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01/11 16:19
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
GMV (Gross Merchandise Volume) $37.8 billion for Q3 2025, reflecting a 9% year-over-year increase. The growth was driven by new merchant and upsell activity.
Revenue $81.9 million for Q3 2025, up 4% year-over-year. Growth was primarily driven by new merchant and upsell activity.
Tickets & Travel Category Grew 6% during Q3 2025. Growth was driven by strong new business wins and upsell activity, offset by softness in tickets and live events due to tougher comparable periods versus 2024.
Fashion & Luxury Category Grew 13% during Q3 2025. Growth was supported by new business activity and improvements in some of the largest merchants, partially offset by same-store sales pressure in high-end fashion.
Money Transfer & Payments Category Achieved approximately 100% year-over-year growth in Q3 2025. Growth was driven by new business activity.
Home Category Contracted by approximately 70% year-over-year in Q3 2025. Decline was attributed to dynamics impacting the first 9 months of 2025.
Revenue in the United States Declined 12% year-over-year in Q3 2025, primarily due to contraction in the home category.
APAC Region Revenue Grew approximately 55% year-over-year in Q3 2025, driven by new business and upsell activity, particularly in the travel subvertical.
Other Americas Revenue Grew approximately 18% year-over-year in Q3 2025, driven by new business and upsell activity, with strength in the travel subvertical.
EMEA Region Revenue Grew approximately 19% year-over-year in Q3 2025, supported by new business and upsell momentum in Fashion & Luxury, Tickets & Travel, and Money Transfer & Payments verticals.
Non-GAAP Gross Profit $41.5 million for Q3 2025, up 5% year-over-year. Growth was driven by improvements in machine learning models and new product revenue, offset by ramping of merchants in newer categories.
Non-GAAP Gross Profit Margin Approximately 51% for Q3 2025, an improvement of 1% year-over-year. Growth was driven by machine learning improvements and new product revenue.
Non-GAAP Operating Expenses $36 million for Q3 2025, down from $38.7 million in the prior year. Decline was due to onetime positive impacts and reflects leverage in the business model.
Adjusted EBITDA $5.6 million for Q3 2025, representing a 7% margin and a 560 basis points year-over-year improvement. Growth was driven by operating leverage and scalability of the platform.
Free Cash Flow $13.4 million for Q3 2025, contributing to $22.4 million for the first 9 months of 2025. Growth reflects a healthy cash flow model.
Share Repurchase 5.2 million shares repurchased in Q3 2025 for approximately $25.3 million. For the first 9 months, 14.2 million shares were repurchased for $69.2 million.
Adaptive Checkout: Launched several quarters ago, it uses AI to raise conversion rates by adding friction only when needed. Results include a 5% increase in conversion for a U.S. ticketing merchant and a 26% increase for an EMEA electronics merchant.
Agentic Commerce: Positioning Riskified to address AI-driven shopping trends through strategic partnerships, innovative technology, and enhanced infrastructure to mitigate risks like chargebacks and disputes.
Money Transfer & Payments: Achieved 100% year-over-year growth in Q3, driven by new business activity. Expected to nearly double revenue in this category for full year 2025.
Fashion & Luxury: Grew 13% in Q3, supported by new business activity and improvements in large merchants, despite some same-store sales pressure.
Tickets & Travel: Grew 6% in Q3, driven by new business wins and upsell activity, with strong growth in travel subvertical.
APAC Region: Revenue grew approximately 55% year-over-year in Q3, driven by new business and upsell activity.
EMEA Region: Revenue grew approximately 19% year-over-year in Q3, with strong performance in Fashion & Luxury, Tickets & Travel, and Money Transfer & Payments.
Machine Learning Automation: Shifted 70% of models from manual to autonomous training, with 100% of autonomously trained models outperforming manual ones. Enables real-time retraining and scalability.
Non-GAAP Gross Profit Margin: Improved to 51% in Q3, up 1% year-over-year, driven by machine learning improvements and new product revenue.
Adjusted EBITDA Margin: Expanded by 560 basis points year-over-year in Q3, with Q4 margin expected to approximate 15%.
Share Repurchase Program: Repurchased 5.2 million shares in Q3 for $25.3 million, with a total of 14.2 million shares repurchased in the first 9 months of 2025.
