and we cannot be certain that we have fully complied with or applied the new requirements, and as a result we may face non-compliance assessments, calculation or remittance gaps and other discrepancies. Further, governments, customs agencies and tax authorities may seek heightened scrutiny and enforcement of the new regulations, which could result in delayed clearance, rejections of our tax submissions, refusal to assess taxes in a timely manner and additional audits.
38
 
In addition, we are subject to taxation in several jurisdictions around the world with increasingly complex tax laws, the application of which can be uncertain. The tax authorities in these jurisdictions could review our tax returns and impose additional tax, interest, and penalties, assert that various withholding requirements apply to us or our subsidiaries or that benefits of tax treaties are not available to us or our subsidiaries, any of which could harm us and our results of operations.
 
Our results of operations may be harmed if we are required to collect sales or other taxes relating to the use of our platforms and services in jurisdictions where we have not historically done so.
 
States and local taxing jurisdictions may impose sales and use taxes, including on services provided electronically or goods sold via the internet. The applicability of sales taxes related to the use of our platforms in various jurisdictions is unclear. We collect and remit sales and value-added tax, or VAT or goods and services tax, or GST, in a number of jurisdictions (including in the U.S.). It is possible, however, that we could face sales tax, VAT or GST audits and that our liability for these taxes could exceed our estimates as state tax authorities could still assert that we are obligated to collect additional tax amounts from merchants and remit those taxes to those tax authorities. Further, one or more U.S. state or non-U.S. authorities could seek to impose additional sales, use or other tax collection and record-keeping obligations on us or may determine that such taxes should have, but have not been, paid by us. We could also be subject to audits in U.S. states and non-U.S. jurisdictions for which we have not accrued tax liabilities. A successful assertion that we should be collecting additional sales or other taxes on our services and/or on goods sold in jurisdictions where we have not historically done so and do not accrue for sales taxes could result in substantial tax liabilities for past sales (including substantial interest and penalties), discourage organizations from utilizing our platforms and services, or otherwise harm our business, results of operations, and financial condition.
 
The enactment of legislation implementing changes in taxation of international business activities, the adoption of other corporate tax reform policies, or changes in tax legislation or policies could impact our future financial position and results of operations.
 
Corporate tax reform, base-erosion efforts and tax transparency continue to be high priorities in many tax jurisdictions where we have business operations. As a result, policies regarding corporate income and other taxes in numerous jurisdictions are under heightened scrutiny and tax reform legislation is being proposed or enacted in a number of jurisdictions.
 
In 2022, the United States Inflation Reduction Act, among other changes, introduced a 15% corporate minimum tax on certain United States corporations and a 1% excise tax on certain stock redemptions by United States corporations, which the U.S. Treasury indicated may also apply to certain stock redemptions by a foreign corporation funded by certain United States affiliates.
 
There can be no assurance that our effective tax rate will not increase over time as a result of changes in corporate income tax rates or other changes in the tax laws in the jurisdictions in which we operate. Any changes in tax laws could have an adverse impact on our financial results. Corporate tax reform, base-erosion efforts and tax transparency continue to be high priorities in many tax jurisdictions where we have business operations. As a result, policies regarding corporate income and other taxes in numerous jurisdictions are under heightened scrutiny, and tax reform legislation is being proposed or enacted in a number of jurisdictions. For example, the recent Inflation Reduction Act enacted in the United States introduced, among other changes, a 15% corporate minimum tax on certain United States corporations. In addition, there is growing pressure in many jurisdictions and from multinational organizations such as the Organization for Economic Cooperation and Development (“OECD”) and the EU to amend existing international taxation rules in order to align the tax regimes with current global business practices. Specifically, in October 2015, the OECD published its final package of measures for reform of the international tax rules as a product of its Base Erosion and Profit Shifting (“BEPS”) initiative, which was endorsed by the G20 finance ministers. Many of the initiatives in the BEPS package required and resulted in specific amendments to the domestic tax legislation of various jurisdictions and to existing tax treaties. We continuously monitor these developments. Although many of the BEPS measures have already been implemented or are currently being implemented globally (including, in certain cases, through adoption of the OECD’s “multilateral convention” (to which Israel is also a party) to effect changes to tax treaties which entered into force on July 1, 2018 and through the European Union’s “Anti Tax Avoidance” Directives), it is still difficult in some cases to assess to what extent these changes will have on our tax liabilities in the jurisdictions in which we conduct our business or to what extent they may impact the way in which we conduct our business or our effective tax rate due to the unpredictability and interdependency of these potential changes. In January 2019, the OECD announced further work in continuation of the BEPS project, focusing on two “pillars.” In October 2021, 137 countries approved a statement known as the OECD BEPS Inclusive Framework, which builds upon the OECD’s continuation of the BEPS project. The first pillar is focused on the allocation of taxing rights between countries for in-scope large multinational enterprises (with revenue in excess of €20 billion and profitability of at least 10%) that sell goods and services into countries with little or no local physical presence. We do not expect to be within the scope of the first Pillar.  Pillar Two legislation has been enacted or substantively enacted in certain jurisdictions in which the Group operates. However, this legislation does not apply to the Group as its consolidated revenue is lower than €750 million.
39
 
General Risks Affecting Our Business and Operations
 
Global pandemics and other health crises, could materially adversely affect our business, financial condition and results of operations.
 
Global pandemics, as well as both future widespread and localized outbreaks of infectious diseases and other health concerns, and the measures attempting to contain and mitigate their effects and the resulting changes in consumer behaviors, could cause a material disruption to our normal operations and impact our employees, suppliers, merchants and shoppers. A future outbreak of a highly infectious or contagious disease or other public health crisis could have significant repercussions across domestic and global economies, including the retail sector within the U.S., and the financial markets. An outbreak of a global pandemic in the future could significantly adversely impact and disrupt our business, financial performance and condition, operating results and cash flows. Additional factors may negatively impact our ability to operate, for example, transitioning employees across our offices to remote work-from-home arrangements and imposing travel and related restrictions. Although we have experienced remote work in recent periods (as a matter of policy and in response to needs), remote work, lockdowns and travel restrictions may create or add challenges and complexity to our operations and the operations of our shipping and logistics partners and any such restrictions that inhibit the ordinary course of our operation of the operation of our shipping and logistics partners may have an adverse effect on our business.
 
A global pandemic could limit merchants’ ability to continue to operate (limiting their abilities to obtain inventory, generate sales, ship and dispatch orders or make timely payments to us). In addition, a global pandemic may also result in volatility or changing preferences in consumer spending and adverse or uncertain economic conditions globally, which in turn may impact the GMV processed through our platform. See “-General Risks Affecting Our Business and Operations-Unfavorable conditions in our industry, the global economy, or e-commerce in general, could limit our ability to grow our business and negatively affect our results of operations.”
 
Unfavorable conditions in our industry, the global economy, e-commerce or particular verticals within e-commerce, could limit our ability to grow our business and negatively affect our results of operations.
 
Our results of operations may vary based on the impact of changes in our industry or the global economy on us or our merchants or our shoppers. The revenue growth and potential profitability of our business depend on demand for our platforms and services, as well as demand for the products offered by our merchants. Therefore, current or future economic uncertainties or downturns could adversely affect our business and results of operations. Negative conditions in the global economy or individual markets, including changes in gross domestic product growth, financial and credit market fluctuations, political turmoil, trade route restrictions or challenges, natural catastrophes, warfare and terrorist attacks, could cause a decrease in business investments, consumer spending, services availability or e-commerce generally and negatively affect our business. Some of our merchants are luxury fashion brands, and the adverse impact to our business resulting from any of the foregoing factors could be magnified to the extent that it disproportionately affects merchants in verticals from which our merchants derive a significant amount of their GMV.
 
During recent periods these and other factors have resulted in heightened inflation rates as well as recessionary pressures in various countries. If economic conditions further deteriorate, shoppers may not have the financial means to make purchases from our merchants and may delay or reduce discretionary purchases, negatively impacting our merchants and our results of operations. Other disruptions, for example, the situation in Ukraine, have caused and may continue to cause other heightened uncertainty in the global economy.
 
Such uncertainties may also cause prospective or existing merchants to defer investment in e-commerce. Our smaller merchants may be more susceptible to general economic conditions than larger businesses, which may have greater liquidity and access to capital. Uncertain and adverse economic conditions also may lead to increased refunds and chargebacks. Since the impact of such uncertainties is ongoing, the effect on the global economy may not be fully reflected in our results of operations until future periods. Volatility in the capital markets has been heightened during recent months and such volatility may continue, which may cause declines in the price of our ordinary shares.
 
To the extent our platforms are perceived by merchants as costly, or too difficult to launch or migrate to, it would negatively affect our growth. Our revenue may be disproportionately affected by delays or reductions in general IT spending and reduction in investments in cross-border expansion by merchants. Our competition may respond to market conditions by lowering prices or otherwise bundling their competing solutions with other of their offerings which are widely used by merchants in a way that may make it difficult to attract merchants to our platforms and services and may offer more competitive prices (including by way of strategic partnerships, collaborations or otherwise), in order to lure away our merchants. We cannot predict the timing, strength, or duration of any economic slowdown, instability or recovery, generally or within any particular industry. If the economic conditions of the general economy or markets in which we operate worsen from present levels, our business, results of operations and financial condition could be adversely affected.
 
Moreover, persistent economic downturns may require us to undertake optimization and cost saving initiatives, including streamlining our organization and adjusting the size and structure of our workforce. Any reduction in force may yield unintended consequences and costs, such as attrition beyond the intended reduction in force, the distraction of employees and reduced employee morale, which could, in turn, adversely impact productivity, including through a loss of continuity, loss of accumulated knowledge or inefficiency during transitional periods. Any of these impacts could also adversely affect our reputation as an employer, make it more difficult for us to hire new employees in the future and increase the risk that we may not achieve the anticipated benefits from the restructuring.
40
 
Actions of activist shareholders may cause us to incur substantial costs, disrupt our operations, divert management’s attention, or have other material adverse effects on us.
 
From time to time, activist investors may take a position in our shares. These activist investors may disagree with decisions we have made or may believe that alternative strategies or personnel, either at a management level or at a board level, would produce higher returns. Such activists may or may not be aligned with the views of our other shareholders, may be focused on short-term outcomes, or may be focused on building their reputation in the market. These activists may not have a full understanding of our business and markets and the alternative personnel they may propose may also not have the qualifications or experience necessary to lead the company.
 
Responding to advances or actions by activist investors may be costly and time-consuming, may disrupt our operations, and may divert the attention of our board of directors, management team, and employees from running our business and maximizing performance. Such activist activities could also interfere with our ability to execute our strategic plan, disrupt the functioning of our board of directors, or negatively impact our ability to attract and retain qualified executive leadership or board members, who may be unwilling to serve with activist personnel. Uncertainty as to the impact of activist activities may also affect the market price and volatility of our shares.
 
Risks Relating to Our Ordinary Shares

Our share price has been and may continue to be volatile.
 
The market price of our ordinary shares has been and could continue to be highly volatile and may fluctuate substantially as a result of many factors, including:
 
•
actual or anticipated fluctuations in our results of operations;
   
•
variance in our financial performance from the expectations of market analysts;
   
•
announcements by us or our direct or indirect competition of significant business developments, changes in service provider relationships, acquisitions or expansion plans;
   
•
changes or proposed changes in laws or regulations or differing interpretations or enforcement of laws or regulations affecting our business;
   
•
changes in our pricing model;
   
•
our involvement in litigation or regulatory actions;
   
•
our sale of ordinary shares or other securities in the future;
   
•
market conditions in our industry;
   
•
changes in key personnel;
   
•
the trading volume of our ordinary shares; 
   
•
publication of research reports or news stories about us, our competition or our industry, or positive or negative recommendations or withdrawal of research coverage by securities analysts;
   
•
changes in the estimation of the future size and growth rate of our markets; and
   
•
general economic and market conditions. 

41
In addition, the stock markets have experienced extreme price and volume fluctuations. Broad market and industry factors may materially harm the market price of our ordinary shares, regardless of our operating performance. In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted against that company. If we were involved in any similar litigation we could incur substantial costs and our management’s attention and resources could be diverted.
 
The concentration of our share ownership with insiders may limit your ability to influence corporate matters, including the ability to influence the outcome of director elections and other matters requiring shareholder approval.
 
Our executive officers, directors, beneficial owners of greater than 5% of our ordinary shares and affiliated entities together beneficially owned approximately 59.16% of our ordinary shares outstanding as of December 31, 2023. Certain of such holders also have rights to acquire additional ordinary shares upon the exercise of options and warrants in the future. As a result, these shareholders, acting together, will have control over most matters that require approval by our shareholders, including the appointment and dismissal of directors, the terms of compensation of our directors and chief executive officer, certain other related party transactions, capital increases, and amendments to our amended and restated articles of association. Corporate action might be taken even if other shareholders oppose them. This concentration of ownership might also have the effect of delaying or preventing a change of control of us that other shareholders may view as beneficial.
 
If we do not meet the expectations of equity research analysts, if they do not publish research or reports about our business or if they issue unfavorable commentary or downgrade our ordinary shares, the price of our ordinary shares could decline.
 
The trading market for our ordinary shares relies in part on the research and reports that equity research analysts publish about us and our business. The analysts’ estimates are based upon their own opinions and are often different from our estimates or expectations. If our results of operations are below the estimates or expectations of public market analysts and investors, the price of our ordinary shares could decline. Moreover, the price of our ordinary shares could decline if one or more securities analysts downgrade our ordinary shares or if those analysts issue other unfavorable commentary or cease publishing reports about us or our business.
 
We are a foreign private issuer and, as a result, we are not subject to U.S. proxy rules and are subject to Exchange Act reporting obligations that, to some extent, are more lenient and less frequent than those of a U.S. domestic public company.
 
We report under the Exchange Act as a non-U.S. company with foreign private issuer status. Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including (1) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act, (2) the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time and (3) the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, although we are subject to Israeli laws and regulations with regard to certain of these matters and intend to furnish comparable quarterly information on Form 6-K. In addition, foreign private issuers are not required to file their annual report on Form 20-F until four months after the end of each fiscal year, while U.S. domestic issuers that are accelerated filers are required to file their annual report on Form 10-K within 75 days after the end of each fiscal year and U.S. domestic issuers that are large accelerated filers are required to file their annual report on Form 10-K within 60 days after the end of each fiscal year. Foreign private issuers are also exempt from Regulation FD, which is intended to prevent issuers from making selective disclosures of material information. As a result of all of the above, you may not have the same protections afforded to shareholders of a company that is not a foreign private issuer.
42
 
We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.
 
As discussed above, we are a foreign private issuer, and therefore, we are not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act. The determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter, and, accordingly, the next determination will be made with respect to us on June 30, 2024. In the future, we would lose our foreign private issuer status if more than 50% of our outstanding voting securities are owned by U.S. residents and any of the following three circumstances applies: (1) the majority of our directors or executive officers are U.S. citizens or residents, (2) more than 50% of our assets are located in the United States, or (3) our business is administered principally in the United States. If we lose our foreign private issuer status, we will be required to file with the SEC periodic reports and registration statements on U.S. domestic issuer forms, which are more detailed and extensive than the forms available to a foreign private issuer. We will also have to mandatorily comply with U.S. federal proxy requirements, and our officers, directors and principal shareholders will become subject to the short-swing profit disclosure and recovery provisions of Section 16 of the Exchange Act. In addition, we will lose our ability to rely upon exemptions from certain corporate governance rules of Nasdaq. As a U.S. listed public company that is not a foreign private issuer, we will incur significant additional legal, accounting and other expenses that we will not incur as a foreign private issuer.
 
As we are a “foreign private issuer” and follow certain home country corporate governance practices, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all corporate governance rules of Nasdaq.
 
As a foreign private issuer, we have the option to follow certain home country corporate governance practices rather than those of Nasdaq, provided that we disclose the requirements we are not following and describe the home country practices we are following. We rely on this “foreign private issuer exemption” with respect to Nasdaq rules for shareholder meeting quorums. We may in the future elect to follow home country practices with regard to other matters. As a result, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all corporate governance rules of Nasdaq.
 
The market price of our ordinary shares has been and could in the future be negatively affected by future issuances and sales of our ordinary shares.
 
