NYSE:RSKD Riskified Q2 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-$0.09Consensus EPS -$0.12Beat/MissBeat by +$0.03One Year Ago EPSN/ARiskified Revenue ResultsActual Revenue$72.77 millionExpected Revenue$72.08 millionBeat/MissBeat by +$690.00 thousandYoY Revenue GrowthN/ARiskified Announcement DetailsQuarterQ2 2023Date8/15/2023TimeN/AConference Call DateTuesday, August 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 Q2 2023 Earnings Call TranscriptProvided by QuartrAugust 15, 2023 ShareLink copied to clipboard.There are 9 speakers on the call. Operator00:00:00Good day and thank you for standing by. Welcome to the Riskified Second Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer Please be advised that today's conference is being recorded. And I would now like to hand the conference over to your speaker today, with the Chet Mandel, Head of Investor Relations. Operator00:00:38Sir, please go ahead. Speaker 100:00:42Good 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 Riskified's financial results for the Q2 of 2023. Participating on today's call are E. Doval, Riskified's Co Founder and Chief Executive Officer and Agi Dolceva, Riskified's Chief Financial Officer. Speaker 100:01:03We released our results for the Q2 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 will be forward looking statements related to our operating performance, financial goals and business outlook, which reflect management's best judgment based on currently available information and are not guarantees of future performance. We intend all forward looking statements will be covered by the Safe Harbor provisions contained in the Private Securities Litigation Reform Act of 1995. Please note That these forward looking statements reflect our expectations as of the date of this call and except as required by applicable 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 100:01:54These 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 the 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 100:02:50I will now turn the call over to Itau. Speaker 200:02:53Thanks, Chad, and hello, everyone. We had a strong Q2 highlighted by year over year revenue growth of 21%. During the Q2, Our revenue growth was primarily driven by the successful execution of our go to market strategy. For the first half of twenty twenty three, Our sales team was able to exceed their internal quotas while simultaneously building a rolling pipeline that is now stronger and more robust than it was at the beginning of the fiscal year. We are fortunate to have strategic and deep rooted relationships with some of the biggest and most sophisticated enterprise e commerce merchants in the world. Speaker 200:03:30We aim to strengthen our position as one of the largest and most accurate e commerce decisioning companies in the world by continuously finding ways to enhance our platform for our merchants. To help accomplish this, we recently formed our Customer Advocacy Board or CAB, made up of 10 senior executive decision makers with C level participation from some of Riskified's top accounts, which together represent a meaningful portion of our revenue base. The mission of the CAB is to share insights, discuss the e commerce trends, share ideas about product enhancements to strengthen our offering. This feedback is intended to help us develop features and strategize our product roadmap to solve bigger and more complex use cases for our merchants, which we expect will ultimately land higher attach rates. Based on the initial feedback from the group, we are even more excited about our technology stack and our multi product platform with DisputeResolve and PolicyProtect. Speaker 200:04:29Dispute Resolve fully automates elements of the dispute process for both fraud and non fraud related chargebacks. During the Q2, we meaningfully improved our user dashboard experience, increased the number of gateway integrations and utilized artificial intelligence to automatically create and gather compelling evidence on behalf of the merchant. As a result of this automation, We expect our merchants to experience an uplift in dispute win rates, which ultimately is intended to lead to recovering more revenue. PolicyProtect uses our innovative AI clustering technology layered on top of the power of our global merchant network of billions of historical transactions, 100 of billions of data attributes and repeat interaction histories for 100 of millions of consumers to help detect fraudulent refund claims And block serial returners in real time. Our internal research indicates that approximately $0.05 out of every e commerce revenue dollar is wasted as a result of bad behaviors like these, which means the total addressable market for Policy Protect maybe in the 100 of 1,000,000,000 of dollars. Speaker 200:05:38A great example of how merchants want to utilize Riskify to help solve this massive problem is exemplified by our 2nd quarter cross sell to an existing enterprise level merchant in our electronics category. This merchant tasked Riskify with helping them solve abusive returns By blocking bad customers upon checkout, addressing a 7 figure return problem for the merchant or more than 10% of their returns. Since going live, this merchant has indicated that we've been successful in blocking excessive returns at checkout with up to 99% precision, a testament to the performance of the product. We also further strengthened our core chargeback guarantee product in the Q2. We deployed our 1st autonomously trained model, researched and trained by our engine, but this time without data science intervention. Speaker 200:06:28We expect this model to allow us to make faster and more accurate decisions for our merchants. And this is just a sample of the features that we have added this quarter. Continuous investment into our machine learning platform like this one further differentiates our offering, which we believe ultimately makes our I am proud of all the enhancements and features that we have rolled out in our platform, Just as we pioneered the way that e commerce fraud was managed 10 years ago with chargeback guarantee, we aim to innovate the way merchants look at the overall e commerce customer experience from checkout to dispute with our full tech stack. And finally, we recently passed the 2 year anniversary of our IPO. Over that time, we have continued working towards positioning our company to be more efficient and productive, while staying focused on delivering value for our shareholders. Speaker 200:07:23We improved our year over year adjusted EBITDA performance for the 4th consecutive quarter through consistent revenue growth and ongoing flattening of our expenses, slowing this leverage entirely through to the bottom line. As we anticipate approaching profitability on an adjusted EBITDA basis In the Q4 of this year and on a full year basis in 2024, we have determined that now would be the right time to allocate some of our capital towards share repurchases. We have a strong balance sheet, a large and stable cash and deposits position of approximately $480,000,000 and 0 debt. At this time, we believe that both the company and our shareholders would benefit from opportunistic share repurchases. As a result, today we've announced our Board's authorization of a share repurchase program of up to $75,000,000 Subject to approval from the Israeli court, which is necessitated by law, this court approval process is expected to take several months. Speaker 200:08:23We believe that our company is undervalued with our cash balance currently comprising approximately 65% of our market capitalization. Thus, This represents an attractive opportunity to repurchase shares and ultimately increase the percentage owned by our current holders. In addition, We intend to continue managing the business with discipline to further reduce dilution and share based compensation from current