Riskified Continues to Execute on Land and Expand Strategy to Achieve Third Quarter Revenue Growth of 14%

Raises Adjusted EBITDA Guidance for FY 2023

Riskified Ltd. (NYSE: RSKD) (the “Company”), a leader in eCommerce fraud and risk intelligence, today announced financial results for the three and nine months ended September 30, 2023. The Company will host an investor call to discuss these results today at 8:30 a.m. Eastern Time.

“I am extremely proud of the team for their resilience and strength in the face of the ongoing conflict in Israel. Our unwavering focus on executing the business in all environments, combined with our commitment in providing outstanding merchant service has been the foundation of the success of Riskified. I remain confident in Riskified's ability to grow and innovate even in challenging times,” said Eido Gal, Co-Founder and Chief Executive Officer of Riskified.

Q3 2023 Business Highlights

  • Operationalized Business Continuity Plan ("BCP"): Our primary focus following the events in Israel on October 7, 2023 was ensuring the safety of our employees and maintaining continuity of service for our merchants. We promptly operationalized our BCP to help ensure continuity of service and to minimize disruptions to our merchants. We remain engaged with all our merchants and have not seen any loss of merchant volumes so far as a result of these events. We believe this is a testament to the deep relationships that we have cultivated with many of our merchants, our high retention rates, and our track record of being a reliable and trusted partner.
  • Further Diversification with the Addition of New Merchants: We continue to have success landing new merchants on the platform. Our top 10 new logos added during the third quarter of 2023 helped us deepen our geographic reach, with particular strength in the United States, and further penetrate four different verticals.
  • Strong Upsell Activity in Key Accounts in our Fashion and Luxury Vertical: Key existing customers expanded their contractual relationships with us during the quarter. In particular, we successfully executed upsells with merchants in our Luxury and Sneakers sub-verticals, and also with one of the world’s largest online fashion retailers in APAC.
  • Signed Multi-Year, Multi-Product Cross-Sell: During the third quarter of 2023, we successfully cross-sold our Policy Protect and Account Secure products to an existing Enterprise merchant in our General Retailers vertical for a multi-year contract. Using Policy Protect and Account Secure, Riskified is able to help block abusive resellers upon checkout and balance the overall customer experience while preventing account takeovers.
  • Partnered with Plaid to Enhance Risk Protection for Automatic Clearing House ("ACH") Bank Payments: This partnership empowers online merchants, marketplaces, and trading platforms to approve ACH payments with greater confidence, safeguarding against fraud and the risk of insufficient funds. The integration enhances Riskified’s existing ACH protection capability to shift fraud liability and protect against ACH ‘insufficient funds’ returns. Riskified’s platform complements Plaid’s Signal offering, a transaction risk scoring engine that furnishes merchants with new data attributes to better assess the return risk of transactions.
  • Share Repurchase Program Update: As previously announced, on August 8, 2023 our Board of Directors authorized a share repurchase program of up to $75 million, subject to approval from the Tel Aviv District Court Economic Department ("Israeli Court"), which is required by law. Due to the events of October 7, the Israeli Court has been operating under rolling Emergency Orders and certain court processes are delayed. We will announce the Israeli Court's decision promptly once it is obtained. Share repurchases are expected to be used to take advantage of attractive repurchase opportunities and to manage share dilution. We believe our strong balance sheet, with zero debt and approximately $482 million of cash, deposits, investments and accrued interest as of September 30, 2023, enables us to continue investing in the growth of our business and simultaneously enhance shareholder value through a share repurchase program.

Q3 2023 Financial Performance Highlights

The following table summarizes our consolidated financial results for the three and nine months ended September 30, 2023 and 2022, in thousands except where indicated:

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

(unaudited)

 

(unaudited)

Gross merchandise volume ("GMV") in millions(1)

$

29,674

 

 

$

25,314

 

 

$

87,897

 

 

$

73,391

 

Increase in GMV year over year

 

17

%

 

 

 

 

20

%

 

 

Revenue

$

71,872

 

 

$

63,172

 

 

$

213,545

 

 

$

181,949

 

Increase in revenues year over year

 

14

%

 

 

 

 

17

%

 