Sales by us or our shareholders of a substantial number of ordinary shares in the public market, or the perception that these sales might occur, could cause the market price of our ordinary shares to decline or could impair our ability to raise capital through a future sale of, or pay for acquisitions using, our equity securities.
 
As of December 31, 2023, we had 165,773,914 ordinary shares outstanding, and 9,718,714 ordinary shares are subject to outstanding awards such as options and restricted share units granted to employees under our share incentive plans, of which 7,368,603 are ordinary shares issuable under currently exercisable share options. Upon issuance, such shares may be freely sold in the public market, except for shares held by affiliates who have certain restrictions on their ability to sell. Subject to compliance with applicable rules and regulations, we may issue ordinary shares or securities convertible into ordinary shares from time to time in connection with a financing, acquisition, investment, our share incentive plans or otherwise. Any such issuance could result in substantial dilution to our existing shareholders and cause the market price of our ordinary shares to decline.
43
 
There can be no assurance that we will not be classified as a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to United States Holders of our ordinary shares.
 
We would be classified as a passive foreign investment company (“PFIC”) for any taxable year if, after the application of certain look-through rules, either: (i) 75% or more of our gross income for such year is “passive income” (as defined in the relevant provisions of the Internal Revenue Code of 1986, as amended), or (ii) 50% or more of the value of our assets (generally determined on the basis of a quarterly average) during such year is attributable to assets that produce or are held for the production of passive income. For these purposes, cash and other assets readily convertible into cash or that do or could generate passive income are categorized as passive assets, and the value of goodwill and other unbooked intangible assets is generally taken into account. Passive income generally includes, among other things, rents, dividends, interest, royalties, gains from the disposition of passive assets and gains from commodities and securities transactions. For purposes of this test, we will be treated as owning a proportionate share of the assets and earning a proportionate share of the income of any other corporation of which we own, directly or indirectly, at least 25% (by value) of the stock. Based on our market capitalization and the composition of our income, assets and operations, we believe that we were not a PFIC for the year ended December 31, 2023 and do not expect to be a PFIC for United States federal income tax purposes for the current taxable year or in the foreseeable future. However, this is a factual determination that must be made annually after the close of each taxable year. Moreover, the value of our assets for purposes of the PFIC determination may be determined by reference to the trading value of our ordinary shares, which could fluctuate significantly. In addition, it is possible that the Internal Revenue Service may take a contrary position with respect to our determination in any particular year, and therefore, there can be no assurance that we were not a PFIC for the year ended December 31, 2023 or will not be classified as a PFIC in the current taxable year or in the future. Certain adverse U.S. federal income tax consequences could apply to a United States Holder (as defined in Item 10.E. “Taxation-U.S. Federal Income Tax Consideration”) if we are treated as a PFIC for any taxable year during which such United States Holder holds our ordinary shares. United States Holders should consult their tax advisors about the potential application of the PFIC rules to their investment in our ordinary shares. For further discussion, see “Taxation-U.S. Federal Income Tax Consideration-Passive Foreign Investment Company” in Item 10.E. below. 
 
If a United States person is treated as owning at least 10% of our ordinary shares, such holder may be subject to adverse U.S. federal income tax consequences.
 
If a United States person is treated as owning (directly, indirectly, or constructively) at least 10% of the value or voting power of our ordinary shares, such person may be treated as a “United States shareholder” with respect to each controlled foreign corporation (“CFC”) in our group (if any). Because our group includes a U.S. subsidiary, certain of our non-U.S. subsidiaries will be treated as CFCs (regardless of whether or not we are treated as a CFC). A United States shareholder of a CFC may be required to report annually and include in its U.S. taxable income its pro rata share of “Subpart F income,” “global intangible low-taxed income,” and investments in U.S. property by CFCs, regardless of whether we make any distributions. An individual that is a United States shareholder with respect to a CFC generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a United States shareholder that is a U.S. corporation. Failure to comply with these reporting obligations may subject a United States shareholder to significant monetary penalties and may prevent the statute of limitations with respect to such shareholder’s U.S. federal income tax return for the year for which reporting was due from starting. We cannot provide any assurances that we will assist investors in determining whether we are or any of our non-U.S. subsidiaries is treated as CFC or whether any investor is treated as a United States shareholder with respect to any such CFC or furnish to any United States shareholders information that may be necessary to comply with the aforementioned reporting and tax paying obligations. The United States Internal Revenue Service has provided limited guidance on situations in which investors may rely on publicly available information to comply with their reporting and tax paying obligations with respect to foreign-controlled CFCs. A United States investor should consult its advisors regarding the potential application of these rules to an investment in our ordinary shares.
44
 
Provisions of Israeli law and our amended and restated articles of association may delay, prevent or make undesirable an acquisition of all or a significant portion of our shares or assets.
 
Provisions of Israeli law and our amended and restated articles of association could have the effect of delaying or preventing a change in control and may make it more difficult for a third-party to acquire us or our shareholders to elect different individuals to our board of directors, even if doing so would be considered to be beneficial by some of our shareholders, and may limit the price that investors may be willing to pay in the future for our ordinary shares. Among other things:
 
•
the Israeli Companies Law, 5759-1999 (the “Companies Law”) regulates mergers and requires that a tender offer be effected when more than a specified percentage of shares in a company are purchased;
   
•
the Companies Law requires special approvals for certain transactions involving directors, officers or significant shareholders and regulates other matters that may be relevant to these types of transactions; 
   
•
the Companies Law does not provide for shareholder action by written consent for public companies, thereby requiring all shareholder actions to be taken at a general meeting of shareholders; 
   
•
our amended and restated articles of association divide our directors into three classes, each of which is elected once every three years; 
   
•
 
our amended and restated articles of association generally require a vote of the holders of a majority of our outstanding ordinary shares entitled to vote present and voting on the matter at a general meeting of shareholders (referred to as simple majority), and the amendment of a limited number of provisions, such as the provision dividing our directors into three classes, requires a vote of the holders of at least 70% of our voting power;
   
•
 
our amended and restated articles of association restrict us, subject to certain exceptions, from engaging in certain business combination transactions, with any shareholder who holds 20% or more of our voting power. The transactions subject to such restrictions include mergers, consolidations and dispositions of our assets with a market value of 10% or more of our assets or outstanding shares. Subject to certain exceptions, such restrictions will apply for a period of three years following each time a shareholder became the holder of 20% or more of our voting power; 
   
•
our amended and restated articles of association do not permit a director to be removed except by a vote of the holders of at least 70% of our voting power; and 
   
•
our amended and restated articles of association provide that director vacancies may be filled by our board of directors.
 
Further, Israeli tax considerations may make potential transactions undesirable to us or to some of our shareholders whose country of residence does not have a tax treaty with Israel granting tax relief to such shareholders from Israeli tax. For example, Israeli tax law does not recognize tax-free share exchanges to the same extent as U.S. tax law. With respect to mergers, Israeli tax law allows for tax deferral in certain circumstances but makes the deferral contingent on the fulfillment of numerous conditions, including a holding period of two years from the date of the transaction during which certain sales and dispositions of shares of the participating companies are restricted. Moreover, with respect to certain share swap transactions, the tax deferral is limited in time, and when such time expires, the tax becomes payable even if no disposition of the shares has occurred.
 
We do not expect to pay any dividends in the foreseeable future.
 
We have never declared or paid any dividends on our ordinary shares. We do not anticipate paying any dividends in the foreseeable future. We currently intend to retain future earnings, if any, to finance operations and expand our business. Consequently, investors who purchase our ordinary shares may be unable to realize a gain on their investment except by selling such shares after price appreciation, which may never occur.
 
Our board of directors has sole discretion whether to pay dividends. If our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that our directors may deem relevant. The Companies Law imposes restrictions on our ability to declare and pay dividends.
 
Payment of dividends may also be subject to Israeli withholding taxes. See “Taxation” in Item 10.E below for additional information.
45
 
We will continue to incur increased costs as a result of operating as a public company, and our management is required to devote substantial time to new compliance initiatives and corporate governance practices.
 
As a public company we will continue to incur significant legal, accounting and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of Nasdaq and other applicable securities rules and regulations impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our management and other personnel have and will continue to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will continue to increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, as a public company it is more difficult and more expensive for us to obtain director and officer liability insurance, and it is more difficult for us to attract and retain qualified members of our board.
 
Furthermore, we are required to comply with the SEC’s rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which require management to certify financial and other information in our annual reports and provide an annual management report on the effectiveness of control over financial reporting. We are also required to disclose changes in internal control over financial reporting on an annual basis. Additionally, we are required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm.
 
To maintain compliance with Section 404, we continue to engage in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we continue to dedicate internal resources and have engaged outside consultants and adopted a detailed work plan to continue to assess and document the adequacy of our internal control over financial reporting, continue to undertake steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a risk that we will not be able to maintain effective internal control over financial reporting as required by Section 404. If we identify one or more material weaknesses in our internal control, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.
 
Irrespective of compliance with Sections 404, any failure of our internal control could have a material adverse effect on our stated results of operations and harm our reputation. In order to implement changes to our internal control over financial reporting triggered by a failure of those controls, we could experience higher than anticipated operating expenses, as well as higher independent auditor fees during and after the implementation of these changes.
 
Our amended and restated articles of association provide that unless we consent to an alternate forum, the federal district courts of the United States shall be the exclusive forum of resolution of any claims arising under the Securities Act which may impose additional litigation costs on our shareholders.
 
Our amended and restated articles of association provide that the federal district courts of the United States shall be the exclusive forum for the resolution of any claims arising under the Securities Act, the Exchange Act or the rules and regulations promulgated pursuant to such statutes. Notwithstanding the foregoing, we note that holders of our securities cannot waive compliance with the federal securities laws and the rules and regulations thereunder. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder, and Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. As a result, the exclusive jurisdiction provision may not preclude or contract the scope of exclusive federal or concurrent jurisdiction for actions brought under the Securities Act or the Exchange Act, or the respective rules and regulations promulgated thereunder. While the Federal Forum Provision does not restrict the ability of our shareholders to bring claims under the Securities Act, nor does it affect the remedies available thereunder if such claims are successful, we recognize that it may limit shareholders ability to bring a claim in the judicial forum that they find favorable and may increase certain litigation costs which may discourage the filing of claims against the Company, its directors and officers.
46
 
If we were deemed to be an investment company under the Investment Company Act of 1940, as amended (the “1940 Act”), applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business, financial condition and results of operations.
 
Under Sections 3(a)(1)(A) and (C) of the 1940 Act, a company generally will be deemed to be an “investment company” for purposes of the 1940 Act if (1) it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities or (2) it engages, or proposes to engage, in the business of investing, reinvesting, owning, holding or trading in securities and it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. We do not believe that we are an “investment company,” as such term is defined in either of those sections of the 1940 Act.
 
Notwithstanding Sections 3(a)(1)(A) and (C) of the 1940 Act, we are a research and development company and comply with the safe harbor requirements of Rule 3a-8 of the 1940 Act. We intend to conduct our operations so that we will not be deemed an investment company. However, if we were to be deemed an investment company, restrictions imposed by the 1940 Act, including limitations on our capital structure and our ability to transact with affiliates, could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business, financial condition and results of operations.
 
Risks Relating to Our Incorporation and Location in Israel
 
Conditions in Israel, including the recent attack by Hamas and other terrorist organizations from the Gaza Strip and Israel’s war against them and the tension between Israel and Hezbollah in the northern border of Israel, could materially and adversely affect our business.
 
We are incorporated under the laws of the State of Israel and some of our employees, including certain management members operate from our offices that are located in Petah Tikva, Israel. In addition, a number of our officers and directors are residents of Israel. Accordingly, political, economic, and military conditions in Israel and the surrounding region may directly affect our business and operations.
 
In October 2023, Hamas terrorists launched an attack on Israel, including infiltrating Israel’s southern border from the Gaza Strip, and launching extensive rocket attacks on Israel, resulting in extensive deaths, injuries and kidnapping of civilians and soldiers. Following the attack, Israel declared war against Hamas and a military campaign against these terrorist organizations commenced in parallel to their continued rocket and terror attacks. In addition, since the commencement of these events, there have been continued hostilities along Israel’s northern border with Lebanon (with the Hezbollah terror organization) and southern border (with the Houthi movement in Yemen, as described below). It is possible that hostilities with Hezbollah in Lebanon will escalate, and that other terrorist organizations, including Palestinian military organizations in the West Bank as well as other hostile countries, such as Iran, will join the hostilities. Such clashes may escalate in the future into a greater regional conflict.
 
Furthermore, following Hamas’ attack on Israel and Israel’s declaration of war against Hamas, the Houthi movement, which controls parts of Yemen, launched a number of attacks on marine vessels traversing the Red Sea, which marine vessels were thought to either be in route towards Israel or to be partly owned by Israeli businessmen. The Red Sea is a vital maritime route for international trade traveling to or from Israel.
47
 
The hostilities with Hamas, Hezbollah and other organizations and countries have included and may include terror, missile and drone attacks. In the event that our facilities are damaged as a result of hostile actions, or hostilities otherwise disrupt our ongoing operations, our ability to offer our platforms and solutions to our merchants could be materially and adversely affected. Our commercial insurance does not cover losses that may occur as a result of events associated with war and terrorism. Although the Israeli government currently covers the reinstatement value of direct damages that are caused by terrorist attacks or acts of war, we cannot assure you that this government coverage will be maintained or that it will sufficiently cover our potential damages. Any losses or damages incurred by us could have a material adverse effect on our business. Any armed conflicts or political instability in the region would likely negatively affect business conditions and could harm our results of operations.
 
The intensity and duration of Israel’s current war against Hamas is difficult to predict, as are such war’s economic implications on the Company’s business and operations and on Israel’s economy in general, that may involve a downgrade in Israel's credit rating by rating agencies (such as the recent downgrade by Moody’s of its credit rating of Israel from A1 to A2, as well as the downgrade of its outlook rating from “stable” to “negative”). These events may be intertwined with wider macroeconomic indications of a deterioration of Israel’s economic standing, which may have a material adverse effect on the Company and its ability to effectively conduct its operations.
 
Further, the State of Israel and Israeli companies have been from time to time subjected to economic boycotts. Several countries still restrict business with the State of Israel and with Israeli companies. These restrictive laws and policies may have an adverse impact on our operating results, financial condition or the expansion of our business. A campaign of boycotts, divestment and sanctions has been undertaken against Israel, which could also adversely impact our business. In addition, there have been increased efforts by countries, activists and organizations to cause companies and consumers to boycott Israeli goods and services. In addition, in January 2024 the International Court of Justice, or ICJ, issued an interim ruling in a case filed by South Africa against Israel in December 2023, making allegations of genocide amid and in connection with the war in Gaza, and ordered Israel, among other things, to take measures to prevent genocidal acts, prevent and punish incitement to genocide, and take steps to provide basic services and humanitarian aid to civilians in Gaza. There are concerns that companies and businesses will terminate, and may have already terminated, certain commercial relationships with Israeli companies following the ICJ decision. The foregoing efforts by countries, activists and organizations, particularly if they become more widespread, as well as the ICJ rulings and future rulings and orders of other tribunals against Israel (if handed), may materially and adversely impact our ability to offer our platforms and solutions to our merchants.
 
Finally, political conditions within Israel may affect our operations. Israel has held five general elections between 2019 and 2022, and prior to October 2023, the Israeli government pursued extensive changes to Israel’s judicial system. In response to the foregoing developments, individuals, organizations and institutions, both within and outside of Israel, voiced concerns that the proposed changes may negatively impact the business environment in Israel including due to reluctance of foreign investors to invest or transact business in Israel as well as to increased currency fluctuations, downgrades in credit rating, increased interest rates, increased volatility in security markets, and other changes in macroeconomic conditions. To date, these initiatives have been substantially put on hold. If such changes to Israel’s judicial system are again pursued by the government and approved by the parliament, this may have an adverse effect on our business, our results of operations and our ability to raise additional funds, if deemed necessary by our management and board of directors.
 
