Core Insights - Riskified has formed a strategic partnership with Radial to enhance payment fraud and refund/return protection for Radial's merchant clients [1] - The integration of Riskified's AI-powered platform aims to help merchants approve more legitimate orders while minimizing losses from payment fraud [1] - Radial, which will rebrand as Paxon, operates a global ecommerce fulfillment network with over 20 centers in North America [1] Group 1: Partnership Details - The partnership allows Radial to utilize Riskified's advanced fraud decisioning capabilities, enabling merchants to calibrate the checkout experience based on risk without delaying fulfillment [1] - Riskified's platform provides real-time fraud decisions at checkout, approving or declining transactions while assuming full financial liability for fraud chargebacks [1] - The collaboration also includes Riskified's Policy Protect solution, which helps merchants identify abuse patterns and implement effective policies against fraudulent claims [1] Group 2: Operational Benefits - Radial's teams can leverage Riskified's Dispute Resolve platform to streamline chargeback management, centralizing data and reducing manual efforts [1] - This partnership is expected to enhance the efficiency of Radial's operations, allowing brands to protect revenue and improve customer experiences across the ecommerce lifecycle [1] - The integration of Riskified's fraud intelligence is positioned to strengthen Radial's service offerings to sophisticated retailers [1]

Core Insights - Riskified reported record quarterly revenue and its first-ever quarter of GAAP profitability in Q4 2025, driven by improved retention metrics and new business wins [4][3][6] Financial Performance - Fourth-quarter revenue reached $99.3 million, a 6% increase year-over-year, while full-year revenue was $344.6 million, up 5% [2] - Fourth-quarter gross profit was $57.3 million, reflecting a 16% year-over-year increase, with adjusted EBITDA of $17.7 million, representing an 18% margin [3] - The company ended 2025 with approximately $298 million in cash and zero debt, achieving a net profit of $5.8 million in Q4 [7][17] Retention and Growth Metrics - Annual dollar retention (ADR) improved to approximately 100%, and net dollar retention (NDR) rose to 105% [1][6] - Q4 2025 saw the strongest new business wins since the IPO, accounting for about 55% of total new business for the year, with win rates exceeding 75% [6][8] Product and Geographic Expansion - Revenue from payments and money transfer grew 75% year-over-year, with APAC revenue increasing by approximately 53% [5][10] - Non-U.S. merchants contributed 46% of total revenue in 2025, up from 39% in 2024 [12] Future Outlook - For 2026, the company projects revenue between $372 million and $384 million, representing an 8% to 11% year-over-year increase, and adjusted EBITDA of $26 million to $34 million [19] - The company anticipates a 20% increase in free cash flow, targeting approximately $40 million in 2026 [17]

Financial Data and Key Metrics Changes - The company reported a fourth quarter non-GAAP gross profit of $57.3 million, reflecting a year-over-year growth of 16% [5] - Adjusted EBITDA for the fourth quarter was $17.7 million, translating to a margin of 18%, which exceeded the full-year adjusted EBITDA of $17.2 million in 2024 [5][6] - Fourth quarter revenues reached nearly $100 million, marking a record since inception and contributing to the first-ever quarter of GAAP profitability [6] - Annual revenue for 2025 was $344.6 million, up 5% year-over-year, while fourth quarter billings grew 9% year-over-year to $103.3 million [24][25] - Full year gross profit was $180.3 million, representing a year-over-year growth of 4% [29] Business Line Data and Key Metrics Changes - The money transfer and payments category grew 75% year-over-year, driven by new business wins and upsell activity [25] - The fashion, cosmetics, and luxury vertical grew 8% year-over-year, primarily due to new business and upsell activity [25] - The travel subvertical showed strong performance, while the tickets and live events subvertical experienced a decline year-over-year [25] - The company achieved a year-over-year improvement in annual dollar retention (ADR) to approximately 100% and net dollar retention (NDR) to 105% [7] Market Data and Key Metrics Changes - Non-U.S. regions collectively grew 22% year-over-year, with APAC growing approximately 53% and other Americas (Canada and Latin America) growing approximately 13% [8][28] - Revenue derived from merchants headquartered outside of the U.S. increased to 46% in 2025, up from 39% in 2024 [28] Company Strategy and Development Direction - The company aims to deepen its geographic presence and grow faster in newer verticals while identifying additional verticals for market share gains [8] - There is a focus on driving gross profit growth rather than solely optimizing for revenue growth, with expectations of non-GAAP gross profit growth accelerating to double digits in 2026 [12][13] - The company plans to expand its offerings in response to the increasing complexity of fraud schemes and the evolving needs of merchants [10][11] Management's Comments on Operating Environment and Future Outlook - Management highlighted the