levels. Additionally, even with this authorization, we believe that we have ample capital to pursue opportunities to continue to execute on our business objectives and strategically invest in the future of the company while pursuing profitable growth. We are laser focused on delivering for shareholders in the near and long term. Speaker 200:09:07Now, I will turn the call over to Agni. Speaker 300:09:10Thank you, Idel, team and everyone for joining today's call. Our GMV for the Q2 was $31,000,000,000 reflecting a 22% increase year over year. We achieved strong Q2 revenue of $72,800,000 up 21% year over year, which represents an Acceleration from our Q1 growth of 17%. Our growth in GMV and revenue during this quarter was primarily driven by Tickets and travel remains the largest category and grew approximately 50% year over year. Going forward, as we now have Fully lapsed COVID related comparable period, we expect a more normalized level of growth in this vertical for the remainder of the year. Speaker 300:10:04Encouragingly, during the Q2 and for the first time in several quarters, the overall business outside of Tickets and Travel has resumed contributing And while too early to tell the ultimate trajectory, we're excited about the positive impact we have seen this quarter. Similar to the Q1, one of our largest categories, fashion and luxury goods, was close to flat year over year in the second quarter as compared to the growth that we saw in this category in 2022. For the Q2 in a row, We have seen softness in some of our same corporate merchants within this category, in particular within our luxury brands and sneakers subsegment. Finally, from a geographic standpoint, the U. S, our largest region, grew by 18%, which was the highest level of growth seen in several quarters. Speaker 300:11:01EMEA grew 20% and the Americas and APAC grew 35% and 44%, respectively, during the quarter. Our continued revenue growth from regions outside of the United States further demonstrates the positive returns from our previous investments and market share gains. Moving on to gross profit margin. Our non GAAP gross profit margin for the Q2 of 2023 was 52%, consistent with the Q2 of 2022. Several weeks ago, we became aware that one of our largest merchants was experiencing a significant fraud event. Speaker 300:11:38Based on the information currently available to us, we anticipate an incremental impact of approximately negative $3,800,000 to $4,800,000 on our 3rd quarter gross profit. We have been working closely with this merchant to remediate the issue. Based on the information currently available to us, we believe that the impact on our gross margin is contained. Outside of the impact of this merchant fraud event, We're encouraged by our gross margin performance and have improved our 4th quarter gross margin outlook accordingly. However, As a result of this merger fraud event, we now anticipate that our annual gross profit margin will be in the range of 50% to 51.5%. Speaker 300:12:22As a reminder, gross margin is best analyzed on an annual basis as gross margin may fluctuate on a quarterly basis. Moving to expenses. Total non GAAP operating expenses were $42,200,000 for the Q2 of 2023, a 6% decrease year over year and relatively flat with the Q1 of 2023. Our absolute dollar expenses have remained essentially flat over the past 4 quarters and our non GAAP operating As a percentage of revenue declined year over year from 75% to 58%, reflecting leverage in the business model. We plan to continue operating the business with discipline. Speaker 300:13:06We're modeling approximately $84,000,000 in second half expenses, with our 4th quarter expenses to be lower than the 3rd quarter. Adjusted EBITDA for the 2nd quarter was negative for the 4th consecutive quarter since making the decision to accelerate our timeline to reach profitability. As previously mentioned, We currently anticipate being profitable on an adjusted EBITDA basis in the Q4 of 2023 and on an annual basis in 2024. Moving to the balance sheet. We ended the 2nd quarter with approximately $480,000,000 of cash Deposits and accrued interest on the balance sheet and we carry 0 debt. Speaker 300:14:00This amount represents a slight sequential decrease in cash, deposits We remain confident in the business' ability to generate positive cash flows over the long term, and we continue to believe that our balance sheet and strong liquidity position are underappreciated assets. In terms of our outlook, we're updating our 2023 guidance that we previously shared on our Q1 call. Assuming no further material changes We now anticipate revenue between $298,000,000 $303,000,000 for the full year 2023 or $300,500,000 at the midpoint. We continue to believe that Full year adjusted EBITDA will be between negative $17,000,000 negative $12,000,000 We continue to approach our guidance responsibly. We will continue to monitor the performance and health of our merchants, consumer spending, the broader e commerce landscape and the impact on our results. Speaker 300:15:04Overall, we're pleased with our strong first half of results amidst the continuous challenging macroeconomic landscape. We remain excited about how we are positioning our business, the continued prospects for long term growth and our ability to deliver value to our shareholders. Operator, we're ready to take the first question please. Operator00:15:27Thank you. One moment please for our first question. Our first question will come from Brent Bracelin of Piper Sandler. Your line is open. Speaker 400:16:01Good morning. Great to see continued strength in tickets and travel. I guess I want to double click into The base business, it sounds like base, ex Chickering Travel returned to growth. What are the factors that drove a return there? Are you just seeing A broader diversified base, is it the top 3 merchants coming back, any sort of additional color on The recovery you're seeing in the base ex ticket travel? Speaker 300:16:30Yes, of course. Brent, thank you for the question. So we're encouraged by what we see in travel and the overall kind of continued strength in consumer spending and moving towards So spend on experiences. Specifically about travel, what we're seeing is that international travel is Growing very nicely. It's better than domestic. Speaker 300:16:54And mostly, it's really the number of transactions that That's kind of like the new S. There's a lot of travel, outbound travel outside of the U. S. Towards Europe and APAC. Speaker 400:17:13Totally makes sense. And then what about the base business? If I exclude tickets and travel, what's driving the base business ex travel to return to growth? Speaker 300:17:24Sorry, I didn't understand. So outside of travel, we've seen some of the continuation of the trends from Q1. We've seen some softness In high end fashion and the segment of sneakers, but we've seen some positive on the flip We've seen some positive trends around food and specifically around home as well. So all in all, I see the higher snow this high, but also the lower much better. So I would say overall normalization. Speaker 300:17:58And for the first time like this quarter, I'm very encouraged by seeing that we've been growing as an aggregate all the industries outside of travel as well. Speaker 400:18:09Helpful. And then maybe, Eido, could you just spend a little time talking about the Merchant I know it's a small summit, but I imagine some of your largest merchants were there. Walk us through what the pain points are out there? What's the feedback On the product, what's the feedback on Policy Protect? We'd love to get any sort of like real world insights given that A relatively recent event and you talked to your largest merchants. Speaker 400:18:36Thanks. Speaker 200:18:37Sure. Happy to provide more context there. So look, I think we are in a unique position that we work With some of the largest enterprises and we've been