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.

Financial Data and Key Metrics Changes - The company reported a GMV of $34.2 billion for Q1 2025, reflecting a 7% year-over-year increase [13] - Revenue for the first quarter was $82.4 million, also up 8% year-over-year [13] - The non-GAAP gross profit margin for Q1 2025 was approximately 50%, with a year-over-year decline attributed to ramping up new merchants in newer categories [17] - Positive adjusted EBITDA of $1.3 million was achieved in Q1, marking the sixth consecutive quarter of positive adjusted EBITDA [19] - The company ended the quarter with approximately $357 million in cash, deposits, and investments, carrying zero debt [19][20] Business Line Data and Key Metrics Changes - The two largest categories, Tickets and Travel and Fashion and Luxury, each grew in the mid-teens range year-over-year, driven by strong new business wins and upsell activity [13] - The money transfer and payments category saw approximately 90% year-over-year growth, primarily driven by new merchant activity [14] - The home category contracted by 74%, contributing to a 5% year-over-year decline in the U.S. market [15] - Growth accelerated across all regions outside the U.S., with APAC growing approximately 70% and Outer Americas growing approximately 13% [16] Market Data and Key Metrics Changes - Eight of the top ten new logos won during Q1 were headquartered outside the U.S., indicating a continued expansion of the company's geographic footprint [12] - The company noted that the overall consumer remained resilient, with April trends stable compared to March [11] Company Strategy and Development Direction - The company is focused on expanding its top-of-funnel efforts to generate more pipeline, converting that pipeline into new business, and retaining and growing with merchants once onboarded [7] - The strategic investment in machine learning capabilities is aimed at enhancing performance for merchants and addressing evolving fraud challenges [10] - The company aims to maintain a non-GAAP gross profit margin between 52% to 53.5% for the full year [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong start to 2025 and the opportunities surrounding the pipeline and anticipated new business activity [21] - The company is maintaining its revenue guidance of between $333 million and $346 million and adjusted EBITDA guidance of between $18 million and $26 million for the year [22] - Management acknowledged the uncertainty around potential impacts of tariffs on merchants and overall spending activity [21] Other Important Information - The company repurchased 4.1 million shares for approximately $20.7 million during the first quarter, contributing to a decrease in share count [20] - The company continues to expect approximately $30 million of positive free cash flow in 2025, with the majority expected in the second half of the year [20] Q&A Session Summary Question: Impact of product roadmap execution on growth confidence - Management expressed satisfaction with the strong start to the year, attributing pipeline growth to the platform's value proposition and increased touchpoints within organizations [26][27] Question: Timeline for gross margin stabilization - Management encouraged looking at gross margins on an annual basis, reiterating expectations set in the previous call [30] Question: Update on mid-tier market strategy - Management indicated that while there is potential in the mid-tier market, the current strength of the pipeline remains focused on enterprise-level clients [35] Question: Long-term potential of the money transfer and payments category - Management highlighted the broad range of use cases in the money transfer category and the opportunity to expand market share [37] Question: Comparison with competitors, specifically Stripe - Management noted that Riskify's data capabilities are significantly greater than those of gateway solutions like Stripe, allowing for more effective fraud prevention [41][43] Question: Industry growth rates compared to company performance - Management acknowledged that their categories do not always align with external e-commerce growth metrics, with some categories performing better than industry averages [45][46] Question: Growth mix between new logos and existing base - Management indicated that new logo growth is slightly higher than expected, while dollar retention rates remain close to 100% [63][64]

