Earnings Call Transcript - RSKD Q1 2026

Operator, Operator

Ladies and gentlemen, thank you for standing by, and welcome to Riskified First Quarter 2026 Earnings Call. (Operator instructions) Please be advised that today's conference is being recorded. I would now like to turn the conference over to Cody Slach, Investor Relations for Riskified. Please go ahead.

Cody Slach, Investor Relations

Good morning, and thank you for joining us today. We are hosting today's call to discuss Riskified's financial results for the first quarter of 2026. Participating on today's call are Eido Gal, Riskified's Co-Founder and Chief Executive Officer; and Aglika Dotcheva, Riskified's Chief Financial Officer. We released our results for the first quarter of 2026 earlier today. Our earnings materials, including a replay of today's webcast, will be available on our Investor Relations website at ir.riskified.com. 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, pipeline generation, pipeline conversion, adjusted EBITDA profitability and adjusted EBITDA margins, 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. Please refer to our Annual Report on Form 20-F for the year ended December 31, 2025, and 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 release issued earlier today and also furnished with the SEC on Form 6-K 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 Eido.

Eido Gal, Co-Founder & Chief Executive Officer

Thanks, Cody, and hello, everyone. We're off to a strong start in '26 to date, and I'm pleased with the momentum we've been seeing across the business. Our performance this quarter was largely the product of disciplined execution across three fronts: converting the growing pipeline into new business at high rates, deepening our platform relationships with existing merchants, and expanding our addressable opportunity across new verticals and payment methods. In the first quarter, we delivered non-GAAP gross profit of $46.3 million and revenue of $88.3 million, up 13% and 7% year-over-year, respectively, along with adjusted EBITDA of $6.2 million, a 370% increase from the prior year. Allow me to highlight the key areas of execution that drove our results this quarter. Our pipeline grew substantially year-over-year with the U.S. being the largest contributor, alongside continued momentum in international markets such as Japan and LatAm. From an industry perspective, we saw healthy activity, particularly in new emerging categories in our travel sub-vertical. Travel was also supported by our recently announced partnership with Outpayce from Amadeus, which deepened our go-to-market reach into airlines globally and contributed to pipeline growth. Our competitive win rates in the first quarter remained above 75%, a testament to the strength and differentiation of our platform. Five of our top 10 new logos won in Q1 were headquartered outside of the United States, with those five wins spanning three verticals: General, Home and Tickets & Travel. We believe that the momentum built in Q1 reinforces our ability to convert our pipeline into paying merchants at high rates in the quarters to come. Over the course of the first quarter, our committed revenue position for '26 and beyond strengthened, reflecting the durable long-term relationships we continue to build with our merchants. Moving to product. We have seen strong demand for ACH fraud intelligence for merchants, supporting our thesis that our fraud platform applies across the full spectrum of digital transactions, not just traditional card payments. We positioned ourselves to capture that demand by investing in building ACH-specific models and bespoke features over the past few years, and that investment is now contributing meaningfully to incremental gross profit this quarter. Three of our top 10 deals this quarter were in the ACH space, featuring our largest new logo win. Each new ACH transaction we process deepens our data advantage, sharpening our models and reinforcing the flywheel effect that compounds performance improvements over time. As noncard payment methods continue to proliferate, we believe we are well positioned to protect merchants no matter how consumers choose to pay. We expect this to be a growing theme throughout '26 as recently onboarded merchants in this category continue to ramp. We have also seen traction in our nonpayment fraud products, demonstrating that our platform is gaining momentum beyond our core chargeback guarantee offering. The number of merchants who are using more than one product grew approximately 50% year-over-year, and these accounts now drive over 30% of our revenue base. Multiproduct merchants also generally carry a stronger margin profile. During the quarter, we also released our first stand-alone identity data product. Allow me to explain. One of our most unique assets is our graph database of hundreds of millions of identities with billions of nodes. This graph is built from the global data of hundreds of the world's largest e-commerce merchants. We cluster, tag and update this graph in real time and leverage it to power our product suite and AI models. Now for the first time, we are making this data available to our merchants to leverage in real time across the entire customer journey. Our first use case involves identity intelligence integrated directly into service workflows, including CRM and service consoles. Agents receive a real-time risk score the moment a customer contacts them, enabling them to fast track loyal members and apply the right friction to serial abusers. Merchants using this capability have seen up to a 30% reduction in complaint rates and in several cases a seven-figure reduction in refund and return costs. Our recently announced partnership with Rue Gilt Groupe, where we are integrated directly into their Zendesk service console, is the clearest proof point of this in action. We are still in the early stages, and we look forward to sharing more as this matures, but the pipeline and merchant conversations it has generated so far give us confidence this represents a meaningful expansion of our addressable opportunity. We recently hosted Ascend 26 North America, the first stop in our global event series for e-commerce risk management leaders. Among hundreds of large enterprise e-commerce leaders representing more than $1.1 trillion in total processing volume, we introduced Riskified ARIA, our AI Risk Intelligence Analyst. Leveraging ARIA, merchants can use simple conversational language to instantly zoom in on transaction-level explainability, visualize specific performance trends or isolate specific risk indicators. ARIA serves as an always-on risk analyst that provides risk intelligence and insight across every touch point of the buyer journey in plain language and in seconds. On our prior earnings call, we shared that we were seeing general-purpose LLMs being used for discovery purposes and not checkout, while merchants were focusing on native LLMs designed to handle the full shopping journey. One quarter on, that remains the case. While still nascent, we now have merchants leveraging Riskified as the identity and risk intelligence layer that makes those interactions both safe and economically viable. The dialogue with merchants on this topic has continued to deepen, and we see it as a growing driver of pipeline and strategic engagement heading into the rest of '26. Moving to distribution. We've started expanding our reach through new channels. This quarter, we've launched Dispute Resolve for Shopify, expanding our reach directly into a large and growing merchant ecosystem. We also announced our partnership with Radial, one of North America's largest e-commerce solutions and omnichannel fulfillment providers, embedding our fraud and risk intelligence at the intersection of payment processing and fulfillment. This reflects our broader strategy to make our platform easily accessible for everyone. I'm excited by the increasing velocity of our product releases enabled by Agentic coding tools. We believe that our deep integrations and network data allow us to provide an expanding set of services and that what we are building across products, channels, payment methods and geographies is showing up where it matters in pipeline growth, high win rates and an addressable market that we believe continues to expand. We enter the rest of '26 with confidence in our growth trajectory. I will now turn it over to Agi for a deeper dive into our financial results.

