Welcome to the Global-e's Third Quarter 2023 Earnings Call. This call is being simultaneously webcast on the company's website in the Investors section under News and Events. For opening remarks and introductions, I will now turn the call over to Erica Mannion at Sapphire Investor Relations. Please go ahead.

Thank you, and good morning. With me today from Global-e are Amir Schlachet, Co-Founder and Chief Executive Officer; Ofer Koren, Chief Financial Officer; and Nir Debbi, Co-Founder and President. Amir will begin with a review of the business results for the third quarter of 2023. Ofer will then review the financial results for the third quarter of '23, followed by the company's outlook for the fourth quarter and full year of 2023. We will then open the call for questions. Certain statements we make today may constitute forward-looking statements and information within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 that relate to our current expectations and views of future events. These forward-looking statements are subject to risks, uncertainties and assumptions, some of which are beyond our control. In addition, these forward-looking statements reflect our current views with respect to future events and are not a guarantee of future performance. Actual outcomes may differ materially from the information contained in the forward-looking statements as a result of a number of factors, including those set forth in the section titled Risk Factors and our prospectus filed with the SEC on September 13, 2021, and other documents filed or furnished to the SEC. These statements reflect management's current expectations regarding future events and operating performance and speak only as of the date of this call. You should not put undue reliance on any forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur. Except as…

Thank you, Erica, and welcome, everyone, to our Q3 earnings call. We delivered a strong third quarter with 35% of growth in GMV and 76% growth in adjusted EBITDA on the back of improved profitability margins and strict cost control. In addition, during the quarter, we made major advances along all our strategic vectors. Despite the continued strong growth for a combination of macro-driven reasons, GMV and revenues for the quarter fell slightly short of our guidance range, which also leads us to a slight downward revision of our annual GMV and revenue forecast. But at the same time, our adjusted EBITDA came in above the guidance range, and we are also raising our adjusted EBITDA forecast for the year. A testament to the strength and durability of our business model as we continue on our path towards reaching our long-term adjusted EBITDA margin target while sustaining high and durable growth. Before we dive in deeper into the results, I would first like to express my personal whole hearted thank you to the many of you who have reached out to us through various channels over the past few weeks. In the wake of the unimaginably barbaric attacks by Hamas terrorists on Israeli civilians that took place on October 7. Your compassion, support and generosity are hot warming and give us raise of light during these dark times. The atrocities of October 7 and the inevitable subsequent military conflict have impacted a lot of Israeli families. Ever since the attack took place, we have taken many actions to both ensure the safety of well-being of our team members and their families and to extend our support to the broad communities that have been impacted. From a business operations perspective, while some of our Israeli colleagues have been called for active…

Thank you, Amir, and thanks again, everyone, for joining us today for our quarterly earnings call. First, I would also like to thank many of you who have expressed support and empathy vis-a-vis the murderous attack on innocent civilians we experienced on October 7. As for our Q3 results, while our top line results came in slightly below our guidance range, driven mainly by softer consumer demand in September, our business model continues to demonstrate its robustness. As Amir stated, we believe that in the coming quarters, growth will accelerate, supported by the rapid growth of Shopify Markets Pro, the continued expansion of the globally enterprise business, and the improvement of consumer sentiment we've witnessed since late October. In parallel, we have witnessed in Q3, a continued improvement in our bottom line results, with adjusted EBITDA coming in above the guidance range. I'd like to point out again 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. As said, our rapid growth in GMV continued in Q3 with $839 million of GMV generated on our platform, an increase of 35% year-over-year. The growth pace was slightly lower than our guidance range, driven by a decrease in same-store sales starting early September due to weakness in luxury goods demand and softness in European consumer demand. In Q3, we generated total revenues of $133.6 million, up 27% year-over-year. Service fee revenues were $62.4 million, up 31% year-over-year and fulfillment services revenue were up 23% to $71.2 million. While service fee take rate increased, compared to Q2, fulfillment take rate continued to decrease, mainly driven by the continued growth of our multi-local services, as well as some shift…

[Operator Instructions] Our first question comes from James Faucette with Morgan Stanley. Please proceed with your question.

