Earnings Call Transcript - RSKD Q1 2023

Operator, Operator

Good morning, and thank you for standing by. Welcome to the Riskified First Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Chett Mandel, Head of Investor Relations. Please go ahead.

Chett Mandel, Head of Investor Relations

Good morning and thank you for joining us today. My name is Chett Mandel, Riskified’s Head of Investor Relations. We are hosting today’s call to discuss Riskified’s financial results for the first quarter of 2023. 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 2023 earlier today. Our earnings materials, including a replay of today’s webcast, are available on our Investor Relations website at ir.riskified.com. Certain statements made on the call today will be forward-looking statements related to our operating performance, financial goals and business outlook, 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, and are including these statements for purposes of invoking these Safe Harbor provisions. Please note that these forward-looking statements reflect our opinions as of the date of this call and except as required by applicable 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 20-S for the year ended December 31, 2022, and other SEC filings for more information on the specific factors that could cause actual results to differ materially from our expectations. Additionally, non-GAAP financial measures and key performance indicators will be discussed on the call. Reconciliations to the most directly comparable GAAP financial measures are available in our earnings release issued and furnished with the SEC on Form 6-K today 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, CEO

Thanks, Chett, and hello, everyone. We achieved revenue growth of 17%, non-GAAP gross profit growth of 19% and adjusted EBITDA improvement of 62% year-over-year. These first quarter results demonstrate our ability to execute across all areas of the organization. We believe that our technology and the demonstrable value that we provide to merchants is resonating within our large addressable markets. This continues to drive very strong upsell activity and new merchant wins, especially during competitive processes, which was the primary driver of growth during the quarter. Also contributing to our year-over-year growth was great levels of tickets and travel activity, which grew nearly 100%. As expected, our new business continues to grow well, above our actual revenue growth of 17%, despite a generally softer e-commerce environment, which demonstrates that our market share gains have outpaced macro-related headwinds during the quarter. But for a few challenged verticals, which Agi will remark on shortly, our overall growth would have been even stronger. We believe that within our existing merchant base, we have further room to penetrate and capture more volume through focused upsell efforts. Regardless of the initial segment that we start with, once we are integrated and demonstrate strong performance, we feel confident in our ability to capture additional order volume over time. We continue to execute on this land and expand strategy very well during the quarter, which was seen in our strong first quarter activity. One of our largest obstacles during the quarter involved winning substantial volume away from a competitor, as a result of our superior performance and accuracy during a head-to-head competition. We were able to take on more segments and geographies for a billion-dollar merchant in the tickets and travel vertical. A separate large first quarter upsell was from a merchant that we only recently onboarded in the fourth quarter of 2022. This merchant, which processes approximately $1 billion in online order volume annually, quickly saw the clear ROI and value that we were able to provide. As a result, we were able to expand our relationship and recognize meaningfully better economics for both Riskified and the merchant early on. We also continue to focus intensely on landing new customers to drive future growth and diversification. To that end, eight of our top 10 new logos closed during the first quarter were outside of tickets and travel. Some of these key wins include a gaming merchant in APAC and fashion, home, and general retail merchants based in the United States. Our go-to-market team has also done a great job at moving some multi-product platform, powered by the same machine-learning tech stack. With our newer products platform, we now have multiple entry points into enterprise e-commerce companies, solving multiple high-value use cases outside of our core Chargeback Guarantee products, which we believe makes it relevant to more merchants and has led to more continuous selling cycles and increased merchant coverage. In addition to the top-line success achieved during the first quarter, our non-GAAP operating expenses have now essentially remained flat over the past three quarters, as a result of continued cost discipline. Also, our G&A expenses were at the lowest level since the third quarter of 2021, which was our first full quarter operating as a public company. We continue to focus on optimizing costs and streamlining the business to improve efficiency. I am pleased that we were able to meaningfully exceed our bottom-line expectations during the first quarter. Based on our performance of the first quarter and the guided trajectory for the year, we are working towards achieving profitability on an adjusted EBITDA basis during Q4 of this year. Over the past 10 years, we have been developing and investing in building a state-of-the-art machine-learning platform. We have dedicated sophisticated R&D resources with domain expertise focused on continuously improving our technological capabilities. Just this quarter alone we deployed over a dozen models into production. These new models were deployed across our most important verticals and geographies. We also introduced nearly 20 new features to further enhance our ability to understand how fraudsters behave, which we believe ultimately drives optimized performance for our merchants. With a superior and expertly tagged set of data, Riskified is one of the largest and most accurate decisioning companies for e-commerce merchants in the world. Taking this all together, we believe that we have a machine-learning factory that has created a significant competitive mode for the business. This is part of the reason why I am optimistic about our long-term trajectory and our ability to deliver value to our shareholders. Agi will provide more context on our first quarter performance and outlook, but before I turn it over, I wanted to take a moment to thank the team for their hard work in achieving a strong first quarter. And we also welcome our first-ever CMO we announced last month. Jeff Otto brings two decades of enterprise technology experience. Jeff has held various senior leadership roles, including most recently in Marqeta and Salesforce. In our view, Jeff has the ideal blend of knowledge and expertise to continue to capitalize on Riskified’s reputation as the preeminent fraud and risk intelligence platform for the largest e-commerce merchants across industries and throughout the globe. On behalf of the executive team and Board, we are thrilled to partner with Jeff. Now to Agi.

