Riskified Ltd.

Good day, and thank you for standing by. Welcome to the Riskified fourth quarter 2021 earnings call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star 1 on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Chris Mimone, Investor Relations for Riskified. Please go ahead.

Good morning, and thank you for joining us today. Riskified is hosting this call to discuss its fourth quarter and full year 2021 financial results for the period ended December 31st, 2021. Participating on today's call are Ido Gall, co-founder and CEO, and Agi Docheva, Chief Financial Officer. Earlier this morning, Riskified issued a press release announcing its fourth quarter and year-end results. A copy of this press release has been furnished with the Securities Exchange Commission on Form 6-K. Before we begin... I want to remind you that matters discussed on today's call will include forward-looking statements related to our operating performance, financial goals, and business outlook, which are based on management's current beliefs and assumptions and are not guarantees of future performance. You should not put undue reliance on any forward-looking statements. Please note that these forward-looking statements reflect our opinions 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. Forward-looking statements are subject to various risks, uncertainties, and other factors, some of which are beyond our control, that could cause our actual results to differ materially from those expected and described today. In addition, we are subject to a number of risks that may significantly impact our business and financial results. For a more detailed description of our risk factors, we encourage you to read Riskified's periodic and other SEC filings, where you will see a discussion of factors that could cause the company's actual results to differ materially from these statements. A replay of this conference call will be available on our website under the investor relations section. I would also like to remind you that during the call, we will discuss some non-GAAP measures when talking about risk applied performance. The presentation of this financial information is not intended to be considered in isolation or as a substitute for or superior to the financial information prepared and presented in accordance with GAAP. We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe that these measures provide useful information about operating results, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making. You can find the reconciliation of those non-GAAP measures to the nearest comparable GAAP measures in the earnings press release issued and furnished on Form 6K today and in our prior filings with the SEC, all of which is posted on our website at ir.riskify.com. I will now turn the call over to Ido Gall, Riskify's co-founder and CEO.

Thanks, Chris, and hi, everyone. Before we get into the results, I'd like to thank the Riskify team for an amazing year. Everything I can report on today is a testament to the hard work of our team and their ingenuity, and we are tremendously grateful for all their contributions. Now, let's move on to the main financial highlights for the fourth quarter and full year. In the fourth quarter, we reviewed 27.8 billion GMV for our merchants, up 23% year over year, achieving revenues of 69.8 million, up 22% year over year. Full-year GMV was 89.1 billion, up 40% year over year, and revenues were 229.1 million, up 35% year over year. These results reflect the impact of continued organic growth within our customer base combined with the addition of new customers, as well as new segments from existing customers. Overall, we were pleased with our results. Continuous improvements in our machine learning platform drove meaningful financial benefits, both for risk-asides and our merchants. We achieved gross margins of 53% for the quarter and 54% for the year. Over the last three years, we were able to consistently improve the chargeback-to-billings ratio for each cohort demonstrating the strength of our AI and our scalable financial model. Adjusted EBITDA was negative $7 million for the quarter and negative $19.5 million for the year, reflecting the global investments we've made to capture the larger international market opportunity and accelerated product development cycles. Our North Star has always been to create outsized value for our customers, and we believe that we have been successful in monetizing that value. One of the most important metrics that we track to validate our progress here is our annual dollar retention rate. In 2021, our annual dollar retention was 99%. For each of the last three years, it's been 98% or higher. For approximately 90% of customer accounts, representing nearly 95% of revenue, we were able to increase year-over-year approval rates, reduce chargeback rates, or both. This highlights the win-win nature of our platform. This focus on generating outsized value to our customers has allowed us to penetrate existing customers more and more over time. In 2021 alone, six of our 20 largest customers chose to submit additional segments of their e-commerce volume to us. Our customers represent a very significant upsell opportunity. There is over $300 billion in GMV available for upsell from our existing clients. This $300 billion represents over 3X our 2021 figures. These upsell opportunities are a strategic priority for us, and we have a strong track record of capturing additional wallet share over time. So far, we have increased our billings from our mature cohorts by 200%, and we believe we can replicate this trend with our more recent cohorts as well. Over the course of 2021, including Q4, we added several prominent online retailers to our platform across a wide variety of industries. We expect many of these clients will expand the share of transactions we review as we continue to demonstrate value. In our emerging verticals, we added customers including Binance, one of the world's leading blockchain ecosystem and cryptocurrency infrastructure providers. Additionally, we added a global remittance and payments company with more than $5 billion in annual revenue. In our established verticals, we added customers including Saks Off-Biz, the premier luxury off-price destination, one of the world's five largest omnichannel retailers, and one of the world's five largest travel retailers. We are able to land and expand with the world's largest online retailer by holistically solving complex technological problems for them. In this vein, we were able to deliver multiple new use cases and product improvements throughout 2021 and Q4 specifically. Most notably, we recently expanded chargeback guarantee to also support ACH. Q4 represented the first quarter when we began to process meaningful ACH volumes. As part of the initiative to support ACH, we are now able to guarantee a broader range of payment types beyond credit cards and PayPal. This expanded functionality allows merchants accepting ACH payments to realize more profitable revenue while also delivering instant settlement times to their customers. We continue to evolve our partner-driven sales efforts with a growing number of partners embedding our chargeback guarantee offering directly into their respective products. Some of the many examples include payment gateways, enterprise-focused e-commerce platforms, and one-click checkout products. This is an exciting new sales channel that should help us reach our target customers even faster. We expanded several new products to make them more relevant for our largest customers. Most notably, we expanded our Policy Protect offering to support INR and refund claims. Policy Protect is used to block abusive customers and is now screening billions of dollars worth of GMV annually. we expanded our ability to dispute chargebacks on our merchants' behalf, even when those chargebacks are not guaranteed by Riskify. Multiple customers started using Riskify to fight disputed payments on their behalf, even for reasons other than payment fraud. Drawing upon all these accomplishments in 2021, we are even more excited about the long-term potential and opportunity ahead of us. By our estimates, the $89 billion and GMV were reviewed in 2021, still represents only 2% of total global e-commerce expenditures. The remaining 98% of this rapidly growing market almost exclusively uses non-guaranteed alternatives, predominantly risk-scoring products, in conjunction with manual human review. Given the size of this opportunity, we are expanding our presence into most major international markets, and we continue to invest in additional products that solve similar problems for our customers using Riskified's world-class machine learning capabilities. We believe that our chargeback guarantee inherently provides much more value as compared to risk scoring product managed by internal teams augmented with manual human review. Merchants no longer need to deploy time, resources, and budget to solving a major pain point that is not their core competency. As a result, we believe that internally managed processes will become obsolete over time. To our knowledge, no other company guarantees e-commerce volumes at a comparable scale anywhere in the world. By using Riskified, our merchants benefit from higher guaranteed approval rates, lower predictable fees, and a fast, frictionless checkout process that delivers superior consumer experiences. Moreover, This value proposition is directly proportional to the size of our merchant network, meaning that our performance guarantees only to become more compelling as we grow. I've never been more excited about the road ahead as we enter 2022 with an incredible product and an amazing team. The ROI we're able to deliver for our customers is tremendously compelling, and there's a huge untapped market opportunity ready for us to capture as we scale our efforts globally. Now, I'd like to turn it over to Hagi to discuss our Q4 and near-end results, as well as to share more perspectives about our growth expectations for 2022.