Riskified Ltd. (RSKD) Q2 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights strong financial performance with a solid revenue growth forecast, high renewal rates, and a significant increase in new product revenue. Positive insights from the Q&A include high win rates and strategic expansion plans. While some uncertainties exist, such as unaddressed expectations for specific sectors, overall sentiment remains positive with strategic investments in AI and global expansion. The market cap indicates moderate sensitivity, supporting a positive prediction.
Key Financial Performance
GMV (Gross Merchandise Volume) $36.4 billion for Q2 2025, reflecting a 4% year-over-year increase. The growth was driven by new merchant and upsell activity.
Revenue $81.1 million for Q2 2025, up 3% year-over-year. Growth was attributed to new merchant and upsell activity.
Revenue (First Half) $163.4 million for the first half of 2025, up 5% year-over-year. Growth was driven by new merchant and upsell activity.
Tickets and Travel Category 15% year-over-year growth, driven by strong new business wins and upsell activity.
Fashion and Luxury Category 10% year-over-year growth, driven by strong new business wins and upsell activity. Growth was partially offset by same-store sales pressure, particularly in high-end fashion and sneakers.
Home Category Contracted by 74% year-over-year, reflecting declines in this segment.
Money Transfer and Payments Category Achieved approximately 90% year-over-year growth, driven by new merchant activity.
United States Region Declined 11% year-over-year, primarily due to contraction in the Home category.
APAC Region Grew approximately 40% year-over-year, driven by new business and upsell activity, particularly in travel.
Other Americas Region (Canada and Latin America) Grew approximately 16% year-over-year, driven by new business and upsell activity, particularly in travel.
EMEA Region Grew approximately 23% year-over-year, with strong performance in Fashion and Luxury, Tickets and Travel, and Money Transfer and Payments verticals, supported by new business and upsell momentum.
Non-GAAP Gross Profit Margin Approximately 50% for Q2 2025, down from 53% in the prior year. The decline was due to ramping of merchants in emerging categories and geographies, partially offset by improvements in machine learning models and new product revenue.
Non-GAAP Operating Expenses $38.2 million for Q2 2025, down from $39.3 million in the prior year. Operating expenses as a percentage of revenue declined from 50% to 47%, reflecting ongoing leverage in the business model.
Adjusted EBITDA $2.1 million for Q2 2025, marking the seventh consecutive quarter of positive adjusted EBITDA.
Free Cash Flow $5.3 million for Q2 2025, up from $4.1 million in the prior year, reflecting a healthy cash flow model.
Cash, Deposits, and Investments $339 million as of the end of Q2 2025, with zero debt.
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Operating Highlights
AI fraud and risk intelligence solutions: Continued demand and advancements in AI capabilities of the multiproduct platform.
Agentic Commerce solutions: Introduced multiple solutions and tools for fraud and abuse prevention in Agentic Commerce.
Policy Protect product: Increased adoption driven by new logo wins, cross-sell activity, and geographic expansion. Launched a new refund abuse model with a 15% improvement in technical performance.
International growth: 7 of the top 10 new logos came from outside the U.S., spanning 4 categories. APAC grew 40%, Other Americas grew 16%, and EMEA grew 23% year-over-year.
Category expansion: Deepened presence in nondiscretionary categories like money transfer and payments, achieving 90% year-over-year growth.
Revenue growth: Achieved record Q2 revenue of $81.1 million, up 3% year-over-year. First half revenue was $163.4 million, up 5% year-over-year.
Gross profit margin: Non-GAAP gross profit margin for Q2 was 50%, with an annual target of approximately 52% for 2025.
Adjusted EBITDA: Positive adjusted EBITDA for the seventh consecutive quarter, with $2.1 million in Q2 and $3.5 million for the first half of 2025.
Share repurchase program: Board authorized an additional $75 million share repurchase program, bringing total authorization to $85 million.
Capital allocation: Maintained a debt-free balance sheet with $339 million in cash and investments. Expected $30 million in positive free cash flow for 2025.
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Risk or Challenges
Fraud Complexity and Sophistication: Fraudsters are leveraging advanced techniques, including nascent capabilities of Agentic Commerce, to launch dedicated attacks, increasing the complexity and sophistication of fraud.
Same-Store Sales Pressure: Continued same-store sales pressure, particularly within high-end fashion and sneakers verticals, is impacting growth in the Fashion and Luxury category.
Home Category Decline: The Home category contracted by 74% year-over-year, significantly impacting revenue from this segment.