fortunate that because of our relationship, we have a good relationship with some of the C level executives and they joined us for 3 days for the summit and we were able both to present, let's call it our immediate kind of 18 month roadmap to them to Collect feedback and have them involved and say, hey, this would work for my business, this would not work for my business, but also really understand their Pain points and strategic goals for the next 18 to 36 month roadmap. And I think really across the board, the issue of Policy, how do we make sure that we're selling to our best customers and give them the best experience While making sure that we're not spending too much money on shipping, logistics, reverse logistics, coupon codes on our low LTV or Bad customers was a consistent theme, and it's definitely something that strategically touches a lot of points in the organization. So having These senior leaders involved in crafting the solution and understanding their pain points, we think is incredibly beneficial. Speaker 400:19:57Helpful color. I'll cede the floor. Thank you. Operator00:20:02Thank you. One moment please for our next question. Our next question will come from Will Nance of Goldman Sachs. Your line is open. Speaker 100:20:18Hey guys, good morning. I appreciate you taking the question. Wanted to follow-up on the merchant fraud event that you called out. I wonder if you could provide a little Color, was this a different sort of event than you guys typically see in the business? How long did it take you guys to catch it, that sort of thing? Speaker 100:20:35And I guess just like looking forward, you mentioned some innovation on the models front. Just 1, is this something you can kind of learn from and factor into future models and roll out for the broader customer base? Speaker 200:20:50Hey, Will. Sure. It's an important question. So let me give kind of a wide answer here. So really what happened is, I would say, a confluence Three main things. Speaker 200:20:58Number 1, this was one of our largest merchants. Number 2, we had recently signed an agreement to target a higher approval rate for a higher fee. And number 3, as we started ramping up approval rates, there was a large fraud attack targeting this margin. Now when we increase approval rates, There is anticipated risk within the account. Unfortunately, the mistake that we made is that we did not correctly Some of the new risks coming from the fraud attack, and that meant that we underrepresented the overall risk level of the account. Speaker 200:21:37So we actually did identify the fraud attack relatively quickly, but because we misunderstood the fraud level in the account, the mitigation Strategy wasn't quick enough or severe enough to really stop the attack and you can see the financial impact like Agi shared. Obviously, we're very frustrated and disappointed with the outcome. This is the single largest monetary event in the 10 years that Centrica filed has existed. In the 5 years that we've kind of published audited financials, this is the first time that we've had to Move down the annual gross margin guide and I would say that some of the immediate steps we're taking to make Sure that's something that this or something like this doesn't happen again is number 1, just more on the operational side, which is a bit simpler, making sure we're not managing accounts that have Multiple events happening at the same time, life change and approval rates and a fraud event. Number 2 is more around the modeling side to make sure that we're able to Better differentiate the risk from different factors in the account like related to approval rates, related to the fraud attack. Speaker 200:22:47And number 3 is just making sure we have a higher reliance on quicker signals about the changing risk levels of the So we can make changes even sooner than we are. I do want to highlight that this is a contained event. We don't think that there's any Additional impact to Q3 margins, there's no forward looking impact, right? So it's not going to impact Q4 or 2024. And again, this is frustrating because outside of this, we do think that the business is performing very well, the new revenue, the platform side, the OpEx And it is frustrating because obviously without this we would have been able to improve the adjusted guide and not keep it So it's like we did for now. Speaker 200:23:35But look, overall, we are encouraged with the modeling performance in the system overall. We have been able to increase our Q4 gross Margin guide and we think that's a better indication of the overall trajectory of the business. Speaker 100:23:50Got it. Appreciate all the color. Thank you, Ito. And maybe just to follow-up on the capital It sounds like we've got a little time before that gets approved by local authorities, but just wondering if you could kind of talk through how you're thinking about The level of share repurchases into 2024 and how you're thinking about alternatives to share repurchases And how that might factor into the amount that ultimately gets done? Speaker 300:24:20Yes, sure. So I'll start and maybe Itau will add up a little bit. So we've already got an approval by the Board, and we are in the process of submitting So the Israeli kind of regulation and authority, our request for approval is just something that we need to go through. I'd expect probably We'll take like 2 months or so. And by the end of the year, we should be able to start the program And kind of execute throughout 2024. Speaker 200:24:53Yes, I would say from our perspective, look, we have $480,000,000 we're approaching profitability. So we definitely feel that even with the $75,000,000 share repurchases, it is not impacting in any way, shape or form our ability to Strategically look for M and A opportunities. Obviously, internally, we feel that we're making a lot of smart investments, profitable investments to the growth of the company. So this isn't impacting that as well. Speaker 100:25:22Understood, very helpful. Thanks for taking the questions. Operator00:25:26Thank you. And one moment please for our next question. Our next question will come from the line of Ramsey El Assal of Barclays. Your line is open. Hi. Speaker 500:25:41This is Owen on for Ramsey. Thanks for taking our question this morning. I wanted to ask a bit about your kind of Q2 take rate. I saw it came in slightly compared to last quarter and the previous year. Just want to get some color on that. Speaker 500:25:54I was wondering if you were maybe kind of pass Along a little bit more value to customers as you achieve scale or maybe there's some cyclicality in the quarter, just anything to consider there would be helpful. Speaker 300:26:07Yes. Thank you for the question. So we do consider the take rates more of an outcome of the model than Really kind of like analytical inputs. There's a number of factors that can influence them in any given quarter. This is the amount of new revenue and upsell that we're adding and the different weights of different industries, the different mix and performance of different merchants. Speaker 300:26:34So all in all, I expect non considerable changes. It's always a little bit ins and outs, But I don't expect huge fluctuations based on that. Speaker 500:26:48Understood. Appreciate that. And then I was wondering if I could follow-up with some of the geographical expansion that you're kind of seeing. You called out APAC, Europe and Canada in this quarter, which is wondering which one of Those kind of regions is sort of the largest opportunity from a geographical perspective that you're currently seeing? Speaker 300:27:10I would say, APAC is definitely a large opportunity for us, which shown like a consistent growth in the last couple of quarters. And but overall, say that we have A lot of room for penetration in our geographies and a proof of that is some of the growth that we've currently seen also in