Global-E Online (NasdaqGS:GLBE) Q3 2025 Earnings Call November 19, 2025 08:00 AM ET Speaker1Welcome to the Global-e Third Quarter 2025 Earnings Conference Call. This call is being simultaneously webcast on the company's website in the Investor section under News and Events. For opening remarks and introduction, I will now turn the call over to Alan Katz, Global-e's Head of Investor Relations. Please go ahead.Speaker0Thank you, and good morning, everyone. With me on the call today are Amir Schlachet, Co-foun ...

Financial Data and Key Metrics Changes - Third-quarter net sales decreased by 1.5% compared to the previous year, slightly better than year-to-date performance but about 60 basis points softer than Q2 [35] - GAAP EPS for Q3 was $1.51, down from $1.85 a year ago, while adjusted EPS was $1.78, approximately 4% lower than the previous year [40] - Gross margin rate for Q3 was 28.2%, about 10 basis points lower than last year, with pressures from higher markdowns offset by lower inventory shrink [38][39] Business Line Data and Key Metrics Changes - Comparable sales in discretionary categories like home and apparel were down 2.7%, while food and beverage saw growth, particularly in beverages, which were up nearly 7% [26][27] - Digital comparable sales grew by 2.4%, driven by over 35% growth in same-day delivery [26] - The FUN 101 category delivered strong performance, with nearly 10% comp growth in toys and double-digit growth in music and video games [26] Market Data and Key Metrics Changes - Consumer sentiment is at a three-year low, with concerns about jobs and affordability impacting spending behavior [28] - The company is experiencing volatility in sales, with net sales close to flat in August and October but down about 4% in September [38] - The company is reaching around 80% of the U.S. population with same-day delivery, with sales growing more than 35% in this segment [21] Company Strategy and Development Direction - The company is focused on three priorities: solidifying design-led merchandising authority, enhancing the shopping experience, and leveraging technology for efficiency [9][10] - Plans for next year include increasing capital expenditures to about $5 billion, which is $1 billion more than the current year, to support store experience and remodel programs [23][45] - The company is committed to making investments that drive growth, particularly in technology and store experience [64] Management's Comments on Operating Environment and Future Outlook - Management acknowledges that the business has not been performing up to its potential and is focused on returning to sustainable growth [6][9] - The company is actively making changes to improve merchandising authority and guest experience, with a strong emphasis on technology [10][48] - Management expresses confidence in the company's direction and the steps being taken to navigate the current challenging environment [46][49] Other Important Information - The company has eliminated approximately 1,800 roles at headquarters, about 8% of its footprint, to enhance agility and decision-making [10] - The company is introducing 20,000 new items into its holiday assortment, twice as many as last year, with over half exclusive to Target [33] Q&A Session Summary Question: Can we rule out a reset of margin during this investment phase? - Management is committed to making the right investments to achieve desired outcomes in merchandising authority and guest experience [51] Question: What are the most urgent gaps and capabilities? - Management is excited about the momentum in categories like FUN 101 and the focus on creating a consistently elevated experience [55] Question: How does the company view the $5 billion CapEx investment? - Investments will focus on areas that drive growth, including new stores, remodels, and technology enhancements [60][64] Question: How is the company addressing the need for change? - Management emphasizes the importance of driving change to achieve different outcomes and is focused on clear priorities [66]

Financial Data and Key Metrics Changes - The company's revenue for Q3 2025 reached RMB 2.48 billion, with a year-over-year growth rate accelerating from 24% in the previous quarter to 31% this quarter [7][19] - Adjusted gross profit for the quarter was RMB 393 million, representing a year-over-year increase of 28% [9][24] - The adjusted operating profit turned from a loss to a profit, reaching RMB 15.36 million, with an adjusted operating profit margin of 0.6% [9][25] - Adjusted net profit recorded a historical positive profit of RMB 28.73 million for the first time [9] Business Line Data and Key Metrics Changes - Public cloud revenue increased significantly by 49% year-over-year, reaching RMB 1.75 billion [7][10] - Intelligent Computing Cloud business gross billings reached RMB 782 million, with a year-over-year growth