Core Insights - Riskified Ltd. reported strong second-quarter sales, with earnings of 2 cents per share meeting analyst expectations and sales of $81.060 million exceeding the consensus estimate of $80.374 million [1] - The company raised its FY2025 sales guidance from a range of $333 million to $346 million to a new range of $336 million to $346 million [1] Company Performance - The CEO of Riskified highlighted solid second-quarter results driven by consistent execution and demand for their platform, emphasizing advancements in AI capabilities to enhance competitive edge and market leadership [2] - Riskified's shares increased by 2.3%, trading at $4.5300 following the earnings announcement [3] Analyst Ratings - DA Davidson analyst maintained a Buy rating but lowered the price target from $6.5 to $6 [8] - UBS analyst kept a Neutral rating and reduced the price target from $5.75 to $5 [8] - Keefe, Bruyette & Woods analyst maintained a Market Perform rating and decreased the price target from $5.5 to $5.25 [8]

Core Viewpoint - Riskified reported quarterly earnings of $0.02 per share, matching the Zacks Consensus Estimate, but down from $0.04 per share a year ago [1] - The company posted revenues of $81.06 million for the quarter, exceeding the Zacks Consensus Estimate by 1.22% and up from $78.73 million year-over-year [2] Financial Performance - Riskified's earnings of $0.02 per share align with expectations, while the previous quarter saw a surprise of +200% with earnings of $0.03 per share against an expectation of $0.01 [1] - The company has surpassed consensus revenue estimates four times over the last four quarters [2] Stock Performance - Riskified shares have increased approximately 11.2% since the beginning of the year, outperforming the S&P 500's gain of 9.7% [3] - The stock's immediate price movement will depend on management's commentary during the earnings call [3] Future Outlook - Current consensus EPS estimate for the upcoming quarter is $0.02 on revenues of $80.43 million, and for the current fiscal year, it is $0.18 on revenues of $340.58 million [7] - The estimate revisions trend for Riskified was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Internet - Software industry, to which Riskified belongs, is currently in the top 30% of over 250 Zacks industries, suggesting a favorable outlook [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Data and Key Metrics Changes - The company's GMV for Q2 was $36.4 billion, with a first half GMV of $70.6 billion, reflecting a 45% year-over-year increase [15] - Q2 revenue reached a record $81.1 million, up 3% year-over-year, while first half revenue was $163.4 million, up 5% year-over-year [15] - Non-GAAP gross profit margin for 2025 was approximately 50%, down from 53% in the prior year [19] - Positive adjusted EBITDA of $2.1 million in Q2 and $3.5 million for the first half of 2025, marking the seventh consecutive quarter of positive adjusted EBITDA [21] Business Line Data and Key Metrics Changes - The two largest categories, tickets and travel, and fashion and luxury, grew 1510% year-over-year, driven by strong new business wins and upsell activity [15] - The home category saw a year-over-year decline of 74%, while the money transfer and payments category achieved approximately 90% year-over-year growth in Q2 [17] - Fashion and luxury category growth was partially offset by same-store sales pressure, particularly in high-end fashion and sneakers [16] Market Data and Key Metrics Changes - The United States market declined 11% year-over-year, primarily due to the contraction in the home category, while APAC grew approximately 40% year-over-year [18] - Other Americas (Canada and Latin America) grew approximately 16% year-over-year, and EMEA grew approximately 23% year-over-year, with strong performance in fashion and luxury, tickets and travel, and money transfer and payments [18] Company Strategy and Development Direction - The company aims to gain market share in existing categories and geographies while expanding into new verticals to diversify its merchant base [7] - A partnership with Human Security was announced to enhance fraud prevention capabilities in the evolving landscape of AI commerce [10] - The board authorized an additional $75 million share repurchase program, reflecting confidence in the company's long-term trajectory [13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the solid first half performance and the potential for improvement in the second half, supported by a robust new business pipeline [6] - The company anticipates delivering an annual non-GAAP gross profit margin of approximately 52% for 2025, with expectations for higher margins in the second half [20] - Management highlighted the increasing complexity of fraud and the need for advanced solutions, positioning the company as a leader in the market [89] Other Important Information - The company ended Q2 with $339 million in cash, deposits, and investments, maintaining a debt-free balance sheet [22] - Quarterly free cash flows were $5.3 million, up from $4.1 million in the prior year, with an expectation of approximately $30 million of positive free cash flow for 2025 [22] Q&A Session Summary Question: Expectations for the second half of the year and same-store sales in fashion and luxury - Management is optimistic about the sales pipeline and expects win rates to be similar to historical levels, but same-store sales in fashion and luxury may be flat or down [27][30] Question: Impact of AgenTek Commerce on pipeline conversations - The evolving space of AgenTek Commerce is generating new conversations and budget opportunities as merchants seek to address AI-related challenges [32][34] Question: Trends in performance by vertical and same-store sales commentary - Travel and payments performed well, while ticket sales showed some softness, particularly in June, with expectations for a challenging comparison to the previous year's strong performance [39][41] Question: Management of operating expenses - Operating expenses were managed well, with expectations for similar levels in the second half of the year [43][45] Question: Adoption trends for adaptive checkout and its impact on new logos - Adaptive checkout has seen double-digit percentage adoption, contributing positively to the overall value proposition [47][49] Question: Proportion of fraud from large coordinated attacks - There has been an increase in professional, coordinated fraud attacks, primarily through remote desktop hacking and data breaches [72] Question: Renewal rates and upsell strategies - The company achieved a 100% renewal success rate and continues to focus on creating unmatched value for merchants [80][81]