Hi, everyone. It's [Michael Fontaine] on for James. Thanks for taking our question. Given Shopify's commentary and your commentary on Markets Pro, I'd be interested if you could unpack what you saw in the quarter from a same-store sales perspective and perhaps the magnitude of recovery you saw in late October and how that's informing the 4Q outlook. Thanks.

Thank you for the question. As we mentioned, during the call what we saw is the weakness in same-store sales growth that came mainly from consumer sentiment in Europe and also for the luxury segment, pretty much across the board. This is - this was also in addition to that, was also a shift in our own mix towards merchants that are using our multi-local offering, which is inherently has a lower fulfillment take rate. So these were kind of the main factors that impacted that figure. As we mentioned also, if we look forward towards Q4 and onwards, since late October, we did see some positive signs and reversal of these trends with an improvement in same-store sales. So we do believe that in the coming quarters, growth will accelerate. And that combined with the growth in Shopify markets Pro and our strong enterprise pipeline gives us the confidence in the dynamics going forward.

Got it. That's helpful. And maybe just on the near-to medium-term outlook for net dollar retention. How are you thinking about the persistence of this 30% level over the medium term? The thing I'm thinking through is, is it more reasonable to assume that as new merchant GMV grows given the market's Pro ramp will the mix of your revenue caused some NDR degradation? And if so, by how much?

Looking into this year to 2023, as we said, we did see some softness in September and then in the first part or most of October, and that is reflected in lower same-store sales. However, we still think that in 2023, we do expect our annual NDR to be close to 130 as we previously communicated. And looking forward, to be honest, we are currently working on our budget for 2024. However, we can already say that we do believe that our NDR will remain close to 130% next year as well. And as I said, this, along with our strong enterprise pipeline and the growth of markets flow gives us confidence in our ability to accelerate our growth in the coming quarters.

That's great. Thank you, all.

Our next question comes from Samad Samana with Jefferies. Please proceed with your question.

Great. Good morning. Thanks for taking my questions. Maybe first, just following up on Shopify Markets Pro. Can you help us understand maybe how you're thinking about the GMV ramp in the fourth quarter? And I think Shopify has mentioned in the thousands in terms of initial customers? And maybe what kind of month-over-month momentum you've seen since the go live in September. And I know, we don't want to get carried away, but just understanding maybe what the early momentum looks like and maybe what kind of GMV you're assuming in, let's call it, the first few quarters, just to think about trends. And I have one follow-up?

Hi Samad. Thank you for that. As Amir mentioned on the call, Shopify Markets Pro achieved a significant milestone in Q3 after almost two years of development for both our team and the Shopify team and is now generally available for merchants in the U.S. Since then, we have onboarded, as Harley mentioned, thousands of merchants who are now able to sell internationally in a simple and seamless way. Given the fact that Markets Pro became generally available only late this quarter, the contribution in Q3, is actually very, very limited. However, we do expect significant contribution to our growth next year and the coming years. But it's still early days, and it will be reflected in our guidance for 2024.

Great. And then maybe just as a follow-up, Wix is obviously another large platform with a lot of e-commerce stores. I'm curious maybe how we should think about the rents there. I know it's just at the very first pilot customer. But any way you can maybe quantify what the size of that is? And is there -- how should we think about that, the economic relationship there versus something like a Shopify, just to maybe help us frame the opportunity?

Sure. Then we did, as you mentioned, launched a first pilot client, which is very, very early days in order to speak about expectation on commercial uplift to come out of it, but we did build a very robust integration in partnership with the Wix team. The relationship with Wix is quite close to what we have with most platforms such as Salesforce formula [ph] for hybrid or others in the method of partnership and work We do expect it to contribute towards growth in 2024. I think, we don't expect it to be the same effect as we would expect from Shopify Markets Pro at the same scale, but we do expect it, to give us some incremental growth.

Great. Thank you. And wishing you and the whole Global-e family well.

Thank you very much, Samad.

Our next question comes from Scott Berg with Needham & Company. Please proceed with your question.

Hi everyone. Thanks for taking my questions. And I certainly echo the sentiments and best of luck with the challenging situation there certainly. I guess a couple of questions here. Let's start off with just the net new business. How should we think about net new logo kind of bookings, new customer wins here in the quarter and maybe year-to-date versus your expectations?

