RSKD - Earnings call 3 2023

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Operator

Good day, and thank you for standing by. Welcome to Riskified's Third Quarter 2023 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Chett Mandel, Head of Investor Relations. Please go ahead.

Chett Mandel

Good morning, and thank you for joining us today. Mandel, of Chett Relations. is name Riskified's Investor Head My

Eido Riskified's call for Participating We Chief and Financial are Dotcheva, today's and discuss Executive on Riskified's financial Officer; Chief call Officer. XXXX. are hosting Riskified's of to results Agi Co-Founder Quarter the today's Gal, Third

the quarter XXXX our today. earlier released We third results for of

today of of are statements ir.riskified.com. Certain that uncertainties occur profit may developments all the call. These Our our margin, Investor judgment on actual to XXXX. results of cash after cause Securities earnings call, provisions are statements based statements and statements on performance, financial and risks, by covered forward-looking future Private webcast, this this we from could contained required are harbor as made best available business materials, flows, expectations in available currently forward-looking except including of result new reflect to goals, to undertake today's statements a expectations. will of the operating information, the our and forward-looking Act beyond materially outlook call to involve be and website adjusted positive as related EBITDA Litigation gross replay safe profitability on time not a at our be some that factors, the control, other of to management's intend which this We by and reflect Relations guarantees These which of date our as information expectations revise obligation performance. differ our law, forward-looking to as the no of as Reform

expectations. differ XX-F our on to filed information or cause on ended specific undue statement. on more any put results XXXX, that our Please the furnished and Form refer not we annual to the forward-looking the materially actual with for reports from XX, December should SEC factors year subsequent reliance report for could You

we indicators comparable financial Reconciliations measures and presentations, of and issued in Additionally, performance appendix most and non-GAAP directly financial which today will website. Form on Investor GAAP are our release key with on call. available the Investor Relations Relations our earlier the the of all in furnished earnings also on measures certain the are SEC posted discuss X-K to our

turn I over will now the Eido. call to

Eido Gal

Chett, Thanks, hello, everyone. and

our situation a provide some on we of outlook, and were workforce through October and financial some in to will Before briefly I of as I'll to the discussion discussion, Then financials the this ensure share I company? Quarter. our my end plan third merchants on uninterrupted our first into the to discussing our service and continuity from wake Agi to remain we commentary efficiently Third business of to in the events. expect Fourth X enact you Then how walk and able evolving what why color adapt results in as I will Quarter would As quarter in dive our touch remarks on the confident part like Israel. the the positioning ever

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of ability to seen loudly of this focus critical meant we've for I flexibility operations on in and all employees for. that of all day-to-day level no need, stepping report the that work their their This I believe up and Riskified. of I maintain for am our has our am across time speaks to culture are at strong the in functions. proud and everyone material relieved accounted organization to the efforts the hard impact

driven to our third growth strategy, XX% Moving successful Third primarily the now XX% of execution the revenue X the and Results. our to by go-to-market the Quarter growth which Once contributed again, of year-over-year months first was quarter our revenue for year. during

more our uncertain growing ones, are and market We macroeconomic merchants, ability confident expand to despite upsell new add and an challenging our and backdrop. existing in retain share

merchants last rates during remained the high year. onboarded versus competitive and new win point have quarter we Our more this

pipeline. generated which more over last contributing compared leads large this XX% have year, growing to point We a and is to

leveraging in the revenue excited the diligently positively highest and decreasing in while execute performance drove simultaneously are to return. expenses which the while overall XX% with EBITDA impact We We opportunities, in XXXX. operating the business top maximizing that ability that our an line believe our total the model. are improvement over working of grown revenue by a XX% business, in we've months find of areas first our adjusted capabilities learning testament machine by by investments to to X%, on prioritizing and the results X leverage strength these I'm

talking event that Next, discussed allow the our me isolated to we on fraud call. spend about some last time earnings