Financial Performance - Q2 2025 revenue reached $811 million, a 3% year-over-year increase[50, 55] - H1 2025 revenue totaled $163447 million, a 5% year-over-year increase[55, 89] - Q2 2025 Adjusted EBITDA was $21 million[50, 57] - The company repurchased 49 million shares for $233 million in Q2 2025[58, 65] - The company has approximately $85 million remaining for share repurchases as of August 15, 2025[58, 65] Market Position and Growth - Riskified reviewed approximately $145 billion in GMV in the twelve months ended June 30, 2025[16, 18] - The company estimates the global ecommerce GMV to be approximately $65 trillion in 2025 and $83 trillion in 2029[19] - Non-GAAP operating expenses as a percentage of revenue decreased from 50% to 47% year-over-year[56] Future Outlook - The company's 2025 revenue guidance is between $336 million and $346 million[59] - The company's 2025 Adjusted EBITDA guidance is between $18 million and $26 million[59] - The company expects approximately $30 million in Free Cash Flow in 2025[74]

Group 1 - Riskified Ltd. is set to release its second-quarter earnings results on August 18, with analysts expecting earnings of 2 cents per share, a decrease from 4 cents per share in the same period last year [1] - The company is projected to report quarterly revenue of $80.37 million, an increase from $78.73 million a year earlier [1] - Riskified's first-quarter results were better than expected, indicating potential positive momentum [1] Group 2 - Riskified shares experienced a decline of 1.5%, closing at $5.11 [2] - Analysts have provided various ratings for Riskified, with DA Davidson maintaining a Buy rating and raising the price target from $6 to $6.5 [4] - Piper Sandler reiterated an Overweight rating with a price target of $7, while JP Morgan maintained a Neutral rating and reduced the price target from $7 to $6 [4]

Summary of Riskified (RSKD) FY Conference Call - June 10, 2025 Company Overview - **Company**: Riskified - **Industry**: E-commerce fraud prevention and risk management Key Points and Arguments 1. **Core Business Model**: Riskified started by helping merchants manage e-commerce risk, focusing on identifying fraudulent transactions and managing chargebacks. The company has expanded its services to include policy abuse management and consumer account protection [1][3][4]. 2. **Market Size**: Merchants are liable for card-not-present fraud, leading to aggregate losses of hundreds of billions annually due to fraud [4]. 3. **Cost Structure for Merchants**: A sample profit and loss statement for e-commerce merchants shows costs related to fraud chargebacks (25 basis points), staffing (3 basis points), and tools (2 basis points) [5]. 4. **Performance Guarantees**: Riskified offers guaranteed performance, including cost guarantees for approved transactions that result in chargebacks, which allows merchants to replace traditional service provider costs [7][8]. 5. **Data Capture and Technology**: Riskified utilizes extensive data capture per transaction, leveraging machine learning to optimize fraud detection and decision-making processes. The company claims to capture three times more data than traditional payment processors [10][12]. 6. **Client Base**: Riskified works with over 50 publicly traded companies, providing tailored models for each client based on their specific data points [12][14]. 7. **Fraud Trends**: Fraud is becoming more sophisticated, necessitating continuous investment from merchants to combat new trends. The rise of e-commerce and AI tools has contributed to this increase in fraud [19][20][21]. 8. **Riskified Flywheel**: As more merchants join the network, Riskified's accuracy improves due to better data, leading to higher approval rates and retention rates among clients [22][23]. 9. **Policy Abuse Management**: Riskified's policy product helps merchants identify and block fraudulent refund and return requests, providing significant ROI [23][37]. 10. **International Growth**: The company has seen strong international growth, with eight out of the top ten clients in Q1 being outside the U.S. [35]. 11. **New Product Growth**: Non-chargeback guarantee products grew by 190% year-over-year, with significant revenue expected from the policy product [36]. 12. **Financial Health**: Riskified has a strong balance sheet with no debt and has been actively repurchasing shares. The company aims for 15% to 20% EBITDA margins by 2026 [53][56]. 13. **Market Opportunity**: The total e-commerce GMV is over $6 trillion, presenting a significant growth opportunity for Riskified as it aims to capture more market share [58]. Additional Important Insights 1. **Client Decision Factors**: Enterprises often weigh the cost of building internal solutions against outsourcing to Riskified, which can improve their P&L by reducing costs and increasing efficiency [60]. 2. **Long-term Vision**: Riskified aims to expand its product portfolio and generate more value for clients, leveraging network effects to gain capabilities across geographies and industries [62]. 3. **M&A Strategy**: The company is open to M&A opportunities that can enhance its technology and cross-sell to existing clients, although current market valuations present challenges [56][57]. This summary encapsulates the key insights from the Riskified FY Conference Call, highlighting the company's strategic focus, market dynamics, and growth potential in the e-commerce fraud prevention industry.