 

 

 

 

 

 

 

 

 

Gross profit

$

31,140

 

 

$

32,679

 

 

$

104,004

 

 

$

93,653

 

Gross profit margin

 

43

%

 

 

52

%

 

 

49

%

 

 

51

%

 

 

 

 

 

 

 

 

Operating profit (loss)

$

(25,210

)

 

$

(26,170

)

 

$

(70,285

)

 

$

(92,097

)

Net profit (loss)

$

(20,925

)

 

$

(26,047

)

 

$

(55,770

)

 

$

(92,653

)

 

 

 

 

 

 

 

 

Adjusted EBITDA(1)

$

(8,448

)

 

$

(9,360

)

 

$

(18,203

)

 

$

(36,746

)

“Our disciplined approach to managing the business is evident as we grew revenue by 17% while simultaneously decreasing total operating expenses by 6% year-to-date. These results are testament to the overall strength of the business, and to our ability to execute and find leverage in the model. I'm encouraged that we improved our Adjusted EBITDA performance by over 50% year-to-date, and we remain on track to deliver positive Adjusted EBITDA in the fourth quarter of 2023,” said Aglika Dotcheva, Chief Financial Officer of Riskified.

Financial Outlook:

We are updating our revenue guidance for the year ending December 31, 2023 as follows:

  • Revenue between $297 million and $300 million.

We assume no further worsening in consumer spending patterns, or material changes to the macro-environment, which remains factored into our revenue guidance for the year.

We now expect:

  • Adjusted EBITDA(2) to be between negative $14.5 million and negative $12.5 million.

We are committed to continuing to manage the business in a disciplined manner and seek to identify further leverage in the business model.

(1) GMV is a key performance indicator and Adjusted EBITDA is a non-GAAP measure of financial performance. See “Key Performance Indicators and Non-GAAP Measures” for additional information and “Reconciliation of GAAP to Non-GAAP Measures” for a reconciliation to the most directly comparable GAAP measure.

(2) We are not able to provide a reconciliation of Adjusted EBITDA guidance for the fiscal year ending December 31, 2023 to net profit (loss) because certain items that are excluded from Adjusted EBITDA but included in net profit (loss), the most directly comparable GAAP financial measure, cannot be predicted on a forward-looking basis without unreasonable effort or are not within our control. For example, we are unable to forecast the magnitude of foreign currency transaction gains or losses which are subject to many economic and other factors beyond our control. For the same reasons, we are unable to address the probable significance of the unavailable information, which could have a potentially unpredictable and potentially significant impact on our future GAAP financial results.

Conference Call and Webcast Details

The Company will host a conference call to discuss its financial results today, November 15, 2023 at 8:30 a.m. Eastern Time. A live webcast of the call can be accessed from Riskified’s Investor Relations website at ir.riskified.com. A replay of the webcast will also be available for a limited time at ir.riskified.com. The press release with the financial results, as well as the investor presentation materials will be accessible on the Company’s Investor Relations website prior to the conference call.

Key Performance Indicators and Non-GAAP Measures

This press release and the accompanying tables contain references to Gross Merchandise Volume ("GMV"), which is a key performance indicator, and to certain non-GAAP measures which include non-GAAP measures of financial performance, including Adjusted EBITDA, non-GAAP gross profit, non-GAAP gross profit margin, non-GAAP cost of revenue, non-GAAP operating expenses by line item, non-GAAP net profit (loss), and non-GAAP net profit (loss) per share, and non-GAAP measures of liquidity, including Free Cash Flow. Management and our Board of Directors use key performance indicators and non-GAAP measures as supplemental measures of performance and liquidity because they assist us in comparing our operating performance on a consistent basis, as they remove the impact of items that we believe do not directly reflect our core operations. We also use Adjusted EBITDA for planning purposes, including the preparation of our internal annual operating budget and financial projections, to evaluate the performance and effectiveness of our strategic initiatives, and to evaluate our capacity to expand our business. Free Cash Flow provides useful information to management and investors about the amount of cash generated by the business that can be used for strategic opportunities, including investing in our business and strengthening our balance sheet.