Competition for skilled technical and other personnel in Israel is intense, and as a result we may fail to attract, recruit, retain and develop qualified employees, which could materially and adversely impact our business, financial condition and results of operations
 
We compete in a market marked by rapidly changing technologies and an evolving competitive landscape. In order for us to successfully compete and grow, we must attract, recruit, retain and develop personnel with requisite qualifications to provide expertise across the entire spectrum of our intellectual capital and business needs.
48
 
Our principal research and development as well as significant elements of our general and administrative activities are conducted at our headquarters in Israel, and we face significant competition for suitably skilled employees in Israel. While there has been intense competition for qualified human resources in the Israeli high-tech industry historically, the industry experienced record growth and activity in 2021, both at the earlier stages of venture capital and growth equity financings, and at the exit stage of initial public offerings and mergers and acquisitions. This flurry of growth and activity has caused a sharp increase in job openings in both Israeli high-tech companies and Israeli research and development centers of foreign companies, and intensification of competition between these employers to attract qualified employees in Israel. As a result, the high-tech industry in Israel has experienced levels of employee attrition and is currently facing shortage of skilled human capital, including engineering, research and development, sales and customer support personnel. Many of the companies with which we compete for qualified personnel have greater resources than we do, and we may not succeed in recruiting additional experienced or professional personnel, retaining personnel or effectively replacing current personnel who may depart with qualified or effective successors. Failure to retain or attract qualified personnel could have a material adverse effect on our business, financial condition and results of operations. 
 
It may be difficult to enforce a U.S. judgment against us, our officers and directors named in this Annual Report in Israel or the United States, or to assert U.S. securities laws claims in Israel or serve process on our officers and directors.
 
Not all of our directors or officers are residents of the United States and most of their and our assets are located outside the United States. Service of process upon us or our non-U.S. resident directors and officers and enforcement of judgments obtained in the United States against us or our non-U.S. our directors and executive officers may be difficult to obtain within the United States. We have been informed by our legal counsel in Israel that it may be difficult to assert claims under U.S. securities laws in original actions instituted in Israel or obtain a judgment based on the civil liability provisions of U.S. federal securities laws. Israeli courts may refuse to hear a claim based on an alleged violation of U.S. securities laws against us or our non-U.S. officers and directors reasoning that Israel is not the most appropriate forum to bring such a claim. In Israeli courts, the content of applicable U.S. law must be proved as a fact by an expert witnesses, which can be a time-consuming and costly process and certain matters of procedure may be governed by Israeli law. There is little binding case law in Israel addressing the matters described above. Israeli courts might not enforce judgments rendered outside Israel, which may make it difficult to collect on judgments rendered against us or our non-U.S. officers and directors.
 
Moreover, an Israeli court will not enforce a non-Israeli judgment if it was given in a state whose laws do not provide for the enforcement of judgments of Israeli courts (subject to exceptional cases), if its enforcement is likely to prejudice the sovereignty or security of the State of Israel, if it was obtained by fraud or in the absence of due process, if it is at variance with another valid judgment that was given in the same matter between the same parties, or if a suit in the same matter between the same parties was pending before a court or tribunal in Israel at the time the foreign action was brought.
 
Your rights and responsibilities as our shareholder will be governed by Israeli law, which may differ in some respects from the rights and responsibilities of shareholders of U.S. corporations.
 
We are incorporated under Israeli law. The rights and responsibilities of holders of our ordinary shares are governed by our amended and restated articles of association and the Companies Law. These rights and responsibilities differ in some respects from the rights and responsibilities of shareholders in typical U.S. corporations. In particular, pursuant to the Companies Law each shareholder of an Israeli company has to act in good faith and in a customary manner in exercising his, her or its rights and fulfilling his, her or its obligations toward the Company and other shareholders and to refrain from abusing his, her or its power in the Company, including, among other things, in voting at the general meeting of shareholders, on amendments to a company’s articles of association, increases in a company’s authorized share capital, mergers and certain transactions requiring shareholders’ approval under the Companies Law. In addition, a controlling shareholder of an Israeli company or a shareholder who knows that it possesses the power to determine the outcome of a shareholder vote or who has the power to appoint or prevent the appointment of a director or officer in the Company, or has other powers toward the Company has a duty of fairness toward the Company. However, Israeli law does not define the substance of this duty of fairness. There is little case law available to assist in understanding the implications of these provisions that govern shareholder behavior.
49
 
Our amended and restated articles of association provide that unless the Company consents otherwise, the competent courts of Tel Aviv, Israel shall be the sole and exclusive forum for substantially all disputes between the Company and its shareholders under the Companies Law and the Israeli Securities Law, which could limit its shareholders ability to brings claims and proceedings against, as well as obtain favorable judicial forum for disputes with the Company, its directors, officers and other employees.
 
The competent courts of Tel Aviv, Israel shall be the exclusive forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of fiduciary duty owed by any director, officer or other employee of the Company to the Company or the Company’s shareholders, or (iii) any action asserting a claim arising pursuant to any provision of the Companies Law or the Israeli Securities Law. This exclusive forum provisions is intended to apply to claims arising under Israeli Law and would not apply to claims brought pursuant to the Securities Act or the Exchange Act or any other claim for which federal courts would have exclusive jurisdiction. Such exclusive forum provision in our amended and restated articles of association will not relieve the Company of its duties to comply with federal securities laws and the rules and regulations thereunder, and shareholders of the Company will not be deemed to have waived the Company’s compliance with these laws, rules and regulations. This exclusive forum provision may limit a shareholders ability to bring a claim in a judicial forum of its choosing for disputes with the Company or its directors or other employees which may discourage lawsuits against the Company, its directors, officers and employees.
 
Item 4. Information on the Company
 
A.
    History and Development of the Company

Global-E Online Ltd. was incorporated in February 2013 under the Companies Law in the State of Israel and commenced operations at that time. Our commercial name is Global-e. Our principal executive offices are located at 9 HaPsagot Street, Petah Tikva 4951041, Israel. Our website address is www.global-e.com and our telephone number is +972-73-2605078. Information contained on, or that can be accessed through, our website does not constitute a part of this Annual Report and is not incorporated by reference herein. We have included our website address in this Annual Report solely for informational purposes. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers, such as we, that file electronically, with the SEC at www.sec.gov.
 
Our agent for service of process in the United States is Global-e US Inc., which maintains its principal offices at 200 West 41st. Street, New York, NY. Its telephone number is +1 347-990-3857.
 
For a description of additional important events in the development of the Company’s business, see Item 5. “Operating and Financial Review and Prospects.”
 
For a description of our principal capital expenditures and divestitures, see Item 5. “Operating and Financial Review and Prospects.”
50
 
B.
    Business Overview
 
Overview
 
Our platforms were purpose-built for international shoppers to buy seamlessly online and for merchants to sell from, and to, anywhere in the world - in short, to “go global”. At the same time, to “be local” reflects the localization of the shopper’s experience and our effort to make international transactions as seamless as domestic ones. We increase the conversion of international traffic into sales by removing much of the complexity associated with international e-commerce. We provide a mission-critical, integrated solution that creates a localized and frictionless shopper experience and our platforms are simple to manage, flexible to adjust and smart in the local market insights and best practices. The vast capabilities of our end-to-end platforms include interaction with shoppers in their native languages, market-adjusted pricing, payment options tailored to local market preferences, compliance with local consumer regulations and requirements such as customs duties and taxes, shipping services, after-sales support and returns management. These elements are unified under our platforms and services to enhance the shopper experience and enable merchants to capture the global e-commerce opportunity.
 
We operate at the forefront of global e-commerce, which is being transformed by technology, internet adoption and the rise of social networks connecting the world. Shopper buying habits are rapidly shifting online, as shoppers expect to be able to purchase any product online - from anywhere in the world. Trends and consumer tastes are becoming increasingly global, driving the expansion of global e-commerce, but the preference remains for an intuitive online shopping experience that feels local. In parallel, the rapid growth in e-commerce has created an opportunity for merchants to build and strengthen a direct relationship with the shopper. Solutions that enable D2C sales have become a strategic priority for brands and retailers as they seek to take advantage of these e-commerce trends, gaining ownership and knowledge of their international shoppers.
 
Our comprehensive platforms create differentiated benefits for both shoppers and merchants. Shoppers seek competitive, localized and transparent pricing, a seamless and secure order and delivery process, and a painless returns and refunding process. We address these needs through a fully localized experience that removes many of the barriers shoppers face when purchasing from merchants internationally. We integrate with and enhance the online stores of merchants and localize the shoppers’ experience based on the country from which they shop. We support local messaging in over 30 languages, purchases in more than 100 currencies by over 150 payment methods and a multitude of shipping options. Shoppers can enjoy a fully guaranteed landed price quote, which includes shipping costs, import duties and tax charges, as well as post-sale services, such as multi-lingual customer service and a managed returns service. The enhanced shopper experience we enable, typically results in improved sales conversion of our merchants’ international traffic, thereby increasing their revenues from global shoppers. We have seen merchants experience significant uplift in international traffic conversion after beginning to use our platform.
 
For merchants, our platforms also remove much of the complexity that is associated with global e-commerce. Sales are reconciled and paid for locally and in the currency of the merchant’s domicile. We handle import duties calculation and collection, foreign sales tax remittance as well as tax recovery for returned goods in line with market regulations. We also displace certain fraud and foreign exchange risks that would otherwise be borne by merchants. We allow merchants to expand and scale their global reach rapidly and efficiently, enabling a quick go-to-market with limited investment.
 
The scale and sophistication of our platforms relies on the data and insights we’ve accumulated since our founding more than ten years ago. We refer to the application of our data as “Smart Insights” - country-, price-point- and vertical-specific lessons learned about shopper behavior. These insights are expanded every time a potential shopper enters a merchant’s online store - which occurs hundreds of millions of times each year - allowing us to gather additional data points along the purchasing journey. We believe that by leveraging our Smart Insights, merchants can provide highly optimized experiences for shoppers on a per-market, per-vertical and per-price point basis, driving increased sales conversion and revenues. By providing a seamless shopper experience and empowering merchants to capture the global e-commerce opportunity, we believe that we drive more transactions and thereby accumulate more data, which in turn increases the quality and depth of our Smart Insights. This creates strong flywheel effect that further power our business and that of our merchants.
51
 
The merchants’ success is our success, and we aspire to become their trusted partner for international sales. The better the outcomes for the merchants and the more revenue and growth they achieve, the greater our own revenue and growth. We believe this alignment of interests with the merchants is core to our long-term success.
 
In September 2023, Shopify launched “Shopify Markets Pro”, a white-label cross-border MoR offering, powered by Global-e, currently available to Shopify US-based merchants. Shopify Markets Pro is based on the Flow platform, leveraging its robust API-based technology and enables merchants of diverse scales, encompassing small and emerging businesses, to seamlessly extend their brand offerings globally with streamlined integration efforts. Moreover, Shopify Markets Pro boasts advanced self-service capabilities, further enhancing its appeal and functionality to merchants seeking international market expansion.
 
Our business has experienced rapid growth over the last years and generally since our inception. Our GMV amounted to $1,449 million, $2,450 million and $3,557 million in 2021, 2022 and 2023, respectively, representing an increase of 69% and 45% in the years ended December 31, 2022 and 2023, respectively. Our revenues were $245.3 million, $409.0 million and $569.9 million in the years ended December 31, 2021, 2022 and 2023 respectively, representing an increase of 66.8% and 39.3% in the years ended December 31, 2022, and 2023 respectively. Our operating efficiency and growing economies of scale have allowed our gross profit growth rates to outpace those of our revenue growth. Our gross profit increased by 73% and 48% in the years ended December 31, 2022 and 2023. Our gross margin has steadily improved from 37.3% in 2021 to 38.7% in 2022 and to 41.0% in 2023. Our Non-GAAP gross profit has increased by 84% and 46% in the years ended December 31, 2022 and 2023 and our Non-GAAP gross margin has reached 42.9% in the year ended December 31, 2023. Our operating loss has Increased from $65.7 million in 2021 to $189.3 million in 2022 and decreased to $137.1 million in the year ended December 31, 2023. Our Adjusted EBITDA has grown from $32.4 million in 2021 to $48.7 million in 2022 and to $92.7 million in the year ended December 31, 2023.
 
Our Opportunity
 
We strive to make international sales as simple as domestic ones for our merchants, while also ensuring that shoppers enjoy an intuitive and frictionless shopper journey, making both shoppers and merchants “abroad-agnostic”. We believe that our scalable platforms enable our merchants to capture the large and growing global e-commerce market. As of December 31, 2023, we served 1,256 merchants on our enterprise platforms across over 30 countries, mainly in the United States, the United Kingdom, other Western European markets and Asia Pacific (“APAC”) countries. In addition, we served thousands of US- based merchants through Shopify Markets Pro; overall, we sell to shoppers in over 200 destination markets worldwide. Forrester estimated that by 2023, the cross-border e-commerce market will reach $736 billion. For the year ended December 31, 2022 and 2023, our merchants’ transactions amounted to a GMV of $2,450 million and $3,557 million, respectively. We believe we have the potential to become an industry-defining player that enables merchants to capture the global e-commerce opportunity.
52
 
Our Solutions
 
Global-e is a leader in global e-commerce enablement. We offer full end-to-end platforms built on a highly scalable technology stack. Our comprehensive solutions provides merchants with mission-critical tools that enable them to sell and scale globally.
 
We believe our offering is a result of a potent combination of key components that will help further fuel the growth of global e-commerce by:

Offering an intuitive and frictionless shopper journey and solving the merchants’ needs through our purpose-built end-to-end platforms
  
Through a combination of proprietary capabilities and useful third-party integrations, Global-e is able to create a localized and efficient experience for shoppers regardless of the country they are shopping from.

Our platforms include mission-critical tools, from local pricing and payments capabilities to after-sales support. We also simplify the international order flow – regardless of shopper and merchant origin, currency and payment method used, whether duties and taxes were pre-paid and which shipping option was chosen – making it as simple to complete as if it was a domestic order.

Across our platforms, we are able to support:
 
•
Languages - localized marketing messaging and checkout in over 30 languages.
   
•
Pricing - more than 100 currencies as well as a sophisticated pricing engine customizable according to the shopper’s location, local market retail pricing conventions and the merchant’s pricing strategy. 
   
•
Payments - over 150 payment methods, with new payment methods being continuously added.
   
•
 
Duties and taxes – the ability to accurately pre-calculate import duties and taxes and remit them in over 170 destination markets, simplifying the customs clearance process and allowing for a guaranteed landed price quote for both the shopper and the merchant. We also ensure we are addressing local market import restrictions.
   
•
 
Delivery - an extensive network of more than 20 shipping carriers, offering multiple shipping modes at attractive rates, including specialized shipping options such as Pick-Up & Drop-Off where applicable. We have found that shopper preferences for shipping modes and pricing vary significantly among markets and are an important driver of conversion rates. 
   
•
After-sale support and returns – multi-lingual shopper services and multiple returns options, including pre-paid and local returns in relevant markets.

The combination of these extensive international capabilities embeds a highly-localized shopper journey into the framework of a merchant’s e-commerce store. This creates benefits for shoppers, who enjoy an efficient and familiar experience, while gaining direct access to the merchant’s full and original e-commerce website. Their positive experience allows us to significantly increase the conversion of our merchants’ international traffic and, consequently, their revenue.

•
 
Increased sales conversion: we enable merchants to scale globally in a rapid, efficient manner. We ensure that the merchants are able to capitalize on their valuable international shopper traffic and growth potential by eliminating friction to close the gap between international markets’ share of traffic and monetization. This enables the merchants to generate an uplift in sales from the conversion of their international shopper conversion. We have seen merchants experience significant uplift in international traffic conversion after beginning to use our platform.
   
•
 
Enabling expansion flexibility: Global-e presents merchants with flexibility to expand as they seek to capture the global e-commerce opportunity. We transform what otherwise would have required significant time and financial investments in proprietary development and go-to-market efforts into an efficient expansion solution managed by adjusting mere configurations on the Global-e platforms per market.
   
