Detailed Narrative
Managed Markets 2.0 Progress
The new iteration of the white-label self-service merchant of record solution on Shopify is progressing as planned, with both Global-E and Shopify pleased with the progress. The offering is expanding to additional countries like Canada and the U.K. in the near term, with new features and enhancements planned for upcoming quarters. Trading volumes are expected to pick up significantly in the back half of the year, realizing the immense potential of this innovative offering.
Duty Drawback Offering Expansion
Global-E made further progress in Q1 on its duty drawback offering, adding new markets for duty and tax reclamation and extending programs to include economy shipping partners. While strong interest exists, particularly for U.S. import duty drawback, merchant data gathering has been slower than expected. Visible contributions to revenue and fees are anticipated later in the year and into 2027, as the complexity of global tariffs increases.
Borderfree.com Channel Growth and Monetization
The number of merchants and volume of referrals expanded on borderfree.com in Q1, with the channel now contributing over 6% of sales for utilizing merchants, up from 4% a few quarters ago. The company began monetizing this offering in early 2026 and sees continued growth potential. Despite starting to charge, no negative dynamics or churn have been observed, indicating merchant satisfaction with the service.
AI Implementation for Efficiency and Growth
Global-E has adopted an AI-first approach across R&D, data analysis, and operational monitoring. AI tools have meaningfully increased feature shipping capacity without additional resources, driven efficiencies in tech and merchant support ticket resolution, and are used for regulatory compliance and logistics. AI-based chats are also emerging as a potential incremental referral channel for merchants, leveraging the company's infrastructure and know-how.
Impact of Middle East Conflict and FX
The ongoing conflict with Iran temporarily impacted trading into the Middle East and GCC regions, reducing Q1 GMV by just over 1%. Demand volumes have mostly recovered in recent weeks. FX tailwinds contributed 3% to 3.5% to Q1 GMV, but are expected to be significantly less in Q2 and very low in the back half of 2026, as the company models using the latest known spot rates.
New Merchant Launches and Existing Merchant Expansion
Q1 saw numerous new brand launches across North America, Europe, and APAC, including LVMH and Richemont Group brands, streetwear labels, and luxury fashion. Expansions with existing brands like ALO Yoga, FIGS, Bandai Namco, Stella McCartney, and Patou involved adding new markets, taking over local distribution, and enabling new services like Buy Online Pickup In Store (BOPIS). This land-and-expand motion is a key growth driver.
Same-Store Sales Drivers and Outlook
Same-store sales growth in Q1 was well above historical trends, primarily driven by better macro trading conditions across most of the 1,500 Enterprise Solution clients. The successful ramp-up of merchants onboarded in H2 2025 also contributed significantly. While Q2 same-store sales are expected to remain above historical ranges, they are projected to moderate to normalized multiyear averages in the back half of 2026.
EU De Minimis Exemption Removal
The EU is removing its de minimis exemption as of July 2026, meaning duties will apply to more orders. However, the impact is expected to be significantly lower than in the U.S. due to a lower threshold (EUR 150 vs USD 800) and a smaller average duty increase (estimated 5% vs 15-25% in the U.S.). Merchants are likely to absorb or embed this into pricing, so a significant impact on trading is not expected.