These non-GAAP measures should not be construed as an inference that our future results will be unaffected by unusual or other items. Non-GAAP measures of financial performance have limitations as analytical tools in that these measures do not reflect our cash expenditures, or future requirements for capital expenditures, or contractual commitments; these measures do not reflect changes in, or cash requirements for, our working capital needs; these measures do not reflect our tax expense or the cash requirements to pay our taxes, and assets being depreciated and amortized will often have to be replaced in the future and these measures do not reflect any cash requirements for such replacements. Free Cash Flow is limited because it does not represent the residual cash flow available for discretionary expenditures. Free Cash Flow is not necessarily a measure of our ability to fund our cash needs.

In light of these limitations, management uses these non-GAAP measures to supplement, not replace, our GAAP results. The non-GAAP measures used herein are not necessarily comparable to similarly titled captions of other companies due to different calculation methods. Non-GAAP financial measures should not be considered in isolation, as an alternative to, or superior to information prepared and presented in accordance with GAAP. These measures are frequently used by analysts, investors and other interested parties to evaluate companies in our industry. By providing these non-GAAP measures together with a reconciliation to the most comparable GAAP measure, we believe we are enhancing investors' understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives.

We define GMV as the gross total dollar value of orders reviewed through our eCommerce risk intelligence platform during the period indicated, including orders that we did not approve.

We define each of our non-GAAP measures of financial performance, as the respective GAAP balances shown in the below tables, adjusted for, as applicable, depreciation and amortization (including amortization of capitalized internal-use software as presented in our statement of cash flows), share-based compensation expense, payroll taxes related to share-based compensation, litigation-related expenses, provision for (benefit from) income taxes, other income (expense) including foreign currency transaction gains and losses and gains and losses on non-designated hedges, and interest income (expense). Non-GAAP Gross Profit Margin represents Non-GAAP Gross Profit expressed as a percentage of revenue. We define non-GAAP net profit (loss) per share as non-GAAP net profit (loss) divided by non-GAAP weighted-average shares. We define non-GAAP weighted-average shares, as GAAP weighted average shares, adjusted to reflect any dilutive ordinary share equivalents resulting from non-GAAP net profit (loss), if applicable.

We define Free Cash Flow as net cash provided by (used in) operating activities, less cash purchases of property and equipment, and cash spent on capitalized software development costs.

Management believes that by excluding certain items from the associated GAAP measure, these non-GAAP measures are useful in assessing our performance and provide meaningful supplemental information due to the following factors:

Depreciation and amortization: We exclude depreciation and amortization (including amortization of capitalized internal-use software) because we believe that these costs are not core to the performance of our business and the utilization of the underlying assets being depreciated and amortized can change without a corresponding impact on the operating performance of our business. Management believes that excluding depreciation and amortization facilitates comparability with other companies in our industry.

Share-based compensation expense: We exclude share-based compensation expense primarily because it is a non-cash expense that does not directly correlate to the current performance of our business. This is because the expense is calculated based on the grant date fair value of an award which may vary significantly from the current fair market value of the award based on factors outside of our control. Share-based compensation expense is principally aimed at aligning our employees’ interests with those of our shareholders and at long-term retention, rather than to address operational performance for any particular period.

Payroll taxes related to share-based compensation: We exclude employer payroll tax expense related to share-based compensation in order to see the full effect that excluding that share-based compensation expense had on our operating results. These expenses are tied to the exercise or vesting of underlying equity awards and the price of our common stock at the time of vesting or exercise, which may vary from period to period independent of the operating performance of our business.

Litigation-related expenses: We exclude costs associated with the legal matter previously disclosed under the caption "Legal Proceedings" in our Form 6-K furnished with the Securities and Exchange Commission ("SEC") on August 15, 2023, because such costs are not reflective of costs associated with our ongoing business and operating results and are viewed as unusual and infrequent.