Agi Dotcheva, CFO

Thank you, Eido, and everyone for joining today's call. Our GMV for the first quarter was $27.3 billion, reflecting a 20% increase year-over-year. We achieved strong first quarter revenue of $68.9 million, up 17% year-over-year, an acceleration from our fourth quarter growth of 14%. Our increase in GMV and revenue was primarily driven by new merchants and upsell and revenue growth across all geographies. Tickets and travel was the most meaningful area of growth, having nearly doubled our billings year-over-year within this vertical. Going forward, as we now have a fully lapped coverage-related comparable period, we expect a more normalized level of growth in these verticals, but still view this as an active area of growth for the year. In addition, our food, electronics, and money transfer categories each grew during the quarter, primarily driven by new merchants and upsell activity. We saw year-over-year improvements in the rate of decline in our general retail and home categories during the first quarter. While these categories are still negatively impacting our growth, this is an encouraging trend that we’re monitoring closely. One of our largest categories, fashion and luxury goods, was flat year-over-year in the first quarter, as compared to growth that we saw in this category in 2022. Within this category, we have seen a slowdown in some of our same-focus merchants, in particular within luxury brands and our sneaker sub-segment. Getting a broad-based and diversified portfolio of merchants helps position us as a durable business across all types of spending environments. As consumer spending continues to shift away from goods towards spending on services and live events, we believe that we remain well-positioned to benefit. From a geographic standpoint, the U.S., our largest region, improved by high-single-digits, and EMEA and APAC each grew approximately 40% during the quarter. Our continued revenue growth from regions outside of the United States demonstrates the positive returns from our previous investments and market share gains. Moving on to gross margins, our non-GAAP gross profit margin for the first quarter of 2023 was 53%, consistent with the fourth quarter of 2022 and an improvement from 52% in the first quarter of 2022. We continue to benefit from improvements in our core machine-learning models and other cost of goods savings, offset by the impacts of ramping significant new merchants. As a reminder, gross profit margin is best analyzed on an annual basis, as margin may fluctuate on a quarterly basis. Moving to expenses, total non-GAAP operating expenses were $1.6 million for the first quarter of 2023, a 6% decrease year-over-year. Our non-GAAP operating expenses as a percentage of revenue declined year-over-year from 75% to 60%, reflecting leverage in the business model. As a result of further optimization and expense reductions in the first quarter of 2023, I'm pleased that our expenses were meaningfully below our first quarter budget rate of $45 million. This was primarily driven by the further optimization of tools and systems, evaluation of non-essential marketing and administrative expenses, and other seasonality of expenses. We expect to carry through most of these savings throughout the remainder of 2023. For modeling purposes, we anticipate our Q2 to Q4 quarterly expenses within the range of approximately $43 million per quarter. Adjusted EBITDA for the first quarter was negative $5.2 billion, a 62% year-over-year improvement. We have meaningfully improved our adjusted EBITDA performance on a year-over-year basis for the third consecutive quarter since making the decision to accelerate our timeline to reach profitability. In addition, we continue to maintain a healthy cash flow model and we were very excited to cross into free cash flow positivity this quarter. We will continue working towards strengthening our free cash flow position. Moving to the balance sheet, we maintain a very strong liquidity position. We ended the first quarter with approximately $484 million of cash deposits and accrued interest on the balance sheet. We carry zero debt. This amount represents a sequential increase in cash deposits and accrued interest of $2 million. For reference, this is a meaningful improvement from a sequential decrease of $10 million from the same comparable period in the prior year. Simply put, we are confident in the business's ability to generate positive cash flows over the long term, and we believe that our balance sheet and strong liquidity position are an underappreciated asset. In this environment, our strong and liquid balance is an advantage and provides us with the flexibility to deploy capital strategically should the opportunity present itself. In terms of our outlook, we're updating and improving our 2023 bottom-line guidance that we previously shared on our Q4 call. Assuming no further material changes to the macro environment, we continue to anticipate revenue of between $297 million and $303 million for the full year of 2023, or $300 million at the midpoint. Moving to adjusted EBITDA, as a result of our disciplined approach to managing the business in the first quarter and expected OpEx reductions going forward, we now believe that our full-year adjusted EBITDA will be between negative $12 million and negative $17 million, an improvement of 41% from our initial range. As always, we look to find additional leverage in our expenses. We continue to approach our guidance responsibly. Due to the macroeconomic environment, we will continue to monitor the performance and health of our merchants, consumer spending, and the broader e-commerce landscape and the impact on our results. Overall, we're pleased with our results and our outlook for the year amidst a challenging landscape. We remain excited about the positioning of our business, the continued prospects for long-term growth, and our ability to deliver value to shareholders. Operator, we’re ready to take the first question, please.