Financial Data and Key Metrics Changes - The company's GMV for Q1 was $34.2 billion, reflecting a 7% year-over-year increase [13] - Revenue for Q1 was $82.4 million, also up 8% year-over-year [13] - Non-GAAP gross profit margin for Q1 was approximately 50%, with a year-over-year decline attributed to ramping up new merchants [17] - Positive adjusted EBITDA of $1.3 million was achieved in Q1, marking the sixth consecutive quarter of positive adjusted EBITDA [19] - The company ended Q1 with approximately $357 million in cash, deposits, and investments, carrying zero debt [19][20] Business Line Data and Key Metrics Changes - The two largest categories, Tickets and Travel and Fashion and Luxury, each grew in the mid-teens range year-over-year [13] - The money transfer and payments category achieved approximately 90% year-over-year growth in Q1, driven by new merchant activity [14] - The home category contracted by 74%, contributing to a 5% year-over-year decline in the U.S. [15] - Growth in APAC was approximately 70%, while Outer Americas grew approximately 13% [16] Market Data and Key Metrics Changes - Eight of the top ten new logos won during Q1 were headquartered outside the U.S., indicating a focus on international growth [12] - The company has seen strong performance in the travel category, contrasting with broader industry trends [46] Company Strategy and Development Direction - The company is focused on expanding its product portfolio and enhancing its AI decisioning engine to address a wider range of use cases [9] - The strategy includes diversifying across verticals and geographies to enhance resilience against economic uncertainty [11] - The company aims to maintain a revenue guidance of $333 million to $346 million for the year, reflecting a balanced view of risks and opportunities [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of consumers despite market uncertainties [11] - The company is strategically investing in machine learning capabilities to support merchants in addressing evolving fraud challenges [10] - The outlook remains cautious due to potential impacts of tariffs on merchants and overall spending activity [21] Other Important Information - The company repurchased 4.1 million shares for approximately $20.7 million in Q1, reflecting a commitment to managing dilution [20] - The company expects to generate approximately $30 million in positive free cash flow in 2025, with most cash flow generation anticipated in the second half of the year [20] Q&A Session Summary Question: Impact of product roadmap execution on growth confidence - Management highlighted strong pipeline growth and the effectiveness of their global go-to-market strategy as key factors for confidence in future growth [26][27] Question: Timeline for gross margin stabilization - Management encouraged looking at gross margins on an annual basis, noting that large client wins in Q1 impacted year-over-year comparisons [30] Question: Update on mid-tier market strategy - Management indicated that while there is potential in the mid-tier market, current strength remains in enterprise-level opportunities [35] Question: Long-term potential of the money transfer and payments category - Management sees a broad opportunity set in money transfer, with various use cases and payment methods contributing to growth [37] Question: Comparison with competitors like Stripe - Management emphasized the advantages of their data capabilities over gateway solutions, allowing for more effective fraud prevention [41][43] Question: Industry growth rate relative to company performance - Management noted that their growth in certain categories, like travel, has outperformed broader industry trends, indicating potential share gains [46][48]

Financial Data and Key Metrics Changes - The company's GMV for Q1 2025 was $34.2 billion, reflecting a 7% year-over-year increase [12] - Revenue for Q1 2025 was $82.4 million, also up 8% year-over-year [12] - Non-GAAP gross profit margin for Q1 2025 was approximately 50%, with a year-over-year decline attributed to ramping up new merchants in newer categories [16] - Positive adjusted EBITDA of $1.3 million was achieved in Q1 2025, marking the sixth consecutive quarter of positive adjusted EBITDA [18] - The company ended Q1 2025 with approximately $357 million in cash, deposits, and investments, carrying zero debt [18] Business Line Data and Key Metrics Changes - New product revenue growth was up approximately 190% year-over-year, indicating strong traction of the platform [8] - The two largest categories, Tickets and Travel and Fashion and Luxury, each grew in the mid-teens range year-over-year [12] - The money transfer and payments category achieved approximately 90% year-over-year growth in Q1 2025, driven by new merchant activity [13] - The home category contracted by 