As we see it in our numbers and in our funnel, we remain on track to achieve our annual target for new bookings, which will make a 2023 a record year for us. We haven't seen any notable changes in the time it takes to either sell the sales cycle itself or to onboard the clients, so we're quite optimistic on the contribution of our enterprise funnel towards 2024 onwards. In terms of additional factor, which is which is Shopify Markets Pro as stated, it was launched into general availability in the U.S. in September. Since then, we've started to see really nice adoption, to-date with thousands of merchants that actually activated the solution, and we do accept it to give us an additional acceleration into 2024 onwards.

Got it. Helpful. And then I know it's a small sample size in September and October. But implementation of customers kind of going into the strong holiday season, does the modestly changing same-store sales environment may be negatively, or even positively impact your ability, or your customers' desires to make sure these - make sure your solutions implemented before the strong holiday selling season? Thank you.

Sure. Then typically, as you mentioned, we do see late October, early November, push from clients to actually go live pre-peak to enjoy the localization and the extra services we provide during peak period. This - goes the same for this year. We have seen dozens of clients that actually launched with us in the last few days prior to the cold freeze that us as well as the merchants imposed for peak trading. We do expect maybe two more days of launches and then it would go into the quiet period in terms of launching and the focus would go into the peak trading. However, we are very happy with the launches, with the sales cycle, as well as onboarding to launch and the multi-year dynamic, we haven't seen any changes there. The change where we've seen and Amir and Offer spoke about, is actually within same-store sales - which is much more affected by consumer sentiment.

Our next question comes from Alex Toepfer with Goldman Sachs. Please proceed with your question.

Hi everyone. This is Alex on for Will. Congrats on the launch of Markets Pro this quarter. We know it's still early, but we were wondering if you could share some color on the -- what you're seeing in terms of the typical merchant profile, maybe like GMV size, cross-border mix and the popular verticals you're seeing getting adopted. And then my follow-up, can you just talk about how much of the lower fulfillment take rate in the last couple of quarters has resulted from multi-local adoption versus sort of the mix shift towards standard shipping from Express? Thanks.

Hi Alex, it's Nir. I'll take the first question related to Shopify Markets Pro. As you mentioned, it's still early days for the adoption of the solution. But the early adoptions we see on average would be smaller in size than what we see on our enterprise solution as we expected. So it's much easier to onboard many more clients than what we can onboard in a certain time period, on enterprise platform. However, they are much smaller in scale. So the second part of your question, I'll refer it to Ofer.

Thank you, Nir. So in terms of the fulfillment take rate, the higher share of impact is from multi-local adoption. Actually, a lot of it is from merchants that have already onboarded a year ago and are growing with us. And from time-to-time, we do launch an additional merchant that prefers to work based on this method, because they are large and they have global inventories that they can utilize. And the remaining is from a certain shift from Express to standard, as you mentioned.

Got it. Thank you very much.

Thanks, Alex.

Our next question comes from Kunal Madhukar with UBS. Please proceed with your question.

Hi. Thanks for taking my questions. Our thoughts definitely go out to you guys that are sitting in a war zone, especially after the tragedy. One, on the weakness in Europe and in the luxury, can you help us understand how big of an exposure you have to luxury and then to European consumers. And then I have a follow-up?

Hi. Thank you for the question. It's Ofer. Basically, we grew during COVID very fast with luxury brands that have adopted direct-to-consumer once they understood that physical stores are closed, and we grew very fast. As you know, we have quite few LVMH brands. We did launch additional three this quarter. Luxury is a wide definition, but currently, it's approximately 25% of our GMV. Regarding Europe, Europe is a large inbound market, and it's approximately 30% of our inbound sales.

Thank you. And then as we look at your marketing efforts on behalf of Shopify Markets Pro customers, is there an opportunity for take rate expansion if you start offering them marketing services with some spread?