of around 122% [7][19] - Revenue from the Xiaomi and Kingsoft ecosystem reached RMB 691 million, increasing by 84% year-over-year, accounting for 28% of total revenue [8][9] Market Data and Key Metrics Changes - The demand for artificial intelligence is driving rapid development in Intelligent Computing Cloud and technological innovation in basic public cloud services [8] - The company is focusing on expanding customer coverage and cross-selling between Intelligent Computing Cloud and Basic Cloud services [10][11] Company Strategy and Development Direction - The company aims to leverage the integration of generative artificial intelligence and cloud services to enhance its offerings [7][8] - The strategic focus includes building a solid foundation through the Xiaomi and Kingsoft ecosystem and investing in intelligent computing infrastructure [18] - The company is targeting advantageous verticals and geographical regions to build core competitiveness for future growth [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth of AI business demand and the potential for higher margins as inference demand increases [35][36] - The company plans to continue investing in infrastructure and enhancing technology to meet the growing demands of AI applications [26] Other Important Information - The company successfully raised HKD 2.8 billion in risk equity financing, with allocations for AI infrastructure and operational needs [21] - Capital expenditures for the quarter were RMB 2,787.8 million, primarily for intelligent cloud infrastructure investment [26] Q&A Session Summary Question: Key drivers of AI revenue growth in Q3 and margin trends - Management indicated that AI revenue growth was driven by the recognition of previously delayed revenues and the transition from training to inference demand [33][34] - Future inference demand is expected to exhibit a higher margin profile compared to current training demand [35] Question: Revenue outlook for next year and industry application scenarios - Management expressed confidence in subsequent demand growth for AI business and highlighted the rapid growth of robotic companies and API services as key revenue drivers [41][43] Question: Pricing methodology and trends between AI training and inference - Management noted that pricing for inference and training is based on resource usage, with API token services expected to yield better margins [50][51]

Financial Data and Key Metrics Changes - The company's revenue for Q3 2025 reached RMB 2.48 billion, with a year-over-year growth rate accelerating from 24% in the previous quarter to 31% this quarter [7][19] - Adjusted gross profit for the quarter was RMB 393 million, representing a year-over-year increase of 28% [9][24] - The adjusted operating profit turned from a loss to a profit, reaching RMB 15.36 million, with an adjusted operating profit margin of 0.6% [9][25] - Adjusted net profit recorded a historical positive profit of RMB 28.73 million for the first time [9] Business Line Data and Key Metrics Changes - Public cloud revenue increased significantly by 49% year-over-year, reaching RMB 1.75 billion [7][10] - Intelligent computing cloud business gross billings reached RMB 782 million, with a year-over-year growth of approximately 122% [7][19] - Revenue from the Xiaomi and Kingsoft ecosystem reached RMB 691 million, increasing by 84% year-over-year, accounting for 28% of total revenue [8][9] Market Data and Key Metrics Changes - The demand for artificial intelligence is driving rapid development in intelligent computing cloud and technological innovation in basic public cloud services [8][10] - The company is focusing on expanding customer coverage and cross-selling intelligent computing cloud and basic cloud services [10][11] Company Strategy and Development Direction - The company aims to leverage the integration of generative artificial intelligence and cloud services to enhance its product offerings and customer solutions [7][8] - The strategic focus includes investing in infrastructure and refining core products to create long-term value for stakeholders [18][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth of AI business demand and the potential for higher margins as inference demand increases [36][37] - The company is optimistic about fulfilling business cooperation under the Xiaomi and Kingsoft ecosystem and anticipates further increases in quotas next year [8][9] Other Important Information - The company successfully raised HKD 2.8 billion in equity financing, with allocations for AI infrastructure and operational needs [20][21] - Capital expenditures for the quarter were RMB 2.79 billion, primarily for intelligent cloud infrastructure investment [26] Q&A Session Summary Question: What are the key drivers of AI revenue growth in Q3? - Management indicated that the growth was driven by clusters that began