NYSE:RSKD Riskified Q3 2023 Earnings Report $4.59 -0.08 (-1.71%) Closing price 04/28/2025 03:59 PM EasternExtended Trading$4.61 +0.02 (+0.33%) As of 04/28/2025 04:05 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Riskified EPS ResultsActual EPS-$0.12Consensus EPS -$0.14Beat/MissBeat by +$0.02One Year Ago EPS-$0.14Riskified Revenue ResultsActual Revenue$71.90 millionExpected Revenue$71.19 millionBeat/MissBeat by +$710.00 thousandYoY Revenue Growth+13.80%Riskified Announcement DetailsQuarterQ3 2023Date11/15/2023TimeBefore Market OpensConference Call DateWednesday, November 15, 2023Conference Call Time8:30AM ETUpcoming EarningsRiskified's Q1 2025 earnings is scheduled for Wednesday, May 14, 2025, with a conference call scheduled at 8:30 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q1 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Riskified Q3 2023 Earnings Call TranscriptProvided by QuartrNovember 15, 2023 ShareLink copied to clipboard.There are 10 speakers on the call. Operator00:00:00Good day, and thank you for standing by. Welcome to Rescify's Third Quarter 2023 Financial Results Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. Operator00:00:27I would now like to hand the conference over to your speaker, Chet Mandel, Head of Investor Relations. Speaker 100:00:32Please go ahead. Speaker 200:00:36Good morning and thank you for joining us today. My name is Chet Mandel, Riskified's Head of Investor Relations. We are hosting today's call to discuss Riskify's financial results for the Q3 of 2023. Participating on today's call are E. Dohgal, Riskified's Co Founder and Chief Executive Officer and Agi Doceva, Riskified's Chief Financial Officer. Speaker 200:00:59We released our results for the Q3 of 2023 earlier today. Our earnings materials, including a replay of today's webcast, are available on our Investor Relations website at ir.riskify.com. Certain statements made on the call today Forward looking statements related to our operating performance, business and financial goals, outlook as to gross profit margin, Adjusted EBITDA profitability and expectations as to positive cash flows, which reflect management's best judgment based on currently available information and are not guarantees of future performance. We intend all forward looking statements to be covered by the Safe Harbor provisions contained in the Private Securities Litigation Reform Act of 1995. These forward looking statements reflect our expectations as of the date of this call And except as required by law, we undertake no obligation to revise this information as a result of new developments that may occur after the time of this call. Speaker 200:01:59These forward looking statements involve risks, uncertainties and other factors, some of which are beyond our control that could cause actual results to differ materially from our expectations. You should not put undue reliance on any forward looking statement. Please refer to our annual report on Form 20 F for the year ended December 31, 2022 and subsequent reports we file or furnish with the SEC for more information on these specific factors that could cause actual results to differ materially from our expectations. Additionally, we will discuss certain non GAAP financial measures and key performance indicators on the call. Reconciliations to the most directly comparable GAAP financial measures are available in our earnings release issued earlier today and also furnished with the SEC on Form 6 ks and in the appendix of our Investor Relations presentation, all of which are posted on our Investor Relations website. Speaker 200:02:56I will now turn the call over to Yu Dao. Speaker 300:02:59Thanks, Chet, and hello, everyone. Before we dive into a discussion on our financial results and outlook, I would like to first briefly touch on the evolving situation in Israel. Then I will share some commentary from the Q3 and end my remarks discussing why I remain as confident as ever in the positioning of the company. As part of this discussion, I'll provide some color on how we were able to efficiently adapt our workforce and enact our business continuity plan To ensure uninterrupted service to our merchants in the wake of the October 7 events, then Agi will walk you through our Q3 financials and what to expect in the Q4. 1st and foremost, we condemn the horrific attacks in Israel and we send our thoughts and support to all affected. Speaker 300:03:43The loss of innocent lives resulting from this unforgivable terrorist act and the war that ensued is truly devastating. To our customers, partners and shareholders who have reached out to support us during this difficult time, on behalf of everyone at Riskify, We sincerely thank you. I am relieved to report that all of our employees are accounted for. I am proud of everyone in the organization This level of focus and flexibility has meant that we've seen no material impact on our ability to maintain day to day operations across all critical functions. Moving now to our Q3 results. Speaker 300:04:26Once again, our revenue growth during the Q3 was primarily driven by the successful execution of our go to market strategy, which contributed to 14% year over year revenue growth and 17% for the 1st 9 months of the year. We are growing more confident in our ability to add new merchants, retain and upsell existing ones and expand our market share despite an uncertain and challenging macroeconomic backdrop. Our competitive win rates remained high during the quarter and we have on boarded more new merchants versus this point last year. We have generated over 20% more leads compared to this point last year, which is contributing to a large and growing pipeline. We are working diligently on maximizing revenue opportunities, leveraging our machine learning capabilities to positively impact our business, while prioritizing investments in the areas with the highest return. Speaker 300:05:18I'm excited that we've grown top line revenue by 17%, while simultaneously decreasing total operating expenses by 6%, which drove an improvement in adjusted EBITDA performance by over 50% in the 1st 9 months We believe that these results are testament to the overall strength of the business and our ability to execute and find leverage in the model. Next, allow me to spend some time talking about the isolated fraud event that we discussed on our last earnings call. As a reminder, one of our largest merchants experienced a significant fraud event in July. This event was contained over the course of a handful of weeks and as expected, The impact caused by this event contributed to our non GAAP Q3 gross margin of 44%. We do not anticipate any further impact to our gross margin going forward a result of this event. Speaker 300:06:08And while we are disappointed by this one time event, we did learn valuable lessons. For example, We have updated and solidified various go live processes, improved some of our chargeback monitoring tools and added new detection capabilities. I should also mention that our relationship with the impacted merchant remains very strong and this isolated example underscores the overwhelming reason We believe that Chargeback Guarantee is a superior model that delivers the most value to merchants. Overall, we remain encouraged by our underlying gross margin performance. I believe that our commitment to continuously invest in our machine learning capabilities through feature enhancements and model improvements continues to strengthen our market leading technology. Speaker 300:06:50Now back to the Israel conflict and how it relates to our business. Our core focus since the event of October 7 has remained the safety of our employees and continuity to services to our merchants. To support the well-being of our teams in Israel, we have provided flexible working arrangements To support our merchants, we've been working diligently as part of our business continuity plan to leverage our global network of employees to fill temporary capacity needs. Although we've experienced minor delays in a small number of long term initiatives, there has not been any material impact to our current productivity. We remain 100% engaged with all our customers through increased communication efforts and have not seen loss of merchant volumes as a result of the October 7 events. Speaker 300:07:43This