Revenue Guidance Update: Raised bottom end of revenue guidance for the second consecutive quarter, now expecting $338 million to $346 million for full year 2025.
Temporary softness in the first half of 2025: The company experienced a 4% decline in non-GAAP gross profit during the first half of 2025, which could indicate challenges in maintaining profitability during certain periods.
Softness in tickets and live events vertical: The tickets and live events vertical faced challenges due to tougher comparable periods versus 2024's record activity, potentially impacting revenue growth in this category.
Same-store sales pressure in high-end fashion: Continued same-store sales pressure in the high-end fashion subvertical could hinder growth in the Fashion & Luxury category.
Year-over-year revenue decline in the United States: Revenue in the United States declined by 12% year-over-year, primarily due to contraction in the home category, which could signal challenges in this market.
Contraction in the home category: The home category contracted by approximately 70% year-over-year, significantly impacting overall revenue performance.
Risk of agentic commerce: The rise of agentic commerce, where AI agents make purchases on behalf of consumers, could reintroduce risks such as higher chargebacks, disputes, and policy abuse, posing challenges for merchants.
Ramping of merchants in newer categories: The ramping of merchants in newer categories, such as money transfer and payments, has impacted gross profit margins, indicating potential challenges in scaling these categories profitably.
Revenue Guidance: The company has raised the bottom end of its revenue guidance for the second consecutive quarter, now anticipating revenue between $338 million and $346 million for the full year 2025, with a midpoint of $342 million.
Adjusted EBITDA Margin: The company expects a significant step-up in adjusted EBITDA margin in Q4, approximating 15%, driven by operating leverage, platform scalability, and efficiency gains.
Free Cash Flow: The company now expects over $30 million of positive free cash flow for the full year 2025.
Category Growth Expectations: The Money Transfer & Payments category is expected to nearly double its absolute revenue dollars for the full year 2025 compared to 2024. The Fashion & Luxury category is expected to continue growing, supported by a strong pipeline of new business opportunities and anticipated macroeconomic steadiness in the high-end fashion subvertical. The Home category, which contracted by approximately 70% year-over-year, is expected to revert to year-over-year growth in Q4.
Geographic Growth: Continued international growth is expected, with strong performance in APAC, EMEA, and other Americas regions driven by new business and upsell activity.
Machine Learning and Automation: The company has shifted approximately 70% of its models from manual to autonomous training, with 100% of autonomously trained models outperforming their manual counterparts. This automation is expected to allow for continued scaling of the business with high leverage.
Holiday Season Outlook: The company is cautiously optimistic for a healthy holiday season, supported by resilient consumer spending and solid performance in its three largest categories: Tickets & Travel, Fashion & Luxury, and Money Transfer & Payments.
Product Development: The Adaptive Checkout product, which uses AI to optimize conversion rates, continues to gain adoption and is expected to capture more market share in the global e-commerce market.
Agentic Commerce: The company is positioning itself to address the rise of agentic commerce through strategic partnerships, innovative technology, and enhanced infrastructure to help merchants navigate this shift safely.
Share Repurchase: In the third quarter, Riskified repurchased 5.2 million shares for a total price of approximately $25.3 million. For the first 9 months of the year, the company repurchased 14.2 million shares for a total price of approximately $69.2 million. This buyback activity is part of the company's ongoing commitment to prudent dilution management, with an expectation that shares outstanding will decline by at least 5% year-over-year.
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.
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.
The earnings call presents a mixed picture: strong revenue growth and share repurchase are positive, but declining profit margins and risks from international expansion are concerning. The Q&A section reveals management's optimism in product execution and growth potential, but also highlights uncertainty in transaction approvals and margin shifts. The decision to maintain guidance amid tariff uncertainties adds to the neutral sentiment. Given the small-cap nature of the company, the stock price is likely to remain stable, falling within the neutral range of -2% to 2% over the next two weeks.
The earnings call reflects a positive sentiment with strong financial performance, including revenue growth, increased share repurchases, and positive EBITDA. The company has a robust market strategy, with expansion into new categories and a strong focus on AI capabilities. While there are some concerns about margin declines and economic uncertainties, the optimistic guidance, solid cash position, and strategic initiatives like moving down market and expanding payment categories indicate a positive outlook. Given the small-cap nature of the stock, a positive stock price movement of 2% to 8% is expected.
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