74% year-over-year, contributing to a 5% decline in the U.S. [14] Market Data and Key Metrics Changes - APAC grew approximately 70% and Outer Americas (Canada and Latin America) grew approximately 13% in Q1 2025, primarily due to new and upsell activity [15] - Eight of the top ten new logos won during Q1 2025 were headquartered outside the U.S., indicating a focus on international growth [11] Company Strategy and Development Direction - The company is focused on expanding its top-of-funnel efforts to generate more pipeline and converting that pipeline into new business [5] - There is a strategic investment in machine learning capabilities to enhance performance for merchants [9] - The company aims to maintain a non-GAAP gross profit margin between 52% to 53.5% for the full year [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of consumers despite macroeconomic uncertainties [10] - The company maintains its revenue guidance of $333 million to $346 million for 2025, reflecting a balanced view of risks and opportunities [20] - Management noted that the global go-to-market strategy is starting to pay off, with more opportunities diversified outside the U.S. [26] Other Important Information - The company repurchased 4.1 million shares for approximately $20.7 million in Q1 2025, reflecting a commitment to managing dilution [19] - The company expects approximately $30 million of positive free cash flow in 2025, with most cash flow generation anticipated in the second half of the year [19] Q&A Session Summary Question: Impact of product roadmap execution on growth confidence - Management highlighted strong pipeline growth and the effectiveness of their platform in driving new business opportunities [25] Question: Timeline for gross margin stabilization - Management encouraged looking at gross margins on an annual basis, with expectations for improvements as large client wins ramp up [29] Question: Update on mid-tier market strategy - Management indicated that while there is potential in the mid-tier market, current strength is still focused on enterprise-level clients [34] Question: Competitive landscape comparison with Stripe - Management emphasized the advantages of their data capabilities over gateway solutions like Stripe, which have more limited data access [40] Question: Industry growth rate compared to GMV growth - Management noted that their growth in certain categories, like travel, has outperformed broader industry metrics, indicating share gains [44] Question: Growth mix between new logos and existing base - Management indicated that new logo growth is slightly higher than expected, while dollar retention rates remain around 100% [62]

Financial Performance - Riskified's Q1 2025 revenue reached $82.4 million, an 8% year-over-year increase[51, 56] - The company achieved positive Adjusted EBITDA of $1.3 million in Q1 2025, marking the sixth consecutive quarter of positive Adjusted EBITDA[51, 58] - Riskified repurchased 4.1 million shares in Q1 2025 at a total cost of $20.7 million[59, 65] - The company maintains its 2025 revenue guidance between $333 million and $346 million, with an Adjusted EBITDA guidance between $18 million and $26 million[61] Business Growth & Diversification - Riskified's GMV for FY2024 was over $140 billion[16, 20] - Revenue from products outside of the core Chargeback Guarantee product increased by approximately 190% year-over-year[64] - The company is expanding into new verticals, including Money Transfer & Payments, which experienced over 90% year-over-year revenue growth in Q1 2025[63] - Riskified is diversifying geographically, with eight of the top ten new Chargeback Guarantee logos representing wins outside of the United States in Q1 2025[62] Platform & Technology - Riskified's platform has reviewed over 4 billion historical eCommerce transactions and includes over 950 million unique consumers in its network[40] - The company's non-GAAP operating expenses as a percentage of revenue decreased from 53% to 48% year-over-year, indicating improved expense management[57]

