Riskified Ltd.

Good day, and thank you for standing by. Welcome to Riskify's third quarter 2023 financial results 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 the session, you'll need to press star 1-1 on your telephone. 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. I would now like to hand the conference over to your speaker, Chet Mandel, Head of Investor Relations. 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 third quarter of 2023. Participating on today's call are Ido Gal, Riskified's co-founder and chief executive officer, and Agi Doceva, Riskify's Chief Financial Officer. We released our results for the third quarter 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, business and financial goals, outlook as to gross profit margin, adjusted EBITDA profitability, and expectations as to positive cash flows, 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 Litigation Reform Act of 1995. These forward-looking statements reflect our expectations as of the date of this call and accept as required by 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 31, 2022, and subsequent reports we file or furnish with the SEC for more information on these 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. Reconciliation 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 6K. and 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, Chet, and hello, everyone. Before we dive into a discussion on our financial results and outlook, I would like to first briefly touch on the evolving situation in Israel. Then I will share some commentary from the third quarter and end my remarks discussing why I remain as confident as ever in the positioning of the company. As part of this discussion, I'll provide some color on how we were able to efficiently adapt our workforce and enact our business continuity plan to ensure uninterrupted service to our merchants in the wake of the October 7th events. Then, Aghi will walk you through our third quarter financials and what to expect in the fourth quarter. First and foremost, we condemn the horrific attacks in Israel and we send our thoughts and support to all affected. The loss of innocent lives resulting from this unforgivable terrorist act and the war that ensued is truly devastating. To our customers, partners, and shareholders who have reached out to support us during this difficult time, on behalf of everyone at Riskified, we sincerely thank you. I am relieved to report that all of our employees are accounted for. I am proud of everyone in the organization for stepping up their efforts and for their hard work in a time of need, and I believe this speaks loudly to the strong culture at Riskified. This level of focus and flexibility has meant that we've seen no material impact on our ability to maintain day-to-day operations across all critical functions. Moving now to our third quarter results. Once again, our revenue growth during the third quarter was primarily driven by the successful execution of our go-to-market strategy, which contributed to 14% year-over-year revenue growth and 17% for the first nine months of the year. we are growing more confident in our ability to add new merchants, retain and upsell existing ones, and expand our market share despite an uncertain and challenging macroeconomic backdrop. Our competitive win rates remained high during the quarter, and we have onboarded more new merchants versus this point last year. We have generated over 20% more leads compared to this point last year, which is contributing to a large and growing pipeline. We are working diligently on maximizing revenue opportunities, leveraging our machine learning capabilities to positively impact our business, while prioritizing investment in the areas with the highest return. I'm excited that we've grown top line revenue by 17%, while simultaneously decreasing total operating expenses by 6%, which drove an improvement in adjusted EBITDA performance by over 50% in the first nine months of 2023. We believe that these results are testament to the overall strength of the business and our ability to execute and find leverage in the model. Next, allow me to spend some time talking about the isolated fraud event that we discussed on our last earnings call. As a reminder, one of our largest merchants experienced a significant fraud event in July. This event was contained over the course of a handful of weeks, and as expected, the impact caused by this event contributed to a non-GAAP Q3 gross margin of 44%. We do not anticipate any further impact to our gross margin going forward as a result of this event. And while we are disappointed by this one-time event, we did learn valuable lessons. For example, we have updated and solidified various go-live processes, improved some of our chargeback monitoring tools, and added new detection capabilities. I should also mention that our relationship with the impacted merchant remains very strong, and this isolated example underscores the overwhelming reason why we believe that chargeback guarantees is a superior model that delivers the most value to merchants. Overall, we remain encouraged by our underlying gross margin performance. I believe that our commitment to continuously invest in our machine learning capabilities through feature enhancements and model improvements continues to strengthen our market-leading technology. Now, back to the Israel conflict and how it relates to our business. Our core focus since the events of October 7th has remained the safety of our employees and continuity to services to our merchants. To support the wellbeing of our teams in Israel, we have provided flexible working arrangements for those who are not yet back to their normal office schedule, assisted those employees and their families who have been called on reserve duty, and expanded our existing mental health and wellness offerings. To support our merchants, we've been working diligently as part of our business continuity plan to leverage our global network of employees to fill temporary capacity needs. Although we've experienced minor delays in a small number of long-term initiatives, There has not been any material impact to our current productivity. We remain 100% engaged with all our customers through increased communication efforts and have not seen loss of merchant volumes as a result of the October 7th events. This is a testament to the deep relationships that we have cultivated with many of our merchants, high retention rates, and our track record of being a reliable and trusted partner. Before I turn it to Aghi, I want to emphasize that I believe the DNA of our company positions as well as we work through the current situation. While we are proud of being a company founded in Israel, we are truly a global company with business functions spread through eight locations around the world and with merchants in nearly 40 countries. Our goal remains to maximize revenue and profit with our AI-powered fraud and risk management platform to all of the world's largest enterprise e-commerce merchants. and I am very confident in our ability to continue executing on that mission through all environments. Now, I will turn the call over to Agni.