Aglika Dotcheva, Chief Financial Officer

Thank you, Eido, team and everyone, for joining today's call. Unless otherwise noted, this discussion will reference non-GAAP financial measures. We have provided a reconciliation of GAAP to non-GAAP financial measures in our earnings release. Our GMV for the first quarter was $37.2 billion, reflecting a 9% increase year-over-year. We achieved first quarter revenue of $88.3 million, up 7% year-over-year. Our GMV and revenue growth during this quarter was primarily driven by continued new merchant and upsell activity. Our first quarter billings grew 11% compared to reported revenue growth of 7%, a gap that is among the widest we have seen in several years. This reflects the timing of revenue recognition under our guarantee accounting framework, and we expect this variance to narrow as we move throughout the year with billings and revenue growth converging on a full year basis, consistent with prior years. Billings growth in the first quarter was broad-based across nearly all of our categories, led by Tickets & Travel and Money Transfer and Payments. Tickets & Travel grew approximately 18% year-over-year, driven by upsell activity across both the verticals and continued same-store sales momentum in travel. Notably, tickets and live events returned to positive growth after several quarters of contraction, and we expect it to remain a positive contributor throughout the year. Our Money Transfer and Payments category grew 30% year-over-year, driven by strong upsell activity with existing merchants. These gains were partially offset by softness in our fashion and luxury vertical concentrated in APAC, driven primarily by a strong prior year comparable period. Looking ahead, we expect our Tickets & Travel, Money Transfer and Payments and Fashion & Luxury categories to collectively approximate 75% of total billings for the year. Within that, we expect Tickets & Travel and Money Transfer and Payments to sustain strong growth throughout 2026, while we expect fashion and luxury to revert to growth as the year progresses. Turning to our regional performance, billings grew across all regions during the first quarter, driven by a combination of new logo wins and upsell activity. The United States, our largest region, grew 10% year-over-year, returning to positive growth. APAC grew 15% and is expected to accelerate as the year progresses. Other Americas grew approximately 11% and EMEA delivered approximately 11% growth, supported by same-store sales performance in the Tickets & Travel vertical. We believe that our broad-based growth across geographies reflects ongoing market share gains globally. Our gross profit for the first quarter was $46.3 million, reflecting a 13% increase year-over-year. The growth was primarily driven by the contribution of new business onboarded over the past year. This was further supported by improved performance across our existing merchant base, with particular strength in our Money Transfer and Payments category, reflecting ongoing enhancements to our core machine learning model. Nonpayment products contributed incrementally, reflecting the continued broadening of our platform, as did ACH, where expanding merchant demand is deepening the contribution of our fraud capabilities across a growing set of payment flows. As a result of our solid first quarter, we now expect our gross profit growth range to be between 8% to 12% for the full year. At the midpoint, this implies quarterly growth generally around 10%. In addition, we estimate that each quarter in 2026 will approximate the same percentage of the total as they did in 2025. Moving to expenses. We continue to manage the business in a focused and disciplined manner. Total non-GAAP operating expenses were $40.1 million for the first quarter. Our non-GAAP operating expenses as a percentage of revenue declined year-over-year from 48% in Q1 of 2025 to 45% in Q1 of 2026, and on a constant currency basis to 42%, reflecting ongoing leverage in the business model. This came in below our anticipated range of $41 million to $42 million per quarter, driven by the timing of certain expenses that shifted into the second quarter. As a result, we expect the second quarter to be approximately $43 million. For the second half of the year, we continue to expect quarterly expenses to approximate between $42 million to $43 million, consistent with our prior guidance. We achieved adjusted EBITDA of $6.2 million in the first quarter, up 370% from $1.7 million in Q1 of 2025, reflecting the continuing leverage in our cost structure as the business scales. On a GAAP basis, we reported a net loss of $4.4 million in the first quarter of 2026 compared to a net loss of $13.9 million in Q1 of 2025, an improvement of 68% year-over-year, primarily reflecting lower share-based compensation expense and ongoing discipline in our overall compensation program. I'm encouraged about this progress and our continued execution as we continue taking steps to narrow the gap towards GAAP profitability. Moving to the balance sheet. We ended the first quarter with approximately $276 million of cash, deposits and investments, and continue to carry zero debt. In addition, we continue to maintain a healthy cash flow model. In the first quarter, we achieved free cash flow of $9 million. We expect approximately $40 million of positive free cash flow in 2026. During Q1 of 2026, we repurchased approximately 6.2 million shares at an average price per share of $4.44 for total consideration of $27.5 million, which contributed to a reduction of 3% in total shares outstanding. Since the inception of our buyback program in the fourth quarter of 2023, we have repurchased approximately 58.2 million shares for a total price of $287 million, which helped contribute to a 19% reduction in total shares outstanding over that period. We believe that our strong balance sheet and liquidity position are strategic assets that provide us with the flexibility to navigate a range of operating environments. We intend to remain disciplined and thoughtful in how we deploy capital to create long-term shareholder value. And now turning to our outlook. As a result of our first quarter performance, we are raising the low end of our full year guidance range across both metrics. We now anticipate full year revenue to be between $376 million and $384 million, or $380 million to the midpoint. This reflects the flow-through of our first quarter revenue performance as well as an incremental rate to our outlook based on the momentum we're seeing in the business. We anticipate all of the quarters in 2026 to reflect a similar percentage of the total revenue as they did in 2025. We currently expect adjusted EBITDA to be between $28 million and $34 million, or $31 million to the midpoint, up from our prior range of $26 million to $34 million. The primary factors that may determine where we fall within each range are consistent with what we shared last quarter: the timing of new merchant go-lives and existing merchant upsells, our success in retaining our merchants and the broader macro environment. We're pleased with how the year has started. Gross profit grew 13%. We raised the low end of our full year guidance on both revenue and adjusted EBITDA, and we continue to generate meaningful free cash flow. We remain focused on our execution and believe we are well positioned to continue driving profitable growth. Operator, we're ready to take the first question, please.