increasing complexity of fraud schemes and the need for enhanced platform features to address these challenges [10][11] - The company anticipates generating approximately $40 million in free cash flow in 2026, reflecting a free cash flow yield of about 10% relative to its current enterprise value [22] - Management expressed confidence in the company's long-term trajectory and announced an additional $75 million share repurchase program [22][23] Other Important Information - The company ended 2025 with approximately $298 million in cash deposits and investments, maintaining a debt-free balance sheet [34] - Share-based compensation expense declined to $51.6 million from $57.8 million in the prior year, with expectations of continued decline in 2026 [37] Q&A Session Summary Question: Can you quantify any early GMV from agentic commerce scenarios? - Management indicated they are in discussions with over 50 publicly traded companies regarding their agentic commerce strategies, but specific GMV figures were not provided [42][44] Question: Do you see outsized growth continuing in money transfer and payments for 2026? - Management expects continued growth in the money transfer and payments category but anticipates it will normalize compared to the exceptional growth seen in 2025 [47][48] Question: How do you view the potential for rising adoption of agentic commerce impacting fraud levels? - Management noted that the complexity of agentic commerce could lead to increased fraud, particularly in newer channels, but this complexity also benefits the company as it positions them as a key partner for merchants [51][53] Question: Can you provide an update on integrating with the latest agentic protocols? - Management acknowledged the fragmented nature of current protocols but emphasized their commitment to supporting a wide range of protocols to enhance fraud detection capabilities [59][61] Question: What are the FX headwinds impacting margins? - Management quantified the FX headwind as approximately 400 basis points or $14 million to adjusted EBITDA, attributing it to the appreciation of the Israeli shekel against the U.S. dollar [63][64]

Financial Data and Key Metrics Changes - The company reported fourth quarter non-GAAP gross profit of $57.3 million, a year-over-year growth of 16% [5] - Adjusted EBITDA for the fourth quarter was $17.7 million, translating to a margin of 18%, exceeding the full-year Adjusted EBITDA of $17.2 million in 2024 [6] - Fourth quarter revenues reached nearly $100 million, marking a record since inception and contributing to the first-ever quarter of GAAP profitability [6][29] - Annual revenue for 2025 was $344.6 million, up 5% year-over-year, while fourth quarter billings grew 9% year-over-year to $103.3 million [24][25] - The company achieved a net profit of $5.8 million in the fourth quarter, compared to a loss of $4.1 million in the prior year [33] Business Line Data and Key Metrics Changes - The money transfer and payments category grew 75% year-over-year, driven by new business wins and upsell activity [25] - The travel subvertical showed strong performance, while the tickets and live events subvertical experienced a decline year-over-year [25] - The fashion, cosmetics, and luxury vertical grew 8% year-over-year, primarily driven by new business and upsell activity [25] - The company processed approximately $750 billion in GMV since inception, with fourth quarter GMV of $46.7 billion, an 18% increase year-over-year [8][24] Market Data and Key Metrics Changes - Revenue from non-U.S. regions grew 22% year-over-year, with APAC growing approximately 53% and other Americas growing approximately 13% [8][28] - Revenue derived from merchants headquartered outside of the U.S. increased to 46% in 2025, up from 39% in 2024 [28] Company Strategy and Development Direction - The company aims to deepen geographic presence and grow faster in newer verticals while identifying additional verticals for market share gains [8] - Focus on driving gross profit growth rather than solely optimizing for revenue growth in 2026 [12] - Plans to expand further in APAC and LATAM by developing localized products and features [8] Management's Comments on Operating Environment and Future Outlook - Management noted an increase in fraud losses related to online transactions, with expectations that total losses attributed to fraud will more than double over the next five years [9][10] - The company anticipates generating free cash flow of approximately $40 million in 2026, with a free cash flow yield of about 10% relative to current enterprise value [22] - Management expressed confidence in the long-term trajectory of the company, supported by strong fundamentals and a disciplined capital allocation strategy [23] Other Important Information - The company repurchased approximately 22 million shares for a total price of $105.9 million in 2025, contributing to an 8% reduction in shares outstanding [34] - Share-based compensation expense declined from $57.8 million in the prior year to $51.6 million [37] Q&A Session Summary Question: Can you quantify any early GMV from agentic commerce scenarios? - Management indicated they are in discussions with over 50 publicly traded companies regarding their agentic commerce