Thank you, and good afternoon. With me today from Global E are Amir Shlokat, Co Founder and Chief Executive Officer Ofer Koren, Chief Financial Officer and Nir Debi, Co Founder and President. Amir will begin a brief review of the business results for the Q2 ended June 30, 2021, and an overview of Globally. Ofer will then review the financial results for the Q2 followed by the company's outlook for the Q3 and full year of 2021. We will then open the call for questions.
Please note that this call will include forward looking statements that are subject to risks and uncertainties that could cause actual results differ materially from management's current expectations. We encourage you to review the Safe Harbor statements contained in the press release from today for a more complete description. Any forward looking statements that management will make on this call are based on assumptions as of today and the company undertakes no obligation to update these statements as a result of new information or future events. All material contained in the webcast is the sole property and copyright of Globally with all rights reserved. Please note this presentation describes certain non GAAP measures, including adjusted EBITDA and gross merchandise value, which are not measures prepared in accordance with U.
S. GAAP. The non GAAP measures are presented in this presentation as we believe that they provide investors with the means of evaluating and understanding how the company's management evaluates the company's operating performance. These non GAAP measures should not be considered in isolation from, as substitutes for or superior to financial measures prepared in accordance with U. S.
GAAP. A reconciliation of GAAP to non GAAP measures is included in our earnings press release from today. Listeners who do not have a copy of the quarter ended June 30, 2021 press release may obtain a copy by visiting the Investor Relations section of the company's website. Now, I would like to turn the call over to Amir.
Thank you, Erica, and welcome, everyone. Thank you all for joining us on our first earnings call as a public company. We are proud and excited to have listed publicly mid on NASDAQ under the ticker GLB. As such, I would like to start by thanking our incredible and growing team of employees, Already more than 400 around the globe with dozens who have joined us just this quarter. This team's hard work and unequivocal dedication has brought us to where we are and will drive our continued growth and success going forward.
I would also like to thank our growing community of investors, both those who supported us in the past as a private company and those who have joined us more recently at and post the IPO. We are honored by the trustee of FoodInUs and are excited to deliver on our mission to make global e commerce border agnostic. And last, but certainly not least, I would like to express our deep gratitude to our loyal merchant partners, already more than 500 of them across North America, the UK, Europe and Asia, who have put their trust in us to handle the cross border online sales and deliver a seamless, localized experience to the shoppers regardless of where they are around the globe. Turning to the results. I am pleased to report that Q2 was another record quarter for us.
GMV grew to $326,000,000 representing 95% growth year on year. Revenues amounted to $57,000,000 or 92% year on year growth. Our gross profit grew even faster by 113% year on year to $20,600,000 driven by gross profitability margin expansion to 36% in Q2, up from 32.4% in the same quarter last year. Thanks to our growing economies of scale and increased efficiency. We continue to operate on the basis of a very efficient operating model, yielding an adjusted EBITDA for the quarter of $7,600,000 representing 145% growth year on year.
During today's call, we will provide details on our Q2 results as well as Q3 2021 full year guidance. But given that this is our first earnings call post the IPO, we will begin by spending a bit more time than we will in the future earnings call covering the business, our strategy and the opportunities ahead for the benefit of many of you who may be new to the Globalea story. Here at Globalea, we have purpose built a global end to end e commerce platform and service that enables merchants to transact with shoppers from anywhere in the world by localizing both merchants and shoppers experiences and seamlessly overcoming the many barriers of cross border trade making globalecommerceborder agnostic. We operate within a huge market opportunity presented by Cross Border Business to Consumer or B2C e commerce. For the past decade, the retail world has experienced an accelerated shift towards e commerce, with growth in online sales outpacing that of traditional retail.
This shift has seen great acceleration during the recent COVID-nineteen pandemic, but the trend has been strong well before the pandemic hit. Concurrently, the rise in social media, which is global by nature, has dramatically changed the way consumers discover brands worldwide. Together, these 2 strong secular trends result in an ever increasing growth in the share of direct to consumer for D2C Sales as merchants put more and more strategic focus on this channel. D2C enables merchants strengthen their relationships with shoppers worldwide, enhance their brands, attain valuable data and enjoy higher margins. As a result of a combination of these and other market factors, cross border e commerce transactions are expected to continue to grow, outpacing the growth in domestic e commerce by a factor of 2.