U. S, which is Our largest category industry as well. Speaker 200:27:36Yes. Maybe just to expand on that. I mean, when we think just about The growth opportunities, it's a combination of some of the new products that we outlined, which are very early stage, so that has a lot of opportunity globally. But also just thinking about core chargeback guarantee, even in kind of the U. S. Speaker 200:27:54And Europe, we still think it's relatively low penetration, but The outside of that in APAC and LATAM, the growth is both faster and the penetration lower. So we think there's a lot of opportunity there. Speaker 500:28:07Understood. Appreciate the color. Operator00:28:11Thank you. One moment please for our next question. The next question will come from Tim Chiodo of Credit Suisse. Your line is open. Speaker 600:28:25Hey, this is Pat on for Tim. Thanks for taking the question. You recently announced a chargeback guarantee integration with Commerce tools, which has some impressive large retail clients and now you have partnerships with other major e commerce platforms. Can you maybe expand more on this distribution channel in terms of maybe how the economics differ from a direct go to market strategy? And generally, what the mix New client wins looks like between the partnered and direct models. Speaker 200:28:53Sure. Happy to expand on that. You're right. Also in our partnership strategy, we continue to target the larger merchants, And we do that either through integrated partnerships or more referral like partnerships. The economics for us, I would say that overall they tend to be similar. Speaker 200:29:12You're just shifting some of the economics away from internal sales and marketing towards the more partner As a broad generalization, I think with the Commerce having just announced that it's still early days of that specific partnership, But we are encouraged by the overall size of demand and how it helps us expand our reach. Speaker 600:29:35Great. And then just had a quick follow-up on travels and ticketing has recovered Nicely over the past year and definitely been a tailwind some of our spreads growth recently, but wanted to dig in more into growth expectations ex travel And Risk Applied supports more discretionary verticals and you guys discussed the return to growth for some of these in this past quarter. Definitely have been macro impacted, but generally on a more normalized basis, how do you see Riskify's merchant mix ex travel growing compared to Industry ecom growth rates in the future. Speaker 300:30:12Yes. So overall, the trend is that For this year, the lower charges better compared to last year. We've seen some normalizations. I would say that overall, it's still like it's still As an aggregate, they're all contributing to our growth, but primarily, what is really happening is that our continued Addition of new business is able to kind of negate some of the negatives from the same cohort growth. And over time, I expect this to continue to normalize, but we're not there yet. Speaker 700:30:56Thank you. Operator00:30:58Thank you. One moment please for our next question. Our next question will come from Robert Cipolli of William Blair. Your line is open. Speaker 800:31:12Thank you and good morning. So I guess maybe a little bit more color on the international business versus the U. S. I guess international was about 37% of the business last in 2022. So Can you tell how is that international business different than the U. Speaker 800:31:33S? Is there we think there's more fraud internationally. Did that $3,800,000 comes from the international business. So how does the economics of the international business look versus the U. S? Speaker 200:31:47Hey, Bob, thanks. I'll take that one. So I think you're right. We are seeing faster growth in some of the newer regions, which would be kind of APAC, LATAM. Our most our more established geographies would be both the U. Speaker 200:32:00S. And Europe. Specifically kind of talking about the fraud event, Just because of different privacy reasons, I wouldn't want to get into the specifics of the merchant, But it's actually considered a safe category and it's more U. S. Domestic, so no international impact there. Speaker 800:32:21And the economics of the international business versus the U. S? Speaker 200:32:26I don't think I have anything meaningful to call out there. We think that broadly on an aggregate, Speaker 600:32:31We should be seeing similar things. Speaker 800:32:33Okay. And then the pipeline, sounds like you added a lot of business. You said the pipeline has grown. Can you give some color on like the ARR added in the quarter, the number of new customers or Just any color on that pipeline on how what you added in the quarter and how that pipeline has grown? Speaker 200:32:56Yes. I would say, look, I think that Adi shared that most of the growth that we're experiencing is coming from our new and upsell business. And that they've been performing better than anticipated relative to kind of our internal projections and just Ending in a better place. The number of logos that we've added in the first half is higher than last year. So we think overall the Operator00:33:31Thank you. And again one moment for our next question. Our next question will come from the line of Terry Tillman of Truist Securities. Your line is open. Speaker 700:33:46Yes. Thanks, Itt, again, Chad. Kind of building on the prior question in terms of I think 8 of the top 10 new merchants were added outside of the U. S. Do you expect that kind of mix or dynamism to continue over the next couple of quarters? Speaker 700:33:58And if you had to kind of dig into maybe some of the traction with these new logos coming internationally, is it The go to market enhancements over the last year, key new sales talent, maybe the Deloitte relationship, anything more you can kind of double click into maybe rising above the other drivers? And then I had a follow-up for Augie. Speaker 200:34:16I think it's hard To crystallize it into one thing, I think it's a confluence of factors. I think the go to market teams and Ravi, who joined us last year to lead them, Have been executing well with the new appointment of our new CMO, Jeff, as well as Opens has also been helpful in driving great outcomes and behaviors And the teams and the team members themselves obviously deserve most of the credit, but it doesn't happen in isolation. I think a lot of the product Enhancements that we've been making, whether it's kind of the more platform sale that solves a wider range of problems or the continued Improvements to the core chargeback guarantee model, which just means that the outperformance of using Riskified is greater than the So, yes, I think all of that is overall helping us with the demand environment and driving more growth there. And it's hard to pinpoint How much each of these factors I outlined is responsible for that. Speaker 700:35:25Understood. I guess, Agha, just a follow-up. I think you had remarked 50% to 51 point To expand a little bit, so whether it's the autonomous train models or platform enhancements, just the technology bringing to bear on improving margins next year At the gross margin side? Thank you. Speaker 300:35:50Yes. Just as Del mentioned earlier, we are increasing our gross margin for Q4, and This is obviously like a reflection of some of the improvements that we're doing internally and on overall basis continue to improve Our cohorts going into next year, I think we're well positioned and I do expect to continue to build on that. Speaker 700:36:16Thanks. Operator00:36:19Thank you. And I'm seeing no further questions in the queue. I would now like to turn the conference back to Ito Gal for closing remarks. Speaker 200:36:30Thank you everyone for joining us. We look Operator00:36:37This concludes today's conference call. Thank you all for participating. You may now disconnect and have a pleasant day.