is a testament to the deep relationships that we have cultivated with many of our merchants, high retention rates and our track record of being a reliable and trusted partner. Before I turn it to Agi, I want to emphasize that I believe the DNA of our company positions us well as we work through the current situation. While we are proud of being a company founded in Israel, we are truly a global company with business functions spread through 8 locations around the world and with merchants in nearly 40 countries. Our goal remains to maximize revenue and profit with our AI powered fraud and risk management platform to all of the world's largest enterprise e commerce merchants and I am very confident in our ability to continue executing on that mission through all environments. Now, I will turn the call over to Arne. Speaker 100:08:31Thank you, Idel, team and everyone for joining today's call. I echo results on how incredible the team and organization has been in the face of a difficult situation in Israel. Our GMV for the Q3 was $29,700,000,000 reflecting a 17% increase year over year. We achieved 3rd quarter revenue of $71,900,000 up 14% year over year and year to date revenue of $213,500,000 up 17%. Our GMV and revenue growth during this quarter was primarily driven by the continued expansion of our platform across new merchants and upsells similar to recent quarters. Speaker 100:09:15Tickets and travel remains the largest overall category with year over year growth in the mid teens. The step down in growth from previous periods was primarily driven by the lapping of a large merchant in this category that was onboarded in Q3 of 2022. Encouragingly, for the first time in 8 quarters, All industries outside of tickets and travel in the aggregate contributed more than that single category or approximately 60% for our quarterly growth. In particular, this quarter we saw solid performance in our Home category, primarily driven by upsell activity. Similar to the first half of the year, 3rd quarter growth in one of our largest categories, fashion and luxury goods, remains relatively flat year over year. Speaker 100:10:04We continue to see softness in particular within our luxury brands and sneakers subsegments. In addition, our electronics category declined further from their 2nd quarter levels during the Q3 as demand for goods in the discretionary category slowed. Finally, we also saw revenue growth across all geographies. Our 3rd quarter revenue in the United States, Our largest region grew by 9% year over year and we experienced 12% year over year growth in EMEA. Our Americas and APAC regions each grew approximately 40%, primarily due to momentum in new and up sell activity. Speaker 100:10:42We believe that our continued revenue growth from regions outside of the United States demonstrates market share gains and validates our decision to invest in these regions. Moving on to gross margin. As Ido mentioned, our Q3 margin was negatively impacted by the isolated fraud event announced at our last earnings call. The impact of the event was in line with expectations and our non GAAP gross profit margin for the Q3 of 2023 reflective of this impact was 44%. As a reminder, gross margin is best analyzed on an annual basis as gross margin may fluctuate on a quarterly basis. Speaker 100:11:22However, given the unique nature of the 3rd quarter margin, Allow me to provide clarity on the annual range as we approach year end. As of today, we anticipate That our annual non GAAP gross profit margin will be at the midpoint of our range of 50% to 51.5% or 50.7%, which translates to a 4th quarter gross margin of approximately 54%. Moving to expenses. Total non GAAP operating expenses were $40,200,000 for the Q3 of 2023, A 5% decrease year over year is a result of our continuous focus on optimizing our expense base. Our Q3 expenses represent the lowest absolute quarterly level since our IPO over 2 years ago. Speaker 100:12:16Our non GAAP operating expenses as a percentage of revenue improved year over year from 67% to 56%, reflecting leverage in the business model. For modeling purposes, we anticipate a modest step up of approximately $1,000,000 in expenses in the Q4. Adjusted EBITDA for the 3rd quarter was negative $8,400,000 and negative $18,200,000 for the 1st 9 months of 2023. Even with the one time impact of the aforementioned merchant fraud event, We have been able to improve our adjusted EBITDA performance year over year for the 5th consecutive quarter and have improved our adjusted EBITDA performance by 50% year to date. As previously mentioned, we continue to anticipate profitability on an adjusted EBITDA basis in the Q4 of 2023 and on an annual basis in 2024. Speaker 100:13:19Moving to the balance sheet. We maintained a very strong liquidity position and generated positive free cash flow during the quarter. We ended the Q3 with approximately $482,000,000 of cash deposits, investments and accrued interest on the balance sheet and we carry 0 debt. This amount represents a sequential increase of approximately 2,000,000 We remain confident in the business' ability to generate positive operating cash flow over the long term as was demonstrated during the Q3. And we continue to believe that our balance sheet and strong liquidity position are under appreciated assets. Speaker 100:14:02Related to our capital allocation initiatives, as we announced alongside our 2nd quarter earnings, Our Board has authorized a share repurchase program of up to $75,000,000 subject to approval from the Israeli court, which is required by law. Due to the event of October 7, Israeli courts are currently operating under rolling emergency orders and certain court processes or delays. We anticipate receiving a decision from the Israeli court in the next several weeks and we will announce the We expect to leverage this program to take advantage of opportunistic repurchasing opportunities and manage share dilution. At valuation levels well below that of companies with similar financial profile, We believe that we have a great opportunity to repurchase our stock at attractive prices. We believe our strong balance sheet enables us We'll continue driving shareholder value by investing in the growth of the business, while maintaining significant capital to continue pursuing M and A opportunities. Speaker 100:15:09Now moving to our guidance, which assumes no further worsening in consumer spending patterns or material changes to the macroeconomic environment. As we approach year end, we have more visibility on the timing and ramp up of the onboarding of certain merchants and expect a more muted than originally anticipated tickets and travel season, especially in the tickets and live event vertical for the remainder of the year. As a result, we're refining our full year 2023 revenue range to be between $297,000,000 to $300,000,000 That being said, as a result of our ongoing expense discipline in the 1st 9 months of the year, we are improving our Full year 2023 adjusted EBITDA guidance to be between negative $12,500,000 negative $14,500,000 an improvement of 7% from the midpoint of our previously disclosed guidance range. Overall, from an operational perspective, I believe that we're executing from a position of strength even in a challenging environment. And despite the evolving geopolitical situation in Israel and the continued challenging macroeconomic landscape. Speaker 100:16:17We remain excited about prospects for long term growth and our ability to deliver value to shareholders. Operator, we are ready to take the first question, please. Thank you. Operator00:16:54And our first question comes from the line of Ramsey El Assad with Barclays, your line is now open. Speaker 400:17:02Hi, this is Owen on for Ramsey. I appreciate you taking our question this morning. I wanted to ask specifically about your sales pipeline and was wondering if you could provide any more color on the portion of new sales that's being driven by Cross sell compared to net new logo growth and if you're seeing any difficulty in one versus the other, any clarity there might be very helpful. I appreciate it. Speaker 300:17:27Hey, Owen. Sure. So we feel great about the pipeline. It's I think we mentioned it's about 20% larger than this point a year ago and that's really across the board both in the newer products