Yes. So I'll just clarify on the difference between Shopify Markets Pro and our enterprise business. On Shopify Markets Pro, there is no marketing efforts from the Global-e side, not onboarding the merchants or selling to the merchants in order to use the platform. And not on the service side, we just offer localization. On the enterprise platform, I would say the investment in marketing, to bring the clients onboard and launch them, of course, is with the company. To those clients, we started to offer indeed marketing service. We're still in the early days. It is part of the assimilation of the Global -- of the Borderfree acquisition capabilities into globally, which is still undergoing on the marketing side. However, we see a nice adoption and growth already at the early stage. So, we did on the back of those capabilities onboard a couple of large merchants into our managed service capabilities. We did launch additional 10 merchants that are using our marketing services to increase brand awareness and demand generation worldwide. So, we see, I would say, the early innings of adoption. Over time, we do expect that as we guided in the past, over time, we do expect it to give us some extra on the take rate. But it will take a few quarters to realize that.

Thank you so much.

Thank you so much.

Our next question comes from Brent Bracelin with Piper Sandler. Please proceed with your question.

Good morning. I'll also extend support and best wishes for you, your family and colleagues impacted by the tragedy in Israel here. Maybe, Amir, I wanted to go back to same-store sales and really double-click into the luxury space. How broad-based was the slowdown in same-store sales? Was it across the majority of your luxury merchants? Was it a handful? Any additional color you could give us around same-store sales and magnitude of the slowdown you saw there with some of those luxury brands would be helpful? Thanks.

Sure. Thank you, Brent, and thank you for the kind words. It was relatively broad in terms of luxury. Obviously, there are always outliers or brands that are impacted less. It is down to the characteristics of the individual brand, but we did see a trend that I would say, roughly covered I would say, around 80% of our luxury brands that did see this same-store sale growth slowdown.

Super helpful there. And then Ofer as a follow-up, if I look at Q4 here, obviously, it came in a little light, because of the macro same-store sales, 35% GMV growth in Q3, you're guiding to 37% growth. So actually an improvement in GMV growth in Q4. Obviously, the macro is getting worse. Data points suggest things are getting more challenging. What's giving you the visibility for growth on a year-over-year basis to improve slightly in Q4? You did talk about several new brands going live in Q3. Maybe that helps Markets Pro could help. I don't know. But could you double click into what gives you confidence GMV growth is going to actually improve in Q4 even with some of the challenges out there and call it, 25% exposure to luxury?

Yes. So thanks, Brent, for the question. Well, as mentioned, we have seen a certain slowdown in same-store sales mainly around luxury in Europe in Q3. And also, as we mentioned, we have seen a bounce back towards the end of October going into November. We do believe that growth will accelerate in the coming quarters. And the main drivers for that is, one, the successful launch of Shopify Markets Pro, which will start contributing already in Q4. It's ramping up. But as mentioned, we do have a large number of merchants on, its smaller merchants, but still, it will contribute into Q4 and contribute more significantly into 2024. In addition to that, the very healthy pipeline and the launches we saw also will support accelerated growth. And we did see an improvement, as I mentioned, in consumer sentiment since late October going actually up to this day to the beginning of the peak. So, there is still the peak period in front of us. And obviously, we took that into account. But we do believe that growth will be accelerated.

Our next question comes from Brian Peterson with Raymond James. Please proceed with your question.

Hi. It's great to hear from you. And best wishes to the Global-e family in these really challenging times. Amir, I wanted to follow up maybe on Brent's last question. You've mentioned you've seen some encouraging signs in spending over the last few weeks. Is that a function of what had softened in luxury and Europe getting better? Or is it maybe broader based trends kind of outside of that? And is it fair to say that those same-store trends are back to where they were in August? I'd love to just kind of double click on what's improved and what you've seen over the last few weeks?

So thanks, Brian, for the question. And what we have seen is the general improvement. We have seen improvement out of Europe as part of the general improvement and less improvement in luxury limited improvement around luxury. But all in all, the numbers have bounced back. So it's a three-week period, but we need to wait and see what happens through the peak, but we have seen a general improvement with Europe as part of that.

I appreciate the perspective. And maybe just on Borderfree. I'd love to get an update on the progress there and expected synergies. And as you kind of talked about that enterprise is a reason for accelerating growth in coming quarters, is Borderfree included in that? I just want to make sure I get an update on what's going on the Borderfree? Thanks guys.

