Riskified Ltd.

Good day and thank you for standing by. Welcome to the Riskified Fourth Quarter 2025 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, today's conference is being recorded. I would like to turn the call 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 released our results and are hosting today's call to discuss Riskified's financial results for the fourth quarter and full year 2025. Our earnings materials, including a replay of today's webcast, will be available on our investor relations website at ir.riskified.com. Participating on today's call, Arit Oghal, Riskified's Co-Founder and Chief Executive Officer, and Aggie Dolceva, Riskified's Chief Financial Officer. Certain statements made on the call today will be forward-looking statements related to, without limitation, 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 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, 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, 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, 2024. 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 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 and 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. We ended the year strong, and this momentum positions us for continued success in 2026. Our fourth quarter non-GAAP gross profit of $57.3 million represented strong year-over-year growth of 16%, and our adjusted EBITDA of $17.7 million translated to a margin of 18%, demonstrating the scale and strength of the business. This quarterly amount alone exceeded our full year adjusted EBITDA of $17.2 million in 24. Our fourth quarter revenues of nearly $100 million were a record since conception and contributed to our first-ever quarter of GAAP profitability. These results are the culmination of consistent, high-quality execution across the year. In 25, Both annual dollar retention, or ADR, and net dollar retention, or NDR, improved year over year. ADR reached approximately 100%, up from 96%, and NDR significantly improved to 105% from 96% in 24. Our go-to-market team had another successful year, with particularly strong results in the fourth quarter of 25. During the quarter, we won the highest quarterly amount of new business since our IPO. which represented approximately 55% of the total new business won for the year and was driven by high competitive win rates of over 75%. This year, we won and onboarded several leaders across industries and geographies, including Erolina Start Peru, Abounds, Adastria, Ace Hardware, Bangsa, Qasem, David's Bridal, NetEase, Nintendo, Temu, TripAdvisor, and XTools. In addition, merchants such as Iberia Airlines, Meta, Fast Retailing, Viva Aerobus, Vivid Seats, and Zeps were all upsold in 25 after landing on the platform over the past few years. We believe this demonstrates the power in ROI that our platform delivers to our merchants once onboarded onto the Riskified network. We have processed approximately $750 billion in GMV and have over 1 billion unique customer interactions in our network since inception. I believe that this data moat has created a structural competitive advantage and that we are well positioned to capture even more of the large opportunity in front of us. That is why we are focusing our efforts on deepening our geographic presence and growing faster in our newer verticals while identifying additional verticals to penetrate for continued market share gains. From a geographic standpoint, Our non-US regions collectively grew 22% year-over-year, driving faster, more diversified growth. Notably, APAC and LATAM were key regions of outperformance. We plan to expand further in these regions by developing localized products and features to boost pipeline generation. We have scaled our presence in the payments and money transfer category, as evidenced by 66% growth in 24 and 90% growth in 25. Based on the current pipeline and the annualization of new business 1 and 25 in this vertical, I expect another strong year of activity in 26. And as we capture more data and payment types, leading to more refined models and bespoke features targeted to this vertical, I believe we are positioned to continue penetrating the significant white space. According to recent industry studies, there was a 27% year-over-year increase in fraud losses related to online transactions. The total losses attributed to fraud are expected to more than double over the next five years, while outpacing the expected growth of e-commerce. In addition, over two-thirds of U.S. companies experienced an increase in AI-related fraud attempts in 2025. We are witnessing escalating complexity of fraud schemes. which now target every touchpoint across the customer journey, from account creation and stored value credentials, all the way through the return, customer service, and dispute portals. Every part of the transaction process is at risk. Broad risk varies across payment types, including ACH, credit cards, digital wallets, crypto and stable coins, agentic checkout, and other methods. We need to be prepared to support and manage risk across the full payment landscape. We are leveraging the capabilities of our AI ecosystem that has been continuously advanced for over a decade. This increase in fraud has further elevated Riskified's role, solidifying our positioning as a key partner for our merchants. I believe that the combination of a more pronounced and complicated fraud landscape, enhanced platform features and functionality, and a deliberate effort to expand the top of our deal funnel has contributed to an increase in our new business lead generation approximately 50% year-over-year. Furthermore, in line with our expectations at the beginning of the year, I am pleased that we generated nearly $10 million in aggregate annual revenues from Policy Protect, Account Secure, and Dispute Resolve in 2025, and we plan to continue to grow our revenues outside of our core fraud services in 2026. As we have expanded our offering, the benefits of having a robust platform are becoming even more pronounced. First, we saw an approximately 50% increase in the number of merchants who are now using more than one product during the year. This multi-product approach has made us stickier. Second, each transaction processed across our suite of products strengthens our flywheel by expanding the breadth and depth of our data sets. This integrated data set compounds across the network, enhancing our identity engine and enabling us to develop dynamic components that can be utilized across the platform. These cross-platform synergies lead to better performance for our merchants. This strong performance with differentiated capabilities allowed us to regularly outperform our competition. And fourth, merchants utilizing more than one product generally leads to higher contribution profit for those merchants. This is part of the reason why in 26 we are focused on driving gross profit growth versus optimizing primarily for revenue growth. As Sagi will discuss shortly, we expect non-GAAP gross profit growth to accelerate to double digits at the midpoint in 26, demonstrating the continued leverage in our model. Now, on to a very topical theme, artificial intelligence. Allow me to discuss how we are observing AI impacting the market and how Riskified's product platform and internal operations are positioned for success in this environment. There are two main dynamics