Riskified Stock

Good day, and thank you for standing by. Welcome to the Riskified Second Quarter 2026 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Stefan Schulstein, Head of 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 second 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 second 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, gross margin, pipeline generation, pipeline conversion, timing of new merchant go-lives, adjusted EBITDA profitability, adjusted EBITDA margins, non-GAAP operating expenses, free cash flow and expectations as to category and regional growth trends, which reflect management's best judgment based on currently available information and are not guarantees of future performances -- 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 to begin.

Thanks, Stefan, and hello, everyone. Before I begin, let me welcome and introduce Stefan Schulstein as our new Head of Investor Relations. Stefan is an experienced Investor Relations executive, and his primary focus will be on fostering strong relationships across the investment community as we continue to drive shareholder value. I am very pleased with our Q2 results, where we delivered the strongest revenue growth in over 4 years. Revenue grew 22% year-over-year to $98.7 million. Non-GAAP gross profit grew 13% to $45.4 million and adjusted EBITDA increased 84% to $3.9 million. Given this momentum, we're once again raising our full year outlook for revenue and adjusted EBITDA. I want to thank our team for driving these results for our clients and shareholders.

We believe this accelerated growth is a result of an increasingly complex fraud environment, driving more demand to our expanded platform. Allow me to elaborate. Fraud risk for our merchants continues to grow. It's getting more sophisticated and moving faster, and we believe agentic tools are part of what's accelerating that. Bad actors are creating fake identities that sign up, hijacking real accounts and driving fraudulent activity across digital wallets, cards, ACH, peer-to-peer transactions, tokenized transactions and 3D secure flows. And it's not limited to checkout as the same activity shows up in refund and return of use, chargeback disputes and friendly fraud. Across that large and increasingly complex surface, we're seeing loss rates rise industry-wide. These complexities are leading merchants to increasingly look for more effective ways to manage fraud while maintaining a leading customer experience.

At the same time, merchants are increasingly frustrated stitching together multiple point solutions. Know Your Customer screening, identity resolution, account security, transactional fraud screening, shipping and returns abuse detection and dispute representment are all part of the stack merchants need to manage, and we hear a clear preference for a single platform and a platform approach isn't just simple. We believe it performs better because the signal from one part of the transaction life cycle strengthens the defense in every other part. That's the flywheel we've talked about before.

Turning to our platform. Our risk intelligence platform applies insights from our global merchant network, identity graph and AI capabilities across the e-commerce journey from account creation and login through checkout to post-purchase refunds, returns and disputes. The platform brings together account, checkout, policy and dispute intelligence, all powered by a shared network intelligence and identity layer. We believe that the recent improvements that have been driving the most demand are expanded checkout fraud coverage. As noncard payment methods continue to grow and proliferate, merchants are increasingly looking to us to create the underlying trust mechanism that is missing in. It is a large undertaking, but once done successfully, we believe meaningfully addresses the fundamental trust issue that hurts adoption of these alternative payment methods.

For example, with ACH, we have built a risk layer that enables instant payouts, closing some of the gaps with credit cards, allowing merchants to leverage a low-cost funding instrument with substantially reduced risk. And as merchants continue to offer alternative ways to pay, our platform allows them to meet customers where they are. And we believe we are well positioned to build and replicate this trust layer for noncard payments in a way that creates value for both our merchants and Riskified. The dollar value of ACH transactions we processed in the quarter was approximately 19x the value of transactions processed in the second quarter of the prior year. Furthermore, merchants are increasingly using Riskified's identity intelligence beyond checkout to improve the customer experience across the transaction life cycle.

We had shared last quarter that we are enabling real-time risk scoring inside customer service workflows, especially as customer service evolves towards a mix of human and conversational AI agents. Additionally, we have now helped one of our newer merchants create a dynamic customer risk profile, which allows safer customers to transact faster and at higher dollar amounts. We believe we are well positioned to deliver additional value to our merchants as our identity database has billions of nodes across the transaction life cycle. Our AI assistant, ARIA, continued to gain traction this quarter. We have embedded ARIA across our wider platform, giving fraud and risk teams a highly effective tool that helps them investigate activity, understand emerging trends and take action more quickly.