Operator, Operator

The first question comes from Brent Bracelin with Piper Sandler. Your line is open.

Brent Bracelin, Analyst

Good morning. Thank you. Very encouraging to see this return of positive free cash flow this quarter. What's your confidence in getting to positive EBITDA this past profit really seems like it's improving, what's driving that? Thanks.

Eido Gal, CEO

Hey, Brent. Thanks for that. Look, we were nearly profitable in Q4 and obviously expecting profitability in Q4 and for the full year of ‘24 when we think about the overall amount. As I look through the P&L, I'm very happy with the performance around OpEx and year-over-year decrease. We were able to completely keep it flat on a sequential basis while driving revenue growth, really showing the leverage in the business. I think it will continue to drive that in future quarters. When I think about margins, we have been able to keep it consistent, even though a lot of growth has been coming from new regions, new verticals, and new categories, which have historically been more challenging from a marketing perspective. I think the team has been executing great there as well. On the new revenue side, we have seen great levels of new revenue growth and upsell activity, and the pipeline is coming along great. The one outstanding item that we have is some uncertainty around the macro environment.

Brent Bracelin, Analyst

Makes sense. Helpful color there. And then, I guess just take a step back and I think about the entire Riskified operation here; it's driven by data. You have this machine-learning factory. How do you envision applying generative AI to the model, if at all?

Eido Gal, CEO

That's a great question. Let me just take a step back and maybe reorient our approach to ML. The thesis when we started Riskified 10 years ago was that we could leverage machine-learning to create the most accurate e-commerce fraud prevention company. The type of machine-learning that we deployed is supervised machine-learning, and we create, you know, we engineer custom features that are focused on e-commerce and have a proprietary data set tagged internally by domain experts. That's the type of platform we've built. Our data science and analytics teams are some of the largest teams at Riskified since we started and have continued to grow. Over the years and also today, as ML has advanced, whether it’s new models, new infrastructure plays, we find ways to integrate it and help with better A/B testing, deploying models better and faster, and using some NLP in some of our newer features. We integrate that into our platform, ultimately resulting in more accurate decisions driving better growth.

Brent Bracelin, Analyst

Great. Thank you so much.

Operator, Operator

Please stand by for the next question. The next question comes from Will Nance with Goldman Sachs. Your line is open.

Will Nance, Analyst

Hey guys. Good morning. I wanted to ask about just kind of a spread between adjusted EBITDA and free cash flow this quarter. Obviously, free cash being positive, adjusted EBITDA still negative, how can you bridge the gap between those two and maybe the sustainability of that gap as we look to get some adjusted EBITDA profitability at the end of the year?

Agi Dotcheva, CFO

Hey, Will. Sorry. Thank you for the question. So, we are benefiting from the large cash that we have on our balance sheet and very good liquidity for us, and thinking through some of the interest rates out there contributes to some of the difference between adjusted EBITDA and the free cash flow, primarily through the interest deposits that we're getting.