recognizing full quarter revenues and some delayed revenue from Q2 [34][35] Question: How does management see the margin trend in the coming quarters? - Management expects inference demand to exhibit a higher margin profile than current training demands, anticipating higher margins in the future [36][37] Question: Could management share the outlook and guidance on revenue for next year? - Management is confident in subsequent demand growth and is currently finalizing the budget process for next year [41][42] Question: How does management view the current market dynamics for procurement versus leasing? - Management stated that both procurement and leasing have their pros and cons, and resource allocation will depend on customer needs [42][43] Question: What is the pricing methodology between AI training and inference? - Management noted that pricing is based on resource usage, with inference services potentially offering better margin ratios [51][52]

Financial Data and Key Metrics Changes - The company's revenue for Q3 2025 reached RMB 2.48 billion, with a year-over-year growth rate accelerating from 24% in the previous quarter to 31% this quarter [5][16] - Adjusted gross profit for the quarter was RMB 393 million, representing a year-over-year increase of 28% [7][19] - The adjusted operating profit turned from a loss to a profit of RMB 15.36 million, with an adjusted operating profit margin of 0.6% [7][21] - Adjusted net profit recorded a historical positive profit of RMB 28.73 million for the first time [7] Business Line Data and Key Metrics Changes - Public cloud revenue increased significantly by 49% year-over-year, reaching RMB 1.75 billion [5][18] - Intelligent computing cloud business gross billings reached RMB 782 million, with a year-over-year growth of approximately 122% [5][16] - Revenue from the Xiaomi and Kingsoft ecosystem reached RMB 691 million, increasing by 84% year-over-year, accounting for 28% of total revenue [6] Market Data and Key Metrics Changes - The demand for artificial intelligence is driving rapid development in intelligent computing cloud and technological innovation in basic public cloud services [6] - The company is focusing on expanding customer coverage and cross-selling intelligent computing cloud and basic cloud services [9] Company Strategy and Development Direction - The company aims to provide stable and efficient integrated training and inference intelligent cloud computing services, positioning itself to capitalize on the growth of AI applications [4][5] - The strategy includes strengthening the control of costs and expenses while investing in intelligent computing infrastructure [7][15] - The company is targeting advantageous verticals and geographical regions to build core competitiveness for future growth [9] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth of AI business demand and the potential for higher margins as inference demand increases [30][32] - The company plans to continue investing in infrastructure and enhancing service stability to meet the growing demand for AI capabilities [22] Other Important Information - The company successfully raised HKD 2.8 billion in equity financing, with allocations for AI infrastructure and operational needs [17] - Capital expenditures for the quarter were RMB 2.79 billion, primarily for intelligent cloud infrastructure investment [22] Q&A Session Summary Question: What are the key drivers of AI revenue growth in Q3? - Management indicated that the growth was driven by clusters that began recognizing full quarter revenues and some delayed revenue from Q2 [29] Question: How does management see the margin trend in the coming quarters? - Management expects inference demand to exhibit a higher margin profile than current training demand, anticipating higher margins in the future [31][32] Question: Could management share the outlook and guidance on revenue for next year? - Management is confident in subsequent demand growth and is currently finalizing the budget process for next year [35] Question: How does management view the current market dynamics for procurement versus leasing? - Management stated that both procurement and leasing have their pros and cons, and resource allocation will depend on customer needs [36][37] Question: What is the pricing methodology between AI training and inference? - Management noted that pricing is based on resource usage, with inference services potentially offering better margin ratios [42]