•
 
Reducing merchant complexity: Global-e assumes the role of merchant of record (“MoR”) vis-à-vis the shopper. We believe that taking on such responsibility significantly reduces legal complexity for the merchants, as we report and forward relevant import taxes and handle import compliance in the local market to where a sale is made, in line with specific market regulations. Our MoR status allows us to handle tax recovery for returned goods, with no hassle to the merchant. We bear certain fraud and foreign exchange risks that would otherwise be borne by the merchants and offer simple access to dozens of local payment methods, which further reduces potential frictions that could deter both merchants and shoppers from engaging in global transactions. We also adapt our systems and operations on an ongoing basis to address the evolving regulatory landscape and technical backdrop. Vis-à-vis the merchant, we streamline order processing by periodically reconciling all international orders in bulk and in the merchant’s native currency. In short, we aim to provide an experience that is akin to a domestic transaction.
   
•
 
Emphasizing merchant branding: maintaining the direct shopper relationships is of strategic importance to the merchants, and we are deeply committed to preserving that connection. All throughout the process, the merchants preserve the integrity of the brand experience and enhance their brand equity. We use minimal own branding - and only where required to do so - so shoppers primarily face the merchant’s existing storefront and brand experience.

53
Combining our access to data and know-how to generate Smart Insights
 
We believe we are well-positioned to provide insights to our merchants thanks to both the breadth and depth of the data we generate, on the basis of the significant international traffic on our merchants’ websites and the millions of transactions we facilitate on a yearly basis. For the year ended December 31, 2023, there were approximately 1.3 billion visits across our merchants’ e-commerce sites, and we enabled approximately 18 million transactions across over 30 origin countries and over 200 destination markets. We gather extensive data along the entire value chain and lifecycle of an order - from the initial visit to the e-commerce store through the actual purchase, delivery and returns.
  
Our proprietary models use this wealth of information to generate curated and actionable Smart Insights for our merchants, advising them on how certain changes to their online value proposition would potentially affect shopper conversion rates. We also provide detailed business analytics on a market-per-market basis, leveraging our know-how, tools and data. Such Smart Insights enable the merchants to optimize their offering to the shoppers by location, alleviating the need for trial and error in order to assess customer preferences on a standalone basis.
 
Our holistic approach - coupling our localization capabilities and market know-how with our data driven Smart Insights - enables the merchants to unlock their potential for global D2C sales by means of a localized and optimized offering for each individual market, vertical and price segment.
 
Environmental, Social and Governance (ESG) Practices
 
Global-e platforms and offerings are designed to promote access and reduce borders and barriers in global e-commerce, where such access can potentially be offered while taking into consideration and contributing to the Environmental, Social and Governance (ESG) goals of our stakeholders, including our merchants and the shoppers. To that end, we have committed to develop our ESG strategy and workplan in alignment with our business strategy and the expectations of our stakeholders, our partners within the value chain, our employees and our local communities.

We continue to gradually develop our ESG strategy. The ultimate responsibility for our ESG strategy, goals, practices and the underlying workplan is vested with our Board of Directors, and the powers and authority to monitor and oversight were delegated and vested to the Board’s Nominating, Governance and Sustainability Committee (NGSC). The NGSC established an executive committee (consisting of c-level management) under its supervision and direction to lead the development and execution of our ESG workplan, and such executive committee has been, and will continue to work closely with various relevant departments and officers, including Facility Managers, Human Resources, Operations, Security and Tech Ops and Legal, among others in designing, furthering and implementing our ESG work plan. In 2023, the Executive Committee held 10 meetings in which key ESG strategy and workplan were discussed.
54

In 2023, we started to prioritize the enhancement of awareness and understanding of our ESG workplans among the members of our management and Board of Directors. The objective of these initiatives was to enable our leadership team to be adequately-equipped with the knowledge necessary for our ESG related decision-making processes.

In the course of our ongoing Board of Directors and NGSC meetings, we held sessions on ESG fundamentals and the relevance of ESG considerations to our business operations and our workplan (including discussions related to the SEC climate disclosure rules). Special focus was given to cybersecurity. The sessions aimed to provide our board members with an understanding how our ESG workplan fits our strategy, in accordance with the materiality assessment conducted by the company. In addition, as part of its ongoing meeting agenda, the Executive Committee underwent sessions that contributed to the understanding of its members of certain functional areas related to the company’s workplan. These sessions covered topics such as integrating sustainability into business operations, stakeholder engagement, and measuring and reporting ESG performance.

We view ESG as an integral part of our corporate strategy and we remain committed to fostering a culture that values sustainable, conscious and responsible business practices. We believe that the sessions conducted during the past year mark the beginning of an ongoing commitment to ESG education within our organization, and serve as a foundation for continued learning and application of ESG considerations in our business operations. We plan to gradually include relevant managers and employees in certain session in the future, and provide relevant tools for encouraging creativity, and fostering engagement, leading to sustainable value creation.

In 2023, we took the first steps to review climate change impacts and addressing Diversity, Equity and Inclusion (DEI) gaps across the organization. We have started to develop a plan to prioritize and promote efforts to manage key long-term non-financial parameters important to our business.

Following our 2022 engagement with the ESG advisory team of Nasdaq Corporate Solutions, LLC, that conducted our first ESG materiality assessment based on what we believe were and still are our stakeholders’ values and our internal leadership views and attitude on ESG, in light of our missions and business strategy, our 2023 workplan was designed and prioritized in consideration with such materiality assessment.

Sustainability

In 2023 Global-e initiated preliminary steps towards assessing and potentially reducing greenhouse gas (GHG) emissions associated with our operations. Recognizing the impact of our activities on the environment, we have started exploring measures to reduce our carbon footprint.

We have always considered the importance of energy efficiency within our office spaces. We have recently adopted facility management policy. We aspire to explore how we can reduce waste generation in our offices, focusing on identifying opportunities to reduce use of paper (by setting a must-have only printing policy, and have reduced significantly the use of disposables including paper cups in our largest office location in Israel), as well as taking steps to implementing recycling practices (for example, in our London office, which is our second largest office facility). For example, the policy requires us to donate unused electrical appliances to non-profit organizations and schools, and placed measures to using only wired computer accessories to limit the use of battery.

We have initiated collaborative discussions with our carriers to jointly assess the measuring of carbon footprint associated with transportation and logistics. These collaborative assessments will inform future strategies for emissions reduction within our supply chain. We are pleased with our carrier network for having their own programs and initiatives, and while we cannot directly influence the scope or success of such programs, we believe that having our lion-share shipments carried through such network, has a meaningful contribution to any carbon-reduction goals.
55

In collaboration with some of our carriers, we were able to pilot a proposed rate card that incorporates optional offsetting fees for GHG emissions. This initiative aims to encourage and facilitate carbon-neutral shipping options for our merchants. We cannot control or impact our merchants’ choice or the actual offering made by such carriers, but we remain committed to making such rate cards available as part of our proposition as long is the carriers make it available on their end. We believe that such offering echoes the importance of emissions reduction along the supply chain.

In tandem with our efforts to address GHG emissions, Global-e is considering initiatives related to circular economy. Global-e has commenced internal preliminary mapping of areas where circular economy modalities could be applied. We are in the early stages of engaging with our carriers and other vendors to explore circular economy initiatives collaboratively. We are committed to taking on these initial steps and further considering and integrating sustainability considerations into our business practices and commercial offering. These efforts align with our commitment to responsible corporate citizenship and addressing the environmental impact of our operations.

While the steps taken are in an early stage, Global-e views sustainability as an ongoing journey, and we are dedicated to exploring and implementing initiatives that could positively contribute to the environment and support sustainability.

Employee Recruitment, Retention and Engagement
 
Our workforce has grown significantly in recent periods, and that has, and continues to require us to seek to build and maintain a working environment that caters for employees motivation, talent, wellbeing and safety, while promoting personal and professional development.

We consider the needs of our clients in our existing and new markets for local culture and local business etiquette. In 2023, we continued to recruit relevant talent to strengthen our team capabilities in our offices worldwide. As we continue to grow our workforce and to expand geographically, diversity will continue to be important to who we are, allowing us to better serve our customers in a local culture fashion yet with a global expertise earned through cross-organizational collaboration.

We remained committed to creating an inclusive and diverse workplace where all employees feel valued and empowered. We acknowledge the importance of diversity, equity and inclusion in driving innovation, fostering creativity, and promoting long-term sustainability. In 2023 we took some initial yet meaningful strides in enhancing our commitment to DEI within the organization. We also take our legal responsibilities seriously, and our DEI efforts are and will continue to be undertaken in a manner that is consistent with applicable law. As part of our workplan, we considered and undertook various initiatives to measure and plan how to address DEI gaps and promote a culture of diversity and equality. The Executive Committee is responsible for the governance of our DEI roadmap planning and execution, in consultation with its member, our VP of Human Resources. We call out the following items for the past few periods:

1. DEI Gap Assessment: With the support of the PWC Israel, Risk and Forensic Services, ESG group, we conducted preliminary assessment to identify areas of improvement and opportunities for enhancing diversity and inclusion across various facets of the organization, including but not limited to hiring, promotion, and professional development.

2. Policy Development: in tandem with the abovementioned assessment, which was designed in accordance with our management’s guidelines and spirit, and in alignment with industry standards, we initiated the development of DEI policies aimed at providing better guidelines for promoting diversity and equal opportunities within the organization, initially aiming to serve as a guide to the Human Resources (HR) team.

3. Measurement and Analytics: With the support and guidance of PWC Israel, ESG group, we built a matrix of available measurable data, based on industry standard metrics and parameters. This includes the collection and analysis of relevant data to assess the representation of diverse groups in different departments and levels of the organization, in a manner consistent with applicable data privacy laws. On the date of this Annual Report, we are still in the process of analyzing the data we gathered.
56

While initial steps were made, it is important to note that the DEI forward plan is still under development. We are committed to keep on building the foundation laid during the previous financial year and continuing to prioritize diversity, equity, and inclusion in our long-term strategy, all based on measurable data and in conformity to our management’s visions and spirit, aligned with industry best practices and recognized reporting standards. We recognize that DEI is an ongoing journey, and we are committed to furthering such efforts. Among other things, we are likely to consider initiatives associated with DEI data measuring, analysis and supporting policies, and training programs.

Human Capital Development, Compensation and Evaluation
 
We value the uniqueness of each of our employees. We appreciate the talent and the caring they put into their work in making us a better organization, which in turn defines our culture, and eventually will make our business strategy, our solutions and our services better. We therefore always aim to encourage and promote our employees’ talent, ambition and sense of devotion.

We seek to provide and constantly develop compensation and equity incentive plans that will remain attractive and rewarding. As such, we offer both stock-based and cash-based compensation awards (in each case subject to eligibility criteria) that are designed to commensurate individual performance and meeting objectives.

Our recruitment spans through students, junior professionals through senior seasoned executives. None of our employees is represented by a labor organization or is a party to a collective bargaining arrangement or expansion orders of such arrangements, with the exception of a small number of employees in France, Spain, Australia and Israel who are covered by mandatory industry-wide collective bargaining agreements in accordance with local law.

We are extremely proud of our employees. In 2023, more than 70 employees (approximately 7.5% of our global workforce) were promoted or assumed new roles within the organization. We believe that such vote of confidence is the result of our culture.

During 2023 our hybrid remote work policies remained in place, enabling our employees to work remotely for parts of the work-week, while still fully operating all our office facilities, and maintaining health and safety measures.

We consider inclusive work culture to be an important criterion in promoting collaboration and transparency among our employees, while still offering private spaces for personal and professional needs. To that end, we strive to have an open workspace with optimized balance between team collaboration and private space.

We offer our employees opportunities to acquire new skills, and to develop through exploration, experience and learning, by providing them learning and development programs. We have a dedicated personnel within our Human Resources team, supervised by our executive leadership, who focus, and will continue to focus, on developing learning, training and growth policies and plans, through internal and external platforms, to be made available for our people worldwide. The Juno Journey platform, which was implemented in 2022, offered tens of thousands of external learning resources from which each employee could choose for own personal and professional growth path. The use of Juno as part of our new-employee induction and training program supported the onboarding of our new hires in 2023, where all new hires used Juno as part of their induction training. Over 70% of our employees are actively using the platform. We have allocated each employee an annual budget allowing them to attend, on average, 2-3 courses of their choice. We continued to create and develop in-house courses and professional sessions covering our products, technology and offering.
57

In parallel, we started building our in-house competence development program. The program is expected to focus mostly on spreading the knowledge about our solution across all verticals in the organization.

In an effort to promote candid and effective dialog between employees and their managers with a view to contribute to career development and personal accomplishments, we carried on with our annual review processes for all employees across the world, making the process streamlined and efficient. In 2023, employees went through their annual performance review, the vast majority of them within the first two months from the end of 2022, and complete salary review withing the first quarter of 2023. Any annual performance and goals review is based on personal individual work and development plan with specific objectives and, if applicable, resource requirements, always attempting to balance between business needs and personal aspirations and targets.

Business Ethics
 
Our unique position as an e-commerce enabler comes with great responsibility to the value chain stakeholders – our merchants (brands and retailers), our consumer shoppers and the vendors we work with or collaborate when we perform our services. We aim to hold ourselves to the highest standard of business and professional ethics, and expect our stakeholders to do the same. We are committed to making equal and unbiased selection of partners, honor our promises and commitments, and stay accountable to our actions and choices towards our stakeholders.

Being a founder-led organization, operating under the oversight of our Board of Directors and its committees, we are committed to the values and standards of behavior set forth in our Code of Conduct. We will keep our employees appraised of the code by annual training and making it available to all, including by reference in our service contracts with our merchants. Our Board of Directors, with the support of our management, has recently conducted a review of the Code of Conduct to reaffirm our commitment to maintaining the highest standards of integrity, transparency, and ethical behavior in all aspects of our operation. No material changes were made in the course of such recent review of the Code of Conduct.

Board Composition
 
We are privileged to have experienced industry-relevant leaders as our members of the Board of Directors. The members of our Board of Directors bring years of leadership experience, making it fit for overseeing our organization’s governance and compliance. We maintain a majority independent Board of Directors, with five independent directors. We believe our Board of Directors demonstrates balanced perspectives of relatively newly appointed directors and required industrial knowledge from the more tenured directors. Under the supervision of the NGSC, we previously conducted Board of Directors and Committee evaluation to facilitate an assessment of the performance of the Board of Directors and its Committee and assessing its strengths and weaknesses and laying a foundation for discussion and future improvement. 3 of our directors self-identify as women or non-binary, and 2 self-identify as members of traditionally underrepresented racial/ethnic groups in their home jurisdiction.
58

Our Merchants
 
We serve a fast-growing and diverse portfolio of merchants around the globe
 
As of December 31, 2023, we had 1,256 merchants using our enterprise platforms, up 21.2% from 1,036 merchants as of December 31, 2022 and 91.2% from 657 merchants as of December 31, 2021. In addition, as of December 31, 2023, we had thousands of merchants already onboarded and using Shopify Markets Pro. During the year ended December 31, 2023, merchants using our platforms made transactions at a total GMV of $3,557 million, up 45% from $2,450 million in the year ended December 31, 2022. The merchants we serve are highly diverse across:

•
Multiple origin countries - we serve merchants from multiple locations including the United States, the United Kingdom, various European markets, Japan, Australia, Hong Kong, Singapore, South Korea, the United Arab Emirates and other markets globally.
   
•
Multiple product verticals - fashion and apparel, luxury, footwear, cosmetics, accessories, children’s fashion, watches and jewelry, sporting equipment, consumer electronics, toys and hobbies, automotive spare parts, and others. 
   
•
Multiple product price points - ranging from everyday fashion retailers to ultra-high-end brands.
   
•
Multiple merchant sizes - from multi-billion-dollar global high-street brands to emerging small and medium businesses. 
   
•
Multiple merchant types - from traditional bricks-and-mortar retailers who have been transitioning to the digital D2C realm to emerging digital-native brands. 

We believe that our large and highly diverse portfolio of merchants presents several key advantages:
 
•
A rich, diverse and fast-growing data asset of international transactions, enabling us to produce Smart Insights.
   
•
Vertical-level as well as geographical expertise, yielding a competitive advantage when approaching prospective merchants as part of our sales process.
   
•
Strong network and word-of-mouth effects within specific verticals and/or geographies.
   
•
High business resilience due to steadily decreasing merchant concentration.
   
•
A certain level of built-in “natural currency hedge” as a result of our business activity being conducted in a large number of different base currencies.