See the tables below for reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward looking statements contained in Section 27A of the U.S. Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Exchange Act. All statements contained in this press release other than statements of historical fact, including, without limitation, statements regarding our revenue and adjusted EBITDA guidance for fiscal year 2023, future growth potential in new verticals and new geographies, anticipated implementation timeline and benefits of our proposed share repurchase program, ongoing impact of the conflict in Israel on our business and financial performance and Company actions designed to mitigate such impact, internal modeling assumptions, expectations as to our new merchant pipeline, upsell opportunities and strategic partnerships, the performance of our products, our management of our cash outflow and leverage, and business plans and strategy are forward looking statements, which reflect our current views with respect to future events and are not a guarantee of future performance. The words “believe,” “may,” “will,” “estimate,” “potential,” “continue,” “anticipate,” “intend,” “expect,” “could,” “would,” “project,” “forecasts,” “aims,” “plan,” “target,” and similar expressions are intended to identify forward-looking statements, though not all forward-looking statements use these words or expressions.

Actual outcomes may differ materially from the information contained in the forward-looking statements as a result of a number of factors, including, without limitation, the following: our ability to manage our growth effectively; our history of net losses and ability to achieve profitability; our ability to attract new merchants and retain existing merchants; continued use of credit cards and other payment methods that expose merchants to the risk of payment fraud, and changes in laws and regulations related to use of these payment methods, such as PSD2, and the emergence of new alternative payment products; the impact of macroeconomic conditions on us and on the performance of our merchants; our ability to continue to improve our machine learning models; fluctuations in our CTB Ratio and gross profit margin, including as a result of large-scale merchant fraud attacks or other security incidents; our ability to protect the information of our merchants and consumers; our ability to predict future revenue due to lengthy sales cycles; seasonal fluctuations in revenue; competition; our merchant concentration; the financial condition of our merchants, particularly in challenging macroeconomic environments; our ability to increase the adoption of our products and to develop and introduce new products; our ability to mitigate the risks involved with selling our products to large enterprises; our ability to retain the services of our executive officers, and other key personnel, including our co-founders; our ability to attract and retain highly qualified personnel, including software engineers and data scientists, particularly in Israel; changes to our prices and pricing structure; our exposure to existing and potential future litigation claims; our exposure to fluctuations in currency exchange rates, including recent declines in the value of the Israeli shekel against the US dollar as a result of the ongoing conflict in Israel; our ability to obtain additional capital; risks associated with our proposed share repurchase program, including the risk that the program could increase volatility and fail to enhance shareholder value, risks relating to our ability to obtain authorization and re-authorization, as necessary, by the Tel Aviv District Court Economic Department to permit share repurchases, or other factors; our third-party providers of cloud-based infrastructure; our ability to protect our intellectual property rights; technology and infrastructure interruptions or performance problems; the efficiency and accuracy of our machine learning models and access to third-party and merchant data; our ability to comply with evolving data protection, privacy and security laws; our ability to comply with lending regulation and oversight; the development of regulatory frameworks for machine learning technology and artificial intelligence; our use of open-source software; our ability to enhance and maintain our brand; our ability to execute potential acquisitions, strategic investments, partnerships, or alliances; our ability to successfully establish partnership channels and to integrate with these partners; potential claims related to the violation of the intellectual property rights of third parties; our limited experience managing a public company; our failure to comply with anti-corruption, trade compliance, and economic sanctions laws and regulations; disruption, instability and volatility in global markets and industries; our ability to enforce non-compete agreements entered into with our employees; our ability to maintain effective systems of disclosure controls and financial reporting; our ability to accurately estimate or judgements relating to our critical accounting policies; our business in China; changes in tax laws or regulations; increasing scrutiny of, and expectations for, environmental, social and governance initiatives; potential future requirements to collect sales or other taxes; potential future changes in the taxation of international business and corporate tax reform; changes in and application of insurance laws or regulations; conditions in Israel that may affect our operations, including ongoing conflict in Israel following the events of October 7, 2023; the impact of the dual class structure of our ordinary shares; our status as a foreign private issuer; and other risk factors set forth in Item 3.D - “Risk Factors” in our Annual Report on Form 20-F, filed with the SEC on February 24, 2023, and other documents filed with or furnished to the SEC. These statements reflect management’s current expectations regarding future events and operating performance and speak only as of the date of this press release. You should not put undue reliance on any forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur. Except as required by applicable law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

About Riskified

Riskified empowers businesses to grow eCommerce revenues and profit by mitigating risk. An unrivaled network of merchant brands partner with Riskified for guaranteed protection against chargebacks, to fight fraud and policy abuse at scale, and to improve customer retention. Developed and managed by the largest team of eCommerce risk analysts, data scientists, and researchers, Riskified’s AI-powered fraud and risk intelligence platform analyzes the individual behind each interaction to provide real-time decisions and robust identity-based insights. Learn more at riskified.com.

