Yahoo Finance

Q & A Highlights

Q: Can you elaborate on the macroeconomic impacts and how they are reflected in your guidance for the year? A: Ofer Koren, CFO: We have incorporated potential impacts from trade policies into our full-year guidance. While there is greater uncertainty, we haven't observed clear trends in trading patterns. Same-store sales are slightly lower than our multi-year average, but we maintain our guidance for the full year, expecting performance within the guidance range.

Q: Could you provide more details on the new Shopify partnership and its implications? A: Nir Debbi, President and Co-Founder: We have transitioned from exclusivity to a preferred partner status with Shopify, retaining exclusivity on certain key features. This change allows Shopify more flexibility with merchants, especially larger ones. We believe our established expertise and integration with Shopify will help maintain our leadership position.

Q: Have you noticed any specific trends or changes in GMV due to tariffs or other factors? A: Ofer Koren, CFO: While we haven't seen clear directional trends, there are pockets of influence. For instance, since May, we've observed some softness with merchants trading goods from China or Hong Kong into the US. However, these are isolated cases, and no broad impact has been noted.

Q: How does the new 3B2C offering work, and what impact do you expect it to have? A: Nir Debbi, President and Co-Founder: The 3B2C offering allows merchants to import goods as a B2B transaction before selling locally, reducing import duties. This setup is complex but provides significant benefits, especially in high-tariff environments. We see strong interest from merchants and expect it to gain traction.

Q: What are the expected impacts of the changes in the Shopify Managed Markets on your revenue and service side? A: Ofer Koren, CFO: With Shopify handling payments in the future, we won't record those elements as revenue, but we expect a positive impact on sales and marketing expenses. Overall, we anticipate limited impact on the bottom line, with opportunities to scale adoption and increase GMV.

Q: How do you view the potential impact of the de minimis rule change in the US on your business? A: Nir Debbi, President and Co-Founder: Inbound to the US accounts for about 12% of our activity, with around 30% of that from China and Hong Kong. The de minimis rule affects about 3% of our GMV. While some merchants are impacted, the overall effect has been relatively light.

Q: Could you discuss the margin trajectory and free cash flow expectations for the rest of the year? A: Nir Debbi, President and Co-Founder: We expect gross margins to be slightly higher for the rest of the year due to revenue mix and efficiencies. Adjusted EBITDA margins are expected to be higher in the second half due to seasonality. Free cash flow is expected to convert nicely from adjusted EBITDA.

Q: How is the Borderfree.com platform performing, and what are your expectations for its future contribution? A: Nir Debbi, President and Co-Founder: Borderfree.com has seen increased merchant adoption and improved contributions, now over 4%. We aim to exceed 5% and believe it could contribute 5% to 10% on average long-term for participating merchants.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.