Forrester expects that by 2023, The cross border e commerce market will reach $736,000,000,000 This creates a huge opportunity for Brands to sell globally as they typically see around 30% of e commerce traffic being international. But this is where the music stops for of the merchants. When you look at their actual sales figures, typically no more than 5% to 10% come from international shoppers. In other words, Many merchants are not able to convert this enormous international traffic into actual sales, leaving a lot of money on the floor. This is because of the many structural barriers that stand between them and their international shoppers, who rightfully expect a seamless and localized shopping experience.
By localizing the but localizing the experience for even a single market is painful and difficult. Our merchant needs to support the local language, present attractive prices in local currency, support the local payment methods that are prevalent in that market, Offer a compelling shipping and delivery experience, guarantee a full landed cost including all relevant import duties and taxes and more. Now multiply these challenges by 50 or 100 markets, it becomes nearly impossible to overcome. There is no one size fits all solution as shoppers from each market have their own different expectations with regard to the localized shopping experience. And merchants of all sizes find a do it yourself cross border strategy to be complex, expensive, time intensive, inflexible and highly difficult to scale and maintain.
This is where Globally comes in. Our software seamlessly connects to any e commerce platform the merchant is using via plug ins and client side scripts we've built and maintained. Once integrated onto the merchant We added deep and rich level of localization to the e commerce store experience. For the shoppers, we localized all aspects of the shopping journey right from the moment they enter the website. We support localized marketing messaging in over 25 languages.
We use our proprietary built localized pricing engine to present prices in more than 100 currencies and support different pricing structures based on the shopper's location, local market convention and the merchant's pricing strategy. We enable shoppers to check out in their native language and to choose their favorite means of payment out of over 150 payment methods we already support. We pre calculate import duties and taxes and can either embed them in the product price or collect them at checkout, thereby simplifying the customs clearance process and allowing for a fully guaranteed landed cost growth for both the shopper and the merchant. We own an extensive network of more than 20 shipping carriers, including market specific methods such as cash on delivery for delivery to drop off points, offering multiple shipping modes at attractive rates. And we even provide localized after sales support and returns management by a multilingual shopper services and multiple returns options including prepaid and local returns in relevant markets.
For the merchant, we make selling internationally as seamless and effective as selling domestically. The greatly improved localized shopper experience increases sales conversion, enabling merchants to better capitalize on their valuable international shopper traffic by generating a considerable uplift in international traffic conversion, often exceeding 60% after they begin to use our platform. We provide our merchants with the flexibility to rapidly and efficiently expand internationally and grow to new markets where and when they want to with little to no upfront investment using their existing storefront and maintaining their own brand experience and direct relationship with their shoppers. Furthermore, we enable our merchants to offload complexities and risks, which are otherwise presented by contacting cross border, making the selling and fulfillment process for international orders as simple as that of domestic sales. We provide all these capabilities by means of our comprehensive end to end cloud delivered technology platform Built on top of a highly scalable multilayered tech stack integrated and coupled with a diverse ecosystem of technology and service partners We have dozens of open APIs.
From leading and commerce platforms such as Shopify, Salesforce, Magento, bcommerce and others through to payment providers like Aedion, Worldpay, Klarna and others through to shipping carriers such as DHL, broad management providers such as Porter and many other partners providing value added services such as translations, online marketing and more. With several of these, including Facebook, Shopify and DHL, we have already struck broader strategic partnerships, Including mutual client referrals, given the significant value we generate for all players in the ecosystem. But this is only half of the story, which is made whole by our unique data engine, which generates specific, actionable and data driven recommendations for our merchants based on the deep, broad and rapidly growing data assets we have. We refer to these recommendations as smart insights. Our smart insights are country, price point and vertical specific and focus on shopper behavior.
The value of our massive and fast growing data set is due to its depth and breadth. Based on this data and coupled with our operational experience accumulated over the years, We enjoy both economies of scale and economies of scale, which enable us to optimize merchants' cross border sales on a market by market basis. By leveraging our smart insights, merchants can provide optimized experiences for shoppers, resulting in better conversion and more revenue. We win thanks to several things we believe we do best. First, we offer merchants of all sizes from small emerging brands to the world's largest retailers, The most potent combination of an easy to integrate proprietary technology platform and a full end to end solution.