RISKIFIED LTD.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

 

 

As of

September 30, 2023

 

As of

December 31, 2022

 

 

 

(unaudited)

 

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

435,473

 

 

$

188,670

 

Restricted cash

 

 

 

 

2,347

 

Short-term deposits

 

15,000

 

 

 

287,000

 

Accounts receivable, net

 

30,750

 

 

 

37,547

 

Prepaid expenses and other current assets

 

12,493

 

 

 

14,371

 

Total current assets

 

493,716

 

 

 

529,935

 

Property and equipment, net

 

16,383

 

 

 

18,586

 

Operating lease right-of-use assets

 

30,854

 

 

 

35,158

 

Deferred contract acquisition costs

 

13,961

 

 

 

14,383

 

Long-term investments

 

28,906

 

 

 

 

Other assets, noncurrent

 

8,695

 

 

 

8,922

 

Total assets

$

592,515

 

 

$

606,984

 

Liabilities and Shareholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

2,571

 

 

$

2,110

 

Accrued compensation and benefits

 

19,417

 

 

 

24,134

 

Guarantee obligations

 

9,489

 

 

 

12,361

 

Provision for chargebacks, net

 

10,698

 

 

 

11,980

 

Operating lease liabilities, current

 

5,493

 

 

 

6,214

 

Accrued expenses and other current liabilities

 

17,630

 

 

 

15,813

 

Total current liabilities

 

65,298

 

 

 

72,612

 

Operating lease liabilities, noncurrent

 

25,919

 

 

 

31,202

 

Other liabilities, noncurrent

 

12,425

 

 

 

8,734

 

Total liabilities

 

103,642

 

 

 

112,548

 

Shareholders’ equity:

 

 

 

Class A ordinary shares, no par value; 900,000,000 shares authorized as of September 30, 2023 and December 31, 2022; 122,263,782 and 102,084,746 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

 

 

 

 

 

Class B ordinary shares, no par value; 232,500,000 shares authorized as of September 30, 2023 and December 31, 2022; 56,010,858 and 68,945,014 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

 

 

 

 

 

Additional paid-in capital

 

900,354

 

 

 

848,609

 

Accumulated other comprehensive profit (loss)

 

(3,177

)

 

 

(1,639

)

Accumulated deficit

 

(408,304

)

 

 

(352,534

)

Total shareholders’ equity

 

488,873

 

 

 

494,436

 

Total liabilities and shareholders’ equity

$

592,515

 

 

$

606,984

 

RISKIFIED LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

(unaudited)

 

(unaudited)

Revenue

$

71,872

 

 

$

63,172

 

 

$

213,545

 

 

$

181,949

 

Cost of revenue

 

40,732

 

 

 

30,493

 

 

 

109,541

 

 

 

88,296

 

Gross profit

 

31,140

 

 

 

32,679

 

 

 

104,004

 

 

 

93,653

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

 

17,397

 

 

 

17,452

 

 

 

54,455

 

 

 

53,512

 

Sales and marketing

 

21,758

 

 

 

20,712

 

 

 

67,097

 

 

 

67,047

 

General and administrative

 

17,195

 

 

 

20,685

 

 

 

52,737

 

 

 

65,191

 

Total operating expenses

 

56,350

 

 

 

58,849

 

 

 

174,289

 

 

 

185,750

 

Operating profit (loss)

 

(25,210

)

 

 

(26,170

)

 

 

(70,285

)

 

 

(92,097

)

Interest income (expense), net

 

5,717

 

 

 

3,123

 

 

 

16,781

 

 

 

5,116

 

Other income (expense), net

 

(193

)

 

 

(1,133

)

 

 

1,055

 

 

 

(1,209

)

Profit (loss) before income taxes

 

