Riskified Reports Strong 20% Year-over-Year Growth

Riskified Ltd. (NYSE: RSKD) (the “Company”), a risk management platform enabling frictionless eCommerce, today announced financial results for the three and nine months ended September 30, 2022.

“Building off of momentum from a strong first half of the year, we saw an acceleration in our top line growth to achieve a very strong third quarter. Our year-over-year growth more than doubled our second quarter 2022 year-over-year growth and our tickets and travel vertical remained an active and growing part of the business,” said Eido Gal, Co-Founder and Chief Executive Officer of Riskified.

“As we head towards the end of the year, I am excited by our enhanced Go-to-Market positioning and the increased traction we are seeing with new and existing merchants. We recently went live with our largest new merchant of the year, and are building a solid pipeline of new merchants and future upsell opportunities within our existing merchant base.”

Q3 2022 Business Highlights

• Further Strengthened Leadership Position in Tickets & Travel Vertical: Riskified recently onboarded one of the world’s largest secondary ticket marketplaces for live sports, concerts, theater, and events. We are reviewing nearly all of this merchant’s eCommerce volume, which we believe further strengthens our positioning as a leader in the tickets and travel vertical.

• Execution of Upsell Strategy Results in Strong Quarter of Activity: During the third quarter of 2022, Riskified achieved strong year-over-year growth in upsell activity. We saw robust activity across varying merchant sizes, with particular momentum from our merchants with more than $3 billion in online sales volumes per year. Our upsell activity was distributed across merchants in our more mature cohorts as well as newer logos. This positive momentum, with the addition of new logos, more than offset declines in the organic growth of some of our existing merchants, which we primarily attribute to the tougher macro-economic environment.

• Meaningful Margin and Free Cash Flow Improvements Accelerate Path to Profitability: We saw a 33% year-over-year and sequential improvement in our Adjusted EBITDA during the third quarter. This led to a meaningful decline of our free cash outflows during the quarter as we continue to build towards sustainable profitability.

• Further Increases to 2022 Revenue and Adjusted EBITDA Guidance: We are increasing our full year revenue outlook as a result of our record first nine month performance. In addition, through a further reduction in our budgeted expense base, we are improving our Adjusted EBITDA outlook for the full year of 2022 by approximately 18% from our previous upward guidance revision in August of 2022.

• Hosted Riskified’s Annual Merchant Summit: Attended by over 100 merchant contacts and prospects across all major verticals, this multiday event focused on new business pipeline generation, information sharing with industry experts and potential partnership opportunities.

Q3 2022 Financial Performance Highlights

The following table summarizes our consolidated financial results for the three and nine months ended September 30, 2022 and 2021, in thousands except where indicated:

“Through focused expense discipline, we further flattened our expense base in the third quarter, achieving our strongest quarterly Adjusted EBITDA result of the year. Our long-term growth trajectory remains intact, and we believe that our efforts to optimize our cost structure should continue to have a meaningful impact on our bottom line,” said Aglika Dotcheva, Chief Financial Officer of Riskified.

“Looking ahead to the fourth quarter, we expect our broad-based and diversified business to continue driving strong revenue generation. Combined with our thoughtful efforts to manage our operating expenses, we expect to continue on our accelerated path to profitability.”

Financial Outlook

Our record first nine month performance and an expected solid fourth quarter of new revenue gives us confidence to raise the full-year revenue outlook. As such, we are increasing our revenue guidance for the year ending December 31, 2022 as follows:

• Revenue between $257 million and $261 million, up from between $255 million and $258 million

In addition, during the prior quarter we initiated a plan to efficiently and thoughtfully reduce and optimize our operating expenses. We continued to successfully execute on this plan, and were successful in further reducing our expense base in the third quarter of 2022. We are diligently managing our expenses, while maintaining our long-term growth outlook. As a result, we are raising our Adjusted EBITDA guidance for the year ending December 31, 2022 as follows:

• Adjusted EBITDA⁽²⁾ between negative $47 million and negative $44 million, an improvement from between negative $57 million and negative $54 million

This revision represents an improvement of approximately 18% from our August guidance. Overall, we have improved our Adjusted EBITDA guidance by 33% from our initial guidance range provided in February 2022.

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

⁽²⁾ We are not able to provide a reconciliation of Adjusted EBITDA guidance for the fiscal year ending December 31, 2022 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. In particular, we are unable to forecast the magnitude of share-based compensation expense and foreign currency transaction gains or losses as applicable without unreasonable efforts, and these items could significantly impact, either individually or in the aggregate, GAAP metrics in the future.