Riskified .(RSKD) - 2025 Q1 - Quarterly Report

Q1 2025 Financial Results Overview Q1 2025 Business Highlights 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] - A new global digital wallet account was onboarded in the Money Transfer & Payments category, which experienced over 90% year-over-year revenue growth[3] - Revenue growth from products outside the core Chargeback Guarantee product increased by approximately 190% year-over-year[3] - An aggregate of 4.1 million shares were repurchased for $20.7 million in Q1 2025[3] - Riskified was named the Most Innovative Fraud Prevention Solution at the Merchant Payments Ecosystem Awards 2025[3] Q1 2025 Financial Summary & Highlights 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] - Free cash inflow of $3.6 million for Q1 2025 compared to $10.5 million in the prior year[8] - Ended March 31, 2025, with approximately $357.1 million of cash, deposits, and investments on the balance sheet and zero debt[8] Financial Outlook 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] Conference Call and Webcast Details Conference Call and Webcast Details 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] - A live webcast and replay of the call can be accessed from Riskified's Investor Relations website at ir.riskified.com[12] Key Performance Indicators and Non-GAAP Measures Definitions and Rationale 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] - 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] - 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][19][20] - Free Cash Flow is defined as net cash provided by (used in) operating activities, less cash purchases of property and equipment[19] Limitations of Non-GAAP Measures 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] - 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] - 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] Forward-Looking Statements Nature of Statements and Safe Harbor 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] - 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] - These statements reflect current views with respect to future events and are not a guarantee of future performance[24] Risk Factors 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] - 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] - 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] About Riskified About Riskified 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] - The company's AI-powered fraud and risk intelligence platform analyzes individual interactions to provide real-time decisions and robust identity-based insights[27] - Riskified was named to CNBC's World's Top Fintech Companies in 2024[27] Consolidated Financial Statements (Unaudited) Consolidated Balance Sheets 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 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 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] - Purchases of treasury shares amounted to $20.69 million in Q1 2025[34] Reconciliation of GAAP to Non-GAAP Measures Adjusted EBITDA and Gross Profit Reconciliation 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 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 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 |