Operator, Operator

(Operator instructions) Our first question comes from Terrell Tillman with Truist.

Connor Passarella, Analyst, Truist Securities

Connor Passarella on for Terrell. Eido, you highlighted the success in ACH-related use cases this quarter, including your largest new logo win. Can you help us understand how materially ACH and other alternative payment methods expand the long-term addressable market for Riskified? And as you move deeper into those workflows, how does the competitive landscape differ versus traditional markets you served?

Eido Gal, Co-Founder & Chief Executive Officer

Sure, Connor. Thanks for the question. The way I would view it is that merchants are looking at an increasingly complex landscape. They need to be able to support ACH, digital wallets, stablecoins, credit card transactions and other smaller localized payment methods. They also need to be able to secure accounts that have stored financials. There is a wide dispersion of risk vectors that they're looking to solve, and they want to consolidate and create a single best-in-breed vendor that can help across these various channels. We've seen a lot of success with this wider platform that helps solve multiple payment use cases. In that sense, we actually see ACH and digital payments and some of the other methods I mentioned as expanding our opportunity across all payment methods, because there are interactions between the types of fraud and value in single-vendor capabilities.

Connor Passarella, Analyst, Truist Securities

Great. That's helpful. And then just as a follow-up, you partnered with Shopify for a number of years. This quarter, you expanded that relationship with the launch of Dispute Resolve for those merchants. As you deepen the integration within the Shopify ecosystem, do you see the partnership becoming a more meaningful growth driver over time from both a customer acquisition and multiproduct adoption standpoint?