2nd, We are diversified by vertical, merchant sector and destination markets. Our wide reaching scale enables us provide a solution to merchants in any region in the world as we are the only cross border enabler with a truly global footprint. 3rd, our highly differentiated and fast growing data assets serves as a basis for a powerful flywheel effect. The optics we generate for our merchants drives more sales, which in turn creates more data and even smarter insights, which are fed back into our systems in order to generate even more uplift, attracting even more new merchants to the platform and so on. 4th, on top of our highly efficient sales and marketing teams, we enjoy our growing ecosystem of partners and merchants that act as a meaningful source of referrals and lead generation.
5th, the mission critical nature of our platform, Coupled with the results and value added we are able to generate for our merchant partners yields very high customer stickiness, providing a sound base for continued strong GMV expansion. And finally, as a fountain of lead business, We've built and maintained a very customer centric culture throughout the ranks of the organization. We put our merchants first in everything we do. Looking forward and in order to continue capturing the immense market opportunities that lie ahead, We are pursuing multiple key growth levers in parallel. 1st, we continue to add more merchants onto the platform across our main geographies, namely North America, UK and Continental Europe, with a very strong pipeline to further support our growth.
This includes both new merchants and continued land and expand efforts, winning additional operated lanes for existing merchants as well as onboarding additional merchants within existing brand groups. As an example, During Q2, we launched TAGA, Sephora and Remoa, which are all part of the LVMH group, of which we have already launched multiple brands in the past. Furthermore, in the months following the launch, Tiger added many more destination markets to our platform. Another example is the value lingerie brand La Perla, which went live with us at the beginning of the year and during Q2 added many more destination markets and also went live with La Perla Beauty, their sister brand, which specializes in beauty Personal Care Products. 2nd, we are making progress on our expansion plans in new geographies with emphasis on Asia Pacific.
During Q2, we launched our 1st APAC based merchant, Thiore Hong Kong, which is part of the fast retaining group. Last quarter, we also opened a new office in Tokyo. 3rd, we continue to build capabilities and broaden our range of value added services, focusing on highly localized capabilities that further enhance our level of support for large merchants and new verticals such as Consumer Electronics. We believe some of these new capabilities could potentially be rolled out faster by buying versus building. And hence, we are gearing up our managerial infrastructure for supporting such future M and A opportunities.
As such, Nir, one of my co founders who is also with us today on this call has recently transitioned to the role of President, allowing him to devote much more of his attention to corporate and business development efforts, which will be spearheaded by a new corporate development department we are assembling. Nir Still retains ultimate responsibility for global sales and customer success, which are now overseen by Ran Friedmann, who recently joined us as our new Chief Revenue Officer. Last but not least, we continue to focus on expanding our work with the various partners that take part of our large and growing With regards to that, it is worth mentioning that we are on track with the rollout of our newly established exclusive strategic partnership with Shopify. We continue signing up and going live with Shopify based merchants on an ongoing basis. In parallel, the respective development and product teams from both companies are working together on a new and deeper integration of Global Eat's offering into the Shopify platform and checkout.
This new integration is expected to be finalized later this year. Once operational, this new integration should allow an even more effortless go live process for new merchants and even more seamless referrals of Shopify based merchants from various channel partners. In conclusion, We are thrilled to have joined the public market and strongly believe in the tremendous growth opportunity that this new phase of Global Eat's life presents us We will continue to serve our merchants and their shoppers wherever they are around the globe and generate value for them as well as for our large and growing ecosystem of partners, all the while pursuing our ultimate mission to make global e commerce Trudy, Board of Directors. And with that, I will hand it over to Ofer, our CFO, to go over our financial results in
Thank you, Amir, and thanks again everybody for joining us today for our first earnings call as a public company. We are very pleased that our strong business momentum is continuing through Q2. Since this is our first earnings call, I'd like to Start by providing a brief overview of our financial model and then I'll go through our Q2 results in detail. Following that, I'll move on to give guidance for the Q3 as well as for the full year 2021. I'd like to point out that in addition to our GAAP results, I'll also be discussing certain non GAAP results.