event expected, not non-GAAP gross one this contained of a margin course of weeks, XX%. caused As QX of the a event. any handful anticipate forward event a to merchants reminder, as going impact fraud and of by margin significant experienced do result event We largest over to impact our contributed further in This a as a this was of our July. gross the

valuable And this while we by lessons. did disappointed we are learn onetime event,

very processes, and updated should tools, also For added with I model monitoring that a Guarantee our the remains capabilities. go-live this superior detection mention and relationship most various value underscores overwhelming to believe merchants. of our delivers that impacted is strong, the that example we merchant example, have reason new and we improved Chargeback why Chargeback isolated solidified some the

feature believe our that commitment our enhancements our market-leading model continuously strengthen performance. encouraged invest technology. and to in margin improvements continues through I we learning remain by gross Overall, capabilities our to underlying machine

Now conflict how our and the back to relates Israel to it business.

the arrangements health has of the and for assisted their normal employees our provided office and and not of we events remained to Israel, have focus back have to October expanded are flexible yet core well-being support their employees schedule, who those on mental who of in to safety those Our duty, reserve called To working offerings. our services merchants. our been existing teams since and X wellness our the families continuity

our network fill to of been To part our of we've global to diligently temporary as leverage support business employees needs. merchants, plan working continuity our capacity

merchants, number delays been not have long-term impact any seen We with initiatives, volumes with there of we result our of many that of current small remain and merchant communication X and have record partner. relationships retention as productivity. customers the reliable our events. of and October not engaged This trusted to a minor deep our Although a track through of cultivated we've a experienced rates, efforts has the increased is all to material in our loss higher a testament being XXX%

us our the to through that current of work it I Agi, believe DNA turn I want to as the well we positions situation. I company emphasize Before

nearly company business a being global locations world company countries. While proud the through X a spread are merchants XX functions are of founded and around Israel, with we in truly we in with

AI-powered world's platform all environments. and Our revenue to am to profit fraud the our I of goal continue And e-commerce in enterprise and risk management to very mission our with remains executing all on largest confident that ability maximize merchants. through

Agi. will turn to call over the I Now

Aglika Dotcheva

organization and everyone, team Eido, team face and call. echo for how of you, Thank on Eido's the I joining situation a Israel. been difficult has in thoughts incredible in the today's

Our We up third revenue revenue XX% was GMV of year-over-year, and $XX.X million, XX%. million, for of $XX.X XX% billion, reflecting increase the third year-over-year. $XXX.X up quarter quarter achieved a year-to-date

our upsells, to Our expansion platform by growth quarter this new and GMV continued and recent revenue was the primarily driven across similar quarters. merchants during of

and Tickets by in to in category, largest first this XX% time category quarter, The than in or In was this performance particular, merchant single driven in all outside the the from remains the previous and year-over-year category contributed for in of upsell overall third by a X growth. travel that quarters, primarily periods mid-teens. XXXX. primarily lapping in of growth solid the onboarded category of was travel step-down the quarter driven our home growth tickets quarterly approximately saw with aggregate the Encouragingly, a our we in more industries large activity.

quarter and luxury Similar to in relatively the of flat largest goods, first year, of fashion one categories, remained year-over-year. the the our half third growth

We within subsegments. sneaker our continue see particular luxury softness brands and to in

quarter our the declined addition, as In category during levels their category from demand second slowed. quarter further third for in discretionary electronics

growth revenue saw all we Finally, geographies. also across

X% by revenue quarter in largest States, EMEA. experienced third year-over-year, year-over-year we United grew in growth XX% the and region, our Our