around policy and dispute, Also from a geographical perspective, so the pipeline increase I would say is relatively broad based. Speaker 400:17:51Understood. I appreciate that. And I also wanted to follow-up, if I may, on your take rate and kind of longer term expectations there And how you expect that to trend relative to the business? Is there any sort of point in which you might choose to favor new logo growth by passing along some Expense savings to customers, any kind of update there might be interesting as well. Appreciate it. Speaker 300:18:17Sure. I would say, look, take rate is always risk adjusted, right? So depending on the risk of the segment or the merchant or the category, That informs our pricing and that means that there's really variance within take rate based on those profiles. To be just a bit more specific, if we work with a digital goods merchant that sells high risk product internationally, The fee would appropriately be higher than a merchant that sells domestically in the U. S. Speaker 300:18:49Low risk products, and that would influence the take rate. Our pricing philosophy is to make sure that there's always value to merchants when they start using Riskify, Right. So our pricing, which impacts our take rate, would always provide them savings relative to their existing costs. So that's how we think about pricing. Speaker 400:19:15Understood. Thank you. Operator00:19:17Thank you. One moment for our next question please. Our next question comes from Robert Napoli with William Blair. Your line is now open. Speaker 500:19:31Thank you. Thank you for taking the question. And we're always thinking about you all during this time. Glad to hear everybody's accounted for. But I guess on the as we think about you're turning to profitability and maybe a longer term Victor, Ito, Aggie on how do you think about a glide path to getting to your long term targets of EBITDA margins? Speaker 300:19:59Look, I think the things that are within our control right around OpEx Discipline around executing on the sales side, like we've been focused on them for the past 8 quarters, we'll continue to focus on As we march towards kind of those longer term margin targets. Speaker 100:20:19Yes. I mean for the last couple of quarters, I think that we've been able to improve our OpEx line and ultimately kind of pass this to adjusted EBITDA. We're still expecting Q4 to be profitable and next year to be profitable. It's very much of a focus and something we're executing on. Speaker 500:20:37Thank you. And from a GEO's perspective, I mean, great to see the strong growth out of Asia. Just Over the next where do you see the bigger opportunities? Are you just scratching the surface in those markets? Or Now is international going to become a much higher portion of the business over time? Speaker 500:20:58And is the international business to profitability, Is there any are there any differences geo wise in the profitability of the business? Speaker 300:21:10Okay. I think we're all very proud of the GMV gains and kind of the market share we do have. Having said that, we still feel we're scratching the surface of the overall e commerce market and penetration. So we still think there's significant growth definitely in some of these newer regions where we're seeing kind of that higher growth rates like you mentioned, but also in the more traditional industries And region. So when I think about growth outlook, it's continuing to focus on our existing categories and geographies. Speaker 300:21:43It's strengthening some of these international markets, APAC, LATAM, and moving more towards a platform sale where Policy and dispute results have a more pronounced impact. So I think all those will help us with the growth moving forward. Speaker 500:22:01Thank you. Appreciate it. Operator00:22:03Thank you. One moment for our next question. Our next question comes from the line of Tim Scioto with UBS. Your line is now open. Speaker 600:22:13Hi, this is Jing on for Tim. Thanks for taking the question. So my question is around the Platt partnership that you announced for ACH payment. Can you provide us any update on how the partnership has contributed to your business so far? And where do you see Most of the use cases among your verticals. Speaker 300:22:34I think ACH is a growing and evolving Payment method and we see more merchants want to offer it as an alternative to credit cards either to build recurring payments plus the interchange fee or Take care of high amounts or different verification statuses. So we do see it as a growing consumer payment option. And what we've heard from our merchants is because the risk there is slightly different than traditional credit card fraud, But they still need help solving those problems. So really the partnership with Playdate is aimed at offering merchants You know an end to end solution that includes a way to accept guaranteed payments via ACH, and it has been meaningful in building some of That pipeline that we discussed earlier. Speaker 600:23:29Got it. That's really helpful. And a quick follow-up on the new products in addition to chargeback guarantee. So it was encouraging to see the pipeline growth and the Cross sell opportunity that you highlighted in the release. So how does the momentum look like with policy per cat contributing to your new revenue bookings? Speaker 600:23:49And do you see any difference in terms of product adoption between U. S. And the international side. Thank you. Speaker 300:24:00Sure. Yes, we feel great about the pipeline, the way it's building. We feel that the merchants That are live. It's all being a very meaningful and significant pain point for them. I'm not sure that I can Differentiate between the global and kind of local market, but we definitely don't see a Inherently, there shouldn't be a difference in the ROI that it's providing to either. Speaker 300:24:24So we look forward to continuing to sell and update you on the progress. Operator00:24:38Our next question comes from the line of Terry Tillman with Tuohy Securities. Your line is now open. Yes. Speaker 700:24:45Thank you, Ito, Agi and Chad. Good morning. And also my thoughts are with everyone impacted by the conflict. I had two questions. Maybe the first question, Ito, I think in your prepared remarks, you talked about having increased confidence. Speaker 700:24:58I think just in general in the business and monetizing new logos, I hope I didn't misrepresent that, but and you all did tell the top 10 new customer deals in the quarter, particularly strength in the U. S. What I'm curious about is what's driving the The macro isn't any better, so it can't be that. Is it stuff on the sales side with leadership? You've got a new CMO. Speaker 700:25:22Is the market just from 12 months prior based on the RFP activity just starting to come around to these advanced ML decisioning engines? I'll stop with my rambling and maybe you could just put a little bit more meat on the bone in terms of the increased confidence and just winning the business. And then I had a follow-up for Augie. Speaker 300:25:40Sure. Happy to do so. I think so let me tighten that up. I have increased confidence On the things within our ability to control, right? So when I think about some of the initiatives we started Probably 2 years ago about the increased investment in additional products in our platform, additional investments into our global enterprise sales force. Speaker 300:26:04Sitting here today, I think we're starting to bear the fruit of some of that, right? And some of that is reflective in some of these products being fully deployed and in the hands of merchants and generating value. Some of that is reflective in the growth rates in APAC and the pipeline that's building. Some of that is reflective in kind of the ML platform and the performance that it's been providing to us and our merchants. Also, you mentioned, Jeff, our new HMO from a few quarters ago, also very confident and happy with our current leadership team. Speaker 300:26:38So I think all those things are definitely helping me become more confident in the business longer term. Like you said, macro, I have not seen it inflect meaningfully this quarter like you mentioned. Speaker 700:26:54Yes, understood. Thank you for that, Yigal. And then, Augie, in terms of the Q4 outlook, I know the comp