Will Nance, Analyst

Got it. Makes sense. And then you think about the OpEx holding flat for the last several quarters, obviously, a lot of built-in operating leverage in this business. Do you think you can continue to grow the top line and hold expenses flat? I mean, how long do you foresee OpEx remaining at this level before we start to see some upward pressure?

Eido Gal, CEO

I think right now, we're planning to keep it flat for the foreseeable future.

Agi Dotcheva, CFO

Yeah, as you can see from some of our guidance, we created our guidance on OpEx specifically from $45 million to $43 million. This is a good level that will allow us to execute our work plans and ultimately remain flat.

Will Nance, Analyst

Got it. Thanks for taking the questions this morning.

Operator, Operator

Please stand by for the next question. The next question comes from Robert Napoli with William Blair. Your line is open.

Rob Napoli, Analyst

Thank you, and good morning. Good results. Solid guidance. Appreciate the operating efficiency continuing to improve. As far as the nice acceleration in revenue growth, I mean, obviously, when you came public, you were targeting much higher revenue growth. It’s been a tricky time with COVID, but if you look at your pipeline and your business, to get that growth rate back up to 20% plus, what is your confidence in being able to drive much higher revenue growth? I know it's tricky, because you're balancing profitability and growth. But just any color on getting that growth rate up, given the size of the TAM and the small portion of TAM you have?

Eido Gal, CEO

Rob, thanks for that question. Look, even in this quarter, the growth from new and upsell was well above that 20% range you mentioned. But what's happening is that we do have several large merchants from categories that, while those categories are improving, they're still declining on a year-over-year basis. You can think about the home category, which is still digesting some of the COVID growth. Because of that, it still has some year-over-year declines. Obviously, this isn’t anything fundamental to that category; everyone expects it to continue to grow in the future, but that’s impacting the results, with organic growth driving some of the overall numbers slightly lower. To your point, we still feel we have a max TAM ahead of us, and we feel confident in the long-term ability of the business.

Rob Napoli, Analyst

Okay. I guess, just looking at your balance sheet and talking about the flexibility that you have, I mean, there are a lot of small, interesting companies around the space globally. In the U.S., valuations of private companies are coming down gradually. Do you see opportunities to expand your TAM or accelerate growth through acquisitions? Where would you - or is that something we should expect to see tuck-in acquisitions that could be used across your platform? Now is that something you're getting more aggressive in?

Eido Gal, CEO

When we think about our merchant base of some of the best e-commerce brands in the world, 99% of them choose to stay with us every single year. We think that’s a strategic asset, and we're always thinking of ways to increase the value that we're providing. Some of that comes from internally built solutions like the policy product we discussed last quarter. Some of that can definitely come through M&A of interesting technologies. It's definitely something that we're looking at. We have a high bar for any action. We're going to continue to try and find something.

Rob Napoli, Analyst

Lastly, could you give us any color on the vertical mix at Riskified? Regarding fashion and luxury, any insights would be helpful.

Agi Dotcheva, CFO

Yes, sure. High-level, fashion was flat this quarter, driven by a decrease in high fashion, especially sneakers. We saw some growth in electronics and food, while the tickets and travel were the highest growth in the industry, both organically, post-COVID, and by adding a lot of new merchants in the current and existing categories.

Rob Napoli, Analyst

In fashion and luxury, what is the percentage mix today at Riskified?

Agi Dotcheva, CFO

I would say, about 30% of our industry. We saw this industry growing last year, but on the backdrop of that, we did see some pockets of volatility, specifically in high fashion and sneakers with industry reports. So it's a reflection of the general industry trend.

Operator, Operator

Please stand by for the next question. The next question comes from Tim Chiodo with Credit Suisse. Your line is open.

Tim Chiodo, Analyst

Great, thank you. Good morning, and appreciate you taking the question. It looks like a great slide in your investor presentation that segments the e-commerce market in terms of the size of the merchants, but a lot of the discussion is around the verticals, retailers, and merchants. Maybe you could shift a little bit just to talk about how it might be different selling into platforms. For aggregators of small businesses selling online, not necessarily these names but the types of companies like Shopify, Wix, Squarespace, or GoDaddy. Is that an area where Riskified is having success? How do you work with those types of platforms?