We have a highly efficient sales and go-to-market strategy

We establish partnerships with new merchants through several sales channels:
  
•
Direct sales - We have a dedicated team of sales executives that use various data sources to screen, qualify, identify and directly approach prospective merchants. 
   
•
Inbound and word-of-mouth - As our scale and the number of merchants we have in each individual market grows, so does our own brand equity. This leads to more inbound prospects as well as stronger word-of-mouth-based sales, whereby  existing Global-e merchants or e-commerce executives recommend our solution to other players in the market.
   
•
Channel partnerships - We have established mutually beneficial strategic partnerships with a range of third parties, including leading e-commerce and technology platforms, shipping providers, third-party logistics providers, payment providers, system integrators and others. In the context of such relationships, our partners pass on leads to our sales teams and provide us with access to merchants. 
   
•
Shopify partnership - In 2021 we entered into the 2021 Shopify Agreement with Shopify to jointly cooperate in offering global e-commerce solutions to Shopify merchants. In January 2022 we extended our partnership with Shopify and entered into the 2022 Shopify Agreement with Flow and Shopify, based on which, in September 2023, Shopify Markets Pro, a white label cross border MoR offering, became generally available to US-based Shopify merchants. Shopify Markets Pro is based on the Flow platform, leveraging its robust API-based technology and it enables merchants of all sizes, including small and emerging merchants, to offer their products internationally with a streamlined integration process and advanced self-service capabilities.

59
Sale cycle length depends on several parameters, such as merchant size, vertical, and type of technical integration but takes between three weeks and six months. Once the sales cycle is completed, implementation periods vary, depending on technical complexity, level of granularity of the merchant’s intended international marketing proposition and operational complexity. Implementation projects for large merchants take approximately 12-16 weeks on average while implementation for small businesses take approximately three to six weeks depending on the client internal team engagement.
  
Our Competitive Advantages
 
We believe that we have built a leading combination of platforms, services and data-driven insights and know-how all working in harmony to address merchants’ global e-commerce needs, creating a competitive advantage for our business. We believe our combination of capabilities and expertise uniquely positions us to cater to shoppers globally, driving significant uplifts in international sales conversion rates and revenue growth for our merchants, while also removing much of the complexity and many of the costs inherent to global e-commerce.
 
Key elements of our competitive advantage include the following:
 
Purpose-built, end-to-end platform
 
We understand the challenges and the strategic objectives of our merchants engaging in global e-commerce. We provide merchants with the capabilities required for effective global D2C trade, using a potent combination of our proprietary technology and third-party providers. Our solutions are easy to integrate, platform-agnostic, scalable and able to support merchants of all sizes from small, emerging brands to the world’s largest retailers. We aspire to be inclusive and far-reaching in scope. We thus enable our merchants to expand internationally effectively, and to do so much more efficiently than previously possible.
 
True global e-commerce enabler at scale
 
We believe we are uniquely positioned to capture the global e-commerce opportunity as we are the only direct-to-consumer e-commerce enabler with truly global scale. We have an extensive footprint in North America, the United Kingdom, across the EU, Japan, Australia, United Arab Emirates and other APAC countries. We are diversified by vertical and end-market. Our wide-reaching scale enables us to provide a solution to merchants across the globe. This scale, coupled with strong brand recognition gained since inception, has allowed us to acquire some of the largest merchants in the world as customers.

Differentiated and growing data asset driving flywheel effect
 
The Global-e platforms are based on more than technical solutions and associated capabilities. They are based on data-driven know-how. Data permeates every layer of our platforms. Data drives how we make decisions, how we develop and improve our offering, and how we make the shopper experience efficient and intuitive. We refer to this as “Smart Insights”, which enjoy a strong flywheel effect as we continue to grow at pace driven by:

•
 
“Economies of scale” - Our platforms facilitate millions of international transactions each year across thousands of merchants, spread across multiple geographies, product verticals, price levels, and shopper demographics. We thus accumulate a vast and rich data set and are able to benefit from economies of scale.
   
•
 
“Economies of skill” - Our massive and fast-growing data is a key asset due to the “richness” of its content. Based on this data, and coupled with our operational experience accumulated over years, we are able to generate what we call economies of skill, which enable us to ensure that global sales are optimized for the merchants on a market-by-market basis. 
   
•
 
Flywheel Effect - Our rich data serves as the basis for a powerful flywheel effect: the uplift we generate for our merchants drives more sales and the ability for them to expand into new geographies, which in turn creates more data, which is then fed back into our systems in order to generate even better conversion rates and more uplift. This in turn drives increased sales for our merchants and attracts new merchants to our platforms. Our data engine gets “smarter” with each new site visit, each merchant and each new shopper.

60
Partner network fueling our differentiated go-to-market strategy

Our go-to-market strategy targets merchants that want to establish or expand their global e-commerce business. The effectiveness, prominence and stickiness of our platforms have enabled us to acquire many of our merchants organically, supplementing the efforts of our professional salesforce. Many of our new merchants are referrals from existing merchants or e-commerce executives, which serve as brand ambassadors for Global-e. In addition, our commerce enabler, marketing, payments, shipping and logistics, system integration and social media partners, which include global and regional players, act as a meaningful source of referrals and lead generation. Our ability to leverage these relationships is an important source of inbound interest. This is further complemented by our highly efficient sales and marketing efforts. Our salespeople and customer success managers build intimate relationships with our merchant partners and are crucial in further expanding our merchant network.

Robust business model with sticky customers
 
Global-e is a global e-commerce enabler covering the entire shopper journey. Our platforms are deeply integrated within merchants’ existing technology stack providing the core tools to power their day-to- day global operations. As a result, we retain significant “stickiness” within our customer base. Not only do we retain our merchants - our merchants also grow with our platform, and we grow with them. Merchants process large and growing order volumes through our platforms as we become increasingly integral to their daily business operations and as they realize the benefits of using our platforms. An important component of our growth is our existing merchant base, which grows organically each year. Due to our consistently high retention rates, we have strong visibility into the subsequent year’s revenue by looking to our current merchants, in a given period. Attracting new merchants is also critical to the scale of our platforms. We have developed a highly efficient sales model based on a direct sales force, channel partners and strong word of mouth, and we continue to build our capabilities to further strengthen our model.
 
Founder-led management team
 
We are a founder-led management team with a strong corporate culture. We are privileged to be led by our founders, Amir Schlachet, Nir Debbi, and Shahar Tamari, who set the tone for our people:
 
•
 
Customer-Obsessed: We are firm believers in putting our customers first in everything we do. This is a principal tenet of our business. We view the merchants as long-term partners and hold their satisfaction as our guiding principle. Our customer success teams have invaluable tools and data to support the merchants’ ongoing needs, as well as direct access to the senior leadership team, including our founders, to leverage on behalf of our merchant partners. 
   
•
 
Initiative and innovation driven: Our goal is to enable merchants to break geographic boundaries and become globally successful businesses. As such, we invest millions in research and development each year, track trends in the e-commerce world across geographies and constantly improve our product offering. Similarly, we encourage our employees to expand the scope of their defined roles, to take initiative, and to elevate Global-e to the next level - every employee can, and does, make a difference. 
   
•
 
Team-Focused: We are a team. We believe in collaboration and inclusion, from our founding team that has been working together since our inception to our employees across all our offices worldwide. Our hiring decisions are based on attracting people whose values align with ours: creating real, meaningful and sustainable value for our merchants.

61
Our Growth Strategy
 
Grow within our existing portfolio of merchants
 
The merchants’ success is our success. We help merchants both grow revenues in their existing markets as well as expand into additional ones. As our merchants’ global sales generated through our platforms grow, attributed either to improved conversion or by expanding their offering into additional geographies, our revenues grow in tandem. Thus, we increase the “stickiness” of our solutions and become increasingly integral to our merchants’ daily businesses as they realize the benefits of using the Global-e platforms. We also have a strong track record of merchants acting as ambassadors for Global-e, referring us to other portfolio brands, as applicable, and more generally, to other potential merchants. We intend to continue deepening our relationships with existing merchants through service and performance of the highest quality, allowing them to continue to serve as our brand ambassadors within and outside their organizations.
 
Acquire new merchants within existing geographies and verticals
 
We have a significant opportunity to continue acquiring new merchants over time. Furthermore, we have proven the ability to rapidly integrate potential merchants with implementation cycles of 12 to 16 weeks on average, and as short as three weeks. We will continue to invest in our marketing and sales teams to enhance awareness of our solutions and to drive lead generation with our strategic partners. We see significant opportunities across multiple existing geographies and brand segments that we believe we are well-positioned to capture.

Expand into additional geographies, verticals and brand segments

We will seek to further expand our geographic footprint and boost our presence across merchant verticals, as well as brand segments. We believe that markets in the vicinity of regions where we already have a strong presence, in particular Europe and North America, and newer markets, such as APAC, are highly relevant for our business.
 
While historically we have held a strong position in the mass market beauty and fashion segments, we have also achieved significant success with merchants in other segments, in particular, within the luxury segment, that we believe we can continue to capitalize on. Additionally, we have extended our reach by engaging with global consumer electronics brands. In order to provide the necessary level of support for these global brands, we have built and continued to build new multi-local capabilities, allowing us to enable localized D2C sales for such brands while also enabling them to utilize their existing local infrastructure, inventory and fulfilment capabilities in multiple destination markets. We are also making use of such multi-local capabilities to better serve the needs of our large global merchants, enabling them to utilize their domestic presence and inventory in chosen markets in order to serve their shoppers in such markets in local fashion, while at the same time serving adjacent markets through our cross-border capabilities.

As we continue to grow and expand into new geographies, through both new merchant acquisition and our existing portfolio of merchants expanding their offerings into additional geographies, we have the ability to reach new audiences in terms of sizes and verticals. Our growing brand recognition and know-how across our trading markets, enables us to acquire additional merchants more efficiently within current markets as well as new geographies.
62
 
Disaggregation of Revenue
 
The following table summarizes revenue by category:
 
 
  
Year Ended December 31,
  
 
  
2021
    
2022
    
2023
  
 
  
Amount
    
Percentage of Revenue
    
Amount
    
Percentage of Revenue
    
Amount
    
Percentage of Revenue
  
 
  
(in thousands, except percentages)
  
Service fees
    
96,659
      
39
%
    
181,887
      
44
%
    
262,255
      
46
%
Fulfillment services    
    
148,615
      
61
%
    
227,162
      
56
%
    
307,692
      
54
%
 
                                                
Total revenue          
  
$
245,274
      
100
%
  
$
409,049
      
100
%
  
$
569,946
      
100
%

The Company's revenues from service fees provided on a standalone basis were $8,366, $16,515 and $44,461 (in thousands) for the years ended December 31 2021, 2022 and 2023 respectively.
 
The following table summarizes revenue by merchant outbound region:
 
 
  
Year Ended December 31,
  
 
  
2021
    
2022
    
2023
  
 
  
Amount
    
Percentage of Revenue
    
Amount
    
Percentage of Revenue
    
Amount
    
Percentage of Revenue
  
 
  
(in thousands, except percentages)
  
United States          
    
71,095
      
29
%
    
173,967
      
43
%
    
285,619
      
50
%
United Kingdom
    
113,385
      
47
%
    
146,562
      
36
%
    
173,584
      
30
%
European Union          
    
58,177
      
23
%
    
78,491
      
19
%
    
92,566
      
16
%
Israel          
    
1,052
      
*
      
1,357
      
*
      
1,806
      
*
  
Other          
    
1,115
      
*
      
8,672
      
2
      
16,371
      
3
%
 
                                                
Total revenue          
  
$
245,274
      
100
%
  
$
409,049
      
100
%
  
$
569,946
      
100
%

* Less than 1%
 
Shopify Markets Pro

In 2023, Shopify Markets Pro became generally available to US-based Shopify merchants, enabling merchants of all sizes, including small and emerging merchants, to offer their products internationally via a streamlined integration effort and advanced self-service capabilities. We believe that this offering will appeal to many merchants, due to its streamlined integration process and advanced self-service capabilities. The streamlined integration process ensures a quick and hassle-free onboarding experience for merchants, while the advanced self-service capabilities empower them to manage and customize their offerings with ease. This combination not only enhances operational efficiency but also provides merchants with the flexibility and control needed to navigate the complexities of international markets, making Shopify Markets Pro an attractive solution for a diverse range of merchants.
63

Drive continuous innovation on our platforms
 
We plan to continue to invest in research and development and operate with an agile approach to address our merchants’ and shoppers’ constantly evolving needs. We strive to continue developing new capabilities and add-on offerings, as well as opportunistically look to complement existing platforms and offering through merger and acquisition opportunities, to maintain Global-e’s position as a leading holistic platform for global e-commerce, enabling efficient selling and purchasing processes for our stakeholders. In addition, we have developed the capabilities and infrastructure to support merchants’ multi-local fulfillment offering whereby select markets are serviced from locally-existing inventory, thereby giving the merchant better utilization of its stock and improving the customer offering. Our ability to provide preferred payment and delivery methods in select geographies, contributes to higher conversion rates of shoppers from these geographies.

We also plan to continue enriching the suite of value-added services we can provide to our merchants. For example, through the acquisition of Borderfree in 2022, we intend to enhance the value that our business brings to global brands by providing them with traffic demand generation services, thereby the ability to attract international shoppers to their web store. We are accomplishing this using both an e-mail based direct marketing and a portal-like affiliation offerings, both building upon and augmenting assets (such as customer accounts) created by Borderfree.
 
We also believe that our differentiated data capabilities and constantly-improving data models will allow us to stay at the forefront of e-commerce solutions. We believe our unique, big data-driven Smart Insights enable us to help our merchants deliver more precise, targeted, localized shopper experiences driving conversion and revenues and also manage their operations more efficiently through our superior ability to forecast and predict trends. We believe that data will be a key driver of future optimization and shopper monetization.
  
Continue to develop and expand our strategic partnerships
 
We have established mutually beneficial strategic partnerships with a range of key players in the broader e-commerce ecosystem, including global technology groups, e-commerce platforms, shipping providers, third-party logistics providers, payment providers and system integrators. Our channel partners have been an important lead generation engine providing our sales team with a strong pipeline of prospective merchants. We intend to further strengthen our existing relationships, such as our partnership with DHL or our partnership with Shopify, and build new strategic partnerships with other key players across the value chain and in the different markets in which we operate.
 
Products and Technology
 
Our end-to-end platforms help merchants remove global e-commerce complexities by empowering merchants with powerful and extensive localization capabilities embedded directly within their websites. Our technology creates a highly-localized shopper experience, which in turn drives increased sales conversion and revenue growth.
 
Our platforms are built on a scalable tech stack which is powered by a robust layer of application programming interfaces (“APIs”) and data models, powering the shopper journey and allowing us to support a fast-growing and rapidly expanding merchant base.
 
Through a range of frictionless integration options, the merchants’ websites can leverage the power of our platforms. The integration technology, either through pre-fabricated e-commerce platform plug- ins, through the implementation of our API’s or through our generic script-based client-side integration, which we refer to as Global-e Module, is based on a simple lightweight integration effort. Such integration effort ranges from a code snippet that is placed into a merchant’s existing online platform enabling us to deploy and integrate with minimal friction, to installation of our plug-ins and/or the implementation of a few of our API’s. After integration, shoppers continue to face the merchant’s existing storefront, and Global-e remains as a “white label” in the background. In the case of Shopify Markets Pro, a simple “one-click” activation process is all that is needed from the merchant’s side to enjoy the benefits of that platform.
64

Shopping experience features

•
 
Localized browsing - We offer localized browsing features, such as a configurable welcome message or a top-line marketing banner that can be customized by market and presented in the local language. Customization breeds familiarity, reducing bounce rates, increasing conversion and improving shopper confidence through a local shopping experience.

•
 
Localized checkout - Embedded within the brand’s e-commerce store, the checkout experience supports over 30 different languages across our platforms, enabling shoppers to switch the checkout language to their own native tongue for a more customized and local experience. Further, shoppers checkout within the merchant website without being redirected to a third-party site.

•
Guaranteed landed cost - We provide shoppers with a “no-surprises” and guaranteed fully-landed cost. We offer multiple options, configurable by market, for handling import duties and taxes. For example, shoppers may select the option to prepay duties and/or taxes at checkout. Alternatively, our platforms have the capability to already embed this cost into the product price within the browsing journey (in full or partially), in order to facilitate an intuitive and frictionless smooth and user-friendly shopper journey. We believe this feature and options are critical in achieving high conversion rates across markets and promoting repeat shoppers.
 