strategies, but specific GMV figures were not disclosed [42][44] Question: Do you see outsized growth continuing in money transfer and payments for 2026? - Management expects continued growth in the money transfer and payments category but anticipates it will normalize compared to the exceptional growth seen in 2025 [47][48] Question: How do you view the potential for rising adoption of agentic commerce impacting fraud levels? - Management noted that the complexity of fraud is increasing, and while agentic channels currently see higher fraud rates, this complexity may benefit Riskified as a fraud prevention partner [51][54] Question: Can you provide an update on mid-market expansion strategy? - Management stated that while targeting enterprises, they are also looking to refine their model for mid-market opportunities, which could present upside to current guidance [55][56] Question: What is the status on integrating into the latest agentic protocols? - Management acknowledged the fragmented nature of current protocols but emphasized their commitment to supporting various protocols to enhance fraud detection capabilities [59][61]

Financial Data and Key Metrics Changes - The company reported fourth quarter revenue of $99.3 million, a 6% year-over-year increase, and full year revenue of $344.6 million, up 5% year-over-year [21] - Fourth quarter non-GAAP gross profit reached $57.3 million, reflecting a 16% year-over-year growth, while full year gross profit was $180.3 million, a 4% increase [25][30] - Adjusted EBITDA for the fourth quarter was $70.7 million, the highest quarterly amount in history, translating to an 18% margin, with full year Adjusted EBITDA at $26.7 million, a 55% year-over-year increase [30][31] - The company achieved GAAP profitability in the fourth quarter with a net profit of $5.8 million, compared to a loss of $4.1 million in the prior year [30] Business Line Data and Key Metrics Changes - The money transfer and payments category grew 75% year-over-year, driven by new business wins and upsell activity [22] - The fashion, cosmetics, and luxury vertical grew 8% year-over-year, supported by new business and upsell activity [22] - The travel subvertical showed strong performance, contributing positively to revenue growth, while the tickets and live events subvertical experienced a decline [22] Market Data and Key Metrics Changes - Revenue from non-U.S. regions grew significantly, with APAC growing approximately 53% year-over-year and other Americas (Canada and Latin America) growing about 13% [24] - EMEA regions grew approximately 18% year-over-year, with strong performance in money transfer and payments, tickets and travel, and fashion and luxury verticals [24] - Revenue derived from merchants headquartered outside of the U.S. increased to 46% in 2025, up from 39% in 2024 [25] Company Strategy and Development Direction - The company aims to deepen its geographic presence and grow faster in newer verticals while identifying additional verticals for market share gains [7] - There is a focus on expanding localized products and features in high-growth regions, particularly APAC and LATAM [7] - The company plans to drive gross profit growth rather than primarily optimizing for revenue growth, with expectations of non-GAAP gross profit growth accelerating to double digits in 2026 [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's long-term trajectory, supported by strong free cash flow and a debt-free balance sheet [19] - The company anticipates generating approximately $40 million in free cash flow in 2026, reflecting a 20% increase [31] - Management highlighted the increasing complexity of fraud schemes and the need for robust fraud prevention solutions, positioning the company as a key partner for merchants [9][10] Other Important Information - The company repurchased approximately 22 million shares for a total price of $105.9 million in 2025, contributing to an 8% reduction in shares outstanding [31][32] - Share-based compensation expense declined to $51.6 million from $57.8 million in the prior year, with expectations for further declines in 2026 [33] Q&A Session Summary Question: Can you quantify any early GMV from agentic commerce scenarios? - The company is in discussions with over 50 publicly traded companies regarding their agentic commerce strategies, indicating promise in merchant-native AI agents [40][41] Question: Will the growth in money transfer and payments continue in 2026? - The company expects continued growth in the money transfer and payments category but anticipates a normalization of growth rates [44] Question: How does the adoption of agentic commerce impact fraud levels? - The company noted that the complexity of fraud is increasing, particularly in agentic channels, which may lead to higher fraud levels initially [51] Question: What is the status of integrating with new agentic protocols? - The company is actively supporting various protocols but anticipates a fragmented approach in the market [58] Question: How do Riskified's services compare to those from card networks? - The company believes its offerings are distinct and provide unique value that is not directly comparable to services from card networks [72]

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.