Eido Gal, CEO

I’ll take that. Thanks for the questions. So maybe just to start, I'll reiterate our standard go-to market motion. We focus on enterprise end, which we define as merchants selling over $100 million annually; and the bigger focus is their merchants selling a billion more. What we do is work with them to run a pilot. Based on that data, we're able to prove that the value of Riskified is higher than an internal team or any competing solution. Based on that, they decide to choose Riskified for a segment. Then, over time, we tend to upsell. That's why we have that strong land and expand motion. When you think about working through some of these aggregators, whether it’s Shopify or some payment processor-oriented companies, that's a different motion, as you don't have that direct relationship with the merchant. In the case of SMBs, they sometimes don't have the ability to test and pilot and understand the nuances of the solutions. We ensure that the integration is handled well, and it is a slightly different motion. It's something we're considering. It's not an important focus for the year. It's important to mention, though, that when we think about the GMV, over 70% of the e-commerce GMV resides within the enterprise space that’s $100 million and above.

Tim Chiodo, Analyst

Excellent. Thank you for taking that. Yeah. From the slide, it's very helpful. Appreciate that.

Operator, Operator

Please stand by for the next question. The next question comes from Terry Tillman with Truist Securities. Your line is open.

Terry Tillman, Analyst

Hi, good morning to Eido, Agi, and Chett. Solid job, particularly on the profitability. My first question, Eido, just relates to a previous comment in the press release, about attractive upsell opportunities with an existing tickets and travel customer that had another vendor in place. What I am curious about is how often do you see situations, whether it's this ticket and travel or some of the other industries, where they actually have a couple of vendors that they're using concurrently? In this environment, is there potential for some inner consolidation after they've been trying out a couple of vendors on efficacy? Finally, what was the driver for them to go with you all versus the other vendor?

Eido Gal, CEO

Hey Terry, thanks for that. When we start working with an organization, they tend to have an existing team and multiple vendors already working with them. On day one, they are often part of an existing staff. What we are able to do, because of our superior accuracy, is show them over time that we can drive a higher ROI, and then they want to consolidate and simplify the structure to one vendor. The process might be that there are a few vendors initially, and we start. We prove our value, and they consolidate to us, which is exactly the case we mentioned during the conference.

Terry Tillman, Analyst

Got it. Maybe a follow-up for Agi. Regarding your prepared remarks, general retail and home goods, at least directionally, the decline was less in the quarter compared to the previous year. Can you give us any more color on what you're seeing in terms of declines and if there could be a tipping point for some growth during new logos you’ve added?

Agi Dotcheva, CFO

Sure, Terry. When I commented on some declines, we see that new additions and upselling are offsetting some of the declines in these categories. We now see the category declining less than a year ago, which is a positive trend. This is driven by the addition of new merchants. I believe that the strong businesses we have will normalize at some point and reverse, but for now, I'm still factoring a decrease, but an improving decrease over time.

Operator, Operator

Please stand by for the next question. The next question comes from Reggie Smith with JPMorgan. Your line is open.

Reggie Smith, Analyst

Hey, good morning. Thanks for taking the question. On your last call, you referenced reduced visibility in some of your onboarding for the back half of the year. With June approaching, what are your updated thoughts on that? How do you feel about your onboarding pipeline for the back half?

Eido Gal, CEO

I would say that we’re feeling better. Our pipeline has continued to increase, and we’ve closed a great number of deals, so we do feel better about that.

Reggie Smith, Analyst

Oh, okay. So maybe I misheard you. Last time it sounded as though you had signed some deals already but weren't sure about how quickly they would onboard in the back half. Did I misinterpret that? Sounds like it was a pipeline you weren’t sure how quickly they would ramp up.

Eido Gal, CEO

Correct. I do feel better about the visibility as we get closer to the back half of this year and the continued movements overall in our new and upsell business.

Agi Dotcheva, CFO

Just to add to that, I hope I am able to clarify. Even for Q1, some of the organic declines we saw, like fashion, were a bit of a surprise. I expected some slight increase there. But all in all, new and upselling tables are helping maintain our guidance.