[Q1 2025 Financial Results Overview](index=1&type=section&id=Q1%202025%20Financial%20Results%20Overview) [Q1 2025 Business Highlights](index=1&type=section&id=Q1%202025%20Business%20Highlights) Riskified expanded market reach with new merchant wins, grew its multi-product platform, and continued its share repurchase program - Further vertical and geographic diversification was achieved, with **eight of the top ten new Chargeback Guarantee logos outside the United States**[3](index=3&type=chunk) - A new global digital wallet account was onboarded in the Money Transfer & Payments category, which experienced **over 90% year-over-year revenue growth**[3](index=3&type=chunk) - Revenue growth from products outside the core Chargeback Guarantee product **increased by approximately 190% year-over-year**[3](index=3&type=chunk) - An aggregate of **4.1 million shares were repurchased for $20.7 million** in Q1 2025[3](index=3&type=chunk) - Riskified was named the **Most Innovative Fraud Prevention Solution** at the Merchant Payments Ecosystem Awards 2025[3](index=3&type=chunk) [Q1 2025 Financial Summary & Highlights](index=2&type=section&id=Q1%202025%20Financial%20Summary%20%26%20Highlights) Riskified reported increased revenue and GMV in Q1 2025, with GAAP gross profit and Adjusted EBITDA decreasing, but maintained a strong cash position with zero debt Q1 2025 Financial Performance (YoY Comparison) | Metric | Q1 2025 | Q1 2024 | YoY Change | | :-------------------------------- | :-------- | :-------- | :--------- | | Gross Merchandise Volume ("GMV") (in billions) | $34.17 | $32.02 | +7% | | Revenue (in millions) | $82.39 | $76.41 | +8% | | GAAP Gross profit (in millions) | $40.45 | $42.12 | -4% | | GAAP Gross profit margin | 49% | 55% | -6 ppts | | Net profit (loss) (in millions) | $(13.89) | $(11.63) | -19% | | Net profit (loss) margin | (17)% | (15)% | -2 ppts | | Adjusted EBITDA (in millions) | $1.32 | $2.75 | -52% | | Adjusted EBITDA margin | 2% | 4% | -2 ppts | - Operating cash inflow of **$3.8 million** for Q1 2025 compared to **$10.7 million** in the prior year[8](index=8&type=chunk) - Free cash inflow of **$3.6 million** for Q1 2025 compared to **$10.5 million** in the prior year[8](index=8&type=chunk) - Ended March 31, 2025, with approximately **$357.1 million of cash, deposits, and investments** on the balance sheet and **zero debt**[8](index=8&type=chunk) [Financial Outlook](index=2&type=section&id=Financial%20Outlook) Riskified reaffirmed its full-year 2025 financial guidance, projecting revenue between $333 million and $346 million and Adjusted EBITDA between $18 million and $26 million Full-Year 2025 Guidance | Metric | Guidance Range | | :------------- | :------------- | | Revenue (in millions) | $333.00 - $346.00 | | Adjusted EBITDA (in millions) | $18.00 - $26.00 | - The company is unable to provide a reconciliation of forward-looking non-GAAP financial measures to net profit (loss), gross profit, and total operating expenses for the fiscal year ending December 31, 2025, due to the unpredictable nature of certain excluded items[11](index=11&type=chunk) [Conference Call and Webcast Details](index=4&type=section&id=Conference%20Call%20and%20Webcast%20Details) [Conference Call and Webcast Details](index=4&type=section&id=Conference%20Call%20and%20Webcast%20Details) Riskified hosted a conference call on May 14, 2025, to discuss its financial results, with a live webcast and replay available on its Investor Relations website - A conference call was hosted on May 14, 2025, at 8:30 a.m. Eastern Time[12](index=12&type=chunk) - A live webcast and replay of the call can be accessed from Riskified's Investor Relations website at ir.riskified.com[12](index=12&type=chunk) [Key Performance Indicators and Non-GAAP Measures](index=4&type=section&id=Key%20Performance%20Indicators%20and%20Non-GAAP%20Measures) [Definitions and Rationale](index=4&type=section&id=Definitions%20and%20Rationale) Riskified defines GMV as a key performance indicator and provides detailed definitions for non-GAAP measures, explaining adjustments for items like share-based compensation - Management and the Board of Directors use key performance indicators and non-GAAP measures as supplemental measures to compare operating performance consistently and remove the impact of items not directly reflecting core operations[13](index=13&type=chunk) - GMV is defined as the gross total dollar value of orders reviewed through the AI-powered ecommerce risk intelligence platform, serving as an indicator of merchant success and platform scale[16](index=16&type=chunk) - Non-GAAP measures are derived from GAAP balances by adjusting for items such as depreciation and amortization, share-based compensation expense, payroll taxes related to share-based compensation, legal-related and other expenses, and restructuring costs[17](index=17&type=chunk)[19](index=19&type=chunk)[20](index=20&type=chunk) - Free Cash Flow is defined as net cash provided by (used in) operating activities, less cash purchases of property and equipment[19](index=19&type=chunk) [Limitations of Non-GAAP Measures](index=4&type=section&id=Limitations%20of%20Non-GAAP%20Measures) The company acknowledges that non-GAAP measures have limitations as analytical tools, not