February 23, 2023

“I believe we are well-positioned for continued success in 2023 and beyond, which I attribute, in part, to a series of strategic decisions that we made in 2022. During the year, we thoughtfully expanded our global footprint, grew our coverage in some existing industry verticals, and captured share in emerging categories. We are also seeing great traction with our enhanced product suite. Combined with the right-sizing of our expense base in 2022, we are confident that we have made significant progress towards our goal of accelerating our path to profitability, which we nearly achieved this past quarter,” said Eido Gal, Co-Founder and Chief Executive Officer of Riskified.

Q4 and Full Year 2022 Business Highlights

  • Success Winning New Logos During Competitive Processes: Our accuracy and positioning as one of the largest fraud-related guarantors of eCommerce transactions in the world has created a distinct competitive advantage for us. This is a key reason why we have disproportionate success during competitive processes, in which we win more often than our competitors.
  • Strong Execution of Land and Expand Strategy in 2022: We continued to successfully execute our “land-and-expand” strategy in 2022. Our top ten new merchants represented five categories across three regions, and we had strong success in executing upsells to our existing merchant base.
  • Further Strengthened Leadership Position in Tickets & Travel Vertical: We recently onboarded a key new merchant in the Tickets & Travel vertical. This merchant has one of the most downloaded travel apps in North America and further adds to our second largest and fastest growing vertical.
  • Improved Cash Flow Model: Our cash used in operating activities and free cash flow both meaningfully improved by approximately 70% in the fourth quarter of 2022. We feel great about our ability to manage our cash position and ended the year with approximately $483 million of cash, deposits and accrued interest on the balance sheet, with zero debt.
  • Award Winning Year for Our Platform: We were the winner of multiple prestigious awards, including the recent announcement as the Best Security Solution at the National Retail Foundation (NRF) Vendors in Partnership (VIP) Awards. In addition we were named as the Juniper Research Future Digital Award winner for Fraud & Security Innovation of the Year.
  • Recently Enhanced Policy Protect Product through the Addition of “Identity Explore”: This new capability allows merchants to visualize customer identities and behavior, tailor customer experience and customize policy decisions. For example, using Policy Protect, merchants have been able to prevent up to 15x more abusive returns and refund claims, detect nearly 95% of unauthorized resellers and may be able to save up to 70% of their promotion budget by thwarting shoppers misusing coupon and promo codes.

Q4 and Full Year 2022 Financial Performance Highlights

The following table summarizes our consolidated financial results for the three and twelve months ended December 31, 2022 and 2021, in thousands except where indicated:

Three Months Ended December 31,

Year Ended December 31,

2022

2021

2022

2021

(unaudited)

(audited)

Gross merchandise volume in millions(1)

$

32,179

$

27,795

$

105,570

$

89,124

Increase in GMV year over year

16

%

18

%

Revenue

$

79,298

$

69,833

$

261,247

$

229,141

Increase in revenues year over year

14

%

14

%

Gross profit

$

41,444

$

36,758

$

135,097

$

122,971

Gross profit margin

52

%

53

%

52

%

54

%

Operating profit (loss)

$

(17,027

)

$

(22,809

)

$

(108,632

)

$

(55,398

)

Net profit (loss)

$

(11,828

)

$

(23,057

)

$

(103,989

)

$

(178,885

)

Adjusted EBITDA(1)

$

(106

)

$

(6,951

)

$

(36,360

)

$

(19,451

)

“Our focused efforts to optimize our expense base in 2022 had, and we believe will continue to have a meaningful impact on our bottom line. As we navigate the ever-changing macroeconomic environment, we remain focused on our long-term goals and on strategically investing in our technology, our products, and our people,” said Aglika Dotcheva, Chief Financial Officer of Riskified.

Outlook

As we look forward to 2023, we remain excited about the opportunities ahead. We expect that the macro-uncertainty we faced last year will remain and do not expect the macro-environment to change materially in the near term, which is factored into our initial revenue guidance for the year ending December 31, 2023 as follows:

  • Revenue between $297 million and $303 million

We anticipate to continue making significant improvements to our bottom line in 2023 as we approach Adjusted EBITDA profitability. For the year ending December 31, 2023, we currently expect:

  • Adjusted EBITDA(2) between negative $27 million and negative $22 million

This would represent a 32% year-over-year improvement to the midpoint, and meaningfully outpaces our anticipated 2023 revenue growth, demonstrating leverage in the business model and a commitment to managing the business in a disciplined manner.

(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 Non-GAAP to 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 without unreasonable efforts, and this item could significantly impact GAAP measures in the future.