(19,686

)

 

 

(24,180

)

 

 

(52,449

)

 

 

(88,190

)

Provision for (benefit from) income taxes

 

1,239

 

 

 

1,867

 

 

 

3,321

 

 

 

4,463

 

Net profit (loss)

$

(20,925

)

 

$

(26,047

)

 

$

(55,770

)

 

$

(92,653

)

Other comprehensive profit (loss), net of tax:

 

 

 

 

 

 

 

Other comprehensive profit (loss)

 

(570

)

 

 

121

 

 

 

(1,538

)

 

 

(2,973

)

Comprehensive profit (loss)

$

(21,495

)

 

$

(25,926

)

 

$

(57,308

)

 

$

(95,626

)

 

 

 

 

 

 

 

 

Net profit (loss) per share attributable to Class A and B ordinary shareholders, basic and diluted

$

(0.12

)

 

$

(0.15

)

 

$

(0.32

)

 

$

(0.56

)

Weighted-average shares used in computing net profit (loss) per share attributable to Class A and B ordinary shareholders, basic and diluted

 

178,360,665

 

 

 

168,798,761

 

 

 

175,627,868

 

 

 

166,598,745

 

RISKIFIED LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

(unaudited)

 

(unaudited)

Cash flows from operating activities:

 

 

 

 

 

 

 

Net profit (loss)

$

(20,925

)

 

$

(26,047

)

 

$

(55,770

)

 

$

(92,653

)

Adjustments to reconcile net profit (loss) to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

Unrealized loss (gain) on foreign currency

 

24

 

 

 

504

 

 

 

(1,384

)

 

 

(1,191

)

Provision for (benefit from) account receivable allowances

 

(18

)

 

 

210

 

 

 

176

 

 

 

35

 

Depreciation and amortization

 

892

 

 

 

886

 

 

 

2,672

 

 

 

2,567

 

Amortization of capitalized internal-use software costs

 

383

 

 

 

124

 

 

 

1,149

 

 

 

371

 

Amortization of deferred contract costs

 

2,393

 

 

 

1,820

 

 

 

6,954

 

 

 

5,028

 

Share-based compensation expense

 

15,330

 

 

 

15,711

 

 

 

47,485

 

 

 

52,234

 

Non-cash right-of-use asset changes

 

1,283

 

 

 

1,161

 

 

 

3,510

 

 

 

3,299

 

Changes in accrued interest

 

1,214

 

 

 

(319

)

 

 

1,659

 

 

 

(974

)

Ordinary share warrants issued to a customer

 

384

 

 

 

384

 

 

 

1,152

 

 

 

1,151

 

Other

 

48

 

 

 

29

 

 

 

123

 

 

 

136

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

7,015

 

 

 

(2,490

)

 

 

6,188

 

 

 

4,860

 

Deferred contract acquisition costs

 

(1,662

)

 

 

(2,510

)

 

 

(5,193

)

 

 

(5,008

)

Prepaid expenses and other assets

 

(3,109

)

 

 

119

 

 

 

(1,897

)

 

 

7,054

 

Accounts payable

 

(1,326

)

 

 

544

 

 

 

402

 

 

 

2,151

 

Accrued compensation and benefits

 

1,767

 

 

 

1,763

 

 

 

(4,292

)

 

 

(3,822

)

Guarantee obligations

 

(403

)

 

 

(3

)

 

 

(2,872

)

 

 

(2,345

)

Provision for chargebacks, net

 

(329

)

 

 

1,077

 

 

 

(1,282

)

 

 

(1,309

)

Operating lease liabilities

 

(2,088

)

 

 

1,385

 

 

 

(3,494

)

 

 

(985

)

Accrued expenses and other liabilities

 

3,620

 

 

 

2,870

 

 

 

4,570

 

 

 

7,247

 

Net cash provided by (used in) operating activities

 

4,493

 

 

 

(2,782

)

 

 

(144

)

 

 

(22,154

)

Cash flows from investing activities:

 

 

 

 

 

 

 

Purchases of short-term deposits

 

(5,000

)

 

 

(143,789

)

 

 

(55,000

)

 

 

(335,753

)

Maturities of short-term deposits

 