Our GAAP financial results along with the reconciliation between GAAP and non GAAP results can be found in our earnings release. Globally generates revenue from service fees and fulfillment services. Service fee revenue is generated as a Percentage of the GMV that flows through our platform for the usage of our integrated platform solution that bundles several components, which we believe are essential to achieve improved sales conversion of our merchants' international traffic. Fulfillment services revenue is generated through our offering of shipping and handling, which are offered on an optional basis, but typically selected due to convenience and pricing achieved based on our economies of scale. Our rapid growth in GMV continued in Q2 as we generated $326,000,000 of GMV, an increase of 95% year over year.
Total revenue for the 3 months that ended on June 30, 2021 were $57,300,000 up 92 percent year over year. Services revenues were $21,100,000 up 104%. Fulfillment services revenue were up 86% to $36,200,000 The higher growth in service fees revenues relative to fulfillment services revenue was driven in part by particularly strong growth from the luxury brands we serve. Luxury items are typically characterized by higher average order values, Resulting in higher service fees relative to fulfillment revenues, which are far less impacted by the value of the goods. Thus from a P and L perspective, a higher share of Luxury sales result in a structurally lower take rate with a higher service fee component and Higher gross profit margin.
While we generated considerable growth all across the business, I would like to point out the continued accelerated growth of our U. S. Outbound revenue, reflecting the deepening of our penetration into the market As we continue to witness high levels of satisfaction from merchants, U. S. Outbound revenue was up 131 percent year over year.
We do not plan to disclose quarterly net dollar retention metrics, But I'm happy to share that our NDR dynamic through the first half of twenty twenty one continued to track well, driven by the increasing focus and efforts devoted by merchants to developing their D2C cross border e commerce businesses, coupled with conversion uplifts enabled by our continuously enhanced platform capabilities as well as existing merchants launches of additional destination markets on our platform. In the quarter, we were pleased to see significant contribution of GMV and revenue from some of the new logos we laid out in our Q1 results such as schemes from Kim Kardashian as well as from regional expansion of existing merchants in Q1 such as Mark and Spencer, which added 47 new markets and Hugo Boss, which launched 12 new markets with us. Fulfillment revenue were positively affected by increased post Brexit clearance fees. Due to the new rules related to cross border e commerce VAT in the EU, which came into force on July 1. We expect a decrease in both clearance fees revenues and costs resulting in a slight reduction in take rate, but with an insignificant effect on gross profit going forward.
Now let's review the income statement in more detail. Gross profit continues to grow even faster than our top line As we continue to improve gross margins based on our economies of scale and improve efficiencies. In Q2, gross profit was 20.6 $1,000,000 up 113% year over year and representing a gross margin of 36% compared to 32.4 percent in the same period last year. We believe such gross margin expansion to and sustainable as it results mainly from increased economies of scale, improved operational processes and pricing optimization. R and D expense was up 59% year over year, totaling $5,700,000 or 10% of revenue.
The continued growth in R and D investments allows us to continue to scale and enhance our platform offering, Adding additional features and capabilities, including the development of a new integration to Shopify, which Amir mentioned earlier, and our multi local capabilities, which allow us to access new merchant verticals and expand our total addressable market. Sales and marketing expenses excluding the amortization expenses related to the Shopify warrant were $4,500,000 or 7.9 percent of revenue compared to $1,900,000 or 6 0.5% of revenue in the same period last year. We continue to invest in sales and marketing, enhancing our sales teams and marketing efforts in current outbound markets as well as new ones to support our accelerated growth while still maintaining very high efficiency levels. Shopify warrants related amortization expense was $25,500,000 including these expenses for the quarter totaled $30,000,000 General and administrative expenses were $4,300,000 or 7.6 percent of revenue compared to $2,700,000 or 9% of revenue In the year ago period, general and administrative expenses reflect additional expenses relating to being a public company, including our new D and O insurance policy costs since the IPO. Adjusted EBITDA was 7 point 13.3 percent adjusted EBITDA margin increasing from $3,100,000 or 10 point 4% margin in the same period last year.