XX%, our continued and our and APAC in of primarily that approximately to share due revenue from decision market regions demonstrates upsell regions Our this outside United Americas States invest growth gains to and each momentum region. validates believe in activity. the grew We new

gross to on margin. Moving

and margin negatively at reflective impact our our was profit call. was our expectations of gross isolated for announced was QX The in last mentioned, XXXX, Eido impact, XX%. non-GAAP with event margin As the of third by impacted quarter line the earnings of fraud event this the

a analyzed gross reminder, basis, an on As fluctuate best margin a annual as on may is gross margin basis. quarterly

the third quarter annual me to as margin, we unique approach clarity the the However, range given provide on nature year-end. allow of

be XX%. the we quarter As of profit which midpoint our anticipate approximately of range a or translates that to our XX.X%, of to non-GAAP gross margin margin of fourth at today, gross XX.X%, annual will XX%

our Total year-over-year on XXXX, operating result expenses. to non-GAAP decrease a third million base. $XX.X optimizing quarter our expenses a focus of expense continued X% Moving the were of as for

lowest since X ago. the represent quarterly level IPO expenses over years quarter third Our absolute our

of business XX%, expenses the Our in year-over-year, revenue model. from non-GAAP percentage reflecting XX% as operating a leverage improved to

the step-up we $X million anticipate expenses fourth For purposes, quarter. modeling in a in of modest approximately

and aforementioned performance improve adjusted the able XX% onetime for consecutive Adjusted the merchant fraud $XX.X EBITDA X EBITDA EBITDA million months our negative the for year-to-date. quarter been performance fifth the event, with Even of improved third first XXXX. adjusted negative we year-over-year the million and $X.X quarter impact by of for was have to our have

an the fourth quarter an of As anticipate to basis on in EBITDA XXXX. and profitability XXXX previously in basis annual mentioned, adjusted we on continue

liquidity sequential balance cash million. strong flow We cash interest to we represents accrued position carry very deposits, increase the This the third a and the $XXX approximately $X million maintained sheet. investments on debt. of free a ended the with approximately during amount and balance positive quarter. quarter sheet, generated We and Moving of zero

are positive third quarter. the was during continue under-appreciated the our over assets. long the ability believe demonstrated confident remain as cash position balance And operating strong flow that generate We in sheet to and we liquidity business term, to

capital Related law. approval allocation Court alongside authorized which we our to subject Israeli required is earnings, program by share second announced up Due our to Board has $XX of quarter a our to initiatives, as of event repurchase the X, decision from court to a courts delayed. million, promptly October rolling we'll it are under and the operating several the the Israeli Israeli orders once currently is We next court obtained. processes weeks are and receiving announce in decision certain anticipate emergency from court

while this believe opportunity of the at growth to profile, a us M&A that leverage to similar We to repurchasing that shareholder driving great believe our of significant strong of balance sheet we repurchase levels opportunistic in well valuation continue expect at business, by and enables We attractive value share continue our opportunities have capital companies advantage manage to the pursuing take opportunities. with below prices. we dilution, investing to program financial maintaining stock

or guidance, material further assumes the to no our spending macroeconomic changes which patterns worsening in moving environment. Now to consumer

travel As and than we more and tickets on we certain the event approach anticipated year-end, the the season, for vertical, of in a visibility the and expect originally more live tickets remainder of and the especially timing year. of onboarding have merchants ramp-up muted

are guidance first are our X be guidance negative As said, our million $XXX discipline XXXX previously result to as refining range expense improving being disclosed the negative to full of year from between million, be an months a $XX.X midpoint a between EBITDA of in of the X% result, our and year, of $XX.X That to ongoing improvement full $XXX range. million. we we adjusted the year XXXX million our revenue

situation a from from an even that despite I about our and a position landscape, the perspective, we And Overall, geopolitical executing and in environment. ability remain prospects evolving shareholders. strength of operational excited for challenging macroeconomic deliver to challenging we're long-term Israel to believe growth value the in continued

first Operator, take ready we question, are the to please.

Operator

of line the from comes question El-Assal first Ramsey our with And Instructions] [Operator Barclays.

Owen Callahan

new provide new This you're that's is wondering very in if specifically versus could Ramsey. was cross-sell any ask portion be other? of being any I wanted I And on sales to for growth. the Any more by logo you might color And your helpful. Owen compared one net on difficulty about clarity driven pipeline. to seeing the if there sale

Eido Gal

Owen. Sure.