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallRiskified Q2 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.com$2 Trillion Disappears Because of Fed's Secretive New Move$2 trillion has disappeared from the US government's books. The reason why is a new, secretive move being carried out by the Fed that has nothing to do with lowering or raising interest rates... but could soon have an enormous impact on your wealth.April 29, 2025 | Stansberry 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 9 speakers on the call. Operator00:00:00Good day and thank you for standing by. Welcome to the Riskified Second Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer Please be advised that today's conference is being recorded. And I would now like to hand the conference over to your speaker today, with the Chet Mandel, Head of Investor Relations. Operator00:00:38Sir, please go ahead. Speaker 100:00:42Good 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 Riskified's financial results for the Q2 of 2023. Participating on today's call are E. Doval, Riskified's Co Founder and Chief Executive Officer and Agi Dolceva, Riskified's Chief Financial Officer. Speaker 100:01:03We released our results for the Q2 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 will be forward looking statements related to our operating performance, financial goals and business outlook, which reflect management's best judgment based on currently available information and are not guarantees of future performance. We intend all forward looking statements will be covered by the Safe Harbor provisions contained in the Private Securities Litigation Reform Act of 1995. Please note That these forward looking statements reflect our expectations as of the date of this call and except as required by applicable 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 100:01:54These 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 the 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 100:02:50I will now turn the call over to Itau. Speaker 200:02:53Thanks, Chad, and hello, everyone. We had a strong Q2 highlighted by year over year revenue growth of 21%. During the Q2, Our revenue growth was primarily driven by the successful execution of our go to market strategy. For the first half of twenty twenty three, Our sales team was able to exceed their internal quotas while simultaneously building a rolling pipeline that is now stronger and more robust than it was at the beginning of the fiscal year. We are fortunate to have strategic and deep rooted relationships with some of the biggest and most sophisticated enterprise e commerce merchants in the world. Speaker 200:03:30We aim to strengthen our position as one of the largest and most accurate e commerce decisioning companies in the world by continuously finding ways to enhance our platform for our merchants. To help accomplish this, we recently formed our Customer Advocacy Board or CAB, made up of 10 senior executive decision makers with C level participation from some of Riskified's top accounts, which together represent a meaningful portion of our revenue base. The mission of the CAB is to share insights, discuss the e commerce trends, share ideas about product enhancements to strengthen our offering. This feedback is intended to help us develop features and strategize our product roadmap to solve bigger and more complex use cases for our merchants, which we expect will ultimately land higher attach rates. Based on the initial feedback from the group, we are even more excited about our technology stack and our multi product platform with DisputeResolve and PolicyProtect. Speaker 200:04:29Dispute Resolve fully automates elements of the dispute process for both fraud and non fraud related chargebacks. During the Q2, we meaningfully improved our user dashboard experience, increased the number of gateway integrations and utilized artificial intelligence to automatically create and gather compelling evidence on behalf of the merchant. As a result of this automation, We expect our merchants to experience an uplift in dispute win rates, which ultimately is intended to lead to recovering more revenue. PolicyProtect uses our innovative AI clustering technology layered on top of the power of our global merchant network of billions of historical transactions, 100 of billions of data attributes and repeat interaction histories for 100 of millions of consumers to help detect fraudulent refund claims And block serial returners in real time. Our internal research indicates that approximately $0.05 out of every e commerce revenue dollar is wasted as a result of bad behaviors like these, which means the total addressable market for Policy Protect maybe in the 100 of 1,000,000,000 of dollars. Speaker 200:05:38A great example of how merchants want to utilize Riskify to help solve this massive problem is exemplified by our 2nd quarter cross sell to an existing enterprise level merchant in our electronics category. This merchant tasked Riskify with helping them solve abusive returns By blocking bad customers upon checkout, addressing a 7 figure return problem for the merchant or more than 10% of their returns. Since going live, this merchant has indicated that we've been successful in blocking excessive returns at checkout with up to 99% precision, a testament to the performance of the product. We also further strengthened our core chargeback guarantee product in the Q2. We deployed our 1st autonomously trained model, researched and trained by our engine, but this time without data science intervention. Speaker 200:06:28We expect this model to allow us to make faster and more accurate decisions for our merchants. And this is just a sample of the features that we have added this quarter. Continuous investment into our machine learning platform like this one further differentiates our offering, which we believe ultimately makes our I am proud of all the enhancements and features that we have rolled out in our platform, Just as we pioneered the way that e commerce fraud was managed 10 years ago with chargeback guarantee, we aim to innovate the way merchants look at the overall e commerce customer experience from checkout to dispute with our full tech stack. And finally, we recently passed the 2 year anniversary of our IPO. Over that time, we have continued working towards positioning our company to be more efficient and productive, while staying focused on delivering value for our shareholders. Speaker 200:07:23We improved our year over year adjusted EBITDA performance for the 4th consecutive quarter through consistent revenue growth and ongoing flattening of our expenses, slowing this leverage entirely through to the bottom line. As we anticipate approaching profitability on an adjusted EBITDA basis In the Q4 of this year and on a full year basis in 2024, we have determined that now would be the right time to allocate some of our capital towards share repurchases. We have a strong balance sheet, a large and stable cash and deposits position of approximately $480,000,000 and 0 debt. At this time, we believe that both the company and our shareholders would benefit from opportunistic share repurchases. As a result, today we've announced our Board's authorization of a share repurchase program of up to $75,000,000 Subject to approval from the Israeli court, which is necessitated by law, this court approval process is expected to take several months. Speaker 200:08:23We believe that our company is undervalued with our cash balance currently comprising approximately 65% of our market capitalization. Thus, This represents an attractive opportunity to repurchase shares and ultimately increase the percentage owned by our current holders. In addition, We intend to continue managing the business with discipline to further reduce dilution and share based compensation from current levels. Additionally, even with this