Sure. Then thanks, Brian, it's Nir. As we mentioned in the past, we did extend the period for Borderfree clients to migrate over to the Global platform. But over this quarter, we managed to start onboarding clients into globally already. I can say that we see positive signs there trading for clients that actually migrated the Borderfree platform to globally, is much better. Conversion rates are up as we expected. And on the back of it, we see higher trading volumes. So, we do expect that once we migrated the vast majority within 2024, this will have positive impact on the same-store sales of BorderFree that is currently, on the Borderfree platform, I would say, not as good as what we see globally.

Our next question comes from Koji Ikeda with Bank of America. Please proceed with your question.

Hi Amir, Nir and Ofer. Thanks for taking the questions. I wanted to dig in on the fulfillment take rate and how to think about this metric going forward. In the quarter, take rate was about 8.5%. And I realize you did call out the kind of multi-local and standard shipping. So I really appreciate the color there. But also thinking about -- I do recall in prior quarters, sometimes smaller box, high-value products can drive the fulfillment take rate lower. And then layering on the ramp of Market Pro on top of that. The question here is how should we be thinking about the long-term fulfillment take rate for the business and maybe some of the dynamics that could affect that?

Yes. So thank you for that, Koji. I'll start from luxury, as we mentioned, it wasn't a great quarter for luxury. So that didn't have any negative impact on fulfillment take rates. Going forward, and as we mentioned, the main drivers were multi-local and also some shift from Express shipping to standard shipping. Going forward, we do expect stabilization and maybe a slight improvement going into next year, into the first quarter. But all in all, if we look to 2024, and again, we are working on the budget currently, but we do expect take rates to stay relatively stable throughout '24 with some volatility between the quarters.

Our next question comes from Maddie Schrage with KeyBanc Capital Markets. Please proceed with your question.

Hi guys. Just wanted to maybe keep on the fulfillment take rate subject. I wanted to know if any of the consumer weakness kind of also resonates with shipping speeds and shipping take rates. Just wondering if we would maybe express -- or expect less express shipping in the holiday season this year maybe compared to last year? Thanks.

I think you're perfectly right that there was some effect related to consumer sentiment and the higher growth of standard shipping versus Express, we've seen in Q3 as we've seen shoppers mainly in Europe, trending more towards the standard with increased standard share in the mix. However, when we go into Q4, especially for peak period and into Christmas sales as consumers are much more concerned with the time it will take for the package to arrive. A lot of it is gifting, especially if we speak about the Christmas shopping, we don't expect to see this trend continue as we do give some warnings in the checkout prior to Christmas to alert about higher transit time in standard. Usually, we see a shift towards -- back towards Express. So, we don't expect this to continue.

Okay. Great. And I think we've heard from some other e-commerce players that they're kind of expecting bigger discount this holiday season from the retailers. So just wondering what your guys' expectations are in terms of maybe discounts from retailers and maybe lower cart sizes than typical? Thanks.

So within September, October, we did witness some lower AOV on average. It was driven by, I would say, a reduction in luxury that also with smaller baskets in Europe, the combination of both yielded on company-wide, a bit of a reduction, or average order value. And we do expect, some of it to translate into lower baskets within peak. We did and we do discuss especially with some of our larger brands, or plans into peak. And some of it is based on heavier discounting than last year. All in all, we don't think it would be a major effect. And the early signings of peaks that we see in the last few days look very positive in terms of uplift in sales without a major impact on the average basket versus last year.

Our next question comes from Pat Walravens with JMP Securities. Please proceed with your question.

Great. Thank you. I mean, so Amir, putting it all together, what are the top one or two things that you feel as CEO, you need to get done for 2024? And as part of that, does the Shopify agreement still expire in April 2024 with the automatic renewal? Is that still how that works?

Thanks, Pat. I'll start with the second one. It's easier as we mentioned, the agreement was extended for another year. The original agreement as was the three year initial term, which indeed ends in April of next year, but it also had an auto renewal mechanism that kicked in. So it was renewed, and it's now until April 2025. So that's regarding the Shopify agreement. In terms of priorities for next year, I think it's pretty clear for us. We have our core set. We believe very firmly in our ability to continue executing on all our strategic vectors. So it will it will be making sure that we continue the strong push of our funnel into actual deals. And getting the many merchants that we have signed and in integration, getting them live as planned. And in parallel, growing Shopify Markets Pro together with Shopify, and extending our reach to additional markets into additional verticals as we stated. On top of that, we have quite a few strategic initiatives. We talked a lot about the demand generation also in previous quarters, and we have a few value-added services that are longer term in terms of their impact on the actual financials, but we believe they are important stones in the building that we are building, and we will continue to invest in these as future growth engines for the business.