This helps our merchants optimize workflow and gain additional insights into their customers. Feedback from our merchants has been overwhelmingly positive. These results are enabled by using our differentiated data assets, which we believe makes it more powerful than other solutions that don't have access to our underlying data. Our multiproduct merchant base grew approximately 50% year-over-year. That consistency is the clearest evidence that this platform strategy is working. Merchants aren't buying one tool. They're expanding into more of the network, which allows for additional upsell opportunities and drives retention. On to new business momentum. The 2 trends I just discussed, more complex fraud and continued improvements in our platform drove a significant acceleration of new business this quarter. This new business was diversified across geographies and across both new and existing merchant categories.

New logo acquisition was a significant contributor this quarter. We added new logos across all 4 regions with 5 of our top 10 headquartered outside the United States, spanning 5 categories. We're encouraged by the pace at which we continue to add merchants to the platform, which builds towards future expansion opportunities. Upsell activity within our existing merchant base was also healthy this quarter, reinforcing the durability of our platform as merchants continue to expand their use of our products. Our pipeline is robust with the U.S. still the largest contributor and strong momentum across APAC. From an industry perspective, we saw healthy activity within travel, payments and fashion, and a particularly strong pace of conversion as many of the opportunities we discussed last quarter converted into new business. Our competitive win rates remained above 75% in the second quarter, further evidence of the differentiation of our platform relative to the alternatives that merchants evaluate.

A notable highlight this quarter with live sports, a dense global events calendar, which included the World Cup and the NBA finals drove elevated transaction volume across 2 connected parts of our business. In tickets, our established base benefited directly from this volume, reinforcing what we believe is the vertical's role as a durable growth driver. In our money transfer and payments category, which we have renamed digital finance to reflect the broader merchant category, strong momentum from the same dynamic with particular strength in event contracts and gaming. We are particularly pleased with our expansion into newer categories within digital finance, enabled by our platform innovation.

Putting it all together, this was a quarter that reflects both the strength of the market opportunity in front of us and our team's execution in capturing it. Fraud keeps growing more complex and merchants are converging on the unified platform we've spent years building. That combination is showing up in our results, strong revenue growth, accelerating new business and a multiproduct base that keeps deepening. It's why we're raising our outlook for the second time this year. We enter the second half with the platform, the pipeline and the momentum to keep delivering for our merchants and our shareholders.

I'll now turn it over to Aglika for a deeper look at our financial results.

Thank you, Aglika, 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 second quarter was $41.3 million, reflecting a 13% increase year-over-year. We achieved second quarter revenue of $98.7 million, up 22% year-over-year, an acceleration from 7% growth in the first quarter and the strongest year-over-year growth in more than 4 years. Our GMV and revenue growth during this quarter was primarily driven by continued new merchants and upsell activity as merchants continue to recognize the value of our platform provides. Growth in the second quarter was broad-based across all of our categories, led by digital finance and tickets and travel.

Our digital finance category grew approximately 180% year-over-year, driven primarily by the ramp of multiple new merchants onboarded in the quarter to the event contracts and gaming of vertical with upsell activity across our existing base contributing as well. Tickets and travel grew approximately 23% year-over-year, an acceleration from 18% in the first quarter. Tickets was the primary driver with growth accelerating meaningfully as same-store sales momentum strengthened across our largest ticketing merchants and travel continued to deliver growth even with a tough year-over-year comparison. Our fashion and luxury vertical grew 4% year-over-year, driven by new and upsell activity as well as same-store performance.

Looking ahead, we continue to expect our tickets and travel, digital finance and fashion and luxury categories to collectively approximate 80% of total billings for the year, with digital finance to significantly exceed the company's average growth rate throughout the remainder of 2026. Turning to our regional performance. Billings grew across all regions during the second quarter. The United States, our largest region, grew approximately 38% year-over-year, up from 10% in the first quarter, reflecting continued strength in tickets and the addition of new merchants in digital finance. APAC grew approximately 42% in Q2. We continue to see healthy underlying demand in the region and expect more balanced growth as the year progresses. Other Americas grew approximately 21% year-over-year, up from 11% in the first quarter, primarily driven by new business activity, and India delivered approximately 3% growth against a strong prior year comparable period in the travel vertical. We believe that our continued growth across geographies is a testament to the success of our global expansion strategy.