In addition to achieving shopper confidence, pre-collection of import duties and taxes enables orders to be dispatched to shoppers under a “Delivery Duties Paid” scheme through relevant shipping carriers. This serves to greatly simplify and streamline the process of releasing the goods from customs at the destination market, in turn contributing to a quicker and simpler delivery experience for the shopper.
 
•
 
Multiple shipping options - Our platforms allow merchants to choose from a menu of shipping options, offering shoppers multiple delivery alternatives, depending on the destination market: mail, express courier, Cash-on-Delivery, store delivery, drop point delivery and more. As part of each market-specific value proposition, merchants can decide which shipping methods to offer and how to price them, based on Global-e’s competitive shipping rates or through their own contracted shipping carriers.

•
 
Localized alternative payment methods - Preferred payment methods of shoppers differ from market to market. In some markets, such as the United States and United Kingdom, the use of global cards (Visa, MasterCard, etc.) is the most common payment method used. In others, local cards, or universal alternative payment methods, such as PayPal, prevail. There are markets, both in developed and developing countries, where alternative payment methods are used more frequently than cards. In order to remove payment friction and ensure higher conversion rates, Global-e supports over 150 payment methods globally, granting shoppers in each market the ability to pay with their preferred local option.

•
 
Real-time anti-fraud screening - Each order is scanned in real-time for potential payment fraud. Global-e utilizes advanced third-party screening services, coupled with proprietary algorithms and processes - all managed by a team of anti-fraud specialists. These capabilities enable Global-e to achieve high payment acceptance rates and low chargeback rates across international markets. The authorization/rejection decision is made in real time without the delays and costs associated with manual or semi-automatic transaction screening. This further contributes to a streamlined and satisfying shopper experience.
 
•
 
International customer services - Global-e operates a branded self-service and multi-lingual online customer service portal, which contains answers to many frequently-asked questions that are typically raised post-sale by international shoppers regarding their orders. In addition, Global-e operates a manned contact center that serves to augment the brand’s own customer services team. Global-e’s contact center can provide either “behind the scenes” support for the merchant’s customer services team, or it can be in touch directly with the brand’s shoppers to handle their queries. In 2023, before the peak trading season, we have successfully tested, piloted and introduced into production our new shopper-facing automated Customer Service Chatbot, based on Open-AI’s ChatGPT technology which has been securely connected to our systems and databases, thereby enabling many of the shoppers to receive highly accurate answers to their support queries in real-time, without a need for human intervention. We believe this is a manifestation of the tremendous business value such technologies can unlock over the next few years and contribute to a more efficient customer support and improved customer satisfaction.

65
•
 
Returns process - Global-e offers a comprehensive and efficient solution for product return management. Through Global-e’s proprietary branded and multi-lingual returns portal, shoppers are presented with multiple return options, according to the various returns services that the merchant enables for a given market. Returns options include self-postage, local return addresses, pre-paid postal labels and courier pick-ups. In addition, merchants set for each option an associated cost. Global-e deducts the return cost from the amount refunded to the shopper once merchants confirm successful receipt of the returned product.

Packaging and pricing
 
We support merchants of all sizes, and at various lifecycles, from small, emerging brands to the world’s globally recognized retailers and high-end brands. Our platforms offer a range of differentiated service levels, enabling us to cater to the different - and constantly evolving - needs of the merchants we serve.
 
Technology, infrastructure and operations
 
  Our platforms were designed with enterprise-grade security, reliability, and scalability as top priorities. Core contributors to our strengths in these areas include:

•
Application architecture. We operate proprietary and modern technology platforms, organically developed by our in-house R&D teams, leveraging leading third-party software where applicable.
   
•
Infrastructure. Our platforms are deployed via market standard cloud computing infrastructure, allowing us to easily scale our platforms globally while maintaining optimal performance.
   
•
Disaster Recovery. For our enterprise platform we maintain a secondary cloud-based data center, holding a full stack of updated applications, which is fully tested at least once a year, with the aim of ensuring the highest reliability for our shoppers. 
   
•
 
Security. We employ a multi-layer security approach utilizing both cloud infrastructure security and endpoint protection to enforce the highest degree of security. We operate and design our systems in accordance with major security standards, including: PCI/DSS, SOC 2 and ISO 27001. We perform penetration tests continuously throughout the year by external vendors to identify any vulnerabilities. Our hybrid office/remote work environment could also negatively impact the security of our platforms and systems as well as our ability to prevent attacks or respond to them quickly, and as such we have taken steps designed to ensure remote work can be performed both effectively and securely.
   
•
Uptime. Our platforms maintains excellent service levels. Across all sites, our platforms achieved over 99.9% average uptime for the year ended December 31, 2023.

Competition
 
The market for cross-border e-commerce enablement solutions is competitive, rapidly evolving, fragmented, and subject to changing regulation, technology, merchant preferences and shopper demands. Our solution and platforms compete with other online and offline services, and other solutions. While among them exist several direct competing solutions, many of these solutions and services only handle a specific section of the cross-border e-commerce value chain.
66

As such, we believe that our existing direct competition fails to offer the same holistic solution based on our combination of global reach, end-to-end advanced feature set, number of merchant partners, accumulated data and insights, quality-of-service and local expertise as embedded in our platforms. We are the chosen partner of some globally recognized retailers and brands as well as some rapidly-growing emerging brands.
 
We consider the following categories of services and solutions to be our primary and direct competition: 

•
 
In-House D2C. Some merchants have built and managed international stores and prefer to maintain these operations in-house supported by proprietary capabilities developed by them, features and capabilities provided by the e-commerce platform they utilize, and/or third-party cross-border components. This DIY approach is expensive and complex to maintain, while also lacking the flexibility and know-how of local preferences that a specialized global provider, such as Global-e, can provide. We believe that with the growing importance to merchants of global D2C, coupled with market awareness of the advantages of using reputable and experienced global third parties, such as Global-e, the trend of shifting towards a third-party global enabler will accelerate - with Global-e as the distinguished front runner.
   
•
 
Alternative, Cross-Border End-to-End Platforms. There is a limited number of platforms offering solutions similar in nature and breadth to those offered by Global-e. However, we believe that none of these providers have the combination of global reach, track record, variety of merchants, scale, feature set and data, to match Global-e’s overall offering. The level of sophistication embedded in our platforms and solutions stemming from executing millions of transactions annually, across merchants in over 200 destination markets, is what makes us a leader in the world of global e-commerce.

Though to a lesser extent, we believe our platforms also indirectly compete with two primary categories of services and providers:
 
•
 
Legacy Players and Local Distributors. Merchants expanding abroad may partner with local distributors, granting them licenses to operate in a given market. Licenses typically include an arrangement to sell goods through bricks-and-mortar locations as well as digital rights to the brand, effectively allowing the local licensee to manage the full client-facing relationship with international shoppers. This may cause frustration among shoppers, as local selection may be limited to best-selling products, and interactions with the merchant are routed through a middle-man. As merchants increasingly understand the value of their digital channels and leverage social media to interact directly with shoppers, we believe wide-ranging agreements with local distributors will continue to become less common, especially for digital D2C e-commerce. Nevertheless, some merchants are constrained by long-term, legacy agreements with distributors, preventing the merchant from directly selling to and interacting with shoppers in select (or all) foreign markets, at least for a certain period of time.
   
•
 
Non-D2C Online Channels. Non-D2C online channels, such as marketplaces, represent digital alternatives to the traditional distributor model. Such online channels are varied, ranging from local, multi-local, regional and global platforms. They generate online traffic from shoppers by marketing under the marketplace’s own brand and command a fee, or “take rate” that may represent a meaningful percentage of the merchant’s revenue. To facilitate the transaction between shopper and seller, online channels may provide complimentary services such as payment acquiring, fraud protection, order management, and access to shipping providers. Merchants do not have direct access to shoppers; rather, they must list their products through the intermediary - i.e., the marketplace - to gain exposure. As such, by selling through non-D2C online channels, merchants often expose their brand to direct competition from other brands sold in parallel through such online channels (e.g. a common feature of marketplaces is “people who bought this also bought this” lists which may include different brands).

For geographical and segmental revenue, see Note 2, reporting segments and geographical information included within our consolidated financial statements elsewhere in this Annual Report.

67

Seasonality

See Item 5. “Operating and Financial Review and Prospects.”
 
Intellectual Property
  
We consider our intellectual property rights, including those in our know-how and the software code of our proprietary technology, to be, in the aggregate, material to our business. We rely on a combination of contractual commitments and statutory and common law rights to protect our intellectual property rights in our technology and know-how. We seek to control access to our trade secrets and other confidential information related to our proprietary technology by entering into confidentiality agreements with our employees, consultants, merchants, vendors and business partners who have access to our confidential information, and we maintain policies and procedures designed to control access to and distribution of our confidential information.
 
Our know-how is an important element of our business. The development and management of our platforms requires sophisticated coordination among many skilled and specialized employees. Despite our efforts to protect our intellectual property rights in our technology and know-how, unauthorized parties may attempt to copy or obtain and use our technology to develop products and services with the same functionality as our platform. Policing unauthorized access to and use of our technology is difficult. Our competition could also independently develop technologies like ours, and our intellectual property rights may not be broad enough for us to prevent our competition from selling products and services incorporating those technologies. For more information, see “Risk Factors-Risks Relating to our Business and Industry-If we fail to adequately maintain, protect or enforce our intellectual property rights, our competitive position could be impaired and we may lose valuable assets, generate reduced revenue, and incur costly litigation to protect our rights.”
 
We own and use unregistered common law marks and service marks on or in connection with our proprietary technology and related services. While most of the intellectual property we use is owned by us, we have obtained rights to use intellectual property of third parties through licenses and services agreements. Although we believe these licenses are sufficient for the operation of our business, these licenses typically limit our use of the third parties’ intellectual property to specific uses and for specific time periods.
 
From time to time, we may become involved in legal proceedings relating to intellectual property arising in the ordinary course of our business, including challenges to the validity of our intellectual property rights and claims of intellectual property infringement. For more information, see “Risk Factors-Risks Relating to our Business and Industry-We may incur costs to defend against, face liability for or be vulnerable to intellectual property infringement claims brought against us by others.” We are not presently and have never been a party to any such legal proceedings that, in the opinion of our management, would individually or taken together have a material adverse effect on our business, financial condition, results of operations or cash flows.

Government Regulation

As with any company operating on the internet, we grapple with a growing number of local, national and international laws and regulations. These laws are often complex, sometimes contradict other laws, and are frequently evolving. Laws may be interpreted and enforced in different ways in various locations around the world, posing a significant challenge to our global business. This ambiguity includes laws and regulations possibly affecting our business, such as those related to data privacy and security, pricing, taxation, content regulation, digital services and intermediatory regulations, intellectual property ownership and infringement, anti-money laundering, anti-corruption, product liability, consumer protection, extended producer responsibility, product safety and export control. Changes to such laws and regulations could cause us or third-party partners on which we rely to incur additional costs and change our or their respective business practices in order to comply.
68

Data Protection and Privacy
 
We are subject to laws across several jurisdictions regarding privacy and protection of data, in particular, in Israel, the European Union, the United States and other jurisdictions. Data protection, privacy, cybersecurity, consumer protection, content regulation, and other laws and regulations can be very stringent and vary from jurisdiction to jurisdiction. These laws govern how companies collect, process, and share data, grant rights to data subjects, and require that companies implement specific information security controls to protect certain types of information.
 
For example, we are subject to the Israeli Privacy Protection Law 5741-1981 (“PPL”), and its regulations, including the Israeli Privacy Protection Regulations (Data Security) 2017 (“Data Security Regulations”), which came into effect in Israel in May 2018 and impose obligations with respect to the manner personal data is processed, maintained, transferred, disclosed, accessed and secured, as well as the guidelines of the Israeli Privacy Protection Authority (“Authority”). In this respect, the Data Security Regulations may require us to adjust our data protection and data security practices, information security measures, certain organizational procedures, applicable positions (such as an information security manager) and other technical and organizational security measures. The regulations may require us to adjust our data protection and data security practices, information security measures, certain organizational procedures, applicable positions (such as an information security manager) and other technical and organizational security measures. In addition, to the extent that any administrative supervision procedure is initiated by the Israeli Privacy Protection Authority that reveals certain irregularities with respect to our compliance with the Privacy Protection Act, in addition to our exposure to administrative fines, civil claims (including class actions) and in certain cases criminal liability, we may also need to take certain remedial actions to rectify such irregularities, which may increase our costs.
 
For further information on the laws regarding privacy and data protection which we are subject to, see “Risk Factors-Risks Relating to our Business and Industry-We are subject to stringent and changing laws, regulations, standards and contractual obligations related to privacy, data protection, and data security. Our actual or perceived failure to comply with such obligations could harm our business.”
 
While it is generally the laws of the jurisdiction in which a business is located that apply, there is a risk that data protection regulators of other countries may seek jurisdiction over our activities in locations in which we process data or serve merchants or shoppers but do not have an operating entity. Where the local data protection and privacy laws of a jurisdiction apply, we may be required to register our operations in that jurisdiction or make changes to our business so that shopper data is only collected and processed in accordance with applicable local law. In addition, because our services are accessible worldwide, certain foreign jurisdictions may claim that we are required to comply with their privacy and data protection laws, including in jurisdictions where we have no local entity, employees or infrastructure. In such cases, we may require additional legal review and resources to ensure compliance with any applicable privacy or data protection laws and regulations. In addition, in many jurisdictions there may in the future be new legislation that may affect our business and require additional legal review.

   There is uncertainty in many of the countries where we operate with respect to the liability of internet service providers or providers of digital services, the application of existing regulations to our business as they relate to, or the enactment of new regulations relating to, issues such as e-commerce, electronic or mobile payments, information requirements for internet, digital services providers or other intermediatory providers. Such uncertainty could negatively affect our operations and use of our services, require us to change or adjust our platforms and could result in changes to our operations or business model and may incur significant expenses should we have to change our model.
69
  
Anti-Corruption and Sanctions
 
We are subject to laws and regulations of the jurisdictions in which we operate, including the United States, United Kingdom, EU and Israel, that govern or restrict our business and activities in certain countries and with certain persons, including the economic sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Control, and the export control laws administered by the U.S. Commerce Department’s Bureau of Industry and Security and the U.S. State Department’s Directorate of Defense Trade Controls. See “Risk Factors-Risks Relating to our Business and Industry-We are subject to governmental sanctions and export controls that may subject us to liability if we are not in full compliance with applicable economic sanctions and export control laws.”

We are subject to laws and regulations related to payments which are complex and vary across different jurisdictions. We are also subject to payment card association operating rules, certification requirements, and rules governing electronic funds transfers, including the PCI DSS, which could change or be reinterpreted to make it more difficult for us to comply. Any failure to comply with these rules or requirements may subject us to higher transaction fees, fines, penalties, damages, and civil liability, and may result in the loss of our ability to accept credit and debit card payments. Depending on how our platforms evolve, we may be subject to additional laws in other jurisdictions across the world.
 
Additionally, we are subject to anti-corruption, anti-bribery, anti-money laundering and similar laws, such as the FCPA, U.S. domestic bribery statute contained in 18 U.S.C. 201, U.S. Travel Act, the USA PATRIOT Act, the U.K. Bribery Act 2010, Chapter 9 (sub-chapter 5) of the Israeli Penal Law, 1977, the Israeli Prohibition on Money Laundering Law-2000 and other applicable laws in the jurisdictions in which we operate. Historically, technology companies have been the target of FCPA and other anti-corruption investigations and penalties. See “Risk Factors-Risks Relating to our Business and Industry-We are subject to anti-corruption, anti-bribery, anti-money laundering and similar laws, and non-compliance with such laws can subject us to criminal penalties or significant fines and harm our business and reputation.”
 
Further, we are currently subject to a variety of laws and regulations related specifically to payment processing, including those governing cross-border and domestic money transmission, gift cards and other prepaid access instruments, electronic funds transfers, foreign exchange, counter-terrorist financing, banking and import and export restrictions.
 