Our next question comes from Mark Zgutowicz with The Benchmark Company. Please proceed with your question.

Thank you. And good afternoon. Two quick ones. Just if you think of - you talked a lot about consumer sentiment improving, and specifically in Europe, I'm curious what you attribute the more near-term snapback to - and if there's any sort of correlation as you look at that snapback, if you will, to higher sales volumes, that type of thing. And then as we look at first half of next year, not looking for any specific numbers, but just trying to understand if the macro gets a bit tighter sort of how you think about flex you have on the expense side and where specifically you may have some flexibility there. Thank you.

Thank you for your question. It's Nir. So the softening we've seen coming in September, and I would say, kind of bouncing back or ending late October. We don't really have a good macro explanation to it as we didn't see a major shift in inflation or in current inflation or inflation expectations in Europe. So I can't honestly attribute it to something specific. However, we did see a change and changing back again. So hopefully, it's a trend we've seen now will continue to repeat. I think we're in a good position for year-end and the following quarters. And on that, we're optimistic.

I'll take your second question. In terms of expenses, we do have some flex, but actually, what we are doing and what we have been doing over the last few quarters, even more than that, is actually preempting that and managing our operational expenses very tightly in making sure, as we look forward to adding additional headcount, we also mentioned in the prepared remarks that we do continue to expand our team to support the future development. But at the same time, we're doing it very diligently, and we are always with the lookout to the expected growth of the business to make sure that our revenues grow faster than our cost base. So this is very actively managed by us on a day-to-day basis.

Okay. Thank you. And maybe one last one. Just when you talk about, you mentioned you expect Shopify Markets Pro to be a significant contributor next year, albeit not quantifying that yet. Just curious, what type of penetration do you need of their plus merchant base for that to be significant?

I think that - and the great thing about Shopify Markets Pro, it caters for virtually all of Shopify merchants. So it's not limited to plus any small merchants on the Shopify platform that is interested in international or doing even small amounts in international can actually subscribe to the service and turn it on. It's simple. And actually, we will see a much broader adoption than outside us. We do believe it will come significant even if the adoption rates aren't very, very high. You will see a very significant contribution. We need to recall that Shopify cross-border reported GMV is around the $30 billion mark. If we get - if we are able to cater for some of it also through the Shopify Markets Pro, it is a nice growth rate for globally on top of our current growth.

Our next question comes from [Zachary Dunn with FT Partners]. Please proceed with your question.

Hi, there guys. Thanks for taking my question. I just wanted to touch quickly on the service fee take rate. So on a year-over-year basis, I think it's the second sequential quarter of the take rate declining. And that decrease actually accelerated. So last quarter, you said you expected to stay stable in the back half with some upside from value-added services. I guess my question is two-fold. One, is that take rate coming in lower because of weaker demand from value-add services? And then just two, how should we think about that take rate going forward? Should we expect it to be down again year-over-year. Any context that would be appreciated. Thanks.

Yes. Thank you for the question. Actually, we are quite satisfied from the service fee take rate. It did meet our expectations. We mentioned in the previous quarter that Q3 is a very tough comp because we had a particularly high service fee take rate in 2022. But as you can see, the service fee take rate has increased sequentially from Q2 to Q3. And we do believe that there is some additional upside. But as I mentioned previously, going into Q4 and next year, we do believe that it should stay stable. And again, maybe some upside on the service fee side.

There are no further questions at this time. I would now like to turn the floor back over to Amir for closing comments.

Thank you, and thank you, everyone, for joining us on this call today. Before we finish, I would just like to take this opportunity and thank you all again for your ongoing support and for sharing our passion for cross-border e-commerce and our belief in the enormous opportunity presented by. We very much look forward to updating you again on our calls as we continue our rapid path to conquer this market. So until next time, goodbye to you all and take care.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.