So we pipeline. feel great about the

mentioned in Policy also we really about around perspective. the this larger ago, a both and it's think I geographical year Dispute, than that's board, and across from the products point a newer XX%

So the pipeline say, I would relatively broad-based. is increase,

Owen Callahan

I may, and be to expectations might to customers? choose you kind interesting logo that. business? there on the well. to kind up, I and trend And favor by you of follow I relative along new update Understood. appreciate it. savings there. some appreciate as to of passing wanted any I to sort longer-term which your there expense Is Any of rate growth also point might expect take how in if that

Eido Gal

Sure.

So I pricing. within risk take rate say, or risk the that right? take really based means the the And there's or So on look, those adjusted, rate that would always informs the our that segment on is category, profiles. variance of merchant depending

high-risk if appropriately influence To take specific sells merchant would than And products. goods in work a sells a fee would digital domestically just more that low-risk that we higher internationally, merchant a with rate. bit the that U.S. the be be the product

take Riskified, rate, they pricing So provide which always make them their pricing, there's costs. our to is existing sure start to always that impacts Our using relative to would value merchants our philosophy savings when right?

think how about that's we pricing. So

Operator

next question Robert Blair. William Our with from comes Napoli

Robert Napoli

Eido, EBITDA But the margins? -- thinking turning guess and path we glide profitability this about a to We're picture, always your a think time. long-term maybe everybody I to to you I'm you do all about it. accounted hear how -- during of as longer-term glad on for to getting think is Agi, about you're targets

Eido Gal

for within are Look, to as around margin on towards the discipline, been think them OpEx like things longer-term side, past quarters, I X the around we've the kind continue targets. focus right, march executing on of that those we our we'll on control, them sales focused

Aglika Dotcheva

expecting been last of and of able our executing to QX couple I this year improve ultimately be and Yes. and the adjusted on. I profitable. still It's mean, focus of for to We're we've we're kind profitable to OpEx next quarters, pass a think that to much line something EBITDA. be very

Robert Napoli

-- growth perspective, the And a great from mean, I geos see to strong out of Asia.

any you next is the those the Are you bigger scratching there are do where to in portion Just business over those -- to there see higher in business? over the profitability, And a international of the much Or of surface opportunities? going time? geo-wise is any become markets? the the just differences the -- profitability international business

Eido Gal

surface we're the e-commerce all kind share market we're very scratching and penetration. we of said feel think that, the still market and GMV do I proud the of gains we have. Having the overall of

these traditional regions. some regions kind also definitely where mentioned, seeing So rates still there's in but and growth think you newer growth industries higher of of significant we're that the in like more we

a So outlook, more Resolve more platform existing when these strengthening LATAM, Policy think focus markets, on to sale Dispute I and continuing and APAC, have geographies. it's a moving and some categories about impact. our where of growth towards international It's pronounced

the all growth I moving help forward. of So those us think will with

Operator

line Our with next Chiodo question of comes from UBS. the Tim

Unknown Analyst

This Tim. is ] Ching for [ on

cases your any you far? where Plaid how among the the payments. has So around business partnership see do most Can that your for is of to on my you partnership verticals? provide use announced And you us question so update contributed the ACH

Eido Gal

want an and is interchange to method, build statuses. think payment different the I amounts offer it more recurring and high to a we either to evolving merchants see ACH to cards, growing fee as alternative verification care of take credit or or less payments

heard option. fraud, solving risk than what because traditional from credit is but So need And different we consumer payment growing as problems. slightly do help see we've merchants is, still they our a those there to it card the

aimed building offering been that an some solution that we pipeline ACH. Plaid with So really, at via merchants partnership a it guaranteed earlier. of And end-to-end discussed to that includes the has payments accept in way is meaningful

Unknown Analyst

a new It's really And on in Guarantee. it. products Chargeback addition follow-up helpful. quick Got the to

to So growth you see pipeline release. encouraging the it was opportunities the and that in the cross-sell highlighted

product how you see between to So with difference momentum does bookings? of And revenue in new the and terms like look international contributing the do Policy Protect U.S. your adoption any side?