Financial Data and Key Metrics Changes - The company achieved fourth quarter revenue of $93.5 million and full-year revenue of $327.5 million, representing year-over-year growth of 11% and 10% respectively [44][9] - The annual gross merchandise volume (GMV) grew by 15% to $141.2 billion for the full year 2024 [45][9] - Adjusted EBITDA for the year was positive $17.2 million, reflecting a year-over-year increase of over 300% [58][9] - The gross profit margin for the full year was 53%, up from 52% in 2023 [53][9] Business Line Data and Key Metrics Changes - The Ticket & Travel category was the largest contributor to year-over-year revenue growth, achieving over $111 million in revenue, which represented approximately one-third of the overall portfolio [49][9] - The Food category saw a 40% year-over-year growth, while the Money Transfer & Payments category grew by 66% [49][9] - The Fashion & Luxury category grew by low single digits in the fourth quarter and for the full year, representing approximately one-third of the portfolio [47][9] Market Data and Key Metrics Changes - The United States, the largest region, grew by 9%, while EMEA grew by 4% [51][9] - The Americas and APAC regions grew approximately 10% and 33% respectively, driven by new and upsell activity [51][9] Company Strategy and Development Direction - The company aims to expand its multi-product platform to diversify its revenue base and has successfully added several key merchants to products outside of its core chargeback guarantee [14][9] - A key focus for 2025 is to enhance top-of-funnel efforts to drive more pipeline and increase opportunities [15][9] - The company is investing in AI capabilities to improve performance and accuracy across its platforms [29][9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about improved performance in annual dollar retention (ADR) and net dollar retention (NDR) rates in 2025, despite challenges faced in 2024 [21][9] - The company is implementing a merchant retention strategy aimed at returning ADR to historical levels [18][9] - Management anticipates revenue for 2025 to be between $333 million and $346 million, driven primarily by new business activity [65][9] Other Important Information - The company ended 2024 with approximately $376 million in cash and deposits and zero debt [59][9] - The company repurchased approximately $27 million shares for a total price of $141 million during 2024 [60][9] - Share-based compensation expense as a percentage of revenue decreased by approximately 300 basis points from 2023 levels [62][9] Q&A Session Summary Question: What are the strategies to maximize top of the funnel activity? - Management highlighted three strategies: expanding platform capabilities through increased R&D, geographical expansion, and a more thoughtful approach to mid-tier market areas [75][76][77] Question: What is the exposure to larger-than-average renewals in 2025? - Management expressed high confidence in multiyear renewals, with over 70% of the book of business already renewed [79][80] Question: Can you provide context around the success of standalone non-chargeback products? - Management indicated significant growth potential, projecting revenue from these products to increase from $4.5 million in 2024 to low double-digit millions [86][9] Question: What are the dynamics affecting net dollar retention (NDR)? - Management noted that NDR decreased due to churn events and a focus on new logo generation rather than upsells, but expressed optimism for improvement in 2025 [92][96] Question: How does the company view alternative payment methods? - Management stated that there is ongoing demand from merchants for fraud identification in alternative payment methods, indicating a growing opportunity in this area [98][9]