Our gross profit for the second quarter was $45.4 million, reflecting a 13% increase year-over-year. The growth was primarily driven by the contribution of new business onboarded led by our digital finance category, where we continue to expand into new verticals. This was further supported by strong same-store activity in our tickets of vertical, which benefited from elevated live sports during the quarter. Our gross margin in the second quarter was 46%, attributable to ramping up new merchants, which typically begin at lower margins and improve over time. Performance across our existing merchant base remained healthy, resulting from ongoing enhancements to our core machine learning models. As a result of our second quarter performance, we're now raising our expected full year gross profit growth to a range of 11% to 14% or 12.5% at the midpoint. We expect gross profit growth in the third quarter to be similar to the growth in the second quarter.

Moving to operating expenses. Non-GAAP operating expenses totaled $41.5 million for the quarter or 42% of revenue compared to 47% in Q2 of 2025, reflecting sustained cost discipline as our business scales. On a constant currency basis, OpEx would have been $4.1 million lower or approximately 39% of revenue, primarily driven by the continued appreciation of the Israeli shekel. We continue to expect quarterly non-GAAP operating expenses to range between $42 million and $43 million. We delivered adjusted EBITDA of $3.9 million, representing an 84% increase compared to $2.1 million in Q2 of 2025 and demonstrating the efficiency of our scaling cost structure. On a GAAP basis, second quarter net loss improved 22% year-over-year to a loss of $9.1 million compared to a loss of $11.6 million in Q2 of 2025. GAAP net loss was impacted by a decline in interest income and increase in other expense, the latter primarily tied to foreign currency fluctuations.

Moving to the balance sheet. We ended the second quarter with approximately $223.6 million of cash, deposits and investments and continue to carry 0 debt. In addition, we continue to maintain a healthy cash flow model. In the second quarter, we achieved free cash flow of $12.9 million. We expect to exceed $40 million of positive free cash flow in 2026. During Q2 of 2026, we repurchased approximately 13.7 million shares at an average price per share of $4.67 for total consideration of $63.9 million, which contributed to a reduction of 8% in total shares outstanding. From the inception of our buyback program through the end of Q2, we have repurchased approximately 72 million shares for a total of $351 million, which helped contribute to a 26% 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.

Now turning to our outlook. As a result of our continued execution, we're raising the full year guidance range across both revenue and adjusted EBITDA. We now anticipate full year revenue to be between $400 million and $410 million, or $405 million to the midpoint, reflecting the outperformance of our second quarter results and increased visibility supported by early execution and elevated transaction volume from live events. We expect third quarter revenue growth of approximately 27%. We currently expect adjusted EBITDA to be between $33 million and $39 million or $36 million to the midpoint, up from our prior range of $28 million to $34 million, representing a margin of approximately 9% at the midpoint, up from 8% implied in our prior guidance.

The primary factors that may determine where we fall within each range are consistent with what we shared last quarter. The timing and ramping of new merchant go-lives and existing merchant upsells, our success in retaining our merchants and the broader macro environment. We're pleased with the strength of our second quarter results. Revenue growth accelerated to its fastest pace in more than 4 years and profitability continued to expand alongside it. We generated meaningful free cash flow while continuing to return capital to shareholders through our buyback program, and we raised our full year guidance for both revenue and adjusted EBITDA for the second time this year. With a strong balance sheet, 0 debt and a favorable market environment, we're well positioned to keep executing through the second half.

Operator, we're ready to take the first question.

[Operator Instructions] And our first question comes from Ryan Tomasello with KBW.

Congrats on the solid quarter. I guess, clearly, it sounds like the increasingly complex fraud environment is driving really solid demand for the business. Maybe just to put a finer point on that, would you describe the momentum you're seeing on the new logo front as a steady continuation of the trends you've already been observing over the last several quarters? Or did this last quarter and the first half of the year represent a more notable inflection in the pipeline maybe as AI proliferation starts to hit a more critical mass? And then on the flip side of that, if you could just talk about your confidence in Riskified's ability to continue to maintain solid CPV ratios just as the fraud you're insuring becomes more complex here.

Ryan, sure. Happy to take that. I think it's a convergence of a few factors. So we've really spent the past few quarters expanding the product platform in a way that solves some of the newer fraud MOs and kind of creates more value, I would say, globally and across a multitude of categories. If you think some of the things we've done around identity and leveraging that to create kind of smarter and more customized flow. Some of the work on accounts, everything around policy, the multi-payment method duality at checkout fraud. So you have this expanding and unique platform on the one hand. And then on the other hand, you do have an increase in the fraud environment, possibly related to agentic tools where the sophistication and the velocity is kind of clearly increasing.

