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.