authorization, we believe that we have ample capital to pursue opportunities to continue to execute on our business objectives and strategically invest in the future of the company while pursuing profitable growth. We are laser focused on delivering for shareholders in the near and long term. Speaker 200:09:07Now, I will turn the call over to Agni. Speaker 300:09:10Thank you, Idel, team and everyone for joining today's call. Our GMV for the Q2 was $31,000,000,000 reflecting a 22% increase year over year. We achieved strong Q2 revenue of $72,800,000 up 21% year over year, which represents an Acceleration from our Q1 growth of 17%. Our growth in GMV and revenue during this quarter was primarily driven by Tickets and travel remains the largest category and grew approximately 50% year over year. Going forward, as we now have Fully lapsed COVID related comparable period, we expect a more normalized level of growth in this vertical for the remainder of the year. Speaker 300:10:04Encouragingly, during the Q2 and for the first time in several quarters, the overall business outside of Tickets and Travel has resumed contributing And while too early to tell the ultimate trajectory, we're excited about the positive impact we have seen this quarter. Similar to the Q1, one of our largest categories, fashion and luxury goods, was close to flat year over year in the second quarter as compared to the growth that we saw in this category in 2022. For the Q2 in a row, We have seen softness in some of our same corporate merchants within this category, in particular within our luxury brands and sneakers subsegment. Finally, from a geographic standpoint, the U. S, our largest region, grew by 18%, which was the highest level of growth seen in several quarters. Speaker 300:11:01EMEA grew 20% and the Americas and APAC grew 35% and 44%, respectively, during the quarter. Our continued revenue growth from regions outside of the United States further demonstrates the positive returns from our previous investments and market share gains. Moving on to gross profit margin. Our non GAAP gross profit margin for the Q2 of 2023 was 52%, consistent with the Q2 of 2022. Several weeks ago, we became aware that one of our largest merchants was experiencing a significant fraud event. Speaker 300:11:38Based on the information currently available to us, we anticipate an incremental impact of approximately negative $3,800,000 to $4,800,000 on our 3rd quarter gross profit. We have been working closely with this merchant to remediate the issue. Based on the information currently available to us, we believe that the impact on our gross margin is contained. Outside of the impact of this merchant fraud event, We're encouraged by our gross margin performance and have improved our 4th quarter gross margin outlook accordingly. However, As a result of this merger fraud event, we now anticipate that our annual gross profit margin will be in the range of 50% to 51.5%. Speaker 300:12:22As a reminder, gross margin is best analyzed on an annual basis as gross margin may fluctuate on a quarterly basis. Moving to expenses. Total non GAAP operating expenses were $42,200,000 for the Q2 of 2023, a 6% decrease year over year and relatively flat with the Q1 of 2023. Our absolute dollar expenses have remained essentially flat over the past 4 quarters and our non GAAP operating As a percentage of revenue declined year over year from 75% to 58%, reflecting leverage in the business model. We plan to continue operating the business with discipline. Speaker 300:13:06We're modeling approximately $84,000,000 in second half expenses, with our 4th quarter expenses to be lower than the 3rd quarter. Adjusted EBITDA for the 2nd quarter was negative for the 4th consecutive quarter since making the decision to accelerate our timeline to reach profitability. As previously mentioned, We currently anticipate being profitable on an adjusted EBITDA basis in the Q4 of 2023 and on an annual basis in 2024. Moving to the balance sheet. We ended the 2nd quarter with approximately $480,000,000 of cash Deposits and accrued interest on the balance sheet and we carry 0 debt. Speaker 300:14:00This amount represents a slight sequential decrease in cash, deposits We remain confident in the business' ability to generate positive cash flows over the long term, and we continue to believe that our balance sheet and strong liquidity position are underappreciated assets. In terms of our outlook, we're updating our 2023 guidance that we previously shared on our Q1 call. Assuming no further material changes We now anticipate revenue between $298,000,000 $303,000,000 for the full year 2023 or $300,500,000 at the midpoint. We continue to believe that Full year adjusted EBITDA will be between negative $17,000,000 negative $12,000,000 We continue to approach our guidance responsibly. We will continue to monitor the performance and health of our merchants, consumer spending, the broader e commerce landscape and the impact on our results. Speaker 300:15:04Overall, we're pleased with our strong first half of results amidst the continuous challenging macroeconomic landscape. We remain excited about how we are positioning our business, the continued prospects for long term growth and our ability to deliver value to our shareholders. Operator, we're ready to take the first question please. Operator00:15:27Thank you. One moment please for our first question. Our first question will come from Brent Bracelin of Piper Sandler. Your line is open. Speaker 400:16:01Good morning. Great to see continued strength in tickets and travel. I guess I want to double click into The base business, it sounds like base, ex Chickering Travel returned to growth. What are the factors that drove a return there? Are you just seeing A broader diversified base, is it the top 3 merchants coming back, any sort of additional color on The recovery you're seeing in the base ex ticket travel? Speaker 300:16:30Yes, of course. Brent, thank you for the question. So we're encouraged by what we see in travel and the overall kind of continued strength in consumer spending and moving towards So spend on experiences. Specifically about travel, what we're seeing is that international travel is Growing very nicely. It's better than domestic. Speaker 300:16:54And mostly, it's really the number of transactions that That's kind of like the new S. There's a lot of travel, outbound travel outside of the U. S. Towards Europe and APAC. Speaker 400:17:13Totally makes sense. And then what about the base business? If I exclude tickets and travel, what's driving the base business ex travel to return to growth? Speaker 300:17:24Sorry, I didn't understand. So outside of travel, we've seen some of the continuation of the trends from Q1. We've seen some softness In high end fashion and the segment of sneakers, but we've seen some positive on the flip We've seen some positive trends around food and specifically around home as well. So all in all, I see the higher snow this high, but also the lower much better. So I would say overall normalization. Speaker 300:17:58And for the first time like this quarter, I'm very encouraged by seeing that we've been growing as an aggregate all the industries outside of travel as well. Speaker 400:18:09Helpful. And then maybe, Eido, could you just spend a little time talking about the Merchant I know it's a small summit, but I imagine some of your largest merchants were there. Walk us through what the pain points are out there? What's the feedback On the product, what's the feedback on Policy Protect? We'd love to get any sort of like real world insights given that A relatively recent event and you talked to your largest merchants. Speaker 400:18:36Thanks. Speaker 200:18:37Sure. Happy to provide more context there. So look, I think we are in a unique position that we work With some of the largest enterprises and we've been fortunate that because