reflecting cash expenditures or working capital needs, and should not replace GAAP results - Non-GAAP measures do not reflect cash expenditures, future capital expenditure requirements, contractual commitments, changes in working capital needs, or tax expenses[14](index=14&type=chunk) - Free Cash Flow is limited because it does not represent the residual cash flow available for discretionary expenditures and is not necessarily a measure of the ability to fund cash needs[14](index=14&type=chunk) - Non-GAAP measures are not necessarily comparable to similarly titled captions of other companies due to different calculation methods and should not be considered in isolation or as an alternative to GAAP information[15](index=15&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) [Nature of Statements and Safe Harbor](index=5&type=section&id=Nature%20of%20Statements%20and%20Safe%20Harbor) The press release contains forward-looking statements intended to be covered by the safe harbor provisions, reflecting current views but not guaranteeing future performance - Forward-looking statements are intended to be covered by the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995[24](index=24&type=chunk) - Statements regarding revenue and adjusted EBITDA guidance for fiscal year 2025, anticipated non-GAAP gross profit margin, future growth potential, and benefits of the share repurchase program are examples of forward-looking statements[24](index=24&type=chunk) - These statements reflect current views with respect to future events and are not a guarantee of future performance[24](index=24&type=chunk) [Risk Factors](index=5&type=section&id=Risk%20Factors) A wide range of factors could impact Riskified's actual outcomes, including managing growth, changes in payment methods, macroeconomic conditions, and operational risks - Actual outcomes may differ materially due to factors such as the ability to manage growth effectively, continued use of credit cards and other payment methods, and the ability to attract and retain new merchants[25](index=25&type=chunk) - Other risk factors include the impact of macroeconomic and geopolitical conditions, competition, the ability to continue improving machine learning models, fluctuations in CTB Ratio and gross profit margin, and the ability to protect merchant and consumer information[26](index=26&type=chunk) - Risks also involve the ability to retain executive officers and key personnel, exposure to litigation claims, fluctuations in currency exchange rates, reliance on third-party cloud providers, and compliance with data protection and privacy laws[26](index=26&type=chunk) [About Riskified](index=6&type=section&id=About%20Riskified) [About Riskified](index=6&type=section&id=About%20Riskified) Riskified is a leader in ecommerce fraud and risk intelligence, empowering businesses with an AI-powered platform to prevent chargebacks, fight fraud, and improve customer retention - Riskified empowers businesses to unleash ecommerce growth by outsmarting risk, providing guaranteed protection against chargebacks and fighting fraud and policy abuse[27](index=27&type=chunk) - The company's AI-powered fraud and risk intelligence platform analyzes individual interactions to provide real-time decisions and robust identity-based insights[27](index=27&type=chunk) - Riskified was named to **CNBC's World's Top Fintech Companies in 2024**[27](index=27&type=chunk) [Consolidated Financial Statements (Unaudited)](index=7&type=section&id=Consolidated%20Financial%20Statements) [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2025, Riskified reported total assets of $459.8 million, a decrease from $495.9 million, primarily due to reduced cash and cash equivalents Consolidated Balance Sheet Highlights | Metric | As of March 31, 2025 | As of December 31, 2024 | | :-------------------------------- | :------------------- | :---------------------- | | Cash and cash equivalents (in millions) | $286.86 | $371.06 | | Total current assets (in millions) | $399.51 | $433.70 | | Total assets (in millions) | $459.76 | $495.86 | | Total current liabilities (in millions) | $57.42 | $70.54 | | Total liabilities (in millions) | $100.44 | $113.56 | | Total shareholders' equity (in millions) | $359.33 | $382.30 | [Consolidated Statements of Operations](index=8&type=section&id=Consolidated%20Statements%20of%20Operations) For Q1 2025, Riskified reported revenue of $82.4 million, an 8% increase year-over-year, but gross profit decreased and net loss widened to $(13.9) million Consolidated Statements of Operations Highlights | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------------------------------------------------------------ | :-------------------------------- | :-------------------------------- | | Revenue (in millions) | $82.39 | $76.41 | | Cost of revenue (in millions) | $41.93 | $34.29 | | Gross profit (in millions) | $40.45 | $42.12 | | Total operating expenses (in millions) | $57.51 | $58.03 | | Operating profit (loss) (in millions) | $(17.06) | $(15.91) | | Net profit (loss) (in millions) | $(13.89) | $(11.63) | | Net profit (loss) per share attributable to Class A and B ordinary shareholders, basic and diluted | $(0.09) | $(0.07) | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Riskified experienced decreased net cash from operating activities in Q1 2025 to $3.8 million, with significant cash outflow from investing activities, leading to an overall cash decrease Consolidated Statements of Cash Flows Highlights | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net cash provided by (used in) operating activities (in millions) | $3.84 | $10.66 | | Net cash provided by (used in) investing activities (in millions) | $(65.85) | $(0.18) | | Net cash provided by (used in) financing activities (in millions) | $(22.31) | $(29.40) | | Net increase (decrease) in cash and cash equivalents (in millions) | $(84.20) | $(19.30) | | Cash and cash equivalents—end of period (in millions) | $286.86 | $421.53 | - Purchases of investments totaled **$78.16 million** in Q1 2025, contributing to the significant cash outflow from investing activities[34](index=34&type=chunk) - Purchases of treasury shares amounted to **$20.69 million** in Q1 2025[34](index=34&type=chunk) [Reconciliation of GAAP to Non-GAAP Measures](index=10&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) [Adjusted EBITDA and Gross Profit Reconciliation](index=10&type=section&id=Adjusted%20EBITDA%20and%20Gross%20Profit%20Reconciliation) For Q1 2025, Adjusted EBITDA was $1.3 million (2% margin), down from $2.8 million, and Non-GAAP gross profit was $41.1 million (50% margin), a slight decrease Adjusted EBITDA Reconciliation | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net profit (loss) (in millions) | $(13.89) | $(11.63) | | Total Adjustments (in millions) | $15.20 | $14.38 | | **Adjusted EBITDA** (in millions) | **$1.32** | **$2.75** | | Adjusted EBITDA Margin | 2% | 4% | Non-GAAP Gross Profit Reconciliation | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | GAAP gross profit (in millions) | $40.45 | $42.12 | | Total Adjustments (in millions) | $0.66 | $0.78 | | **Non-GAAP gross profit** (in millions) | **$41.11** | **$42.90** | | Non-GAAP gross profit margin | 50% | 56% | [Operating Expenses and Free Cash Flow Reconciliation](index=11&type=section&id=Operating%20Expenses%20and%20Free%20Cash%20Flow%20Reconciliation) Non-GAAP operating expenses for Q1 2025 showed slight changes, with Free Cash Flow at $3.6 million, a decrease from $10.5 million in Q1 2024 Non-GAAP Operating Expenses Reconciliation | Expense Category | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Non-GAAP research and development (in millions) | $13.75 | $13.41 | | Non-GAAP sales and marketing (in millions) | $16.76 | $17.39 | | Non-GAAP general and administrative (in millions) | $9.29 | $9.36 | Free Cash Flow Reconciliation | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Net cash provided by (used in) operating activities (in millions) | $3.84 | $10.66 | | Purchases of property and equipment (in millions) | $(0.21) | $(0.18) | | **Free Cash Flow** (in millions) | **$3.64** | **$10.48** | [Net Profit (Loss) and EPS Reconciliation](index=12&type=section&id=Net%20Profit%20(Loss)%20and%20EPS%20Reconciliation) For Q1 2025, non-GAAP net profit was $4.5 million, down from $7.0 million, and non-GAAP diluted net profit per share was $0.03, compared to $0.04 in the prior year Non-GAAP Net Profit (Loss) Reconciliation | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net profit (loss) (in millions) | $(13.89) | $(11.63) | | Total Adjustments (in millions) | $18.38 | $18.66 | | **Non-GAAP net profit (loss)** (in millions) | **$4.49** | **$7.03** | Non-GAAP Net Profit (Loss) per Share | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------------------------------------------------------------ | :-------------------------------- | :-------------------------------- | | Non-GAAP net profit (loss) per share attributable to Class A and B ordinary shareholders, basic and diluted | $0.03 | $0.04 | | Weighted-average shares used in computing non-GAAP net profit (loss) per share, diluted | 167,823,008 | 182,510,110 |