Financial Data and Key Metrics Changes - For Q3 2025, total revenue reached RMB 1 billion, with a gross margin of 11% and an adjusted net profit of RMB 62.6 million, reflecting a 9% year-over-year increase [4][15] - Non-GAAP net margin expanded to 6.2% from 5% in the same period last year, while shareholders' equity grew to RMB 839.3 million, up from RMB 747.1 million at the end of 2024 [15][16] - Cash position remained healthy, totaling RMB 877.9 million as of the end of Q3 2025 [5][17] Business Line Data and Key Metrics Changes - The company adopted a refined tiered management approach for merchant customers, enhancing service quality and customer experience, which contributed to stable revenue from high-frequency merchant customers [5][6] - Daily delivery volume for individual users grew by 15% from the previous quarter, driven by new service offerings in the FlashEx APP [8][9] Market Data and Key Metrics Changes - The overall order volume demonstrated strong resilience despite external market fluctuations, with an increase in average selling price (ASP) year-over-year [23] - The company is focusing on enhancing collaboration with merchant clients to increase order frequency and improve service quality [22] Company Strategy and Development Direction - FlashEx aims to deepen its core business operations while exploring new service opportunities and enhancing user experience [13][14] - The company is strategically positioned to capture emerging opportunities and drive sustainable long-term growth through refined operations and differentiated business positioning [18] Management's Comments on Operating Environment and Future Outlook - Management noted that the scaling back of subsidies in the food delivery industry is shifting competitive focus towards better service, fostering a more stable market environment [22] - Looking ahead, the company plans to amplify time efficiency advantages and deepen scenario penetration to drive long-term growth [24] Other Important Information - The company has repurchased approximately 1.6 million ADS as of November 18, 2025, demonstrating a commitment to enhancing shareholder value [16] Q&A Session Summary Question: Order volume and ASP trends in 2B and 2C segments - Management indicated that the scaling back of subsidies is fostering a stable market environment, allowing FlashEx to leverage its differentiated value proposition [22] Question: Outlook on future reduction in expense ratio - Management stated that the expense ratio has been gradually declining due to refined operations and efficiency enhancements, with expectations for further optimization in the future [25][27]

Financial Data and Key Metrics Changes - For Q3 2025, total revenue reached RMB 1 billion, with a gross margin of 11% and adjusted net profit of RMB 62.6 million, reflecting a 9% year-over-year increase [4][15] - Non-GAAP net margin expanded to 6.2% from 5% in the same period last year, while shareholders' equity grew to RMB 839.3 million, up from RMB 747.1 million at the end of 2024 [15][16] - Cash and cash equivalents totaled RMB 877.9 million, indicating a healthy financial position [5][17] Business Line Data and Key Metrics Changes - The company adopted a refined tiered management approach for merchant customers, enhancing service quality and customer experience, which is expected to drive stable revenue growth [5][6] - Daily delivery volume for individual users grew by 15% from the previous quarter, driven by new service offerings [8][9] Market Data and Key Metrics Changes - The overall order volume demonstrated strong resilience despite external market fluctuations, with an increase in average selling price (ASP) year-over-year [23] - The company is focusing on high-frequency merchant customers and expanding its reach among small and medium-sized businesses [7][10] Company Strategy and Development Direction - The company aims to enhance its unique on-demand dedicated courier model, focusing on service quality and user experience [4][10] - Strategic initiatives include expanding service categories, optimizing delivery efficiency, and deepening collaboration with enterprise clients [10][12] - The company is exploring new service opportunities and strengthening partnerships to enhance user experience and brand recognition [13][18] Management's Comments on Operating Environment and Future Outlook - Management noted that the scaling back of subsidies in the food delivery industry is shifting competitive focus towards better service, which aligns with the company's value proposition [22] - The outlook for Q4 2025 and 2026 includes amplifying time efficiency advantages and increasing order frequency through collaborative management [24] Other Important Information - The company has repurchased approximately 1.6 million ADS as of November 18, 2025, demonstrating a commitment to enhancing shareholder value [16] - The company is implementing a citywide low-altitude logistic delivery solution, positioning itself as a leader in urban drone delivery systems [11] Q&A Session Summary Question: Order volume and ASP trends in 2B and 2C segments - Management indicated that the scaling back of subsidies is fostering a more stable market environment, allowing the company to leverage its differentiated value proposition [22] Question: Outlook on future reduction in expense ratio - Management stated that the expense ratio has been gradually declining due to refined operations and enhanced efficiency, with expectations for further optimization in the future [25][27]

