• Revenue: $78.8 million in Q3 2024, up 10% year-over-year.
• GMV (Gross Merchandise Volume): $34.7 billion in Q3 2024, reflecting a 17% increase year-over-year.
• Gross Profit Margin: 50% for Q3 2024, with full-year expectations between 52.5% to 53.5%.
• Operating Expenses: $38.7 million in Q3 2024, a 4% decline year-over-year.
• Adjusted EBITDA: Positive $0.9 million in Q3 2024, compared to negative $8.4 million in Q3 2023.
• Free Cash Flow: $14 million in Q3 2024, the highest in the company's history.
• Cash and Investments: Approximately $390 million with zero debt as of Q3 2024.
• Share Repurchases: 8.6 million shares repurchased in Q3 2024 for approximately $47 million.
• 2024 Revenue Guidance: Between $322 million and $327 million.
• 2024 Adjusted EBITDA Guidance: Between $14 million and $20 million.

• Warning! GuruFocus has detected 1 Warning Sign with RSKD.

Release Date: November 13, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Riskified Ltd (NYSE:RSKD) achieved a 10% year-over-year revenue growth in the third quarter of 2024, driven by their go-to-market strategy.
• The company reported a 17% year-over-year growth in non-GAAP gross profit, outpacing revenue growth and demonstrating commitment to adjusted EBITDA margin expansion.
• Riskified Ltd (NYSE:RSKD) successfully expanded its merchant base with new logo wins across six verticals, including a significant win with a traditional grocery merchant.
• The company achieved a 100% renewal rate across its top 20 contracts up for renewal in the third quarter.
• Riskified Ltd (NYSE:RSKD) improved its adjusted EBITDA outlook for the third consecutive quarter and is generating meaningful free cash flow with strong cash reserves and no debt.

Negative Points

• A significant merchant in the home category decided to leave the Riskified network, impacting future revenue and GMV.
• The fashion and luxury vertical experienced continued same-store sales pressures, with growth only in low-single-digits.
• The general retail sub-vertical showed weakness, offsetting growth in the food sub-vertical.
• The company faces an uptick in competitive pressure, which could impact future growth and pricing strategies.
• Riskified Ltd (NYSE:RSKD) anticipates non-comparable periods in the home category until the fourth quarter of 2025 due to the churn event.

Q & A Highlights

Q: Can you provide more details on the churn in the home category and its impact on revenue and guidance? A: Eido Gal, CEO, explained that the merchant decided to move their volume in-house after experimenting with different vendors, including Riskified. The churn is expected to impact Q4 revenue by approximately $5 million and around $18 million in 2025. The company is using this as an opportunity to refine pricing and product bundling strategies.

Q: What was the impact of the large upsell for Policy Protect on the annual contract value (ACV)? A: Eido Gal, CEO, noted that the upsell was significantly larger than the typical 10% to 30% ACV uplift seen with Policy Protect and Dispute Resolve products. This deal is a proof point of potential bundling opportunities and platform expansion with large merchants.

Q: How is Riskified expanding its presence in new verticals like remittances and groceries? A: Eido Gal, CEO, highlighted the company's conscious effort to diversify into non-discretionary areas such as groceries and remittances. The strategy involves leveraging early successes to capture more market share and increase wallet share within existing clients.

Q: What are the expectations for the holiday season and its impact on growth? A: Aglika Dotcheva, CFO, expects a healthy holiday season, though not extraordinarily strong. The company anticipates continued strong new logo activity and positive trends in travel and live events, which should support growth into the end of the year.

Q: Can Riskified's AI and machine learning capabilities be applied beyond retail? A: Eido Gal, CEO, stated that Riskified's AI capabilities, particularly in machine learning and data optimization, could potentially be applied to other areas. The company is focused on expanding its suite of services for enterprise e-commerce clients, though specific future applications were not detailed.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.