Summary of Riskified (RSKD) FY Conference June 04, 2025 Company Overview - **Company Name**: Riskified - **Founded**: 2013 - **Public Listing**: 2021 - **Core Business**: Provides fraud management solutions for e-commerce, focusing on chargeback guarantee products and expanding into new areas [2][6] Industry Insights - **E-commerce Market Size**: The total addressable market (TAM) for e-commerce is approximately $6 trillion, with Riskified managing over $140 billion in gross merchandise volume (GMV) [17][40] - **Fraud Management Challenge**: E-commerce merchants face significant costs due to chargebacks, averaging around 25 basis points (bps) of revenue, which can be substantial [9][11] Core Product Offerings - **Chargeback Guarantee**: Riskified offers a chargeback guarantee that reduces the cost structure for merchants from an average of 30 bps to 20-25 bps, while also guaranteeing transaction approval rates [14][40] - **Adaptive Checkout**: A product that enhances bank payment authorization rates by sending enriched data to issuing banks, improving overall transaction success [19] - **Policy Protect**: The fastest-growing product with 90% year-over-year growth, aimed at identifying and blocking fraudulent refund requests [20][21][26] - **Chargeback Management Software**: A tool for managing chargebacks, allowing fraud teams to handle disputes efficiently [27] Financial Performance - **Cost Structure**: The cost of chargebacks is the largest component affecting gross margins, which hover around 50% [44] - **Operational Efficiency**: The company has focused on reducing operational expenses (OpEx) while improving profitability, with a flat OpEx forecast for the current year [41] - **Cash Flow**: Strong cash flow generation, with guidance over $30 million for the year [44] Growth Opportunities - **Market Expansion**: Riskified is targeting geographic expansion in regions like APAC and LATAM, with a focus on diversifying into non-discretionary categories [42][49] - **Upselling Potential**: There is significant white space for upselling within existing clients, with 80% of the top 30 clients having at least one upsell [49] - **New Product Development**: Continuous innovation in machine learning and data analytics to enhance product offerings and improve fraud detection capabilities [35][39] Key Metrics and Results - **ROI for Merchants**: On average, top clients experience a 30% reduction in costs and a high single-digit increase in approval rates [17][40] - **Data Capture Advantage**: Riskified's ability to capture extensive data per transaction allows for more accurate fraud detection and tailored solutions for enterprise clients [33] Conclusion Riskified is positioned as a leading player in the e-commerce fraud management space, leveraging machine learning and extensive data capture to provide value to merchants while addressing the significant challenges posed by fraud and chargebacks. The company is focused on expanding its product offerings and geographic reach, aiming for sustained growth and improved profitability in the coming years.

Group 1 - The investment approach focuses on long-term investments while incorporating short-term shorts to uncover alpha opportunities [1] - The analysis is based on bottom-up evaluation, emphasizing the fundamental strengths and weaknesses of individual companies [1] - The goal is to identify companies with solid fundamentals, sustainable competitive advantages, and growth potential [1]