of our relationship, we have a good relationship with some of the C level executives and they joined us for 3 days for the summit and we were able both to present, let's call it our immediate kind of 18 month roadmap to them to Collect feedback and have them involved and say, hey, this would work for my business, this would not work for my business, but also really understand their Pain points and strategic goals for the next 18 to 36 month roadmap. And I think really across the board, the issue of Policy, how do we make sure that we're selling to our best customers and give them the best experience While making sure that we're not spending too much money on shipping, logistics, reverse logistics, coupon codes on our low LTV or Bad customers was a consistent theme, and it's definitely something that strategically touches a lot of points in the organization. So having These senior leaders involved in crafting the solution and understanding their pain points, we think is incredibly beneficial. Speaker 400:19:57Helpful color. I'll cede the floor. Thank you. Operator00:20:02Thank you. One moment please for our next question. Our next question will come from Will Nance of Goldman Sachs. Your line is open. Speaker 100:20:18Hey guys, good morning. I appreciate you taking the question. Wanted to follow-up on the merchant fraud event that you called out. I wonder if you could provide a little Color, was this a different sort of event than you guys typically see in the business? How long did it take you guys to catch it, that sort of thing? Speaker 100:20:35And I guess just like looking forward, you mentioned some innovation on the models front. Just 1, is this something you can kind of learn from and factor into future models and roll out for the broader customer base? Speaker 200:20:50Hey, Will. Sure. It's an important question. So let me give kind of a wide answer here. So really what happened is, I would say, a confluence Three main things. Speaker 200:20:58Number 1, this was one of our largest merchants. Number 2, we had recently signed an agreement to target a higher approval rate for a higher fee. And number 3, as we started ramping up approval rates, there was a large fraud attack targeting this margin. Now when we increase approval rates, There is anticipated risk within the account. Unfortunately, the mistake that we made is that we did not correctly Some of the new risks coming from the fraud attack, and that meant that we underrepresented the overall risk level of the account. Speaker 200:21:37So we actually did identify the fraud attack relatively quickly, but because we misunderstood the fraud level in the account, the mitigation Strategy wasn't quick enough or severe enough to really stop the attack and you can see the financial impact like Agi shared. Obviously, we're very frustrated and disappointed with the outcome. This is the single largest monetary event in the 10 years that Centrica filed has existed. In the 5 years that we've kind of published audited financials, this is the first time that we've had to Move down the annual gross margin guide and I would say that some of the immediate steps we're taking to make Sure that's something that this or something like this doesn't happen again is number 1, just more on the operational side, which is a bit simpler, making sure we're not managing accounts that have Multiple events happening at the same time, life change and approval rates and a fraud event. Number 2 is more around the modeling side to make sure that we're able to Better differentiate the risk from different factors in the account like related to approval rates, related to the fraud attack. Speaker 200:22:47And number 3 is just making sure we have a higher reliance on quicker signals about the changing risk levels of the So we can make changes even sooner than we are. I do want to highlight that this is a contained event. We don't think that there's any Additional impact to Q3 margins, there's no forward looking impact, right? So it's not going to impact Q4 or 2024. And again, this is frustrating because outside of this, we do think that the business is performing very well, the new revenue, the platform side, the OpEx And it is frustrating because obviously without this we would have been able to improve the adjusted guide and not keep it So it's like we did for now. Speaker 200:23:35But look, overall, we are encouraged with the modeling performance in the system overall. We have been able to increase our Q4 gross Margin guide and we think that's a better indication of the overall trajectory of the business. Speaker 100:23:50Got it. Appreciate all the color. Thank you, Ito. And maybe just to follow-up on the capital It sounds like we've got a little time before that gets approved by local authorities, but just wondering if you could kind of talk through how you're thinking about The level of share repurchases into 2024 and how you're thinking about alternatives to share repurchases And how that might factor into the amount that ultimately gets done? Speaker 300:24:20Yes, sure. So I'll start and maybe Itau will add up a little bit. So we've already got an approval by the Board, and we are in the process of submitting So the Israeli kind of regulation and authority, our request for approval is just something that we need to go through. I'd expect probably We'll take like 2 months or so. And by the end of the year, we should be able to start the program And kind of execute throughout 2024. Speaker 200:24:53Yes, I would say from our perspective, look, we have $480,000,000 we're approaching profitability. So we definitely feel that even with the $75,000,000 share repurchases, it is not impacting in any way, shape or form our ability to Strategically look for M and A opportunities. Obviously, internally, we feel that we're making a lot of smart investments, profitable investments to the growth of the company. So this isn't impacting that as well. Speaker 100:25:22Understood, very helpful. Thanks for taking the questions. Operator00:25:26Thank you. And one moment please for our next question. Our next question will come from the line of Ramsey El Assal of Barclays. Your line is open. Hi. Speaker 500:25:41This is Owen on for Ramsey. Thanks for taking our question this morning. I wanted to ask a bit about your kind of Q2 take rate. I saw it came in slightly compared to last quarter and the previous year. Just want to get some color on that. Speaker 500:25:54I was wondering if you were maybe kind of pass Along a little bit more value to customers as you achieve scale or maybe there's some cyclicality in the quarter, just anything to consider there would be helpful. Speaker 300:26:07Yes. Thank you for the question. So we do consider the take rates more of an outcome of the model than Really kind of like analytical inputs. There's a number of factors that can influence them in any given quarter. This is the amount of new revenue and upsell that we're adding and the different weights of different industries, the different mix and performance of different merchants. Speaker 300:26:34So all in all, I expect non considerable changes. It's always a little bit ins and outs, But I don't expect huge fluctuations based on that. Speaker 500:26:48Understood. Appreciate that. And then I was wondering if I could follow-up with some of the geographical expansion that you're kind of seeing. You called out APAC, Europe and Canada in this quarter, which is wondering which one of Those kind of regions is sort of the largest opportunity from a geographical perspective that you're currently seeing? Speaker 300:27:10I would say, APAC is definitely a large opportunity for us, which shown like a consistent growth in the last couple of quarters. And but overall, say that we have A lot of room for penetration in our geographies and a proof of that is some of the growth that we've currently seen also in U. S, which is Our largest