Riskified Ltd.

Good 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 speaker's presentation, there will be a question and answer session. To ask a question during that session, you'll need to press star 1 1 on your phone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded, and I would now like to hand the conference over to your speaker today, Mr. Chet Mandel, Head of Investor Relations. Sir, please go ahead.

Good 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 second quarter of 2023. Participating on today's call are Ido Gal, Riskified's co-founder and chief executive officer, and Aggie Dolceva, Riskified's chief financial officer. We released our results for the second quarter of 2023 earlier today. Our earnings materials, including a replay of today's webcast, are available on our investor relations website at ir.riskified.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 to be covered by the Safe Harbor provisions contained in the Private Securities and 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. These 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 20F for the year ended December 31st, 2022, and subsequent reports we file or furnish with the SEC for more information on the specific factors that could cause actual results 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-K and in the appendix of our investor relations presentation, all of which are posted on our investor relations website. I will now turn the call over to Idao.

Thanks, Chad. And hello, everyone. We had a strong second quarter highlighted by year-over-year revenue growth of 21%. During the second quarter, our revenue growth was primarily driven by the successful execution of our DOSA market strategy. For the first half of 2023, 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. We 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 e-commerce trends, and 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 tax rates. Based on the initial feedback from the group, we are even more excited about our technology stack and our multi-product platform with Dispute Resolve and Policy Protect. Dispute Resolve fully automates elements of the dispute process for both fraud and non-fraud related chargebacks. During the second quarter, 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, hundreds of billions of data attributes, and repeat interaction histories for hundreds of millions of consumers to help detect fraudulent refund claims and block serial returners in real time. Our internal research indicates that approximately five cents out of every e-commerce revenue dollar is wasted as a result of bad behaviors like these, which means the total addressable market for PolicyProtect may be in the hundreds of billions of dollars. A great example of how merchants want to utilize Riskify to help solve this massive problem is exemplified by our second quarter cross-sell to an existing enterprise-level merchant in our electronics category. This merchant tasked Riskified with helping them solve abusive returns by blocking bad customers upon checkout, addressing a seven-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 second quarter. We deployed our first autonomously trained model, researched and trained by our engine, but this time without data science intervention. We 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 technology and ability to drive great outcomes for our merchants even stronger 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 two-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. We improved our year-over-year adjusted EBITDA performance for the fourth 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 fourth quarter 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 million, and zero 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 million, subject to approval from the Israeli court, which is necessitated by law. This court approval process is expected to take several months. We 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. Now, I will turn the call over to Agi.