that we are seeing. First is the increased utilization of agentic commerce through general purpose LLMs, but still primarily only for discovery purposes and not checkout. The second is the rise of merchant-native LLMs, which are advanced agents within a merchant's ecosystem designed to handle the full shopping journey, from answering queries to completing the purchase, closing the loop completely within their ecosystems. Both flows present unique transaction risks that our platform aims to solve. In the first agentic flow, when customers do use general purpose LLMs for checkout, we have seen instances where fraudsters utilize AI to throw agentic traffic off script by generating synthetic IDs to bypass LLM verification. Our internal estimates indicate that approximately 30% to 40% of essential model features are lost when consumers transact through general purpose LLMs, increasing risk, and escalating the prevalence of fraud like this. To combat this, we strive to help merchants by providing clear visibility into agentic traffic and emerging fraud MOs that they don't otherwise have on their own. proactively adjusting models based on low signal environments, segmenting order flows, and rapidly developing features to identify emerging agentic fraud MOs. In the second flow, merchants are building out their AI shopping assistance to offer depersonalization and loyalty programs based on customer preferences. Riskify provides a critical risk intelligence layer that helps make these transactions both smart and secure. This is especially critical when those interactions have financial implications. An example of this is providing merchant-native AI agents with real-time risk signals while they are in the conversation with customers to offer instant refund or exchange decisions based on that individual customer's risk and eligibility. Because Riskified analyzes the complete purchase history of the end customer across an expansive global network of e-commerce brands, including exact product lists, SKUs, and cross merchant behaviors, we can provide highly differentiated data that merchants cannot otherwise access on their own. We are able to provide a decision platform for their agents to make important and accurate financial decisions. We are excited about the continuous expansion and enhancement of our agentic commerce offering. Merchants are actively preparing and ready to support agentic commerce across its various forms and flows. Our ability to not only service the dynamic needs of an evolving market, but also to innovate in real time is generating an increase in merchant dialogue. I believe that this strategic engagement is a driver for our future business pipeline and growth. Internally, we continue to adopt AI to automate and scale complex business workflows across departments. This is intended to help drive operational efficiency and productivity, lower costs, improve response times, and enhance service delivery. For our engineering teams, AI has become a force multiplier. Our developers have moved from basic coding assistance to agentic systems that span the entire development lifecycle. from discovery and requirements assessment to automated root cause analysis for production alerts. In addition, by using agentic floats for code review and observability, we are reducing technical depth while increasing release velocity. The impact on productivity is measurable. Between Q2 and Q4 of 25, many of our engineers saw more than 2x increase in tickets completed. This enables us to focus on developing new product enhancements and features and to test, train, and deploy them more efficiently, strengthening our relationships with the hundreds of enterprise merchants in our network. We are seeing similar functional leverage across the other business units in finance and analytics. We have moved several initiatives into production to automate processes that reduce human error and manual labor. And the go-to-market team has found success utilizing LLMs to drive merchant inbounds and high-intent queries. We've also developed agents that automate time-consuming cost-benefit analysis of merchant prospecting, minimizing manual work to drive quicker and more accurate outreach. And while we are getting leverage from general-purpose LLMs in our own business, I don't believe that those same LLMs pose a true threat to our decision engines. In our view, LLMs lack calibration and the precise probability intervals required for fraud engines. Additionally, LLMs are optimized for text and image, while traditional AI fraud models like ours are much better at analyzing structured data inputs. The data we collect includes browsing behavior, account activity, checkout data, and post-fulfillment signals for every transaction. Our models learn from over 5 billion historical non-public merchant network transactions that have been labeled and tagged. With this data, we create, update, and continuously deploy features to be used by our models that solve the increasing complexities of fraud. To that end, As we announced yesterday, we have recently developed features to address this problem. Within our policy protect decision studio, merchants are able to identify and apply business rules to manage the risk of order volume coming from their native AI shopping agents. This control will allow merchants to confidently deploy their branded conversational AI agents without exposing themselves to programmatic refund claim abuse, reseller arbitrage, or promotional abuse. We also expanded our AI agent identity signals, allowing a merchant's AI shopping agent to directly query Riskify's identity graph to retrieve associated risk indicators and resolve an identity programmatically. The breadth and sophistication of our platform allows us to train, test, and deploy merchant or payment-specific models. We also use this platform to retrain models with updated data, new features, and segment calibrations to protect from emerging fraud patterns across our network. All this helps us drive optimized merchant performance, which at the end of the day is the key driver of merchant satisfaction. Our ability to rapidly adapt in the face of a shifting landscape does more than just protect our merchants. I believe it serves as the foundation for our sustained financial strength and disciplined execution. Over the past two years, we have repurchased shares representing approximately two-thirds of our current enterprise value. Based on our current expectations of improved free cash flow of approximately $40 million in 26, we anticipate generating a free cash flow yield of approximately 10% relative to our current enterprise value. Looking ahead, I believe that our momentum remains strong. As a reflection of our confidence in Riskified's long-term trajectory, I am pleased to announce that our board has authorized an additional $75 million share repurchase program. This decision reflects our conviction in the fundamentals of the business, supported by strong free cash flow, a debt-free balance sheet, and a disciplined capital allocation strategy that we believe will prove beneficial for our shareholders. I want to thank our team again for their focus and strong execution against our 25 financial plan. Our results reflected the top of our revenue and adjusted EBITDA guidance ranges, and we enter 26 in a position to accelerate our performance even further. Now, over to Agi.