80,000

 

 

 

149,789

 

 

 

327,000

 

 

 

235,000

 

Purchases of investments

 

(29,086

)

 

 

 

 

 

(29,086

)

 

 

 

Purchases of property and equipment

 

(826

)

 

 

(434

)

 

 

(1,074

)

 

 

(3,413

)

Capitalized software development costs

 

 

 

 

(563

)

 

 

 

 

 

(1,535

)

Net cash provided by (used in) investing activities

 

45,088

 

 

 

5,003

 

 

 

241,840

 

 

 

(105,701

)

Cash flows from financing activities:

 

 

 

 

 

 

 

Proceeds from exercise of share options

 

333

 

 

 

828

 

 

 

3,113

 

 

 

3,009

 

Payments of deferred offering costs

 

 

 

 

(14

)

 

 

 

 

 

(204

)

Net cash provided by (used in) financing activities

 

333

 

 

 

814

 

 

 

3,113

 

 

 

2,805

 

Effects of exchange rates on cash, cash equivalents, and restricted cash

 

(536

)

 

 

(722

)

 

 

(353

)

 

 

(2,646

)

Net increase (decrease) in cash, cash equivalents, and restricted cash

 

49,378

 

 

 

2,313

 

 

 

244,456

 

 

 

(127,696

)

Cash, cash equivalents, and restricted cash—beginning of period

 

386,095

 

 

 

295,118

 

 

 

191,017

 

 

 

425,127

 

Cash, cash equivalents, and restricted cash—end of period

$

435,473

 

 

$

297,431

 

 

$

435,473

 

 

$

297,431

 

Reconciliation of GAAP to Non-GAAP Measures

The following tables reconcile non-GAAP measures to the most directly comparable GAAP measure and are presented in thousands except for share and per share amounts.

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

(unaudited)

 

(unaudited)

Net profit (loss)

$

(20,925

)

 

$

(26,047

)

 

$

(55,770

)

 

$

(92,653

)

Provision for (benefit from) income taxes

 

1,239

 

 

 

1,867

 

 

 

3,321

 

 

 

4,463

 

Interest (income) expense, net

 

(5,717

)

 

 

(3,123

)

 

 

(16,781

)

 

 

(5,116

)

Other (income) expense, net

 

193

 

 

 

1,133

 

 

 

(1,055

)

 

 

1,209

 

Depreciation and amortization

 

1,275

 

 

 

1,010

 

 

 

3,821

 

 

 

2,938

 

Share-based compensation expense

 

15,330

 

 

 

15,711

 

 

 

47,485

 

 

 

52,234

 

Payroll taxes related to share-based compensation

 

109

 

 

 

89

 

 

 

386

 

 

 

179

 

Litigation-related expenses

 

48

 

 

 

 

 

 

390

 

 

 

 

Adjusted EBITDA

$

(8,448

)

 

$

(9,360

)

 

$

(18,203

)

 

$

(36,746

)

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

(unaudited)

 

(unaudited)

GAAP gross profit

$

31,140

 

 

$

32,679

 

 

$

104,004

 

 

$

93,653

 

Plus: depreciation and amortization

 

427

 

 

 

177

 

 

 

1,299

 

 

 

521

 

Plus: share-based compensation expense

 

191

 

 

 

183

 

 

 

574

 

 

 

477

 

Plus: payroll taxes related to share-based compensation

 

3

 

 

 

2

 

 

 

8

 

 

 

4

 

Non-GAAP gross profit

$

31,761

 

 

$

33,041

 

 

$

105,885

 

 

$

94,655

 

Gross profit margin

 

43

%

 

 

52

%

 

 

49

%

 

 

51

%

Non-GAAP gross profit margin

 

44

%

 

 

52

%

 

 

50

%

 

 

52

%

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2023

 

2022

 

2023

 

2022

 

(unaudited)

 

(unaudited)

GAAP cost of revenue

$

40,732

 

$

30,493

 

$

109,541

 

$

88,296

Less: depreciation and amortization

 

427

 

 

177

 

 

1,299

 

 

521

Less: share-based compensation expense

 

191

 

 

183

 

 

574

 

 

