Riskified Ltd. Q4 FY2024 earnings call

• 2024 was a significant year for Riskified, with 15% GMV growth and 10% revenue growth, exceeding guidance. Although certain areas like ADR and NDR didn't meet historical benchmarks, operational achievements positioned the company well for improvement in 2025. - The go-to-market team had a strong year, landing large global merchants, proving ROI, and expanding relationships. Approximately $45 million in revenue came from new merchants added in 2024 and the annualization of 2023 onboarded merchants. Wins were seen in fashion, ticketing, live events, and newer verticals like money transfer and food. - Focus on expanding top-of-funnel efforts by leveraging the expanded multi-product platform. The company aimed to shift merchants to multiyear contracts, with over 70% of the 2025 book of business committed, and increased the weighted average contract term for larger accounts by 30%. - The product platform advanced with AI capabilities, including autonomous training, a performance segmentation system, and a modular machine learning infrastructure. Adaptive Checkout was introduced to optimize the checkout process. - Non-GAAP operating expenses decreased 4% in 2024, and adjusted EBITDA was positive $17.2 million for the year, a year-over-year increase of over 300%.

Riskified reported fourth quarter 2024 revenue of $93.5 million and full-year revenue of $327.5 million, with year-over-year growth of 11% and 10% respectively. The fourth quarter GMV stood at $39.5 million, the highest quarterly volume in the company's history, driven by continued new and upsell growth and strong Black Friday through Cyber Monday holiday activity. For the full year 2024, GMV grew by 15% to $141.2 billion. The Fashion & Luxury vertical represented approximately one-third of the company's portfolio for the year, with low single-digit growth in the fourth quarter and full year. The Ticket & Travel category was the largest contributor to year-over-year revenue growth, achieving over $111 million in revenue and becoming the company's largest vertical. The Food category saw 40% year-over-year growth, and the Money Transfer & Payments category grew by 66%. The Home vertical declined year over year but is expected to grow in 2025. Billings increased across all geographies, with the United States growing 9%, EMEA up 4%, Americas up 10%, and APAC up 33%.

• For 2025, revenue is expected to be between $333 million and $346 million, with the midpoint at $339.5 million, driven by new business activity. - Adjusted EBITDA is anticipated to be between $18 million and $26 million, with the midpoint around $22 million, demonstrating margin expansion. - The first three quarters of 2025 are expected to have similar absolute dollar revenue, with the fourth quarter exceeding that level. - Improved net dollar retention is expected in 2025, aided by stabilization in challenged verticals, execution of retention initiatives, and penetration of upsell white space.

• Vertical market challenges: In 2024, areas like ADR and NDR didn't meet historical benchmarks and long-term objectives. - Contract renewal risks: While progress was made in shifting to multiyear contracts, ongoing churn events and competitive pressure could impact retention. - Macro environment risks: Broader economic conditions and changes in consumer spending could affect e-commerce activity and merchant adoption of Riskified's services.

Q: What are you all doing to maximize top of the funnel?

A: Eido Gal highlighted three key points: increased R&D spend expanding the platform capabilities benefits top-of-funnel opportunities, geographical expansion is driving pipeline, and a more thoughtful approach to the midtier market including channel distribution.

Q: Update on alternative payment methods?

A: Eido Gal stated that alternative payment methods such as buy now pay later, Google Pay, and Apple Pay are addressable as merchants have inefficiencies and losses in these areas, with Riskified reviewing volume in both uncovered and covered models.

Q: Clarification on Adaptive Checkout?

A: Eido Gal explained that Adaptive Checkout is a functionality of the Chargeback Guarantee product available to existing and new clients, designed to optimize the checkout process end to end.

Q: Thoughts on consolidation?

A: Eido Gal mentioned that Riskified believes it is the leader in the space and is looking for opportunities for potential consolidation to drive scale and synergies.

Q: PSC2 in the UK and Europe?

A: Eido Gal said that PSC2 Europe has mostly been a non-guaranteed model, with Riskified leaning on newer products or non-guaranteed offerings in that context.