Eido Gal

we sure and great solving for the feel can merchants the a market, local at the the meaningful I'm differentiate difference We that are feel don't but and inherently, pipeline, that be -- ROI that in a pain to we between them. building. Yes, global a live are it's Sure. way that point it's -- definitely shouldn't providing there I of see not kind the about significant very either.

So look continuing on sell the forward and we you progress. update to to

Operator

of question Terry Securities. Tillman the comes next Our line with Truist from

Terrell Tillman

Chett. also everyone Yes. Thank conflict. X Agi impacted Maybe you, had And Eido, are I questions. the first the thoughts question, and with by my Eido.

monetizing U.S. in think about new having remarks, didn't hope prepared did quarter, I you strength general, I ] in in increased all in just the customer deals the misrepresent you that that. I business confidence, logos. think, top the your XX And [ in new particular I help the and talked

better. What what's The the about I'm driving is confidence? increased isn't any curious macro

ML a prior sales RFP with these the from starting So months a Is just to be You've side business? just for follow-up to come leadership? got then rambling, of it can't terms XX I the the around meat my just on increased on advanced the more activity and maybe just Is winning have that. stuff a confidence market the little with on it Agi. put stop based CMO. And in new and bit the I'll engines? decisioning bone could you

Eido Gal

Happy to Sure. do so.

me think on of X the hands the confidence into increased started and And probably generating that products we in initiatives up. increased additional some to these so that, tie So starting I being the platform, of enterprise think have when investments we're force, the of think here of sales about some of I deployed bear our things I right? I is control. products ago and in and right? within some let that reflective of sitting about years -- ability to the additional some in merchants our investment global our today, value. fully fruit

growth of the reflected pipeline Some APAC the that in building. is rates that's in and

Some our of and it's kind that is providing of in reflective and that merchants. ML been the the platform us to performance

Also, new current a also leadership happy Jeff, you with our and CMO from quarters ago, confident mentioned our few very team.

this think the quarter, confident like business all me are definitely said, more Like helping longer mentioned. those I not have term. things you I become in inflect you meaningfully seen macro, So

Terrell Tillman

And in know comp. year-over-year. XQ, Yes. then, maybe terms Understood. kind of easier But comp sense Agi, is that was I it growth quarter fourth XQ, on of outlook, in the an the in so tougher made

a I'd the travel, conservatism? -- bit But an love perspective longer. of more degree will sole just to rollout little maybe think say that, the I and tickets hear little a get there's of on, take well, some I that's maybe did incremental is did factor. You there

there's incremental timing, some of and of benefits then this the a XQ, some little in of actually from some rollouts. Just is more maybe bit terms

the comment. growth at Just a the on more roughly little midpoint X% bit

Aglika Dotcheva

you thank the for question. Terry, Yes,

year. nuances in year, end October. would little beginning of I trends, and out subvertical, summer, softer different season So way coming about of of the reported, and and kind industry kind really a the of mostly events, mostly this our ticketing it, I bit the saw through we since of end bit a look we seasonality what's from in like the the saw we specifically a and at some in that the at And in mostly it's than last live but starting of last it's also the some of travel, out early of in fourth the perspective it's tickets quarter at of changed of quarter a terms little the say something -- the what coming busy and

So the related there that's kind QX. of like to aspects one of

driven new it's for aspect other in. a like We're around XXXX is us. primarily it's And at more deals very, coming of the and new driver by growth, kind very business, looking strong

early into QX, of some there bit in all I just in But deals really a maybe the slightly half in them think of strong a push still little year. back next of deals. coming little Looking are was bit the quarter,

All in like the of later them bit a just still in of cycle. forecast the kind are little

Eido Gal

quarters is our point of I Yes. throughout that anticipate And seen I add e-commerce different to there fluctuations between we this because Again, of the that you've year. it sometimes is just underlying would think would reflective be next don't can important maybe And QX I trends -- that. what to out year, us would categories. feel rate like across for we