Concern about the use of e-commerce platforms for illegal conduct, such as money laundering or to support terrorist activities, may in the future result in legislation or other governmental action that could require changes to our platforms or impose additional compliance burdens and costs on us. See “Risk Factors-Risks Related to our Business and Industry-Changes in laws and regulations related to the internet or changes in the internet infrastructure itself may diminish the demand for our platforms and services, and could harm our business.”
 
Depending on how our platform evolves, we may become subject to additional laws in the United States, the United Kingdom, the EU, Israel and elsewhere.

Environmental, Health, and Safety (EHS)

We are subject to laws and regulations regarding protection of the environment as well as worker health and safety. Certain environmental laws may impose liability regardless of knowledge, fault, or legality of the action at the time taken. There are also increasing expectations regarding product stewardship, including end-of-life considerations, and we may become subject to such laws due to our role as merchant of record.
 
Depending on how our platforms evolve, we may become subject to additional laws on these or other matters in the United States, the United Kingdom, the EU, Israel and elsewhere.
70

Product liability & product safety

Our business and operations will increasingly be subject to laws and regulations regarding product liability and safety associated with placing goods in the market, notably in the EU and United Kingdom. Recent and upcoming developments in such laws and regulations are likely to increase the compliance burden and risks on our business, and to require us to make changes to the way in which we operate.

For example, a new EU Product Safety Regulation, which will apply beginning as of December 13, 2024, will extend the EU’s product safety regime to additional parties including providers of certain platforms and fulfilment services, in addition to imposing greater compliance obligations including information provision requirements and requirements to designate responsible persons and facilitate or implement corrective measures such as product recalls. Specific product safety and liability laws and regulations also apply or will or are expected to take effect soon, in relation to certain types of products. For example, the pending EU Toy Safety Regulation, is likely to result in more stringent guidelines for the manufacturing, labeling, and distribution of toys including the introduction of digital product passports. In the UK, additional product safety regulatory developments may lead to changes to the current product liability regime.

Depending on how such new laws and regulations are implemented, evolve, and are enforced and interpreted, in particular with regards to their applicability over personal importation scenarios, we or the merchants may become subject to additional requirements or limitations as well as the extent to which we are successful in adapting our business and operations to comply with such laws and regulations, we could be subject to regulatory action such as investigations and penalties, actions from consumers resulting in damages including by way of collective redress mechanisms, and other negative legal, regulatory and reputational consequences.

C.
    Organizational Structure

The following sets forth our key subsidiaries as of the date of this Annual Report. All ownership is 100%. 

•
Global-e online Pte Ltd (Singapore) 
   
•
Globale UK Limited (England) 
   
•
Crossborder Global Apparel and Equipment Trading L.L.C (UAE)
   
•
Crossborder Global Apparel and Equipment Trading L.L.C (DMCC Branch) (UAE)
   
•
Global-e Middle East FZCO Dubai Branch (UAE, Jebel Ali Free Zone)
   
•
Global-e Middle East FZCO (DAFZA) (UAE, Dubai Airport Free Zone)
   
•
E Commerce Globale Middle East FZCO (UAE, Dubai Commercity Free Zone)
   
•
Global-e Canada e-commerce Ltd. (Canada)
   
•
Global-e CH AG (Switzerland)
   
•
Global-e NL B.V (Netherlands)
   
•
Global-e Japan KK (Japan)

71

•
Global-e France SAS (France)
   
•
Olami E-Commerce Solutions Ireland Limited (Ireland)
   
•
Global-e Australia Pty Ltd. (Australia) 
   
•
Global-e Spain S.L (Spain)
   
•
Global-e HK Limited (Hong Kong) 
   
•
Global-e (Beijing) Technology Co. Ltd. (China)
   
•
Global-e US Inc. (Delaware, USA).
   
•
Global-e Panama Inc. (Panama, Colon Free Zone) 
   
•
Global-e Solutions Ltd. (Israel)
   
•
Global-e South Africa (PTY) Ltd. (South Africa)
   
•
Global-e Solutions Korea Ltd. (Korea)
   
•
Crossborder Solutions For E- Commerce Ltd. (Egypt)*
   
•
International E-commerce Solutions Morocco Ltd. (Morocco)
   
•
Flow Commerce Inc. (Delaware, USA) 
   
•
Flow Commerce Limited (Ireland) 
   
•
Flow Commerce Australia Pty Ltd. (Australia)
   
•
Flow Commerce Canada Inc. (Canada)
   
•
Flow Trading Shanghai Company Limited (China)
   
•
Flow Commerce UK LTD (England) 
   
•
Borderfree Inc. (US)
   
•
Pitney Bowes Payco US Inc. (US)
   
•
Borderfree Research and Development (Israel)
   
•
Pitney Bowes PayCo Holdings Limited (Ireland)

72

•
Borderfree UK Limited (England)
   
•
Borderfree Payco Australia PTY Ltd. (Australia)
   
•
Borderfree PayCo Canada Ltd. (Canada)
   
•
Borderfree PayCo Japan KK (Japan)
   
•
Borderfree PayCo Singapore Pte. Ltd. (Singapore)
   
•
Borderfree PayCo Switzerland GmbH (Switzerland)
   
•
Pitney Bowes PayCo UK Limited (England)

* Less than 1% of the ownership rights is held by a director, due to local laws

D.
Property, Plants and Equipment

We are headquartered in Petah-Tikva, Israel, where we occupy approximately 83,312 square feet of office space pursuant to a lease that expires on September 1, 2027 (with automatically renew for an additional 5 years). We currently lease additional office space in Israel, the UK and the U.S., and we are party to agreements whereby we have access to and the right to use certain office space in the U.S., France, Ireland Australia, Japan, Singapore and the United Arab Emirates. We do not own any real property. We evaluate, based on our growth, the need to procure additional space as we continue to add employees, expand geographically and expand our work spaces. We believe that our facilities are adequate to meet our needs for the immediate future, and that, should it be needed, suitable additional space will be available to accommodate any such expansion of our operations.
 
Item 4A. Unresolved Staff Comments
 
None.
 
Item 5. Operating and Financial Review and Prospects
 
You should read the following discussion together with “Selected Consolidated Financial Data” and the consolidated financial statements and related notes included elsewhere in this Annual Report. This discussion contains forward-looking statements regarding industry outlook and our expectations regarding our future performance, planned investments in our expansion into additional geographies and brands, research and development, sales and marketing and general and administrative functions, liquidity and capital resources, as well as other non-historical statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in “Risk Factors” and “Special Note Regarding Forward-Looking Statements.” Our actual results may differ materially from those contained in or implied by any forward-looking statements.
 
Certain information called for by this Item 5, including a discussion of the year ended December 31, 2021 compared to the year ended December 31, 2022 has been reported previously in our Annual Report on Form 20-F for the fiscal year ended December 31, 2022 under Item 5. “Operating and Financial Review and Prospects”, filed with the SEC on March 31, 2023.

Overview
 
Our platforms were purpose-built for international shoppers to buy seamlessly online and for merchants to sell from, and to, anywhere in the world, while reflecting the localization of the shopper’s experience to make international transactions as seamless as domestic ones.

We increase the conversion of international traffic into sales by removing much of the complexity associated with international e-commerce. Our platforms provide mission-critical, integrated solutions that create a localized and frictionless shopper experience and are simple to manage, flexible to adjust and smart in local market insights and best practices. The vast capabilities of our end-to-end platforms include interaction with shoppers in their native languages, market-adjusted pricing, payment options tailored to local market preferences, compliance with local consumer regulations and requirements such as customs duties and taxes, shipping services, after-sales support and returns management. These elements are unified under our platforms to enhance the shopper experience and enable merchants to capture the global e-commerce opportunity.
 
We aspire to become the merchants’ trusted partner for international sales. The better the outcomes for merchants and the more revenue and growth they achieve, the greater our own revenue and growth. We believe this alignment of interests with merchants is core to our long-term success. This is evidenced by our Gross Dollar Retention Rate, which was over 97% in 2023, and our Net Dollar Retention Rate, which was 127% during the same period.
73
  
Our Business Model
 
We have an attractive volume-based revenue model, driven by shopper order activity on our merchants’ websites. As a result, our revenues, which are generated from the fees charged for the use of our integrated platforms solution and provision of fulfillment services, are closely correlated with the level of GMV (as defined under “-Key Performance Indicators and Other Operating Metrics”) that flows through our platform. We offer a fully integrated platform solution to merchants and derive revenues by charging fees that vary depending on the transaction volume processed, outbound countries and destination markets, level of customer service provided and shipping options, among other variables.
 
Service fees revenue is generated as a percentage of the transaction value that flows through our platform. Fulfillment services revenue is generated through our offerings of shipping and handling. We mandatorily bundle components of our integrated platform solution that we believe are essential to achieving improved sales conversion of our merchants’ international traffic. Our fulfillment services are offered on an optional basis, and thus merchants may choose to utilize or cease utilizing our fulfillment services, either in whole or for select markets, at any time and from time to time. Many merchants use our fulfillment services alongside our integrated platform solution due to convenience and competitive pricing achieved based on our economies of scale, while some merchants choose to use our integrated platform solution on a standalone basis. Service fees revenue generated from the use of our integrated platform solution on a standalone basis has increased over time, equaling $8.4 million (or 8.7% of service fees revenue), $16.5 million (or 9.1% of service fees revenues) and $44.5 million (or 17% of service fees revenue) for the years ended December 31, 2021, 2022 and 2023, respectively. The increase in standalone basis revenues as a percentage of service fees revenues is mainly attributed to the development of our multi-local offering for which we typically do not provide fulfillment services.
 
Over and above the revenues generated, we view shopper traffic and GMV as critical to our success because they generate valuable data, further fueling our Smart Insights. These data-driven insights are an integral part of the integrated solutions we provide to our merchants and a key driver in the growth of their global revenues. During the year ended December 31, 2023, shoppers that visited e-commerce websites powered by our platforms generated approximately 18 million transactions which translated to $569.9 million of revenue.
 
An important component of our revenue growth is the retention and expansion of our existing merchant base. Our revenue model is driven by the ability to retain and grow our business with  existing merchants and attract new merchants from new geographies, segments and verticals. Revenue from our existing merchant base has grown significantly over time as our merchants’ global revenues have grown, the volume of transactions that our merchants process through our platforms has increased and we have expanded to additional geographic corridors. The revenue growth from our existing merchants that continue to process transactions on the Global-e platforms has historically exceeded any lost revenue from merchants that discontinued their use of our platform. We measure the revenue growth from our existing merchant base using Net Dollar Retention Rate, and we measure the lost revenue from merchants that discontinue their use using Gross Dollar Retention Rate.
   
Our existing merchant base is critical to our success, generating approximately 77% and 89% of our GMV in the year ended December 31, 2022 and 2023, respectively. Our Net Dollar Retention Rate for the years ended December 31, 2022 and 2023 was 130% and 127%, respectively. Our high Net Dollar Retention Rate is driven both by strong retention and by the growth of our merchants’ transaction volumes processed on our platforms. We believe this highlights the mission-critical nature of our platforms for merchants that continue to grow with us over time.
74
 
As of December 31, 2023, we had a diversified base of 1,256 merchants using our enterprise platforms, which translates to an annual increase of 21.2% from 1,036 merchants and of 91.2% from 657 merchants as of December 31, 2022 and December 31, 2021, respectively. These merchants range from globally recognized retailers to small, emerging brands located across more than 30 countries. No single merchant represents more than 6% of total GMV for the years ended December 31, 2022 and 2023. In addition, thousands of merchants have onboarded and are using Shopify Markets Pro as of December 31, 2023.

Our significant scale and growth mean we also enjoy increasing geographic diversification in terms of both “outbound” sales, which term refers to sales from the merchant’s country of origin, and “destination market” sales, which term refers to sales made to shoppers in various markets. The United Kingdom has historically been our largest outbound market. However, over the last few years outbound sales from the United Kingdom as a percentage of total revenue have been decreasing as we developed additional outbound markets, namely the United States and the EU. For the year ended December 31, 2023, the United States represented 50% of our revenues, with the United Kingdom, the EU, Israel, and other territories (APAC and Middle East) representing 30%, 16%, 0.3%, and 3%, respectively. We expect to continue attracting new merchants in diverse geographies, including countries in which we have existing operations as well as new markets. For example, we continued to develop our presence in APAC, which we believe represents a significant opportunity. Of the 1,256 merchants served on our enterprise platforms as of December 31, 2023, 44% were located in North America, while 34% and 16% were located in the United Kingdom and Europe, respectively, and 6% were located in other geographies. With regards to the destination markets from which shoppers make purchases, Canada, the US and the UK represented 12%, 10% and 10% of our total revenue for the year ended December 31, 2023, respectively, no other destination market represented more than 10% of our total revenue for the year ended December 31, 2023.

In addition to retaining and growing our existing merchant base, we are able to efficiently acquire new merchants. We have developed an effective go-to-market strategy leveraging a dedicated team of sales executives. We also plan to continue leveraging our mutually beneficial channel partnerships, which broaden our merchant base and generate significant leads for our sales team. As our scale grows, so does our own brand equity, which leads to more inbound prospects as well as stronger word-of-mouth-based sales whereby an existing Global-e merchant recommends our solution to other players in the market. We view our ability to efficiently acquire merchants at scale as a differentiated competitive advantage.

Key Performance Indicators and Other Operating Metrics
 
Key Performance Indicators
 
We review the following indicators to measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions. Increases or decreases in our key performance indicators may not correspond with increases or decreases in our revenue.
 
The following table summarizes the key performance indicators that we use to evaluate our business for the years ended December 31, 2021, 2022 and 2023.
  
 
  
Year Ended December 31,
  
($ in millions)
  
2021
    
2022
    
2023
  
Gross Merchandise Value
    
1,449
      
2,450
      
3,557
  
Net Dollar Retention Rate
    
152
%
    
130
%
    
127
%
Revenue
    
245.3
      
409.0
      
569.9
  
Non-GAAP Gross Profit
    
91.4
      
167.9
      
244.8
  
Non-GAAP Gross Margin
    
37.3
%
    
41.1
%
    
42.9
%
 
                        
Adjusted EBITDA
    
32.4
      
48.7
      
92.7
  
Adjusted EBITDA Margin
    
13.2
%
    
11.9
%
    
16.3
%

75
Key Profit GAAP Figures

   
Year Ended December 31,
  
($ in millions)
  
2021
    
2022
    
2023
  
Gross profit
    
91.4
      
158.2
      
233.6
  
Operating profit (loss)
    
(65.7
)
    
(189.3
)
    
(137.1
)
Net profit (loss)
    
(74.9
)
    
(195.4
)
    
(133.8
)

Gross Merchandise Value. We derive a substantial part of our revenue from fees we charge for the use of our integrated platforms solutions and fulfillment services. These fees are generally correlated with the total value of transactions processed through our platforms. We assess the growth in transaction volume using a metric we refer to as Gross Merchandise Value (“GMV”) which is defined as the combined amount we collect from the shopper and the merchant for all components of a given transaction, including products, duties and taxes and shipping. GMV does not represent revenue earned by us; however, the GMV processed through our platforms is an indicator of the volume of transactions processed through our platforms by our merchants. 
 (GMV, USD in millions)
  
Net Dollar Retention Rate. We assess our performance in retaining and expanding relationships with our existing merchant base using a metric we refer to as Net Dollar Retention Rate, which compares our GMV from the same set of merchants across comparable periods. Net Dollar Retention Rate for a given period is calculated by dividing the GMV in that period by the GMV in the comparable period in the prior year, in each case, from merchants that processed transactions on our platforms in the earlier of the two periods. Our Net Dollar Retention Rate therefore includes the effect on GMV of any merchant renewals, expansion, contraction and churn but excludes the effect of revenue from merchants that contributed to our GMV in the current period but not in the earlier period. A Net Dollar Retention Rate greater than 100% for a given period implies overall growth in GMV from merchants that were already processing transactions on our platforms prior to that period. Our Net Dollar Retention in 2023 excludes Borderfree Inc. and affiliated companies (“Borderfree”) that were acquired in 2022, as it is based on annual GMV figures, and Borderfree’s financials were consolidated into the Company’s financials in July 2022; therefore, GMV was not recorded for the full year in 2022.