Eido Gal, Co-Founder & Chief Executive Officer

I think taking a step back, we've always been very focused on our direct-to-merchant enterprise sales motion because of the configurations, modeling and operational environment required to successfully deploy and leverage Riskified. Over the past few quarters, as we've been working on distribution, we've developed what we view to be a best-in-class reseller approach and rethought our distribution channel. For us, it's about making sure that the Riskified platform is easily available to anyone, everywhere. As part of this strategy, we're enhancing capabilities on Shopify and also partnering with platform providers with wider reach. For example, we announced the partnership with Radial, which has wider platform components, and a deeper integration with Outpayce, Amadeus to enable more travel merchants. So it's revamping the distribution channel to make it easier for merchants globally to consume Riskified.

Operator, Operator

(Operator instructions) And the next question will come from Ryan Tomasello with KBW.

Huan Chong, Analyst, KBW (on for Ryan Tomasello)

This is Huan Chong on for Ryan. So nice to see that 50% growth in merchants using more than one solution. Could you share an update on what you're assuming for ancillary non-chargeback product revenue for the year? I think previously you called out $15 million to $20 million in 2026.

Eido Gal, Co-Founder & Chief Executive Officer

Yes. We still feel we're on track to achieve that target. We're very happy with the growth in multiproduct adoption. It's predominantly being driven by Policy and Dispute. We see better satisfaction with multiproduct merchants, better incremental gross profit and better overall retention. So we think that the strategy is working well.

Huan Chong, Analyst, KBW (on for Ryan Tomasello)

Great. And also, thanks for sharing details on the new product enhancement. Could you share a sense of how ARIA and the identity database risk scoring tool will be monetized and help us size that opportunity?

Eido Gal, Co-Founder & Chief Executive Officer

Of course. Let me recap what ARIA is. If you're a fraud manager and you see a dip in approval rates overnight and your CEO is asking, 'What happened?' you can now ask in simple text, 'Why did my approval rate drop by 2% last night?' and get a clear explanation: there was a fraud ring with particular characteristics. You can dive deeper into that fraud ring. What's unique is that ARIA leverages our network data to create better insights for merchants, and we've structured the data so things like 'approval rate' and 'fraud ring' are meaningful and interactive. It's been a clear merchant demand and it's available to every Riskified customer; feedback so far has been tremendous. Regarding Riskified Identity, we've spent a lot of time building our graph database. Separate from linking, the graph can do multi-hop linking and helps us understand identities better — is this a reshipper, is this a shared address with multiple identities — and can create these identities in real time. That's important for powering features in products like Policy Protect: what's the return ratio of this identity, what's the abuse ratio. As we've developed the identity graph and accumulated hundreds of millions of customers and billions of nodes, we've explored additional value points for merchants. One recurring request was about customer service agents: when they get requests and call-ins, it would be incredibly helpful if they had identity data in their consoles. Our release with Rue Gilt Groupe embeds Riskified Identity data in their Zendesk console, so when customers call in, agents automatically have identity data to make smarter decisions around returns and refunds today. We see multiple use cases moving forward that we believe we can price and that will provide meaningful revenue contribution.

Operator, Operator

(Operator instructions) And the next question will come from Clark Wright with D.A. Davidson.

Clark Wright, Analyst, D.A. Davidson

First one on my end. As you accelerate the pace of platform innovation and see a ramp in multiproduct adoption, are you beginning to expand beyond the traditional fraud departments and unlock new budgets within organizations?

Eido Gal, Co-Founder & Chief Executive Officer

I think the Rue Gilt Groupe example is a great illustration because it's more focused on customer experience and customer support and less directly on fraud. We are seeing expansion into those areas. The work we're doing on identity and AI touches more engineering and technology organizations beyond traditional fraud and payments. So we are starting to engage additional points in the organization.

Clark Wright, Analyst, D.A. Davidson

Got it. And then just wanted to talk about more of the open framework that you mentioned in your prepared remarks, with the data graph and opening that database up. What is the strategy there? Longer term, how do you see access being provided? Is it primarily through agents being able to leverage the data that you already have, or through another means? And how do you plan on monetizing that capability?

Eido Gal, Co-Founder & Chief Executive Officer

Sure. What's unique about our data is the incredibly rich transactional lifetime data: from the time a user browses on a website, to checkout, to post-order flows around returns and refunds. It's very granular and we have it across a network of our largest e-commerce enterprise merchants globally. We also have a relations graph database that is updated in real time. That data can be consumed by third-party services in merchant-native AI examples: it's the data queried when a native AI agent decides whether to approve a payment or initiate a refund. Another example is CRM or customer support systems ingesting this data so that a CX agent — live or AI-driven — can make better decisions. From our perspective, we anticipate being able to monetize this data through these integrations and use cases.

Operator, Operator

(Operator instructions) And I am showing no further questions in the queue at this time. I would now like to turn the call back over to the Riskified team for closing remarks.

Eido Gal, Co-Founder & Chief Executive Officer

Okay. Thank you, everyone, for joining our Q1 call. We look forward to updating you in the quarters ahead.

Operator, Operator

This does conclude today's conference call. Thank you for participating, and you may now disconnect.