Operator

the of Our Reginald next JPMorgan. from with Smith question line comes

Reginald Smith

guys Most of during Did quarter? size that of impact loss fraud follow-up. been of you need actual my a I clarification. And have I the questions quick have the a just hit. point

Aglika Dotcheva

you Yes. question. for Thank the

also $X.X expected it So with we range the expected, And fraud margin up this more our that around expectations. on XX%, aligned of we event is based million. we that precisely, just landed gross the whatever within

Reginald Smith

but on Perfect. through guys provide extent seeing maybe X.X you the kind And can Anything maybe I'm just there of -- throughout the can month, trends what of quarter, first in worth if us curious out. sure walk you there's kind I'm XQ? general this, of X not to color e-com month, calling through you're

Aglika Dotcheva

course. Yes, of

been it's I year performing overall very biggest and a But around little think already for the still I ticket overall, of prior the mentioned, expectations it's events strong growth change kind as softer. from bit driver a live well. in still are sub-industry, So the

And little the been the upsells a bit we soft. would able in food and home I some execute. later has strength say there's category, one to by primarily trend, that some other were electronics The of the driven

the this highlights. the quarter, of soft quarter. it think kind continued biggest was but these are in I Yes, like softness probably last

Reginald Smith

So and are that into fourth that to toward correctly. that clarify comment. the travel you the tickets the concert, of I this if I'm suggesting end quarter Beyonce trying Just weakened would the about and thinking coincide with quarter? guess

Aglika Dotcheva

to it's across see driven it, than and what's more like more hard but X don't I X, do say. this really would in one of say, We probably geos category. merchant. exactly It's in merchants it I than, the in see like

Eido Gal

to You're than more it's ticketing. right highlight live of that other types to events specific

Operator

Our of next comes Brent line the question from Bracelin with Piper Sandler.

Unknown Analyst

This Brent is support you, this I I'm glad for. employees you accounted to upfront Chargeback answer, wanted previous the Hannah echo Guarantee morning. moving for are just how evolved? families Eido, all I on to merchants your to with your land talk your than for and to hear here. my in you and about mentioned can just a guess, new platform that's sale. more ability your more colleagues

Eido Gal

these of chargebacks for financial fraudulent points codes, Sure. conversations "Hey, that that's new for ability, such helping And solve other reason right? that's the related saying, issue, codes, we Guarantee, we policy a reason chargeback platform it's to or are non-fraud So some pain problems." through a now, just of don't we're Chargeback would sometimes sell and different sale initially. sale commentary. forms set a merchants And inefficiencies with solving a the Thank our or wider cross-sell abuse. whether And chargebacks you right of that problems, I advance of when related upsell, have issue us lot merchants, great. I have a as right? related with that loss to have say to Look, to I leaves for

fraud know a It's and can sale. now," "You which change a actually has to easy great dispute, with really I'm ready and or start we good might my is platform initial a actually showing when make also helping say, right us not policy merchant even on what, been attraction

good then So conversations more feel and approach. opportunities merchants with platform about we from the new

Unknown Analyst

how side? Okay. Super the helpful. in the side on And more expect Agi, that over time? are seeing or trend strength, volume of terms cross-sell upsell do you to you And strength then

Aglika Dotcheva

It's it's GMV higher -- from a a ability for think areas. to existing strong upsell lot and -- kind have -- both approval and coming expand and or I more driver. of a category a rate has have been been different customers of from of take expand the the Definitely, to been also like factor. to strong

Operator

showing the conference to closing no further this I'd I'm remarks. hand back Gal to Eido time. Mr. for questions at over currently like

Eido Gal

everyone, support. We forward Yes. on you call. in coming Thank look to you, for the our the updating months next

Operator

This conference participation. Thank you for call. your concludes today's

You wonderful may now disconnect. Everyone, day. have a

Riskified (RSKD) 15 Nov 232023 Q3 Earnings call transcript