Our Net Dollar Retention Rate has typically been over 125% since 2018, and for the years ended December 31, 2021, 2022 and 2023 was 152%, 130% and 127%, respectively. Our Net Dollar Retention Rate may fluctuate in future periods due to a number of factors, including the expansion of our revenue base, the level of penetration within our merchant base, enhancements made to our existing platforms and our ability to retain our existing merchant base.
 
Revenue. We generate revenues by charging merchants fees for the use of our end-to-end global e-commerce solution. Our revenues are closely correlated with the level of GMV that flows through our platforms. We have experienced rapid revenue growth in recent years, growing 66.8% and 39.3% in the years ended December 31, 2022 and 2023, respectively.
76
 
Non-GAAP Gross Profit and Non-GAAP Gross Margin. Our cost of revenue consists primarily of costs associated with payment acquiring fees, shipping and logistic costs, hosting, amortization of acquired intangibles, operational merchant support expenses, such as customer service and allocated overhead. Our Non-GAAP gross profit is defined as gross profit adjusted for amortization of acquired intangibles. In recent years, we have consistently increased our gross profit as a percentage of revenue, or our gross margin, mainly due to economies of scale resulting from growth in GMV and revenue, as well as efficiencies stemming from our optimization. For the years ended December 31, 2021, 2022 and 2023, our Non-GAAP gross margin, which is calculated as Non-GAAP gross profit divided by revenues, was 37.3%, 41.1% and 42.9%, respectively. Our GAAP gross margin for the respective periods was 37.3%, 38.7% and 41.0%.
 
Adjusted EBITDA. Adjusted EBITDA is a non-GAAP financial metric and defined as operating profit (loss) adjusted for depreciation and amortization, stock-based compensation expenses, commercial agreements amortization, amortization of acquired intangibles, merger related contingent consideration, acquisition related expenses and secondary offering costs. Our Adjusted EBITDA grew from $48.7 million for the year ended December 31, 2022 to $92.7 million for the year ended December 31, 2023. This increase was primarily driven by growth in revenues and gross margin, as well as operating leverage.
 
Other Operating Metrics
 
Gross Dollar Retention Rate. In addition to tracking our key performance indicators and Non-GAAP financial measures above, we also periodically measure our Gross Dollar Retention Rate to further assess our performance in retaining our existing customer base. Gross Dollar Retention Rate measures revenue lost from merchants that discontinue their use of our platform, but does not reflect the benefit of customer expansion, contraction or additions. Gross Dollar Retention Rate may therefore never exceed 100%. We believe our high gross retention rates demonstrate that we serve a vital role for our merchants, as the vast majority of our merchants continue to use our platform.
 
To calculate the Gross Dollar Retention Rate for a particular quarter, we first calculate the total seasonality adjusted annualized GMV for that quarter. We then calculate the value of GMV from any merchants who discontinued their use of our platform during that quarter, or churned, based on their total GMV from the four quarters preceding such quarter, which we refer to as churned GMV. We then divide (a) the churned GMV by (b) the total seasonality adjusted annualized GMV to calculate the percentage churn for that quarter. Gross Dollar Retention Rate for a particular year is calculated by aggregating the percentage churn of the four quarters within that year and subtracting the result from 100%.
 
Our Gross Dollar Retention Rate was 97% in 2023.

Key Factors Affecting Our Performance
 
We believe our future performance will continue to depend on many factors, including the following:

•
 
Continued Growth in Global E-commerce: We expect to benefit from the continuation of several long-term secular market trends, including growth in global e-commerce over time, the continued rise in the influence of social media on shopper spending habits worldwide, the increasing relevance of D2C, as well as increased cross-border e-commerce. The rise in complexity of global trade, stemming from constantly changing regulations and technology, serves as an additional tailwind by driving merchant demand for third-party solutions with the relevant expertise and infrastructure, such as Global-e. 

•
 
Existing Merchant Retention and Expansion: We care deeply about the merchants we serve. Our commitment to their success, we believe, increases retention and likelihood of expanding their activity on our platforms. Supporting our merchants begins with enhancing both the shopper and the merchant experience; as such, we focus our efforts on developing products and functionality to ease the complexity they face when engaging in global e-commerce. We provide customer support services to their shoppers, take full responsibility for processing duties and taxes, employ dedicated teams to optimize their offering and increase their sales conversion and continue to take steps to boost retention. Our effectiveness in retaining and expanding our existing merchants’ sales is a critical component of our revenue growth and operating results.
 
77
•
 
New Merchant Acquisition: Our growth depends in part on our ability to attract new merchants and add their GMV to our platforms. Over the past years, we have experienced substantial expansion in the number of merchants served by our enterprise platforms, which totaled 1,256 and 1,036 as of December 31, 2023 and December 31, 2022, respectively. In addition, thousands of merchants have already onboarded and are using Shopify Markets Pro as of December 31, 2023. New merchant acquisition is a key to scaling our platform. We have historically achieved efficient payback periods driven by a combination of direct sales, inbound inquiries, word-of-mouth referrals and channel partnerships. Continuing to add merchants to our platforms in an efficient manner is a key component of our ability to grow our revenues.

•
 
Successful Expansion to Additional Geographies: We believe our platforms can compete successfully around the world, as they enable merchants, regardless of geography, to expand their market footprint to more shoppers by selling globally. In order to successfully acquire merchants across geographies, Global-e has local sales teams in the United States, the United Kingdom, the EU, Japan and Australia as part of our efforts to expand our business within the APAC region. We plan to add local sales and additional required support in further select international markets over time to support our growth.

•
 
Investing to Scale Our Platforms and Merchant Base: We have made, and will continue to make, significant investments in our platforms to retain and scale our merchant base and enhance their experiences. In the years ended December 31, 2021, 2022 and 2023, excluding stock-based compensation, we spent $25.6 million (or 10.4% of revenue), $59.2 million (or 14.5% of revenue) and $71.3 million (or 12.5% of revenue), respectively, on research and development. These amounts represent year over year increases of 131.7% and 20.4% in the years ended December 31, 2022 and 2023, respectively. The decrease of research and development spend as a percentage of revenue in 2023 is attributed to operational leverage post the assimilation of Flow and Borderfree. In the years ended December 31, 2021, 2022 and 2023, excluding the amortization of the Shopify warrants related asset, amortization of acquired intangibles and stock-based compensation, we spent $19.1 million (or 7.8% of revenue), $35.1 million (or 8.6% of revenue) and $53.1 million (or 9.3% of revenue), respectively, on sales and marketing. These amounts represent year over year increases of 83.7% and 51.3% in the years ended December 31, 2022 and 2023, respectively. Overall research and development expenses were $29.8 million, $81.2 million and $97.6 million, in the years ended December 31, 2021, 2022 and 2023, respectively. Overall sales and marketing expenses were, $104.7 million, $206.1 million and $217.0 million in the years ended December 31, 2021, 2022 and 2023, respectively. We plan to continue to invest significantly in go-to-market and innovation to address the needs of merchants. We also plan to increase our headcount. The resources we commit to, and the investments we make in, our platforms, are designed to retain and expand the sales of our merchants, expand into new geographies and acquire new merchants, fuel our “Smart Insights” data set, develop value added services and improve our operating results in the long term.

•
 
Revenue Seasonality: Our revenue is highly correlated with the level of GMV that our merchants generate through our platforms. Our merchants typically process additional GMV each year in the fourth quarter, which includes Black Friday, Cyber Monday and the holiday season, driven by an uptick in e-commerce sales. As a result, we historically have generated higher revenues in the fourth quarter than in other quarters. In the years ended December 31, 2021, 2022 and 2023, fourth quarter GMV represented approximately 35%, 34% and 33%, respectively, of our total GMV. We believe that similar seasonality trends will affect our future quarterly performance. 

78
•
 
Increased Efficiency from Economies of Scale: As our GMV scales, we can achieve margin expansion due to operating leverage. In addition, our larger size allows us to negotiate better terms with our suppliers allowing us to further optimize our cost base. As the number of merchants on our platforms grows, we also generate increasing amounts of data which in turn enable smarter decisions and optimizations that further increase efficiency. 
 
  
•
 
Global macro-economic: We operate alongside continued recessionary concerns and a volatile macro-economic and geo-political situation in many of the world’s largest economies. Inflationary pressures and rising interest rates in key markets may influence consumer sentiment and have a negative effect on consumer spend. Currency exchange rate fluctuations may impact our revenues and expenses and hence, our operating results. Global events have created extreme volatility in the global capital markets and is expected to have further global economic consequences, including disruptions to the global supply chain and energy markets, which may adversely affect us or the third parties on whom we rely to conduct our business and may also have a negative effect on consumer spend. 
 
Components of Our Results of Operations
 
Revenue. Our revenue is comprised of service fees and fulfillment services fees.
 
Service fees revenue is generated as a percentage of the transaction value that flows through our platforms. Fulfillment services revenue is generated through the Company’s offerings of shipping and handling services. Revenue is recognized at the time the related performance obligation is satisfied by transferring the promised product or delivery of service. The amount of revenue recognized reflects the consideration that the Company expects to receive in exchange for these products or services.
 
Cost of revenue. Cost of revenue primarily consists of payment acquiring fees, fulfillment costs, including shipping and logistic costs, hosting, operational merchant support expenses, such as customer service, payroll, amortization of acquired intangibles and allocated overhead. Overhead is allocated to cost of revenue based on applicable headcount. We expect cost of revenue to increase in absolute dollars in future periods due to our expected expansion. The level and timing of all these items could fluctuate and affect our cost of revenue in the future.
 
Gross profit and gross margin. Our gross profit and gross margin may fluctuate from period to period. Such fluctuations may be influenced by our revenue, including the seasonality of our revenues, revenues mix, changes in cost of goods sold, our continued investments in our platforms, our expected expansion into additional geographies and the growth of our merchant base.
 
Research and development expenses. Research and development expenses include personnel-related expenses, including merger related contingent consideration, associated with development personnel responsible for the design, development and testing of Company products, other development-related expenses, including cost of development environments and tools, and allocated overhead. Research and development costs are expensed as incurred. We expect these costs to increase as we continue to hire new employees in order to support the growing scale and feature set of our platforms. We believe continued investments in research and development are important to attain our strategic objectives and maintain our market leadership position. As such, we expect research and development costs to increase in absolute dollars, but this expense may potentially decrease as a percentage of total revenue over time.
 
Sales and marketing expenses. Sales and marketing expenses primarily consist of the amortization of the Shopify related commercial assets, costs of our sales, marketing and merchant success personnel, sales commissions, marketing activities, merchant acquisition costs, amortization of acquisition related intangible assets, channel partners fees and allocated overhead. Overhead is allocated to sales and marketing based on applicable headcount. We intend to continue to invest in our sales and marketing capabilities in the future to further increase our brand awareness and to grow our merchant base. We expect these costs to increase as we grow our business. Sales and marketing expense in absolute dollars and as a percentage of total revenue may fluctuate from period-to-period based on total revenue levels and the timing of our investments in our sales and marketing functions as these investments may vary in scope and scale over future periods. As a result of our entry into the Shopify Agreements and the related issuance of warrants to purchase ordinary shares to Shopify, we recognize a commercial agreement asset upon the vesting of the warrants, and we amortize such asset over time.
79

General and administrative expenses. General and administrative expenses primarily consist of costs of personnel-related expenses including merger related contingent consideration, associated primarily with our finance, legal, human resources and other operational and administrative functions, external professional services and allocated overhead. We expect that our general and administrative expenses will increase in absolute dollars for the foreseeable future as we increase the size of our general and administrative function to support the growth of our business.
 
Financial expenses, net. Financial expenses, net primarily include interest income (expense), currency conversion and other bank-related fees and income and gains (losses) from foreign exchange fluctuations.
 
Income taxes. Income taxes consist primarily of deferred taxes and income taxes related to the jurisdictions in which we conduct business. Our effective tax rate is affected by tax rates in jurisdictions and the relative amounts of income we earn in those jurisdictions, changes in the valuation of our deferred tax assets and liabilities, applicability of any valuation allowances, and changes in tax laws in jurisdictions in which we operate. Our net operating loss carry forwards for Israeli tax purposes amounted to approximately $301 million as of December 31, 2023.
 
We expect to realize net losses in 2024 as a result of the significant increase in sales and marketing expenses in connection with the vesting of the warrants issued to Shopify. 
 
A.
    Operating Results

The following tables set forth our results of operations in U.S. dollars and as a percentage of revenue for the periods indicated:

 
 
  
Year Ended
December 31,
  
 
  
2021
    
2022
    
2023
  
(in thousands)
                  
Revenue
    
245,274
      
409,049
      
569,946
  
Cost of revenue
    
153,841
      
250,871
      
336,343
  
Gross profit
    
91,433
      
158,178
      
233,603
  
Operating expenses:
                        
Research and development
    
29,761
      
81,206
      
97,568
  
Sales and marketing
    
104,687
      
206,100
      
217,035
  
General and administrative
    
22,643
      
60,196
      
56,059
  
Total operating expenses
    
157,091
      
347,502
      
370,662
  
Operating profit (loss)
    
(65,658
)
    
(189,324
)
    
(137,059
)
Financial expenses (income), net
    
8,570
      
12,093
      
(5,262
)
Profit (loss) before income taxes
    
(74,228
)
    
(201,417
)
    
(131,797
)
Income taxes (benefit) expenses
    
705
      
(6,012
)
    
2008
  
Net profit (loss)
    
(74,933
)
    
(195,405
)
    
(133,805
)

80

 
 
  
Year ended
December 31,
  
 
  
2021
    
2022
    
2023
  
(as a % of revenue)
                  
Revenue
    
100
      
100
      
100
  
Cost of revenue
    
62.7
      
61.3
      
59.0
  
Gross profit
    
37.3
      
38.7
      
41.0
  
Operating expenses:
                        
Research and development
    
12.1
      
19.9
      
17.1
  
Sales and marketing
    
42.7
      
50.4
      
38.1
  
General and administrative
    
9.2
      
14.7
      
9.8
  
Total operating expenses
    
64.0
      
85.0
      
65.0
  
Operating profit (loss)
    
(26.8
)
    
(46.3
)
    
(24.0
)
Financial expenses, net
    
3.5
      
3.0
      
(0.9
)
Profit (loss) before income taxes
    
(30.3
)
    
(49.2
)
    
(23.1
)
Income taxes
    
0.3
      
(1.5
)
    
0.4
  
Net profit (loss)
    
(30.6
)
    
(47.8
)
    
(23.5
)

Reconciliation to Non-GAAP Gross Profit

 
  
Year Ended December 31,
  
 
  
2021
    
2022
    
2023
  
Gross Profit
    
91,433
      
158,178
      
233,603
  
Amortization of acquired intangibles included in cost of revenue
    
-
      
9,743
      
11,183
  
Non-GAAP Gross Profit
    
91,433
      
167,921
      
244,786
  
Revenues
    
245,274
      
409,049
      
569,946
  
Non-GAAP Gross Margin
    
37.3
%
    
41.1
%
    
42.9
%

81

Reconciliation to Adjusted EBITDA

 
  
Year Ended December 31,
  
 
  
2021
    
2022
    
2023
  
 
      
Operating profit (loss)
    
(65,658
 )
    
(189,324
)
    
(137,059
)
1 Stock-based compensation:
                        
Cost of revenue
    
85
      
262
      
639
  
Research and development
    
4,192
      
21,970
      
26,266
  
Selling and marketing
    
1,287
      
3,877
      
4,259
  
General and administrative
    
6,437
      
12,800
      
13,796
  
Total stock-based compensation
    
12,001
      
38,909
      
44,960
  
 
                        
2 Depreciation and amortization
    
331
      
1,585
      
1,788
  
 
                        
3 Secondary offering costs
    
879
      
-
      
-
  
 
                        
4 Commercial agreement asset amortization
    
84,298
      
149,047
      
150,451
  
 
                        
5 Amortization of acquired intangibles
    
-
      
27,833
      
20,434
  
 
                        
6 Merger related contingent consideration
    
-
      
12,161
      
12,161
  
 
                        
7 Acquisition related expenses
    
573
      
8,492
      
-
  
 
                        
Adjusted EBITDA
    
32,424
      
48,703
      
92,735