was tougher in 3Q, so that made sense on maybe Growth year over year, but in 4Q it is an easier comp. I think I'd love to just get a little bit more perspective on is there an incremental degree of conservatism? You did say tickets and Travel, maybe that's the sole factor, but I did hear that well, maybe there's some of the rollouts will take a little longer, just a little bit more in terms of Maybe some of this is timing and then actually 1Q, there's some incremental benefits from some of the rollouts. Speaker 700:27:28Just a little bit more on the roughly 7% growth at the midpoint Speaker 300:27:32Thank you. Speaker 100:27:34Yes, Terry, thank you for the question. So in terms of the Q4 and what's kind of changed some of Our perspective since we last reported, I'll update some of the nuances and trends specifically about The ticketing subvertigo in Tickets and Travel mostly in live events is something that we saw a little bit softer coming out At the end of the quarter and kind of like early in October, and it's mostly the way I look at it, it's mostly coming out A really busy season starting from the beginning of the year, but also through the summer, and a little bit of a different seasonality in this industry than what we saw last year. So that's kind of like one of the aspects there related to Q4. And the other aspect is more around new deals coming in, Looking at kind of like 2023 growth, it's primarily driven by new business It's a very, very strong driver for us. Looking into Q4, I think there was some push in slightly in a little bit of deals Still coming in, just a little bit in the back half of the quarter, maybe early next year, but all of them are really strong deals. Speaker 100:28:49All of them are still kind of like in the forecast just a little bit later in the cycle. Speaker 500:28:57Yes. And I would maybe This is Augie when Speaker 300:28:59Yes. Sorry. Go ahead. Speaker 400:29:01No, I Speaker 300:29:01would just add to that. Again, I think, like you've seen throughout this year, sometimes There can be fluctuations between quarters for us because of underlying e commerce trends across our different categories. And it is important to point out that we don't feel that the Q4 rate is reflective of what we would anticipate next year. Speaker 700:29:21That's helpful. Thank you very much. Operator00:29:24Thank you. One moment for our next question please. Next question comes from the line of Reginald Smith with JPMorgan. Your line is now open. Speaker 800:29:39Thank you. Good morning. I guess most of my questions have been hit. I just want a clarification, did you guys Size, the actual impact of that fraud loss during the quarter and I have a quick follow-up. Thanks. Speaker 100:29:55Yes. Thank you for the question. So it landed up within the range of whether we expected more precisely around 4,500,000 And the gross margin that we expected based on this fraud event is also 44%, just aligned with our expectations. Speaker 800:30:16Perfect. Thank you. And then and I'm not sure to what extent you guys can provide color on this, but I'm just curious If there's maybe you can kind of walk us through ecom trends in general throughout the quarter or maybe through the first Month to month and a half of 4Q, anything you're seeing there or worth kind of calling out? Speaker 100:30:41Yes, of course. So as I already mentioned, I think the biggest kind of change from prior And prior expectations are around live events in the ticket sub industry. It's been a little bit softer, but overall it's still very strong growth driver for the year and still overall performing well. The other trends, I would say, there's some strength in the food and home category, the later one primarily driven by some of the upsells that we were able to execute. And electronics has been a little bit soft. Speaker 100:31:16I think it was soft last quarter, but continues the softness in this quarter. Yes, these are probably kind of like the biggest highlights. Speaker 800:31:29So are you suggesting that Tickets and Travel weakened toward the End of the quarter and into this Q4. Just trying to clarify the comment. I guess that would coincide with the Beyonce concert, If I'm thinking about that correctly. Speaker 100:31:48It's hard to say. We do see it in more than 1 merchant. I don't see exactly what's driven, but it's really like across geos and in more than I would say like probably 2, 3 of the merchants in Category? Speaker 300:32:02You're right to highlight that it's more specific to live events than other types of ticketing. Speaker 800:32:11Thank you. Operator00:32:13Thank you. One moment for our next question please. Our next question comes from the line of Brent Bracelin with Piper Sandler. Your line is now open. Speaker 900:32:24Hi, all. This is Hannah on for Brent this morning. Thanks for taking my questions and glad to hear all your employees are accounted for. Just Wanted to echo my support for you, your colleagues and your families here. Ito, in a previous answer, you mentioned moving more to the platform sale. Speaker 900:32:40I guess, can you talk about your ability to land new merchants with more than just chargeback guarantee upfront and how that's evolved? Speaker 300:32:48Sure. Thank you for that commentary. Look, I would say that when we sell chargeback guarantee, we're solving for Chargebacks related to fraudulent reason codes, right. And that leaves a lot of Pain points and inefficiencies for our merchants, such as chargebacks related to non fraud reason codes, Different forms of financial loss related to policy abuse. And right now, we have the ability, whether it's through a new sale Or cross sell or up sell to solve a wider set of problems, right? Speaker 300:33:26So sometimes merchants are saying, hey, that's great. I don't just have a chargeback issue. I have issue Some of these other problems and that's helping us advance conversations with the platform sale initially. It's actually also helping us even when a merchant might say, you know what, I'm not ready to make a change on my fraud platform right now. We can actually start with Policy or dispute, which has been showing great traction and is a really easy and good initial sale. Speaker 300:33:57So we feel good about the opportunities and conversations with new merchants from that more platform approach. Speaker 900:34:05Okay, super helpful. And then, Aggie, in terms of upsell strength, are you seeing more strength on the volume side or the cross sell side? And How do you expect that to trend over time? Speaker 100:34:16I think, it's upsell has been a strong category and a strong driver. It's coming Definitely the ability to expand both to for higher approval rate or also to kind of And then take more of the GMV and from existing customers have been like have been a factor. Speaker 900:34:41Great. Thank you. Operator00:34:44Thank you. I'm currently showing no further questions at this time. I'd like to hand the conference Back over to Mr. Ito Gal for closing remarks. Speaker 300:34:53Yes. Thank you everyone for the support. We look forward to updating you in the coming months on our next call. Operator00:35:00This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallRiskified Q3 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K) Riskified Earnings HeadlinesCritical Contrast: Society Pass (NASDAQ:SOPA) vs. Riskified (NYSE:RSKD)April 25, 2025 | americanbankingnews.comRiskified To Report First Quarter 2025 Financial Results on Wednesday, May 14April 23, 2025 | finance.yahoo.comHere’s How to Claim Your Stake in Elon’s Private Company, xAIEven though xAI is a private company, tech legend and angel investor Jeff Brown found a way for everyday folks like you… To partner with Elon on what he believes will be the biggest AI project of the century… Starting with as little as $500.April 29, 2025 | Brownstone Research (Ad)Riskified price target lowered to $6 from $7 at DA DavidsonApril 15, 2025 | markets.businessinsider.comIs Riskified Ltd. (RSKD) the Best Technology Penny Stock to Buy Right Now?March 31, 2025 | insidermonkey.comRiskified Ltd.: Free Cash Flow And Balance Sheet Are The Best Part Of The StoryMarch 28, 2025 | seekingalpha.comSee More Riskified Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Riskified? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Riskified and other key companies, straight to your email. Email Address About RiskifiedRiskified (NYSE:RSKD), together with its subsidiaries, develops and offers an e-commerce risk management platform that allows online merchants to create trusted relationships with consumers in the United States, Europe, the Middle East, Africa, the Asia-Pacific, and the Americas. It offers Chargeback Guarantee that ensures the legitimacy of merchants' online orders; Policy Protect, a machine learning solution designed to detect and prevent refund and returns policy abuse in real-time; Account Secure, a solution that cross-checks every login attempt; Dispute Resolve, which is used to compile submissions for fraud and non-fraud related chargeback issues; and PSD2 Optimize that helps merchants avoid bank authorization failures and abandoned shopping carts. The company serves direct-to-consumer brands, online-only retailers, omnichannel retailers, online marketplaces, and e-commerce service providers in various industries, such as payments, money transfer and crypto, tickets and travel, electronics, home, and fashion and luxury goods. Riskified Ltd. was incorporated in 2012 and is headquartered in Tel Aviv, Israel.View Riskified ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Alphabet Rebounds After Strong Earnings and Buyback AnnouncementMarkets Think Robinhood Earnings Could Send the Stock UpIs the Floor in for Lam Research After Bullish Earnings?Texas Instruments: Earnings Beat, Upbeat Guidance Fuel RecoveryMarket Anticipation Builds: Joby Stock Climbs Ahead of EarningsIs Intuitive Surgical a Buy After Volatile Reaction to Earnings?Seismic Shift at Intel: Massive Layoffs Precede Crucial Earnings Upcoming Earnings AstraZeneca (4/29/2025)Booking (4/29/2025)DoorDash (4/29/2025)Honeywell International (4/29/2025)Mondelez International (4/29/2025)PayPal (4/29/2025)Regeneron Pharmaceuticals (4/29/2025)Starbucks (4/29/2025)American Tower (4/29/2025)América Móvil (4/29/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. 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There are 10 speakers on the call. Operator00:00:00Good day, and thank you for standing by. Welcome to Rescify's Third Quarter 2023 Financial Results Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. Operator00:00:27I would now like to hand the conference over to your speaker, Chet Mandel, Head of Investor Relations. Speaker 100:00:32Please go ahead. Speaker 200:00:36Good morning and thank you for joining us today. My name is Chet Mandel, Riskified's Head of Investor Relations. We are hosting today's call to discuss Riskify's financial results for the Q3 of 2023. Participating on today's call are E. Dohgal, Riskified's Co Founder and Chief Executive Officer and Agi Doceva, Riskified's Chief Financial Officer. Speaker 200:00:59We released our results for the Q3 of 2023 earlier today. Our earnings materials, including a replay of today's webcast, are available on our Investor Relations website at ir.riskify.com. Certain statements made on the call today Forward looking statements related to our operating performance, business and financial goals, outlook as to gross profit margin, Adjusted EBITDA profitability and expectations as to positive cash flows, which reflect management's best judgment based on currently available information and are not guarantees of future performance. We intend all forward looking statements to be covered by the Safe Harbor provisions contained in the Private Securities Litigation Reform Act of 1995. These forward looking statements reflect our expectations as of the date of this call And except as required by law, we undertake no obligation to revise this information as a result of new developments that may occur after the time of this call. Speaker 200:01:59These forward looking statements involve risks, uncertainties and other factors, some of which are beyond our control that could cause actual results to differ materially from our expectations. You should not put undue reliance on any forward looking statement. Please refer to our annual report on Form 20 F for the year ended December 31, 2022 and subsequent reports we file or furnish with the SEC for more information on these specific factors that could cause actual results to differ materially from our expectations. Additionally, we will discuss certain non GAAP financial measures and key performance indicators on the call. Reconciliations to the most directly comparable GAAP financial measures are available in our earnings release issued earlier today and also furnished with the SEC on Form 6 ks and in the appendix of our Investor Relations presentation, all of which are posted on our Investor Relations website. Speaker 200:02:56I will now turn the call over to Yu Dao. Speaker 300:02:59Thanks, Chet, and hello, everyone. Before we dive into a discussion on our financial results and outlook, I would like to first briefly touch on the evolving situation in Israel. Then I will share some commentary from the Q3 and end my remarks discussing why I remain as confident as ever in the positioning of the company. As part of this discussion, I'll provide some color on how we were able to efficiently adapt our workforce and enact our business continuity plan To ensure uninterrupted service to our merchants in the wake of the October 7 events, then Agi will walk you through our Q3 financials and what to expect in the Q4. 1st and foremost, we condemn the horrific attacks in Israel and we send our thoughts and support to all affected. Speaker 300:03:43The loss of innocent lives resulting from this unforgivable terrorist act and the war that ensued is truly devastating. To our customers, partners and shareholders who have reached out to support us during this difficult time, on behalf of everyone at Riskify, We sincerely thank you. I am relieved to report that all of our employees are accounted for. I am proud of everyone in the organization This level of focus and flexibility has meant that we've seen no material impact on our ability to maintain day to day operations across all critical functions. Moving now to our Q3 results. Speaker 300:04:26Once again, our revenue growth during the Q3 was primarily driven by the successful execution of our go to market strategy, which contributed to 14% year over year revenue growth and 17% for the 1st 9 months of the year. We are growing more confident in our ability to add new merchants, retain and upsell existing ones and expand our market share despite an uncertain and challenging macroeconomic backdrop. Our competitive win rates remained high during the quarter and we have on boarded more new merchants versus this point last year. We have generated over 20% more leads compared to this point last year, which is contributing to a large and growing pipeline. We are working diligently on maximizing revenue opportunities, leveraging our machine learning capabilities to positively impact our business, while prioritizing investments in the areas with the highest return. Speaker 300:05:18I'm excited that we've grown top line revenue by 17%, while simultaneously decreasing total operating expenses by 6%, which drove an improvement in adjusted EBITDA performance by over 50% in the 1st 9 months We believe that these results are testament to the overall strength of the business and our ability to execute and find leverage in the model. Next, allow me to spend some time talking about the isolated fraud event that we discussed on our last earnings call. As a reminder, one of our largest merchants experienced a significant fraud event in July. This event was contained over the course of a handful of weeks and as expected, The impact caused by this event contributed to our non GAAP Q3 gross margin of 44%. We do not anticipate any further impact to our gross margin going forward a result of this event. Speaker 300:06:08And while we are disappointed by this one time event, we did learn valuable lessons. For example, We have updated and solidified various go live processes, improved some of our chargeback monitoring tools and added new detection capabilities. I should also mention that our relationship with the impacted merchant remains very strong and this isolated example underscores the overwhelming reason We believe that Chargeback Guarantee is a superior model that delivers the most