And while we have had positive momentum over the past few quarters, and we've called it out, I think this quarter, definitely kind of everything clicked. And you can see that in the numbers and the pipeline that we've been building, we were able to convert. We were able to convert it relatively quickly, saw good expansion globally, saw good upsell opportunity, saw a lot of new logos leading to some of those future upsells. So I do think some kind of fundamental issues and kind of just all aligning to good timing right now. To the second part of your question, yes, we continue to feel confident about our ability to solve the problems of fraud and definitely more so than any single individual merchant can. I think that's one of the unique value points. And we'll think we'll continue to see that newer categories and newer geographies can start at higher CPV, but will continue to improve over time, similarly to prior cohorts.

And then maybe one for Aglika on the implied take rate -- revenue take rate on GMV in the quarter that, I think, drove some strong outperformance to street models since GMV growth was only slightly ahead of, I think, where folks were modeling. Maybe if you could just help us understand the drivers there and how we should think about the trajectory of GMV versus take rates in the back half of the year, if there's any mix or seasoning dynamics to call out on the take rate? And then also on gross margins, I think those were down decently year-over-year, I assume, on mix dynamics. But if you can also just talk about how we should think through the trends around gross margin into the back half?

Thank you for the questions, Ryan. So on the take rate, I always like to say that we look at this as an output of the business. So it's not something that at any point in time, it can fluctuate. But the way -- specifically for this quarter, it's really a function of the higher risk profile of the new business that we added. And I do see it in terms of the quarter mostly is a timing effect as we continue to add more merchants and diversify and add more business, the take rates will potentially kind of like continue to fluctuate, but maybe slightly lower than what we see this quarter. So why I do expect GMV and revenue growth to diverge for the rest of the year, maybe like at a slightly lower spread than what we sell. Again, this is an output of the model. And in any given quarter, the dynamics of the business, the different kind of growth existing merchants, the upsell and new logo opportunities can drive slightly different results. And then on your second question.

That was on gross margins.

The gross margin, of course. So I'm very excited about the market share gain this quarter. It's very exciting to be able to accelerate our revenue growth and also kind of to add nicely on the gross profit growth. And this is the way we drive the business. This is kind of like the main KPIs. And when I think about the gross margin on any given quarter, it can fluctuate depending on the mix shift, which we did see this quarter with some of the kind of more activity in the ticketing space, which tends to have a slightly lower gross margin and also significantly higher weight from new business. But it's more of a mix shift in the quarter. And as Eido kind of shared on the CDB, we've seen some new business just come at a lower gross margin initially, but there's nothing structural to that. We do expect all cohorts to kind of improve over time.

Our next question comes from Terry Tillman with Truist.

This is Connor Passarella on for Terry. Congrats on the strong results this quarter. Maybe just to start, you called out merchants increasingly using Riskified identity intelligence beyond the checkout and across the transaction life cycle. Could you maybe just give us a sense of where you're seeing the strongest demand today and whether you're starting to see intelligence -- identity intelligence open up entirely new budgets or buyers within customers beyond just the traditional fraud organization?

I think one of the more interesting things about leveraging identity is you're able to leverage your risk knowledge to create a better experience for the good customers, right? So kind of the smartest and most forward-thinking merchants are not just saying, hey, how can we block fraud, they're kind of saying, hey, how can we leverage this understanding about who the customer really is and provide them a better checkout or shopping experience. And that could be anything from how do we create an instant refund instead of waiting for this package to be delivered? How do we make sure that all our systems kind of support systems, CRM systems understand who this identity is so that as we interact with them. We can provide them a white glove service if they deserve it.

How can we go from a position where we don't really know who this new customer is that signing up to actually understanding it's a really important relationship for us and maybe the limits or the transfers or others restrictions that are set on the account can be set differently based on the identity. So we definitely think that's expanding the conversation and really putting people in a position where they understand a great risk tool is not just about blocking fraud, but it's creating a better experience based on the understanding of where fraud happens.

And then maybe just as a follow-up, as revenue growth has accelerated, you also raised the adjusted EBITDA guidance. Just does the performance this quarter change anything on how you think about the trade-off between reinvesting behind the stronger growth opportunity and allowing incremental revenue to flow through to margins?