Net loss was $22,200,000 compared dollars compared to a net loss of $400,000 in the year ago period, a direct outcome of the amortization expense related to the Shopify warrant, Net profit excluding the amortization expense related to the Shopify warrant was $3,300,000 Switching gears and turning to the balance sheet and cash flow statement, we ended Q2 with $488,000,000 in cash and cash equivalents, including short term deposits and marketable securities, a significant increase resulting from the IPO proceeds. Operating cash flow in the quarter was $6,900,000 compared to $10,300,000 a year ago, impacted by an increase Moving to our financial outlook, we are raising our Q3 and full year guidance significantly. In our guidance, we are taking into account the potential impact of the additional opening of physical stores and a gradual increase in traveling mainly during Q4 towards the holiday season. For Q3, we are expecting GMV to be in the range of $328,000,000 to $338,000,000 At the midpoint of the range, This represents a growth rate of 76% versus Q3 of 2020. We expect Q3 revenue to be in the range of $54,356,300,000 This represents a growth rate of 66 Percent at the midpoint of the range versus Q3 of 2020.
For adjusted EBITDA, we are expecting a profit We anticipate GMV to be in the range of $1,350,000,000 to $1,370,000,000 representing nearly 76% annual growth at the midpoint of the range. Revenue is expected to be in the range of $227,000,000 to $231,000,000 representing a growth rate of 68% at the midpoint of the range. For adjusted EBITDA, we are expecting a profit of $22,000,000 to $24,000,000 Our outlook for the full year of 2021 reflects additional investments in personnel related costs, Sales and Marketing and Product Development as well as incremental general and administrative costs associated with being a public company. We manage our business for the long term and do not plan to optimize for any single quarter. As our business growth, we intend to continue to invest as we pursue opportunities to expand our competitive mode.
We plan to pursue growth opportunities in the transformation of D2C cross border e commerce, while also continuing demonstrate scale and operational leverage over time. And with that, Amir, Nir and I are happy to take any of our questions. Operator?
Thank you. At this time, we'll be conducting a question and answer session. Our first question comes from the line of James Faucette with Morgan Stanley. Please proceed with your question.
Thank you very much and really appreciate all the details and color that you guys have walked through. I'm wondering if you can talk a little bit about How you're thinking about new brands and geos beginning to ramp? And if you can give us any color on Particularly the Shopify relationship, how much that contributed here in the June quarter versus what you're expecting going forward? And then I have one follow-up question.
Sure. Thanks, Dave. It's Amir. So generally speaking, we are seeing an uptick In additional brands joining the platform, which is reflected obviously in the both in the growth and the Guidance, the updated guidance that you've seen from us, on top, of course, of additional growth from our Existing brands. Now referring specifically to Shopify, we are seeing already an increase In our pipelines and the sign ups of especially on the SMB front, kind of the smaller size merchants, We do expect as we guided before that we will see more movement on the pipeline with larger Brand probably towards next year and the beginning of next year as we complete the new integration that we mentioned in our comments.
And in terms of financial impact, as such, we do expect as we guided before, The main impact to kick in on the next year towards the second half of the year. So hopefully that answers your question.
Yes, that's good color. And then, I guess my other question is, as you mentioned that, obviously, there's been some organizational changes and that There may be some opportunities to buy additional capabilities that would be allow you to be quicker to market Than building them yourselves. Can you give us a little more detail in terms of like the timing? Should we expect Acquisitions to contribute at least some inorganic growth or are they likely to be purely technology? Just trying to get a little bit of color of kind of what you're thinking in terms of investment
Sure. So we're actually looking at both types of acquisition, both The growth in activity as well as additional capabilities. And as you said, we are definitely Gearing up for that and looking at the potential space, I would say in terms of timing, You should hopefully expect to see us do, I would say, at least 1 or maybe 2 transactions This side of Christmas.
That's really helpful. Thank you very much.
Thank you, James. Well, appreciate it.
Thank you. Our next question comes from the line of Samad Samana with Jefferies. Please proceed with your question.
Hi, good afternoon. Thanks for taking my questions. Congrats On the first public call, great to see the very strong results. Maybe if I think about, I know on new brands, you just discussed that. But when I think about The pipeline of deals and Ofer, I want to ask in the context, this is your first set of guidance on the call.
I'm just curious how much Embedded in the guidance relies on new brands ramping or how much of that's based on the existing portfolio? And then I have a follow-up question.