Geographic Revenue Decline: The United States experienced an 11% year-over-year revenue decline, primarily due to the contraction in the Home category.
Gross Profit Margin Pressure: Non-GAAP gross profit margin declined year-over-year from 53% to 50%, driven by ramping of merchants in emerging categories and geographies, as well as varying risk profiles of transactions.
Regulatory Requirements for Share Repurchase: The $75 million share repurchase program is subject to Israeli regulatory requirements, which could delay or complicate execution.
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Guidance & Outlook
Revenue Expectations: The company has updated its revenue guidance for 2025 to be between $336 million and $346 million, with a midpoint of $341 million.
Adjusted EBITDA Guidance: The adjusted EBITDA guidance remains between $18 million and $26 million, with a midpoint of $22 million.
Gross Profit Margin: The annual non-GAAP gross profit margin for 2025 is anticipated to be approximately 52%, with the second half expected to have a higher margin than the first half. The third quarter is expected to be slightly below 52%, while the fourth quarter is expected to exceed this target.
Free Cash Flow: The company expects approximately $30 million of positive free cash flow for 2025, with the majority of cash flow generation anticipated in the fourth quarter.
Market Trends and Growth: The company expects continued growth in its Money Transfer and Payments category, which achieved approximately 90% year-over-year growth in Q2 2025. International growth is also expected to continue, with strong performance in regions such as APAC, Other Americas, and EMEA.
Product Innovation and Expansion: The company is focusing on advancing its AI capabilities and expanding its product portfolio, including new solutions for fraud and abuse prevention in Agentic Commerce. It also plans to leverage its partnership with HUMAN Security to enhance its offerings.
Share Repurchase Program: The Board has authorized an additional $75 million share repurchase program, bringing the total outstanding authorization to approximately $85 million.
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Shareholder Return Plan
Share Repurchase Program: The Board of Directors has authorized an additional $75 million share repurchase program, subject to Israeli regulatory requirements. Combined with the remaining amounts under the existing authorization, the total outstanding authorization is approximately $85 million. In the first half of 2025, the company repurchased 9 million shares for a total price of approximately $44 million. The company expects its share count to decline year-over-year as a result of this buyback activity.
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Key Q&A
Q:How much of the strong second half sales pipeline is expected to convert to business and live implementations by the holiday season?
A:Management expressed optimism about the second half of the year, citing a solid first half and a strong sales pipeline. Some opportunities are already integrated or in a committed stage, while others are still in the pipeline. They expect win rates or conversion rates similar to historical levels.
Q:What are the expectations for Fashion and Luxury same-store sales during the holiday season?
A:Management did not provide a direct answer regarding specific expectations for Fashion and Luxury same-store sales during the holiday season.
Q:How is Agentic Commerce impacting pipeline conversations?
A:Agentic Commerce is seen as a net benefit, opening up budget opportunities and enabling more conversations as merchants seek to address AI-related hurdles and position themselves at the forefront of this evolving space.
Q:What are the recent trends across business verticals, and what is the basis for same-store sales commentary for the back half of the year?
A:Travel and Payments performed strongly in Q2 and are expected to continue. Tickets showed softness due to lapping strong performance in 2024 and volatility in Q2, particularly in June. Fashion showed stability with negative same-cohort numbers but growth driven by new merchants and upselling.
Q:What are the notable moving pieces in OpEx, and is there any line of sight to OpEx growth?
A:OpEx has been well-managed, with Q2 slightly lower due to offshoring activities, timing of backfills, and vacation taking. Management expects a similar run rate for the back half of the year and did not indicate immediate OpEx growth.
Q:What are the trends in merchant adoption of Adaptive Checkout, and has it helped win new logos?
A:Adaptive Checkout has seen great adoption, with double-digit percentage growth within the current installed base and new prospects. It contributes to high win rates but is part of a broader platform offering.
Q:What risky traffic has been observed with Agentic Commerce, and does it increase demand for Chargeback Guarantee offers?
A:Risky traffic includes stolen credit cards loaded into AI shopping agents, leading to an initial bump in fraudulent activity. While still nascent, this trend positions Riskified to address these challenges strategically.
Q:What is the implied second-half guidance for revenue growth, and what are the main factors influencing it?
A:The implied second-half guidance suggests low single-digit revenue growth, influenced by lapping last year's large customer churn and billing versus revenue growth dynamics. Management is focused on achieving double-digit revenue growth by 2026.