Look, right now, I think internally, we're still focused on efficiency and making sure that we're able to leverage AI capabilities to kind of drive more with less. Obviously, we're going to balance that with the large opportunity ahead of us. And we're happy we were able to execute on both fronts at the same time.

Our next question comes from Cris Kennedy with William Blair.

You talked about some of the macro tailwinds in the business and some of the strong upsell activity. Can you just give us your latest thoughts on the expectations for net dollar retention and your visibility into that metric going forward?

Thank you for the question. So, our expectations for net dollar retention remains around 105%, no change from what we had before. Specifically for this quarter, we saw very strong tailwinds coming from the ticketing space, and it drove a nice kind of growth in this area. At the same time, we saw kind of travel while continue to grow a little bit softer than what we saw earlier in the year. And all in all, I would say that the majority of the growth at this point is kind of being driven by new business, and that's driving like the higher growth rate that we guided to.

And then can you just give us an update on the expectations from the revenue contribution from newer products as you extend beyond chargeback guarantee?

As we currently kind of project, we're still in the ballpark that we shared earlier in the year. There's no change in that as well. And we're just very happy with the continued addition of new merchants and that are continuing to kind of grow and using more than one product.

[Operator Instructions] Our next question comes from Timothy Chiodo with UBS.

I want to talk a little bit more on the Marqeta partnership that you recently announced. This is a good example of Riskified's technology working on the issuer side. I was hoping you could talk a little bit about, number one, the mechanics associated with this and how the technology helps the issuing banks. And then number two, the mechanics or how the revenue model might work or if we should think about this as more of a distribution channel, if there's a rev share, any of those kind of mechanics would be appreciated.

Tim, I'll take that. Thanks for the question. When we talk to merchants, they increasingly focus on what we call the post-authorization approval, right? You can either look at approval rates before you send the payment through the authorization stream or afterwards. And obviously, you have the merchant, the transaction, the initial risk decision by a vendor like us, and then it needs to go through the entire payment chain and funnel. And throughout that entire payment chain and funnel, there are various points where the transaction can be blocked and it can be blocked because someone enters the wrong CPV code. It can be blocked because there's not enough funds in the account or it can be blocked because someone further upstream from Riskified and the merchant decides that this transaction might be fraudulent or higher risk.

Because we really see our solution, our focus is on maximizing end-to-end conversion for our clients, we really try to think, hey, so what other avenues do we have? And it's not just about being the most accurate at identifying fraud for the merchant, it's also helping other partners in the payment ecosystem make smarter decisions. So, the relationship with Marqeta provides us an ability to share data and risk information in a way that allows them to increase rates on behalf of our merchants, right? So basically, if the card was issued by Marqeta or the processor there, we would expect by several percentage points higher off rates.

The value that creates for Riskified is in kind of the competitive situations where we come to new merchants, it helps create a more differentiated offering, right? It's not just about the multiproduct when we talk about the unique use cases like policy or like the identity we talked about, it also allows us to show them that on the actual offering that obviously, they care about very much, we can create a differentiated approval expectation through these types of partnerships. So, we monetize it directly through the merchant by increasing win rates and having better retention there.

Thank you. I would now like to turn the call back over to Eido Gal for any closing remarks.

Thank you, everyone. We're really excited about the momentum in the business, and we look forward to updating you on the quarters ahead.

Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.

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 like now to turn the conference over to [ Cody Slach ], Investor Relations for Riskified. Please go ahead.

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.

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 3 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. 5 of our top 10 new logos won in Q1 were headquartered outside of the United States, with those 5 wins spanning 3 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 of users. Merchants using this capability have seen an up to a 30% reduction in complaint rates and in several cases, a 7-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.

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, bidding through 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 front 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 0 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 Instructions] Our first question comes from Terrell Tillman with Truist.

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?

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 both ACH, both digital wallets, both stablecoins, obviously, credit card transactions, other smaller localized payment methods. They need to be able to secure accounts that have stored financials. So there's a lot of dispersion kind of risk vectors that they're looking to solve. And I think that they're looking at, hey, how do we kind of consolidate and create a single best-in-breed vendor that can help us across these various channels.

And we've really seen a lot of success kind of this wider platform that helps solve multiple payment use cases be successful. So in that sense, we actually see ACH and digital payments and some of these other things that I mentioned, they just help us with all payment methods, right? Because there's both some interaction between the types of fraud and that kind of focus on single vendor capabilities.