477

Less: payroll taxes related to share-based compensation

 

3

 

 

2

 

 

8

 

 

4

Non-GAAP cost of revenue

$

40,111

 

$

30,131

 

$

107,660

 

$

87,294

 

 

 

 

 

 

 

 

GAAP research and development

$

17,397

 

$

17,452

 

$

54,455

 

$

53,512

Less: depreciation and amortization

 

391

 

 

387

 

 

1,172

 

 

1,120

Less: share-based compensation expense

 

3,182

 

 

2,538

 

 

10,092

 

 

7,421

Less: payroll taxes related to share-based compensation

$

1

 

$

 

$

1

 

$

Non-GAAP research and development

$

13,823

 

$

14,527

 

$

43,190

 

$

44,971

 

 

 

 

 

 

 

 

GAAP sales and marketing

$

21,758

 

$

20,712

 

$

67,097

 

$

67,047

Less: depreciation and amortization

 

260

 

 

245

 

 

767

 

 

731

Less: share-based compensation expense

 

4,940

 

 

3,872

 

 

14,714

 

 

14,076

Less: payroll taxes related to share-based compensation

 

71

 

 

41

 

 

208

 

 

99

Non-GAAP sales and marketing

$

16,487

 

$

16,554

 

$

51,408

 

$

52,141

 

 

 

 

 

 

 

 

GAAP general and administrative

$

17,195

 

$

20,685

 

$

52,737

 

$

65,191

Less: depreciation and amortization

 

197

 

 

201

 

 

583

 

 

566

Less: share-based compensation expense

 

7,017

 

 

9,118

 

 

22,105

 

 

30,260

Less: payroll taxes related to share-based compensation

 

34

 

 

46

 

 

169

 

 

76

Less: litigation-related expenses

 

48

 

 

 

 

390

 

 

Non-GAAP general and administrative

$

9,899

 

$

11,320

 

$

29,490

 

$

34,289

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

(unaudited)

 

(unaudited)

Net cash provided by (used in) operating activities

$

4,493

 

 

$

(2,782

)

 

$

(144

)

 

$

(22,154

)

Purchases of property and equipment

 

(826

)

 

 

(434

)

 

 

(1,074

)

 

 

(3,413

)

Capitalized software development costs

 

 

 

 

(563

)

 

 

 

 

 

(1,535

)

Free Cash Flow

$

3,667

 

 

$

(3,779

)

 

$

(1,218

)

 

$

(27,102

)

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

(unaudited)

 

(unaudited)

Net profit (loss)

$

(20,925

)

 

$

(26,047

)

 

$

(55,770

)

 

$

(92,653

)

Depreciation and amortization

 

1,275

 

 

 

1,010

 

 

 

3,821

 

 

 

2,938

 

Share-based compensation expense

 

15,330

 

 

 

15,711

 

 

 

47,485

 

 

 

52,234

 

Payroll taxes related to share-based compensation

 

109

 

 

 

89

 

 

 

386

 

 

 

179

 

Litigation related expenses

 

48

 

 

 

 

 

 

390

 

 

 

 

Non-GAAP net profit (loss)

$

(4,163

)

 

$

(9,237

)

 

$

(3,688

)

 

$

(37,302

)

 

 

 

 

 

 

 

 

Weighted-average shares used in computing net profit (loss) and non-GAAP net profit (loss) per share attributable to Class A and B ordinary shareholders, basic and diluted

 

178,360,665

 

 

 

168,798,761

 

 

 

175,627,868

 

 

 

166,598,745

 

 

 

 

 

 

 

 

 

Net profit (loss) per share attributable to Class A and B ordinary shareholders, basic and diluted

$

(0.12

)

 

$

(0.15

)

 

$

(0.32

)

 

$

(0.56

)

Non-GAAP net profit (loss) per share attributable to Class A and B ordinary shareholders, basic and diluted

$

(0.02

)

 

$

(0.05

)

 

$

(0.02

)

 

$

(0.22

)

 

Contacts

Investor Relations: Chett Mandel, Head of Investor Relations | ir@riskified.com

Corporate Communications: Cristina Dinozo, Senior Director of Communications | press@riskified.com

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