Hi, Samad, it's Mira. Thank you for your question. A lot of our guidance is based on clients already integrated in live on our platform. Most of the contribution for the 2nd part of the year is already from live clients. There will be some contribution and a growing Contribution towards late Q3 of small merchants going live on the platform that are already signed in to use our services and currently in integration, but we expect most of the effect of the growing pipeline and design clients to affect our Q1 and Q2 results next year and even more so in the 2nd part of 2022.
Great. And then maybe as a follow-up, I know you mentioned the robust trends on outbound to U. S, but I'm just curious if there's any other color on other geographies and maybe how they're trending, especially given that the world is kind of reopening at an uneven cadence. Just any other notable pockets of strength beyond outbound into the U. S?
In terms of the outbound, we've seen also tremendous increase in Continental Europe, which has grown over 100% year on year for us, so quite a lot of traction supporting European brands going worldwide. In terms of inbound, we've seen even in markets where there were signs of COVID relief, As such as Israel with the vaccinations, I would say, widespread around the market and some other markets that trend for a certain period of time such as Australia and not much of an effect in terms of the willingness of shoppers to buy. So we didn't see any much Fluctuation in terms of the inbound into the market of personnel imports. So, so far, We don't see, I would say, significant signs of COVID relief.
Great. Maybe I'll just squeeze one more in if you'll indulge me. I'm just curious, you've now been public for about 4 months. And I know it's still only it's not been a long amount of time, but have you seen a benefit to the brand in terms of engaging with either larger merchants Or bringing in merchants that may not have heard of Global E before. I'm just curious if going public has helped the brand in attracting more newer types of customers into the pipeline.
Thanks, Hammad. It's Amir. Yes, we've quite Clearly seen it. As a matter of fact, we've seen very positive traction building up after our IPO. We sense that we get even higher exposure now to key decision makers and much higher Confidence, I would say, as they go about to take their decision, especially because we are now the only cross platform that is publicly traded and kind of regulated and audited as such, so it gives a lot, I would say, more confidence When it takes to brands taking the decision who to work with.
Great. Congrats on the strong results.
Thank you very much, Amit.
Thank you. Our next question comes from the line of Brent Bracelin with Piper Sandler. Please proceed with your question.
Thank you and good afternoon. A couple of questions from me if I could. I'll start with Amir first. GMV in the quarter on an absolute basis was actually up more in Q2 than in Q2 of a year ago when you had The COVID tailwind. So just trying to drill down a little bit.
What drove the outside strength in GMV? Is it Largely onboarding new merchants, was it just a broad set of merchants, existing merchants going, Expanding to countries, any color there would be super helpful just given the momentum and outside strength we saw there this quarter.
Hi, Brent. It's Ofer. I think there were, I would say, a couple of reasons for that. The first one is that we had Very successful launches of new merchants in Q1 that contributed significantly to GMV growth in Q2. I think the second major factor is the fact that Many brands have identified the B2C opportunity and put a lot of Strategic emphasis on this channel.
And when you couple that with the uplift in conversion that we are able to That generates a lot of GMV. And as we said, we do not Disclosed the NDR numbers on a quarterly basis, but they're tracking really well. So I'd say those are the main drivers behind the growth.
Helpful color there. I guess as a follow-up, Ophir, you're now at what, 500 plus merchants. Is there any way to quantify how many of those merchants or what Portion of those merchants have rolled out globally to all 200 countries. Just trying to assess how much expansion potential there is Just within the existing customer footprint.
Hi, Brent, it's Nir. The vast majority of the merchant did deploy globally throughout the international market. So I wouldn't say if it's 80% or 90%, but vast majority did. However, the large merchants, Specifically, the super large merchants are the ones that are deploying batches of markets with us. And with them, basically there is a significant opportunity still ahead of us.
They are only 10% or 20% of The brand, but they hold a significant portion of our GMV and the growth opportunity with them is huge. We've seen that this year with Hugo Boss giving us 12 more markets. We've seen it with Versace giving us additional markets this year. We've seen it with Marks and Spencer that added 47 more markets, which is the 6 consecutive years where which we opened more markets With them. So with the large ones, we do see quite a lot of opportunities still ahead of us.
