Riskified Ltd.

Good day and thank you for standing by. Welcome to the Riskify third quarter 2024 earnings 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 this conference is being recorded. I would now like to hand the conference over to your speaker today, 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 2024. Participating on the call today are Ido Gall, Riskified's Co-Founder and Chief Executive Officer, and Agi Doceva, Riskified's Chief Financial Officer. We released our results for the third quarter of 2024 earlier today. Our earnings materials, including a replay of today's webcast, will be 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 revenues, gross profit margin, adjusted EBITDA profitability, adjusted EBITDA margins and expectations as to positive cash flows, which all 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 Security Litigation Reform Act 1995. These forward-looking statements reflect our expectations as of the date of this call, and except 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 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 2023 in subsequent reports we file or furnish with the sec for more information on the specific factors that could cause actual results to differ materially from our expectations additionally We will discuss our 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 6K 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, Chet, and hello, everyone. Our revenue growth during the third quarter and first nine months of 24 continued to be primarily driven by the execution of our go-to-market strategy, which contributed to 10% year-over-year revenue growth in both periods. For the first nine months of 24, we've achieved GMV growth of 16%, and our non-GAAP gross profit growth of 17% year-over-year outpaced our revenue growth, demonstrating our ongoing commitment to adjusted EBITDA margin expansion. I am pleased that we are flowing through some of the outperformance that we've seen in the third quarter to the annual guide. We are executing on our goal of expanding our merchant base through new logo wins. Our top 10 new logos added in the third quarter included key wins across each of our six verticals, further broadening our network. We continue to add to our portfolio of merchants in our more established areas, such as fashion and luxury, and tickets and travel, and captured share in newer areas, such as remittance and food. I want to highlight an important win in a newer sub-vertical for us. During the third quarter, We went live with our core chargeback guarantee product with our first traditional grocery merchant who has GMV of over $1 billion. We have helped this merchant reduce its fraud costs by approximately 40% by fully automating their fraud efforts and upon initial contract, captured all of their eligible chargeback volume for a multi-year term. As the way consumers shop continues to migrate towards online channels, we are being strategic in how we focus our go-to-market efforts towards both discretionary and especially non-discretionary areas. Overall, I am excited about the expansion in our food category. Year to date, we've been successful with our new business generation. I believe that our focus on strong merchant performance, combined with the sophistication and accuracy of our platform, continues to differentiate us from our competitors. In the third quarter, we closed more new business than in each of the first and second quarters, and we anticipate a similarly strong fourth quarter. Notably, in the first nine months of the year, we have already matched the number of new business contracts with an annual value of one million or more that we achieved throughout all of 23. We believe that our pipeline for 25 is robust and that we are well positioned to further diversify our revenue across verticals, geographies, and product lines. It is important to note that we have made this progress against an uneven backdrop in a recent uptick in competitive pressure. We were recently made aware that a large merchant, which makes up a significant portion of our home category, would be leaving the Riskified Network at the end of October. We are taking this opportunity to refine our pricing and product bundling strategies, enhance our go-to-market coverage, and strengthen our contract renewal processes. in order to best position the business to win and retain customers. I want to highlight that during the third quarter, we achieved 100% renewal rate across our top 20 contracts up for renewal, and outside of this turn event, we anticipate a similarly strong fourth quarter of renewal activity as well. I believe that our underlying business fundamentals remain strong. I believe that we have developed one of the most powerful and differentiated AI platforms in the market. This platform is powered by our advanced machine learning intelligence models, which are built from proprietary and vast data sets comprising billions of historical transactions, hundreds of billions of data attributes, and repeat interaction histories for hundreds of millions of consumers captured over a more than 10 year period. I believe that this large global merchant network has created a unique data advantage for us and is what sets us apart. Our algorithms learn from every transaction by being fed back into the system for model training, creating a constant feedback loop that strengthens our platform's predictive capabilities, generating strong performance for our merchants. We believe that by focusing on improvements to our technology, we are continuing to strengthen the accuracy and performance of our artificial intelligence. As has been reported widely, Scammers are now leveraging artificial intelligence tools in areas beyond typical card-not-present fraud. Just as an example, we are now seeing scammers use chatbots to automate return and refund requests, generate phony tracking numbers, and find other vulnerabilities in merchants' back-end systems to deliberately return empty boxes while keeping goods for themselves. It's imperative for merchants to fight bad actors and outmatch these fraudsters by leveraging the technological capabilities of advanced next-generation solutions like Riskified. That's why I'm really excited about the enhanced suite of tools that we recently released for Policy Protect, which are aimed at preventing this type of behavior. These sophisticated tools place our machine learning network directly in our merchants' hands by providing automated self-service capabilities for the creation, simulation, and management of customer-facing policy decisions. We are able to deliver unmatched flexibility and precision in automating and setting policies based on Riskify's identity and risk models. These enhancements, in part, have contributed to a rise in platform adoption. I am excited that in the third quarter, we went live with the largest policy protect deal since launch, worth nearly $2 million in annual contract value. We have been able to deliver value to the merchant by blocking an incremental 7% of abusive returns while working to keep customer complaints in line with the merchant's target. Overall, I believe that we have the best product in a huge market and are well positioned to capture more market share. As we continue to layer in additional capabilities to help enterprise e-commerce merchants manage their businesses better, become more profitable, and further understand their customers, we are only extending our leadership position. I am proud of our ability to execute on our gross profit objective as we scale our global network. We have improved our adjusted EBITDA outlook for the third consecutive quarter and are working towards delivering further adjusted EBITDA margin expansion in the quarters and years to come. We are generating meaningful free cash flow and our strong cash reserves with no debt empower us to utilize our capital strategically. We are assessing product bolts on M&A to help accelerate growth and expand our platform and we are looking for opportunities for potential consolidation of smaller players to drive scale and synergies. We have a high bar for M&A and will always weigh shareholder value when assessing potential M&A opportunities. That being said, in the near term, we believe that we have capital available to accomplish these capital allocation goals while also leveraging our large cash position to opportunistically repurchase shares. To this end, Our board has recently approved an additional 75 million buyback authorization. Given our past buyback activity and our current intent to strategically utilize our strong cash position for additional repurchases, we believe that we have the capacity to remove approximately 10 to 15% of our shares outstanding annually over the coming years. Putting this all together, I am confident that our business is resilient and that we have the best team in place to attack the opportunities in front of us. As we head into the holiday season, I am looking forward to driving value for our merchants and shareholders. Now, over to Agi.