Financial Data and Key Metrics Changes - For Q3 2025, total revenue reached RMB 1 billion, with a gross margin of 11% and adjusted net profit of RMB 62.6 million, reflecting a 9% year-over-year increase [4][14] - Cash and cash equivalents totaled RMB 877.9 million, indicating a healthy financial position [5][16] - Non-GAAP net margin expanded to 6.2% from 5% year-over-year, while shareholders' equity grew to RMB 839.3 million from RMB 747.1 million [14][15] Business Line Data and Key Metrics Changes - The company adopted a refined tiered management approach for merchant customers, enhancing service quality and customer engagement [5][6] - Daily delivery volume for individual users grew by 15% from the previous quarter, driven by new service offerings [8][9] - The average delivery time improved to 26 minutes, contributing to increased repeat orders and stable writer income [21] Market Data and Key Metrics Changes - The overall order volume demonstrated strong resilience despite external market fluctuations, with an increase in average selling price (ASP) year-over-year [21] - The company is focusing on high-frequency merchant customers and expanding its reach among small and medium-sized businesses [7][8] Company Strategy and Development Direction - The company aims to enhance service capabilities and user experience while exploring new service opportunities [12][10] - FlashEx is positioning itself as a leading on-demand dedicated courier service provider, leveraging technology and operational efficiency to drive growth [11][12] - The strategy includes deepening collaboration with enterprise clients to tap into their private traffic potential [10][23] Management's Comments on Operating Environment and Future Outlook - Management noted that the scaling back of subsidies in the food delivery industry is shifting competitive focus towards better service, fostering a more stable market environment [19][20] - The company plans to continue amplifying time efficiency advantages and increasing order frequency through collaborative management models [22] Other Important Information - The company repurchased approximately 1.6 million ADS as of November 18, 2025, demonstrating commitment to enhancing shareholder value [15] - FlashEx is implementing a citywide low-altitude logistic delivery solution, which is currently in the commercial testing stage [10][11] Q&A Session Summary Question: Could you please share our third-quarter order volume and ASP trends broken down by 2B and 2C segments? - Management indicated that the scaling back of subsidies and regulatory standardization are fostering a stable market environment, allowing FlashEx to leverage its differentiated value proposition [19][20] Question: What is the management's outlook on the trend and potential for future reduction in the company's expense ratio? - Management stated that the overall expense ratio has been on a stable and gradually declining trajectory, with further room for optimization as revenue grows and client structure improves [22][23]

Financial Data and Key Metrics Changes - Total revenue for Q3 2025 rose by 14.2% year-over-year to RMB 35.6 billion [5][32] - Adjusted net profit increased by 26.3% year-over-year to RMB 5 billion, with an adjusted net margin of 14% [5][36] - Operating profit surged by 69.9% year-over-year to RMB 5.3 billion [36] Business Line Data and Key Metrics Changes - Revenue from online marketing services reached RMB 20.1 billion, up 14% year-over-year [14][33] - E-commerce GMV grew by 15.2% year-over-year to RMB 385 billion [18] - Live streaming revenue increased by 2.5% year-over-year to RMB 9.6 billion [26][34] Market Data and Key Metrics Changes - Average Daily Active Users (DAUs) on the Kuaishou app surpassed 416 million, marking the third consecutive quarter of record highs [5][12] - Monthly Active Users (MAUs) reached 731 million [11] Company Strategy and Development Direction - The company continues to advance its AI strategy, focusing on scenario-based applications and innovative use cases [5][30] - Kling AI has been positioned as a key technology for video generation, with a focus on empowering creators and expanding its use cases [8][43] - The company aims to transform its organizational structure and product design to enhance its competitive edge in the AI era [30][37] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth prospects of Kuaishou, emphasizing the importance of AI in driving operational efficiency and business value [36][37] - The company anticipates continued investment in AI technologies to unlock further value across its content and business ecosystems [30][76] Other Important Information - The company declared a special dividend of HKD 2 billion in Q3, reflecting its solid financial position [36] - Total marketing spending from Omni Domain Platform marketing solutions accounted for over 65% of closed-loop marketing spending [15] Q&A Session Summary Question: Competitive landscape of video generation AI and Kling AI's strategy - Management acknowledged the growing competition in the video generation market and emphasized the importance of continuous innovation to meet user needs [40][42] Question: AI-powered business and operational efficiency - Management highlighted the integration of AI across Kuaishou's operations, improving content understanding, generation, and recommendations [48][51] Question: Online marketing services revenue acceleration - Management attributed the growth in online marketing services to increased impressions and higher CPM driven by AI technologies [55][57] Question: CapEx and profit margins related to AI investments - Management expects total CapEx for 2025 to increase in the mid to high double digits year-over-year, driven by investments in AI initiatives [74][76]

Financial Data and Key Metrics Changes - In Q3 2025, Kingsoft's total revenue was RMB 2.419 billion, a year-on-year decrease of 17% but a quarter-on-quarter increase of 5% [6][13] - Revenue from the office software and services business increased by 26% year-on-year and 12% quarter-on-quarter to RMB 1.521 billion [13][14] - Revenue from online games and other businesses decreased by 47% year-on-year and 6% quarter-on-quarter to RMB 898 million [14] - Gross profit decreased by 21% year-on-year but increased by 5% quarter-on-quarter to RMB 1.944 billion, with a gross profit margin decrease of 4% year-on-year [15] - Profit attributable to owners of the parent was RMB 213 million, down from RMB 413 million year-on-year [18] Business Line Data and Key Metrics Changes - WPS individual business revenue reached RMB 899 million, up 11% year-on-year, with global monthly active devices for WPS Office at 669 million, a 9% increase [7][8] - WPS 365 business revenue was RMB 201 million, a significant increase of 17% year-on-year [8] - Revenue for the WPS software business was RMB 391 million, up 15% year-on-year, driven by localization projects and AI-enabled products [9] Market Data and Key Metrics Changes - The online game business saw a decline in revenue primarily due to low contributions from certain existing games, although new games are in development [6][10] - The flagship game Jian Wang 3 Online celebrated its 16th anniversary, with new content updates planned [10] Company Strategy and Development Direction - Kingsoft continues to prioritize AI collaboration and internationalization, aiming to meet the needs of individual users and enterprises [4][12] - The online games business will focus on high-quality content development and global publishing [12] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the sustainability of growth in the office software segment, driven by increased membership and AI product enhancements [24][25] - The company is optimistic about the overseas market potential for WPS Office and 365, particularly in competition with Microsoft [31][32] Other Important Information - As of September 30, 2025, Kingsoft had cash resources of RMB 26 billion, indicating a strong cash position [19] - Research and development costs increased by 4% year-on-year, reflecting higher investment in AI and collaboration products [15][16] Q&A Session Summary Question: Regarding the gaming business, could management elaborate on operational strategies and the update progress of Metal Brick? - Management indicated that they are focusing on long-term upgrades and new content for existing games, with ongoing improvements for Metal Brick [22][23] Question: What are the main drivers behind the accelerated growth in the office business, and will this momentum be sustainable? - Management highlighted three growth factors: personnel growth, AI enhancements, and positive user feedback, indicating confidence in sustainability [24][25] Question: How does the company view opportunities for WPS Office and 365 in international markets? - Management noted strong growth in overseas markets and emphasized their competitive advantages against Microsoft, particularly in mobile and AI capabilities [31][32][33] Question: What is the progress of the AI business and its commercialization pace? - Management stated that the AI business is in early stages but is developing various applications across industries, with plans to establish an AI product center [42][43] Question: Will sales and marketing expenses return to normal levels in the near future? - Management expects that as the business stabilizes, marketing expenses will normalize, with a focus on long-term sustainable development [44][45]