category industry as well. Speaker 200:27:36Yes. Maybe just to expand on that. I mean, when we think just about The growth opportunities, it's a combination of some of the new products that we outlined, which are very early stage, so that has a lot of opportunity globally. But also just thinking about core chargeback guarantee, even in kind of the U. S. Speaker 200:27:54And Europe, we still think it's relatively low penetration, but The outside of that in APAC and LATAM, the growth is both faster and the penetration lower. So we think there's a lot of opportunity there. Speaker 500:28:07Understood. Appreciate the color. Operator00:28:11Thank you. One moment please for our next question. The next question will come from Tim Chiodo of Credit Suisse. Your line is open. Speaker 600:28:25Hey, this is Pat on for Tim. Thanks for taking the question. You recently announced a chargeback guarantee integration with Commerce tools, which has some impressive large retail clients and now you have partnerships with other major e commerce platforms. Can you maybe expand more on this distribution channel in terms of maybe how the economics differ from a direct go to market strategy? And generally, what the mix New client wins looks like between the partnered and direct models. Speaker 200:28:53Sure. Happy to expand on that. You're right. Also in our partnership strategy, we continue to target the larger merchants, And we do that either through integrated partnerships or more referral like partnerships. The economics for us, I would say that overall they tend to be similar. Speaker 200:29:12You're just shifting some of the economics away from internal sales and marketing towards the more partner As a broad generalization, I think with the Commerce having just announced that it's still early days of that specific partnership, But we are encouraged by the overall size of demand and how it helps us expand our reach. Speaker 600:29:35Great. And then just had a quick follow-up on travels and ticketing has recovered Nicely over the past year and definitely been a tailwind some of our spreads growth recently, but wanted to dig in more into growth expectations ex travel And Risk Applied supports more discretionary verticals and you guys discussed the return to growth for some of these in this past quarter. Definitely have been macro impacted, but generally on a more normalized basis, how do you see Riskify's merchant mix ex travel growing compared to Industry ecom growth rates in the future. Speaker 300:30:12Yes. So overall, the trend is that For this year, the lower charges better compared to last year. We've seen some normalizations. I would say that overall, it's still like it's still As an aggregate, they're all contributing to our growth, but primarily, what is really happening is that our continued Addition of new business is able to kind of negate some of the negatives from the same cohort growth. And over time, I expect this to continue to normalize, but we're not there yet. Speaker 700:30:56Thank you. Operator00:30:58Thank you. One moment please for our next question. Our next question will come from Robert Cipolli of William Blair. Your line is open. Speaker 800:31:12Thank you and good morning. So I guess maybe a little bit more color on the international business versus the U. S. I guess international was about 37% of the business last in 2022. So Can you tell how is that international business different than the U. Speaker 800:31:33S? Is there we think there's more fraud internationally. Did that $3,800,000 comes from the international business. So how does the economics of the international business look versus the U. S? Speaker 200:31:47Hey, Bob, thanks. I'll take that one. So I think you're right. We are seeing faster growth in some of the newer regions, which would be kind of APAC, LATAM. Our most our more established geographies would be both the U. Speaker 200:32:00S. And Europe. Specifically kind of talking about the fraud event, Just because of different privacy reasons, I wouldn't want to get into the specifics of the merchant, But it's actually considered a safe category and it's more U. S. Domestic, so no international impact there. Speaker 800:32:21And the economics of the international business versus the U. S? Speaker 200:32:26I don't think I have anything meaningful to call out there. We think that broadly on an aggregate, Speaker 600:32:31We should be seeing similar things. Speaker 800:32:33Okay. And then the pipeline, sounds like you added a lot of business. You said the pipeline has grown. Can you give some color on like the ARR added in the quarter, the number of new customers or Just any color on that pipeline on how what you added in the quarter and how that pipeline has grown? Speaker 200:32:56Yes. I would say, look, I think that Adi shared that most of the growth that we're experiencing is coming from our new and upsell business. And that they've been performing better than anticipated relative to kind of our internal projections and just Ending in a better place. The number of logos that we've added in the first half is higher than last year. So we think overall the Operator00:33:31Thank you. And again one moment for our next question. Our next question will come from the line of Terry Tillman of Truist Securities. Your line is open. Speaker 700:33:46Yes. Thanks, Itt, again, Chad. Kind of building on the prior question in terms of I think 8 of the top 10 new merchants were added outside of the U. S. Do you expect that kind of mix or dynamism to continue over the next couple of quarters? Speaker 700:33:58And if you had to kind of dig into maybe some of the traction with these new logos coming internationally, is it The go to market enhancements over the last year, key new sales talent, maybe the Deloitte relationship, anything more you can kind of double click into maybe rising above the other drivers? And then I had a follow-up for Augie. Speaker 200:34:16I think it's hard To crystallize it into one thing, I think it's a confluence of factors. I think the go to market teams and Ravi, who joined us last year to lead them, Have been executing well with the new appointment of our new CMO, Jeff, as well as Opens has also been helpful in driving great outcomes and behaviors And the teams and the team members themselves obviously deserve most of the credit, but it doesn't happen in isolation. I think a lot of the product Enhancements that we've been making, whether it's kind of the more platform sale that solves a wider range of problems or the continued Improvements to the core chargeback guarantee model, which just means that the outperformance of using Riskified is greater than the So, yes, I think all of that is overall helping us with the demand environment and driving more growth there. And it's hard to pinpoint How much each of these factors I outlined is responsible for that. Speaker 700:35:25Understood. I guess, Agha, just a follow-up. I think you had remarked 50% to 51 point To expand a little bit, so whether it's the autonomous train models or platform enhancements, just the technology bringing to bear on improving margins next year At the gross margin side? Thank you. Speaker 300:35:50Yes. Just as Del mentioned earlier, we are increasing our gross margin for Q4, and This is obviously like a reflection of some of the improvements that we're doing internally and on overall basis continue to improve Our cohorts going into next year, I think we're well positioned and I do expect to continue to build on that. Speaker 700:36:16Thanks. Operator00:36:19Thank you. And I'm seeing no further questions in the queue. I would now like to turn the conference back to Ito Gal for closing remarks. Speaker 200:36:30Thank you everyone for joining us. We look Operator00:36:37This concludes today's conference call. Thank you all for participating. You may now disconnect and have a pleasant day.Read morePowered by