value to merchants. Overall, we remain encouraged by our underlying gross margin performance. I believe that our commitment to continuously invest in our machine learning capabilities through feature enhancements and model improvements continues to strengthen our market leading technology. Speaker 300:06:50Now back to the Israel conflict and how it relates to our business. Our core focus since the event of October 7 has remained the safety of our employees and continuity to services to our merchants. To support the well-being of our teams in Israel, we have provided flexible working arrangements To support our merchants, we've been working diligently as part of our business continuity plan to leverage our global network of employees to fill temporary capacity needs. Although we've experienced minor delays in a small number of long term initiatives, there has not been any material impact to our current productivity. We remain 100% engaged with all our customers through increased communication efforts and have not seen loss of merchant volumes as a result of the October 7 events. Speaker 300:07:43This is a testament to the deep relationships that we have cultivated with many of our merchants, high retention rates and our track record of being a reliable and trusted partner. Before I turn it to Agi, I want to emphasize that I believe the DNA of our company positions us well as we work through the current situation. While we are proud of being a company founded in Israel, we are truly a global company with business functions spread through 8 locations around the world and with merchants in nearly 40 countries. Our goal remains to maximize revenue and profit with our AI powered fraud and risk management platform to all of the world's largest enterprise e commerce merchants and I am very confident in our ability to continue executing on that mission through all environments. Now, I will turn the call over to Arne. Speaker 100:08:31Thank you, Idel, team and everyone for joining today's call. I echo results on how incredible the team and organization has been in the face of a difficult situation in Israel. Our GMV for the Q3 was $29,700,000,000 reflecting a 17% increase year over year. We achieved 3rd quarter revenue of $71,900,000 up 14% year over year and year to date revenue of $213,500,000 up 17%. Our GMV and revenue growth during this quarter was primarily driven by the continued expansion of our platform across new merchants and upsells similar to recent quarters. Speaker 100:09:15Tickets and travel remains the largest overall category with year over year growth in the mid teens. The step down in growth from previous periods was primarily driven by the lapping of a large merchant in this category that was onboarded in Q3 of 2022. Encouragingly, for the first time in 8 quarters, All industries outside of tickets and travel in the aggregate contributed more than that single category or approximately 60% for our quarterly growth. In particular, this quarter we saw solid performance in our Home category, primarily driven by upsell activity. Similar to the first half of the year, 3rd quarter growth in one of our largest categories, fashion and luxury goods, remains relatively flat year over year. Speaker 100:10:04We continue to see softness in particular within our luxury brands and sneakers subsegments. In addition, our electronics category declined further from their 2nd quarter levels during the Q3 as demand for goods in the discretionary category slowed. Finally, we also saw revenue growth across all geographies. Our 3rd quarter revenue in the United States, Our largest region grew by 9% year over year and we experienced 12% year over year growth in EMEA. Our Americas and APAC regions each grew approximately 40%, primarily due to momentum in new and up sell activity. Speaker 100:10:42We believe that our continued revenue growth from regions outside of the United States demonstrates market share gains and validates our decision to invest in these regions. Moving on to gross margin. As Ido mentioned, our Q3 margin was negatively impacted by the isolated fraud event announced at our last earnings call. The impact of the event was in line with expectations and our non GAAP gross profit margin for the Q3 of 2023 reflective of this impact was 44%. As a reminder, gross margin is best analyzed on an annual basis as gross margin may fluctuate on a quarterly basis. Speaker 100:11:22However, given the unique nature of the 3rd quarter margin, Allow me to provide clarity on the annual range as we approach year end. As of today, we anticipate That our annual non GAAP gross profit margin will be at the midpoint of our range of 50% to 51.5% or 50.7%, which translates to a 4th quarter gross margin of approximately 54%. Moving to expenses. Total non GAAP operating expenses were $40,200,000 for the Q3 of 2023, A 5% decrease year over year is a result of our continuous focus on optimizing our expense base. Our Q3 expenses represent the lowest absolute quarterly level since our IPO over 2 years ago. Speaker 100:12:16Our non GAAP operating expenses as a percentage of revenue improved year over year from 67% to 56%, reflecting leverage in the business model. For modeling purposes, we anticipate a modest step up of approximately $1,000,000 in expenses in the Q4. Adjusted EBITDA for the 3rd quarter was negative $8,400,000 and negative $18,200,000 for the 1st 9 months of 2023. Even with the one time impact of the aforementioned merchant fraud event, We have been able to improve our adjusted EBITDA performance year over year for the 5th consecutive quarter and have improved our adjusted EBITDA performance by 50% year to date. As previously mentioned, we continue to anticipate profitability on an adjusted EBITDA basis in the Q4 of 2023 and on an annual basis in 2024. Speaker 100:13:19Moving to the balance sheet. We maintained a very strong liquidity position and generated positive free cash flow during the quarter. We ended the Q3 with approximately $482,000,000 of cash deposits, investments and accrued interest on the balance sheet and we carry 0 debt. This amount represents a sequential increase of approximately 2,000,000 We remain confident in the business' ability to generate positive operating cash flow over the long term as was demonstrated during the Q3. And we continue to believe that our balance sheet and strong liquidity position are under appreciated assets. Speaker 100:14:02Related to our capital allocation initiatives, as we announced alongside our 2nd quarter earnings, Our Board has authorized a share repurchase program of up to $75,000,000 subject to approval from the Israeli court, which is required by law. Due to the event of October 7, Israeli courts are currently operating under rolling emergency orders and certain court processes or delays. We anticipate receiving a decision from the Israeli court in the next several weeks and we will announce the We expect to leverage this program to take advantage of opportunistic repurchasing opportunities and manage share dilution. At valuation levels well below that of companies with similar financial profile, We believe that we have a great opportunity to repurchase our stock at attractive prices. We believe our strong balance sheet enables us We'll continue driving shareholder value by investing in the growth of the business, while maintaining significant capital to continue pursuing M and A opportunities. Speaker 100:15:09Now moving to our guidance, which assumes no further worsening in consumer spending patterns or material changes to the macroeconomic environment. As we approach year end, we have more visibility on the timing and ramp up of the onboarding of certain merchants and expect a more muted than originally anticipated tickets and travel season, especially in the tickets and live event vertical for the remainder of the year. As a result, we're refining our full year 2023 revenue range to be between $297,000,000 to $300,000,000 That being said, as a result of our ongoing expense discipline in the 1st 9 months of the year, we are improving our Full year 2023 adjusted EBITDA guidance to be between negative $12,500,000 negative $14,500,000 an improvement of 7% from the midpoint of our previously disclosed guidance range. Overall, from an operational perspective, I believe that we're executing