Very encouraging. Last question from me, Amir, strong pipeline of new merchants you talked about Looking into the second half of the year, would you say the bulk of those continue to be luxury retail? Or are you seeing a Diversification of new merchants coming to Global Enow. Thanks.
No, I would say, Brent, these are obviously some luxury Brands in that as well, but it's actually all across the field that we see including Even some new verticals that we are starting to see traction on where we haven't been active before. So I would definitely say More diversification in terms of verticals is the trend.
Great to hear. Thank you.
Thanks, Brent.
Thank you. Our next question comes from the line of Pat Walravens with JMP Securities. Please proceed with your question.
Great. Thank you. And let me add my congratulations. So I guess, Amir, maybe if you could just sort of specify for us what the top 2 or 3 things that you need to get done with Shopify are in terms of the integrations, I think that would be helpful. And then secondly, just how much of the potential benefit from that partnership have you seen so far?
Yes. So I wouldn't like to bore everyone with the technical details. The main things about the Our technical, but I would say generally speaking, it's making our services kind of the same services That you know, just built in straight into the Shopify checkout itself, so making it a seamless Transition, I would say, for the merchants as they switch globally on, it will just become part of their existing Shopify checkout as well as deeper integration into the Shopify system or backend as well, which Should enable once the order is a multi phase project. So once the final phases are in, it will enable And even more seamless integration and kind of going live process for these merchants and Hopefully making it almost as easy as flipping a switch. So that is the intent, I would say on the things that we still need to get done on the technical integration front.
In terms of the impact, as we guided, this is what we're seeing, we're on track. We are seeing already initial Kind of traction, no additional traction in our pipeline as it's growing, including more and more SMB merchants, Shopify based merchants that are going live with us. So we already see an increase in that. But I would say financially, we'll probably see more of the impact towards The first and second quarters of next year and certainly onwards on the second half of next year Once we have done the new integration kind of late this year, which will enable us to bring Also, it's to the bigger size kind of enterprise size merchants that are on Shelby Phone. Hopefully that answers your question.
Yes. No, that's great. And then, Ofer, if I could sneak one in for you. So a nice bump up in the gross margin, I'm looking at it right to 36 percent this quarter from 33% last quarter. How should we think about Q3 and then just how should we think about the expansion over time, but Q3 first?
So the increased share of service fee revenues contributed To the gross margin expansion as well as the continued leveraging of our economies of scale and price We believe that the gross margin expansion is structural and basically we expect the Same trend to continue into the future. Not in every quarter, we will increase the gross profit That as much as we did this quarter, but we certainly expect the trend to continue in the coming quarters.
Okay, great. Thank you.
Thanks, Pat.
Thank you. Our next question comes from the line of Josh back with KeyBanc Capital Markets. Please proceed with your question.
Thank you all for taking the question and my congratulations as Well, New Life as a public company at least. I wanted to ask about Structural growth in the cross border market, I realize it's a challenging one to Answer because it's a little bit nuanced, but just when I look at your GMV growth projections for Q3, it is much higher than All of the other GMV oriented models that probably have a lot lower cross border exposure. So Structurally, do you think there was there's maybe a greater emphasis to start selling in a cross border fashion? Is it Just simply going to be less impacted by reopenings. Any qualitative commentary there would be great.
Hi, George. Thank you for your question. It's Mir. I think one of the main differentiator allowing us, I would say to see higher growth into Q3 in terms of inbound markets worldwide. Our approach is and our reach is truly global.
We are not we don't have a single market that is a 2 digit market With us in terms of inbound and this diversity allows us to enjoy, I would say, the growth of global e commerce. So despite signs of relief in certain markets here and there, other markets do not see it and we see balancing In between and even in the markets that did experience some relief, we didn't see a lot Changes in the way shoppers are buying online. So all in all, we are very positive in the growth trend going forward. And I think we're a bit differentiated here by our true global footprint.
Very helpful. And then just wanted to follow-up on the first APAC merchant win. Obviously, that's an exciting Development. I'm curious when you look at the APAC offering, do you feel like the platform and the partnership Ecosystem is fairly mature and Maybe up to par with other markets. And so the emphasis now is much more about really stepping on the go to market or is it a little bit Both of you had probably some critical mass of partnerships and platform in place, but there's more work to do there before you really start to get Perhaps more aggressive on the go to market.
