Riskified .(RSKD) - 2025 Q2 - Earnings Call Transcript

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]