Q:How is the competitive landscape evolving, and what are Riskified's win rates?
A:Riskified's win rates remain high at around 70%. The company is expanding globally, entering new verticals, and increasing accuracy, which creates a competitive edge. The platform's breadth and additional offerings like Adaptive Checkout enhance its value proposition.
Q:What is the revenue contribution from newer products like Policy Protect, Dispute Resolve, and Account Secure?
A:Revenue growth from these products was well over 100%, in the range of 150%, and is on track for high single to low double-digit total contribution for the year.
Q:What is the strategy for M&A and capital allocation?
A:Riskified is open to acquiring small technologies to enhance its product portfolio and consolidate smaller players. The company also evaluates repurchase decisions based on current valuations and business expectations.
Q:What proportion of fraud is from large coordinated attacks, and how does Agentic Commerce impact fraud trends?
A:There has been an increase in large coordinated fraud attacks, often involving stolen information loaded into AI shopping agents. Agentic Commerce introduces new fraud vectors but also opportunities for Riskified to address these challenges.
Q:What is the renewal rate for larger contracts, and what drives upsell in the business?
A:The renewal rate for larger contracts has been 100%. Upsell is driven by demonstrated performance, cost savings, and additional solutions like Policy Protect.
Q:How is Riskified progressing in the payments and remittance space?
A:Riskified is leveraging success in other verticals to expand in payments and remittance, creating custom features and models to provide value to merchants.
Q:How is Riskified positioned to address the growing AI fraud crisis?
A:Riskified's platform addresses increasing fraud complexity with solutions like Adaptive Checkout, Policy Protect, and Dispute Resolve, making it challenging for merchants to manage fraud internally.
Q:Review of Unclear Management Responses
A:Management avoided giving a direct answer regarding expectations for Fashion and Luxury same-store sales during the holiday season.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI adoption
AI agent
AI fraud
AI shopper
Agentic AI
Agentic Commerce
Alfred Nance
Bank Research
Blair LLC
Bruyette Woods
CEO Chairman
Chairman Clark
Chase Co
Clark Wright
Co Research
Commerce attack
Commerce capability
Conference
Dotcheva Chief
HUMAN
Inc Research
Mandel Head
Policy Protect
Research Division
abuse prevention
category geography
commerce
expertise
insight
platform network
risk intelligence
threat
visibility
RSKD Transcript
Riskified Ltd. (RSKD) Q1 2026 Earnings Call Transcript
Positive5-13
The earnings call reveals strong financial performance with revenue and gross profit up 18% and 20% YoY, respectively. Adjusted EBITDA turned positive, and net income improved significantly. The strategic plan includes geographic expansion and product growth, with additional share repurchases signaling confidence. Despite no new partnerships or specific risk discussions, the company's optimistic outlook and financial health suggest a positive stock movement, especially for a small-cap firm.
Riskified Ltd. (RSKD) Q4 2025 Earnings Call Transcript
Positive3-4
The earnings call summary and Q&A indicate strong financial performance with raised revenue guidance and expected EBITDA margin improvement. The company is optimistic about category growth and international expansion. Despite FX headwinds, positive cash flow and growth in new products are expected. Analysts' questions reveal confidence in management's ability to handle complexities in agentic commerce and fraud risks. The positive outlook, combined with strategic initiatives and raised guidance, suggests a positive stock price movement, especially for a small-cap stock like this one.
Riskified Ltd. (RSKD) Q3 2025 Earnings Call Transcript
Positive11-12
The earnings call summary and Q&A session highlight strong financial performance, including improved gross profit margins, reduced operating expenses, and significant free cash flow. The company is also actively repurchasing shares, indicating confidence in its financial health. The focus on product innovation and strategic partnerships, alongside a positive outlook for both upselling existing clients and acquiring new ones, further supports a positive sentiment. Despite some uncertainties in new regions, the overall guidance and strategic initiatives suggest a positive stock price movement over the next two weeks.
Riskified Ltd. (RSKD) Q2 2025 Earnings Call Transcript
Positive8-18
The earnings call highlights strong financial performance with a solid revenue growth forecast, high renewal rates, and a significant increase in new product revenue. Positive insights from the Q&A include high win rates and strategic expansion plans. While some uncertainties exist, such as unaddressed expectations for specific sectors, overall sentiment remains positive with strategic investments in AI and global expansion. The market cap indicates moderate sensitivity, supporting a positive prediction.
RSKD Slides
RSKD Report
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