Reggie Smith, Analyst

Got it, okay. And if I could follow-up on the upsell that you announced in the press release this morning. What were you doing for them previously? Were you doing a guarantee on a small portion of their volume? Is there additional upside potential available? Could you talk about the timeline of how long it took you to go from what you were doing initially to finally upselling to this announcement today?

Eido Gal, CEO

Sure, we started with a smaller segment and amount of volume, focused on a few specific geographies. The upsell came once we proved the value and accuracy that we can outperform their current solution by a significant amount, which allowed us to capture more volume. We are doing all of that kind of billion-plus volume for that vertical today. We have hundreds of billions in GMV to upsell just from merchants already integrated into Riskified.

Reggie Smith, Analyst

What was the proof period timeline? Was it 6 months, 12 months? Just trying to understand how quickly these relationships can expand?

Eido Gal, CEO

In this example, this merchant went live in Q4 and upsold in Q1. So, it was a very fast timeframe. Obviously, we’re working diligently to shorten it.

Reggie Smith, Analyst

Assuming they were using some type of scoring system before, were they using a competing product or just guarantee? Thank you.

Eido Gal, CEO

Correct. They were using a vendor that offers predominantly scoring, but also sometimes a guarantee.

Operator, Operator

Please stand by for the next question. The next question comes from Josh Beck with KeyBanc. Your line is open.

Josh Beck, Analyst

Thank you for taking the question. Kind of a two-parter. It sounds like, was the revenue guidance unchanged, but within it, maybe there's a little bit of a lower component of NRR. Then perhaps a larger component of the kind of new bookings, new customers, I’d like to clarify that? Any commentary on the monthly cadence? I think generally, consumer patterns were a little bit softer in April, but that's very broad-based kind of payments, card-oriented metrics. I don't know if within e-com there was anything that really stood out as a contrast between the early months of the year and what you're seeing recently?

Agi Dotcheva, CFO

Yeah, sure. We did see some pockets of softness, specifically about fashion. I expected a slight increase that was offset by an overall drop in electronics. Fashion is our largest category. Regarding our planning, there's a lot of ins and outs to consider at how trends might play out moving forward. While it’s volatile, we are maintaining our guidance. In the recent months, April and May have shown visible fluctuations, but nothing to suggest a notable trend apart from what we have seen in Q1.

Josh Beck, Analyst

Okay. That's very helpful. Any additional considerations regarding the seasonality of your year, given the vertical ebbs and flows? Any key points to keep in mind as we build out the quarterly cadence of our models?

Agi Dotcheva, CFO

Nothing really to call out. We expect Q4 to be predominantly driven by traditional retail outperforming, particularly in tickets and travel.

Josh Beck, Analyst

Thank you, Agi.

Operator, Operator

Please stand by for our next question. The next question comes from Robert Napoli with William Blair. Your line is open.

Rob Napoli, Analyst

Yeah, thank you for the follow-up. Just on the international front, Agi, you mentioned some impressive growth rates there. Can you provide more insights into the strategy? What percentage of your business today is international, and what do you think it could be over time?

Eido Gal, CEO

Sure. We're really happy with the investments we made last year to build enterprise sales capabilities to go after those markets. I think Agi mentioned our 40% growth in some of those international markets. APAC and EMEA have performed very well. We think they are still on a smaller base and there is a lot of opportunity ahead.

Agi Dotcheva, CFO

We are very pleased that our investments are paying off. Overall, we are happy to see new and upsell business boosting our market share. Once the e-commerce trends normalize and return, that will be a further boost to our overall growth.

Rob Napoli, Analyst

Thank you. Lastly, regarding new products, can you provide more details about which new products are gaining momentum? What new product opportunities exist outside of the Chargeback Guarantee?

Eido Gal, CEO

Sure. We feel that policy is our biggest opportunity right after Chargeback Guarantee. We're still on track to meet our annual target, which has been for 10% of new revenue bookings coming from this product. The conversations are strong, and it’s generating a continuous sales cycle with merchants. The reception has been very positive so far.

Rob Napoli, Analyst

Thank you, I appreciate it.

Operator, Operator

I show no further questions. At this time, I would now like to turn the call back to Eido for closing remarks.

Eido Gal, CEO

Thank you everyone for joining. We look forward to continuing to update you on our progress in the future quarters.

Operator, Operator

This concludes today's conference call. Thank you for participating. You may now disconnect.

Agi Dotcheva, CFO

Goodbye.