from a position of strength even in a challenging environment. And despite the evolving geopolitical situation in Israel and the continued challenging macroeconomic landscape. Speaker 100:16:17We remain excited about prospects for long term growth and our ability to deliver value to shareholders. Operator, we are ready to take the first question, please. Thank you. Operator00:16:54And our first question comes from the line of Ramsey El Assad with Barclays, your line is now open. Speaker 400:17:02Hi, this is Owen on for Ramsey. I appreciate you taking our question this morning. I wanted to ask specifically about your sales pipeline and was wondering if you could provide any more color on the portion of new sales that's being driven by Cross sell compared to net new logo growth and if you're seeing any difficulty in one versus the other, any clarity there might be very helpful. I appreciate it. Speaker 300:17:27Hey, Owen. Sure. So we feel great about the pipeline. It's I think we mentioned it's about 20% larger than this point a year ago and that's really across the board both in the newer products around policy and dispute, Also from a geographical perspective, so the pipeline increase I would say is relatively broad based. Speaker 400:17:51Understood. I appreciate that. And I also wanted to follow-up, if I may, on your take rate and kind of longer term expectations there And how you expect that to trend relative to the business? Is there any sort of point in which you might choose to favor new logo growth by passing along some Expense savings to customers, any kind of update there might be interesting as well. Appreciate it. Speaker 300:18:17Sure. I would say, look, take rate is always risk adjusted, right? So depending on the risk of the segment or the merchant or the category, That informs our pricing and that means that there's really variance within take rate based on those profiles. To be just a bit more specific, if we work with a digital goods merchant that sells high risk product internationally, The fee would appropriately be higher than a merchant that sells domestically in the U. S. Speaker 300:18:49Low risk products, and that would influence the take rate. Our pricing philosophy is to make sure that there's always value to merchants when they start using Riskify, Right. So our pricing, which impacts our take rate, would always provide them savings relative to their existing costs. So that's how we think about pricing. Speaker 400:19:15Understood. Thank you. Operator00:19:17Thank you. One moment for our next question please. Our next question comes from Robert Napoli with William Blair. Your line is now open. Speaker 500:19:31Thank you. Thank you for taking the question. And we're always thinking about you all during this time. Glad to hear everybody's accounted for. But I guess on the as we think about you're turning to profitability and maybe a longer term Victor, Ito, Aggie on how do you think about a glide path to getting to your long term targets of EBITDA margins? Speaker 300:19:59Look, I think the things that are within our control right around OpEx Discipline around executing on the sales side, like we've been focused on them for the past 8 quarters, we'll continue to focus on As we march towards kind of those longer term margin targets. Speaker 100:20:19Yes. I mean for the last couple of quarters, I think that we've been able to improve our OpEx line and ultimately kind of pass this to adjusted EBITDA. We're still expecting Q4 to be profitable and next year to be profitable. It's very much of a focus and something we're executing on. Speaker 500:20:37Thank you. And from a GEO's perspective, I mean, great to see the strong growth out of Asia. Just Over the next where do you see the bigger opportunities? Are you just scratching the surface in those markets? Or Now is international going to become a much higher portion of the business over time? Speaker 500:20:58And is the international business to profitability, Is there any are there any differences geo wise in the profitability of the business? Speaker 300:21:10Okay. I think we're all very proud of the GMV gains and kind of the market share we do have. Having said that, we still feel we're scratching the surface of the overall e commerce market and penetration. So we still think there's significant growth definitely in some of these newer regions where we're seeing kind of that higher growth rates like you mentioned, but also in the more traditional industries And region. So when I think about growth outlook, it's continuing to focus on our existing categories and geographies. Speaker 300:21:43It's strengthening some of these international markets, APAC, LATAM, and moving more towards a platform sale where Policy and dispute results have a more pronounced impact. So I think all those will help us with the growth moving forward. Speaker 500:22:01Thank you. Appreciate it. Operator00:22:03Thank you. One moment for our next question. Our next question comes from the line of Tim Scioto with UBS. Your line is now open. Speaker 600:22:13Hi, this is Jing on for Tim. Thanks for taking the question. So my question is around the Platt partnership that you announced for ACH payment. Can you provide us any update on how the partnership has contributed to your business so far? And where do you see Most of the use cases among your verticals. Speaker 300:22:34I think ACH is a growing and evolving Payment method and we see more merchants want to offer it as an alternative to credit cards either to build recurring payments plus the interchange fee or Take care of high amounts or different verification statuses. So we do see it as a growing consumer payment option. And what we've heard from our merchants is because the risk there is slightly different than traditional credit card fraud, But they still need help solving those problems. So really the partnership with Playdate is aimed at offering merchants You know an end to end solution that includes a way to accept guaranteed payments via ACH, and it has been meaningful in building some of That pipeline that we discussed earlier. Speaker 600:23:29Got it. That's really helpful. And a quick follow-up on the new products in addition to chargeback guarantee. So it was encouraging to see the pipeline growth and the Cross sell opportunity that you highlighted in the release. So how does the momentum look like with policy per cat contributing to your new revenue bookings? Speaker 600:23:49And do you see any difference in terms of product adoption between U. S. And the international side. Thank you. Speaker 300:24:00Sure. Yes, we feel great about the pipeline, the way it's building. We feel that the merchants That are live. It's all being a very meaningful and significant pain point for them. I'm not sure that I can Differentiate between the global and kind of local market, but we definitely don't see a Inherently, there shouldn't be a difference in the ROI that it's providing to either. Speaker 300:24:24So we look forward to continuing to sell and update you on the progress. Operator00:24:38Our next question comes from the line of Terry Tillman with Tuohy Securities. Your line is now open. Yes. Speaker 700:24:45Thank you, Ito, Agi and Chad. Good morning. And also my thoughts are with everyone impacted by the conflict. I had two questions. Maybe the first question, Ito, I think in your prepared remarks, you talked about having increased confidence. Speaker 700:24:58I think just in general in the business and monetizing new logos, I hope I didn't misrepresent that, but and you all did tell the top 10 new customer deals in the quarter, particularly strength in the U. S. What I'm curious about is what's driving the The macro isn't any better, so it can't be that. Is it stuff on the sales side with leadership? You've got a new CMO. Speaker 700:25:22Is the market just from 12 months prior based on the RFP activity just starting to come around to these advanced ML decisioning engines? I'll stop with my rambling and maybe you could just put a little bit more meat on the bone in terms of the increased confidence and just winning the business. And then I had a follow-up for Augie. Speaker 300:25:40Sure. Happy to do so. I think so let me tighten that up. I have increased confidence On the things within our ability to control, right? So when I