Just help us think about that balance, please.
I think it's a combination of both Of course, what you mentioned. Yes, we do see great opportunity in APAC and we do intend to invest much more. But as you stated, we do plan to enhance our partnership and channel partners in order to support it. Yes, we do have channel partners that are global in nature that would be the likes of DHL or Facebook or our partnership with Shopify, but we are building also APAC specific partnerships. This is in process, And we are hoping we will have good news within Q3 or Q4 to announce about the partnership to support that growth As well and on the back of it, we expect much more contribution coming out of APAC into our pipeline and into our numbers, I would say from the Q2 Q3 of 2022.
Very helpful. Congrats, Dean.
Thank you. Our next question comes from the line of Brian Peterson with Raymond James. Please proceed with your question.
Hi, thanks for taking the question and congrats on the really strong results. So first question for me, just kind of high level. We don't typically see 90% plus revenue growth and GMV growth at this scale. If we're thinking longer term, What are kind of the key swing factors on growth? And how do we think about the sales and marketing investments, the right level of sales and marketing investments to drive that.
Yes. I think to answer the first part of your Question, we are very effective in our sales and marketing approach Over the years, historically, we've been less than 10% spend on sales and marketing out of our revenue. And the reason we were able to do it is because we had historically, on the one hand, huge NDL with over 140% Quite stable that supported our growth with existing merchants that continue to grow and enjoy the benefits our platform It brings to merchants wanting to scale up international. And in parallel to that, We have really good win ratio on merchants stepping into a tailwind of a very aggressively growing market With merchants trying to scale cross border. So the combination of both together with the fact that We basically have a pool with no leaks in it.
Our GDR numbers are sub two Percent historically is on an annual average, so we don't actually lose business we have. We win Much more business coming in and we grow the business that we already have in and the combination of it allows us to grow Very fast even at the scale we already have. We do expect to continue this high growth rates going forward. So high two digit numbers is something we expect to continue with us going into the The above future as we do have quite a lot of levers we continue to push. In terms of sales and marketing, we do spend a lot.
You can see in our Q2 numbers, we grew more than 100 In the investment in sales and marketing, still doing it very, very efficiently as a percent based Out of our revenue, but we do scale up. We scale up in the current markets where we are already present across Continental Europe, Across North America as well in the new regions. We established our operations in Japan with the first two employees in Japan. We are intending to roll out additional markets in APAC late Q3 and early Q4. So we do intend to invest much more within sales and marketing in different aspects as well as building our channel partners continue to do it efficiently and at scale.
That's great perspective. And maybe Follow-up, the U. S. Outbound strength grew over 130% year over year this quarter. I'm curious if you can kind of shed any more light on what Rode that.
And what are you typically displacing when you pick up a new merchant? I know you kind of mentioned S and B from the Shopify partnership, But I'm curious what kind of functionality somebody might have in place, particularly looking at the U. S. Outbound merchants? Thank you.
Usually, we just enhance the basic stores that the merchant has. We treated we look at it as a greenfield. There's not much of competition we replace And most of it is uncharted territory as a merchant are suboptimal in the international journey and what we bring to the table is Our platform to enhance is our current job, whether it would be on the Salesforce Commerce, Big Commerce or Shopify. So on that aspect, we just get them to do better within the current operations. The reason for the growth in U.
S. Outbound that is That's reflected in our numbers is basically that there's quite a good traction for U. S. Brands, a lot of digital first brands Coming out of the U. S.
And now with the social networks and global influencers, we've seen tremendous growth of those digital First brands, I think that the schemes of King Kardashians that launched with us in Q1 is a great example that we've seen tremendous Track record and performance through Q2 with the merchant growing and we have several of those That launched with us over the last few quarters and we've seen great traction with them as well as many new SMBs brands Satal coming in and growing now fueled further by the Shopify partnership.
Great to hear. Thank you.
Thanks, Brian.
Thank Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Shloket for any final comments.
Thanks a lot. And I would say on behalf of Ofer, Nir and myself and the entire Global E team, I'd like to thank you all for joining today and for your interest in Global Ea and for the thoughtful questions. We very much look forward to seeing you again on our future earnings calls. So goodbye to everyone and take care.