Summary of Riskified Conference Call Company Overview - **Company**: Riskified - **Industry**: E-commerce fraud prevention and management - **Core Offering**: AI solutions for managing online payments fraud, policy abuse, chargeback management, and account security [4][5] Core Value Proposition - **Merchant Challenges**: Merchants face liability for fraudulent transactions, requiring robust systems to differentiate between legitimate and fraudulent transactions [5] - **Fraud Types**: Includes chargebacks from "liar buyer friendly fraud," where customers falsely claim fraud to return items [6][7] - **Impact on Business**: Riskified's solutions have led to a cost reduction of over 30% and an average increase in approval rates of about 8% for top customers [9][10] Market Strategy - **Target Market**: Focus on enterprise clients, particularly those with revenues from $50 million to over $1 billion, with a growing presence in Latin America and Asia-Pacific [12] - **Sales Approach**: Direct sales targeting large enterprises, with plans to expand into mid-market and SMB segments [12] Industry Dynamics - **Fraud Evolution**: Increased sophistication in fraud tactics, including the use of AI by fraudsters, necessitating advanced solutions [14][21] - **Market Opportunity**: The growth of e-commerce (projected at $6.5 trillion) presents a significant opportunity for fraud, driving demand for Riskified's services [18][19] Financial Performance - **Net Dollar Retention**: Declined to 96% in 2024, attributed to large merchant churn and macroeconomic factors affecting discretionary spending [31][32] - **Growth in Non-Discretionary Categories**: Shift towards non-discretionary spending categories like food delivery and groceries has diversified the revenue base [30] Competitive Landscape - **Competitors**: Traditional legacy players and newer fintech solutions, with Riskified positioned as a more advanced, AI-driven alternative [35][36] - **Data Advantage**: Riskified captures extensive data across the transaction lifecycle, enhancing modeling performance compared to competitors [37][38] Product Development - **New Products**: Introduction of adaptive checkout, policy protect, and dispute resolve tools aimed at improving merchant conversion rates and managing fraud [55][61] - **Chargeback Guarantee**: Offers merchants a guaranteed approval rate and cost of fraud, enhancing value and accountability [49][50] Customer Engagement - **Cross-Selling Opportunities**: Increased focus on cross-selling additional products to existing clients, with significant growth in new product revenue [44][46] - **Customer Experience**: Emphasis on improving customer experience through faster refunds for loyal customers and managing abusive refund requests [62][63] Macro Environment - **Economic Resilience**: Despite uncertainties, consumer spending has remained resilient, with minimal impact from tariffs on overall business [27][28] - **Future Outlook**: Anticipated recovery in discretionary spending and continued growth in non-discretionary categories expected to stabilize net dollar retention [34] Conclusion - Riskified is well-positioned in the e-commerce fraud prevention market, leveraging advanced AI technology to address evolving fraud challenges while expanding its product offerings and market reach. The company is focused on enhancing customer experience and driving growth through strategic diversification and innovation.

Summary of Riskified Conference Call Company Overview - **Company**: Riskified - **Industry**: Fintech, specifically focused on e-commerce fraud prevention and management Core Business and Value Proposition - Riskified started by helping e-commerce merchants manage online fraud, which is a significant and growing issue, with global fraud estimated at $50 billion annually [5] - The company leverages machine learning, cybersecurity, and big data to create models that detect fraudulent transactions [3][4] - Riskified has expanded its services to include policy abuse, dispute management, and account security, addressing various challenges faced by merchants [4] Financial Metrics and Cost Structure - Typical merchants incur costs of 30 basis points for managing fraud, which includes chargebacks, internal staffing, and current solution providers [6][7] - Riskified offers a guaranteed model that reduces costs to around 24 basis points, providing a 20% reduction in costs and a guaranteed approval rate of 93% [9][10] - On average, Riskified has reduced costs for its top clients by over 30% and increased approval rates by 7-8% [11] Policy Abuse and Refund Management - Policy abuse, particularly in refund and return requests, is a major issue, with Riskified able to block over 10% of fraudulent requests without increasing false positives [12][13] - The company emphasizes the importance of educating merchants on the value of their services, which can be difficult to quantify [14][16] Competitive Landscape - Riskified differentiates itself from competitors by offering a chargeback guarantee and a broader range of services, while many competitors focus solely on risk scoring [17][19] - The company has a competitive win rate above 70%, attributed to its comprehensive platform and ability to address multiple issues [21][25] Market Opportunity - Riskified processed $140 billion in reviewed volume last year, with the global e-commerce market estimated at $6 trillion [26][30] - The company believes that a significant portion of the market still relies on legacy solutions, presenting an opportunity for market share gains [31] Business Resilience and Outlook - Riskified's business is diversified across various sectors, including travel, fashion, and electronics, which has helped mitigate risks from market fluctuations [45][46] - The company has maintained a strong pipeline and is confident in its guidance for the upcoming quarters, despite potential economic uncertainties [47] Long-term Goals and Strategy - Riskified aims to achieve a gross margin target of over 15% by 2026, focusing on scalability and automation [48][49] - The company is open to M&A opportunities but has not pursued any to date due to a lack of suitable options [52][53] - Riskified envisions leveraging its AI platform to expand its service offerings and increase the GMV flowing through its system [69] Conclusion - Riskified is positioned as a leader in the fintech space, focusing on fraud prevention and management for e-commerce merchants, with a strong emphasis on machine learning and data analytics to drive value and efficiency in its services. The company is optimistic about its growth potential and market opportunities in the coming years.