Group 1 - The article focuses on Riskified Ltd. (NYSE: RSKD), a small-cap tech company based in New York City, which has not been analyzed since early 2023 [1] - The Busted IPO Forum, led by Bret Jensen, targets stocks that have been public for 18 months to 6 years and are significantly below their offering price [1] Group 2 - The article does not provide specific financial metrics or performance data for Riskified Ltd. [1]

Currency and Financial Risks - The company is exposed to fluctuations in currency exchange rates, particularly with a portion of revenue denominated in Euros, which could negatively affect revenues if foreign currencies weaken against the U.S. dollar[116]. - The company may require additional capital in the future, and its ability to obtain financing will depend on various factors, including operating performance and capital market conditions[117]. - The company’s financial position could be negatively impacted if it issues significant credits or refunds to merchants due to performance malfunctions in its platform[127]. - Changes in tax laws and regulations could adversely affect the company's operations and financial condition, potentially leading to increased costs and liabilities[199]. - The company is subject to routine tax audits, which may result in additional tax, interest, or penalties being imposed[200]. - The application of indirect taxes to online transactions is complex and evolving, with potential liabilities exceeding current estimates[201]. - The company may face substantial tax liabilities if required to collect sales or other taxes in jurisdictions where it has not historically done so[201]. Technology and Operational Risks - The company relies on third-party Public Cloud Providers for its cloud-based SaaS products, and any disruption in their operations could adversely affect the company's business and financial condition[119]. - The company faces risks related to interruptions or performance problems with its technology and infrastructure, which could undermine merchant confidence and negatively impact revenues[127]. - The company’s proprietary machine learning models depend on data from merchants and third parties, and any loss of access to this data could adversely affect its ability to evaluate transactions and detect fraud[128]. - The company faces risks related to the accuracy and availability of third-party data used for training machine learning models, which could adversely affect product offerings and merchant relationships[131]. - The company relies on third-party data sources for fraud detection may lead to inaccuracies, affecting its ability to make informed decisions[130]. - The company may incur significant costs for using alternative equipment or services in response to disruptions affecting its Public Cloud Providers[120]. Intellectual Property and Compliance Risks - The company has not registered any copyrights and primarily relies on trade secret protection, which may limit remedies for unauthorized use of its software[122]. - The company’s ability to protect its intellectual property rights is uncertain, particularly in foreign jurisdictions, which may expose it to unauthorized use of its technology[121]. - There is a risk of being sued for alleged infringement of intellectual property rights, which could lead to substantial damages or redesigning of products[179]. - The company does not currently have a patent portfolio, which may hinder its ability to defend against patent infringement claims[179]. - Compliance with evolving privacy laws and regulations may result in significant liabilities and operational costs, impacting revenues and financial condition[132]. Regulatory and Legal Risks - The California Consumer Privacy Act (CCPA) imposes civil penalties for violations, and failure to comply could lead to legal actions against the company[137]. - The General Data Protection Regulation (GDPR) imposes strict obligations on data processing, with potential fines for non-compliance that could significantly impact financial condition[140]. - The company anticipates increased operational costs due to compliance with the Digital Markets Act (DMA) and Digital Services Act (DSA) which require modifications to practices and policies[148]. - The evolving regulatory landscape in the European Economic Area and the UK may lead to increased operational costs and risks associated with data transfers and processing[139]. - The company is subject to complex and rapidly changing U.S. state laws regarding privacy and data security, which could lead to costly compliance efforts[136]. - The introduction of new regulations in China, such as the Regulations on Network Data Security Management, expands obligations for data processors and may