think about some of the initiatives we started Probably 2 years ago about the increased investment in additional products in our platform, additional investments into our global enterprise sales force. Speaker 300:26:04Sitting here today, I think we're starting to bear the fruit of some of that, right? And some of that is reflective in some of these products being fully deployed and in the hands of merchants and generating value. Some of that is reflective in the growth rates in APAC and the pipeline that's building. Some of that is reflective in kind of the ML platform and the performance that it's been providing to us and our merchants. Also, you mentioned, Jeff, our new HMO from a few quarters ago, also very confident and happy with our current leadership team. Speaker 300:26:38So I think all those things are definitely helping me become more confident in the business longer term. Like you said, macro, I have not seen it inflect meaningfully this quarter like you mentioned. Speaker 700:26:54Yes, understood. Thank you for that, Yigal. And then, Augie, in terms of the Q4 outlook, I know the comp was tougher in 3Q, so that made sense on maybe Growth year over year, but in 4Q it is an easier comp. I think I'd love to just get a little bit more perspective on is there an incremental degree of conservatism? You did say tickets and Travel, maybe that's the sole factor, but I did hear that well, maybe there's some of the rollouts will take a little longer, just a little bit more in terms of Maybe some of this is timing and then actually 1Q, there's some incremental benefits from some of the rollouts. Speaker 700:27:28Just a little bit more on the roughly 7% growth at the midpoint Speaker 300:27:32Thank you. Speaker 100:27:34Yes, Terry, thank you for the question. So in terms of the Q4 and what's kind of changed some of Our perspective since we last reported, I'll update some of the nuances and trends specifically about The ticketing subvertigo in Tickets and Travel mostly in live events is something that we saw a little bit softer coming out At the end of the quarter and kind of like early in October, and it's mostly the way I look at it, it's mostly coming out A really busy season starting from the beginning of the year, but also through the summer, and a little bit of a different seasonality in this industry than what we saw last year. So that's kind of like one of the aspects there related to Q4. And the other aspect is more around new deals coming in, Looking at kind of like 2023 growth, it's primarily driven by new business It's a very, very strong driver for us. Looking into Q4, I think there was some push in slightly in a little bit of deals Still coming in, just a little bit in the back half of the quarter, maybe early next year, but all of them are really strong deals. Speaker 100:28:49All of them are still kind of like in the forecast just a little bit later in the cycle. Speaker 500:28:57Yes. And I would maybe This is Augie when Speaker 300:28:59Yes. Sorry. Go ahead. Speaker 400:29:01No, I Speaker 300:29:01would just add to that. Again, I think, like you've seen throughout this year, sometimes There can be fluctuations between quarters for us because of underlying e commerce trends across our different categories. And it is important to point out that we don't feel that the Q4 rate is reflective of what we would anticipate next year. Speaker 700:29:21That's helpful. Thank you very much. Operator00:29:24Thank you. One moment for our next question please. Next question comes from the line of Reginald Smith with JPMorgan. Your line is now open. Speaker 800:29:39Thank you. Good morning. I guess most of my questions have been hit. I just want a clarification, did you guys Size, the actual impact of that fraud loss during the quarter and I have a quick follow-up. Thanks. Speaker 100:29:55Yes. Thank you for the question. So it landed up within the range of whether we expected more precisely around 4,500,000 And the gross margin that we expected based on this fraud event is also 44%, just aligned with our expectations. Speaker 800:30:16Perfect. Thank you. And then and I'm not sure to what extent you guys can provide color on this, but I'm just curious If there's maybe you can kind of walk us through ecom trends in general throughout the quarter or maybe through the first Month to month and a half of 4Q, anything you're seeing there or worth kind of calling out? Speaker 100:30:41Yes, of course. So as I already mentioned, I think the biggest kind of change from prior And prior expectations are around live events in the ticket sub industry. It's been a little bit softer, but overall it's still very strong growth driver for the year and still overall performing well. The other trends, I would say, there's some strength in the food and home category, the later one primarily driven by some of the upsells that we were able to execute. And electronics has been a little bit soft. Speaker 100:31:16I think it was soft last quarter, but continues the softness in this quarter. Yes, these are probably kind of like the biggest highlights. Speaker 800:31:29So are you suggesting that Tickets and Travel weakened toward the End of the quarter and into this Q4. Just trying to clarify the comment. I guess that would coincide with the Beyonce concert, If I'm thinking about that correctly. Speaker 100:31:48It's hard to say. We do see it in more than 1 merchant. I don't see exactly what's driven, but it's really like across geos and in more than I would say like probably 2, 3 of the merchants in Category? Speaker 300:32:02You're right to highlight that it's more specific to live events than other types of ticketing. Speaker 800:32:11Thank you. Operator00:32:13Thank you. One moment for our next question please. Our next question comes from the line of Brent Bracelin with Piper Sandler. Your line is now open. Speaker 900:32:24Hi, all. This is Hannah on for Brent this morning. Thanks for taking my questions and glad to hear all your employees are accounted for. Just Wanted to echo my support for you, your colleagues and your families here. Ito, in a previous answer, you mentioned moving more to the platform sale. Speaker 900:32:40I guess, can you talk about your ability to land new merchants with more than just chargeback guarantee upfront and how that's evolved? Speaker 300:32:48Sure. Thank you for that commentary. Look, I would say that when we sell chargeback guarantee, we're solving for Chargebacks related to fraudulent reason codes, right. And that leaves a lot of Pain points and inefficiencies for our merchants, such as chargebacks related to non fraud reason codes, Different forms of financial loss related to policy abuse. And right now, we have the ability, whether it's through a new sale Or cross sell or up sell to solve a wider set of problems, right? Speaker 300:33:26So sometimes merchants are saying, hey, that's great. I don't just have a chargeback issue. I have issue Some of these other problems and that's helping us advance conversations with the platform sale initially. It's actually also helping us even when a merchant might say, you know what, I'm not ready to make a change on my fraud platform right now. We can actually start with Policy or dispute, which has been showing great traction and is a really easy and good initial sale. Speaker 300:33:57So we feel good about the opportunities and conversations with new merchants from that more platform approach. Speaker 900:34:05Okay, super helpful. And then, Aggie, in terms of upsell strength, are you seeing more strength on the volume side or the cross sell side? And How do you expect that to trend over time? Speaker 100:34:16I think, it's upsell has been a strong category and a strong driver. It's coming Definitely the ability to expand both to for higher approval rate or also to kind of And then take more of the GMV and from existing customers have been like have been a factor. Speaker 900:34:41Great. Thank you. Operator00:34:44Thank you. I'm currently showing no further questions at this time. I'd like to hand the conference Back over to Mr. Ito Gal for closing remarks. Speaker 300:34:53Yes. Thank you everyone for the support. We look forward to updating you in the coming months on our next call. Operator00:35:00This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.Read morePowered by