require significant adjustments to operations[157]. - The regulatory framework for artificial intelligence (AI) and machine learning (ML) is rapidly evolving, with significant new laws enacted in California, Colorado, and Utah, impacting compliance and operational costs[161]. - The EU AI Act, effective from August 2024, will impose obligations including transparency and risk assessments, with fines for non-compliance reaching up to 7% of worldwide annual turnover[161]. - China has implemented strict regulations governing generative AI and algorithmic technologies, requiring service providers to file algorithms and complete security assessments[161]. Market and Competitive Risks - The market for AI and ML technologies remains unproven, and the company faces challenges in developing and commercializing these technologies effectively[165]. - The company relies on third-party AI technologies, and any changes in availability or pricing could adversely affect its solutions and customer appeal[166]. - The use of open-source software poses risks, including potential litigation and requirements to disclose proprietary code, which could impact revenue generation[171]. - Maintaining and enhancing the company's brand is critical for growth, requiring substantial investments in marketing and product quality[173]. - The company may pursue acquisitions or strategic investments to expand capabilities, but such efforts could face integration challenges and divert management attention[176]. - The company faces challenges in identifying desirable acquisition targets and may incur significant costs if regulatory approvals are not obtained for acquisitions[177]. Governance and Shareholder Risks - The dual class share structure concentrates voting power with management, limiting shareholder influence over important transactions[213]. - The company's Class A ordinary shares have experienced significant price volatility, influenced by various market factors and operational performance[210]. - Future issuances of Class A ordinary shares or convertible securities may result in substantial dilution to existing stockholders[226]. - The dual class share structure allows existing shareholders to significantly influence shareholder approval matters, even with less than a majority of shares[232]. - The company believes it was not classified as a Passive Foreign Investment Company (PFIC) for the year ending December 31, 2024, but this status is subject to annual determination and could change[246]. - Rights and responsibilities of shareholders are governed by Israeli law, differing from U.S. corporations[261]. - Shareholders must act in good faith and refrain from abusing their power within the company[261]. - Controlling shareholders have a duty of fairness toward the company, though the substance of this duty is not defined[262]. Economic and Geopolitical Risks - The ongoing military conflict in Israel has led to a deterioration of certain economic indicators, including a downgrade in Israel's credit rating by agencies such as Moody's, S&P Global, and Fitch[253]. - The company’s commercial insurance does not cover losses from war and terrorism, which could materially affect its business if damages occur[255]. - The ongoing war has resulted in several hundred thousand Israeli military reservists being drafted, potentially disrupting the company's operations due to employee absences[254]. - The company faces risks related to geopolitical instability in Israel, which may adversely affect its revenues and financial condition[249]. - The global perception of Israel may lead to increased sanctions and negative measures against Israeli companies, potentially impacting business operations[257]. - Enforcement of U.S. judgments against the company and its non-U.S. officers may be difficult in Israel[259]. - Israeli courts may refuse to hear claims based on alleged violations of U.S. securities laws[259]. Internal Control and Reporting Risks - The company must maintain effective internal controls over financial reporting to avoid material weaknesses that could affect investor confidence[188]. - Any failure to comply with financial reporting regulations could result in investigations by the SEC and negatively impact the trading price of the company's shares[191]. - The company continues to incur increased costs due to operating as a public entity, particularly after no longer qualifying as an "emerging growth company," leading to significant legal and accounting expenses[236]. - The company is subject to various compliance costs and challenges due to regulations imposed on public companies, which may evolve over time[237].