Great. That's helpful. And then just as a follow-up, you partnered with Shopify for a number of years. And 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?

I think taking a step back, we've always been very focused on our direct-to-merchant enterprise sales motion. And the reason being some of the configurations and the modeling and the operational environment required to successfully deploy leverage Riskified. And over the past few quarters, as we've been working on it, we've developed what we view to be a best-in-breed reseller and kind of rethought about the distribution channel. And for us, it's kind of making sure that the Riskified platform is easily available to anyone everywhere.

So as part of this strategy, kind of revamping both the capabilities on Shopify, but also thinking about -- we announced the partnership with Radial, which has wider platform components. We announced a deeper integration with Outpayce, Amadeus to enable more travel merchants. So I think it's kind of revamping the distribution channel to make it easier for merchants globally to consume Riskified.

[Operator Instructions] And the next question will come from Ryan Tomasello with KBW.

This is Huan Chong on for Ryan. So nice to see that 50% growth in merchants using more than one solution. Could you maybe 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.

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

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

Of course. So let me also just recap what ARIA is, right? Let's say you're a fraud manager and you see a dip in approval rates overnight and your CEO is calling you and asking, "Hey, what happened?" You can now, in simple text say, "Hey, why did my approval rate drop by 2% last night?" And you would get a clear explanation. There was a fraud ring with so and so characteristics. You can continue to dive deeper into this fraud ring. And what's unique about this is that both has our network data to allow you to create better insights for your business.

But we've also structured the data in a way that things, like what's an approval rate, what's a fraud ring, it actually makes sense. You can interact with that. And it's been a very clear merchant demand and ask. And right now, we're rolling it out and it's available to every single Riskified customer and the feedback so far has been tremendous on that. So that's on Riskified ARIA.

On the Riskified identity, we've spent a lot of time building our graph database over the past few years. And the graph database separate from linking, what's unique about it is it can do linking and can do multi-hops. And really, this is a way for us to understand identities better and understand is this a reshipper? Is this a shared address with multiple identities and it can create these various identities in real time. And that's very helpful and important for us as we're powering some of the features and the capabilities of products like Policy Protect, right? What's the return ratio of this identity, what's the abuse ratio.

And as we've continued to develop the identity graph and have kind of hundreds and millions of customers there, billions of nodes, we've started thinking how can we expand this? What other value points can this identity graph create to merchants and in consultation with them, one thing that kept coming up is, hey, we have these customer service agents. When they get requests and call-ins, it would be incredibly helpful, if they have some of this identity data in their various consoles.

So our release right now with Rue Gilt Groupe is around their Zendesk console. And now when you call in, agents automatically have Riskified Identity data embedded in that console to make smarter decisions, specifically around returns and refunds right now. But we do see multiple use cases for this moving forward that we believe we will be able to price and have a good revenue contribution from.

And the next question will come from Clark Wright with 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?

I mean I think the Rue Guilt Groupe example that I just shared is great because this one is more focused on customer experience and customer support and less directly on fraud. So we are seeing an expansion in those areas. Obviously, the work that we're doing on identity and AI, there's much more engineering and technology orientation than just traditional fraud and payments. So we are starting to touch additional points in the organization. That's a good point.

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

Sure. So what's unique about the data that we have? We have incredibly rich transactional lifetime data from the time you're browsing on a website from the time you're checking out, from post order flows around returns and refunds. So it's a very rich level of data, with very high level of granularity. And we have it across a network of our largest e-commerce enterprise merchants globally. And not only that we now also have this kind of great relations graph database that we discussed. So it's a very rich updated set of data.

That data can be consumed by third-party services in the kind of merchant native AI examples. This is the data that's being queried where the native AI agent is trying to decide, hey, should I approve a payment, should I initiate a refund for this customer? So that's one example. Another example could be the CRM system or the customer support system that's ingesting this data, so that's a CX agent, whether that's a live agent or kind of an AI agentic agent is kind of decide the point from our perspective. And we do anticipate being able to monetize this.

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.

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

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

Good day, and thank you for standing by. Welcome to the Riskified Fourth Quarter 2025 Earnings Call. [Operator Instructions] Please be advised today's conference is being recorded.

I would now like to turn the call over to your speaker today, Chett Mandel, Head of Investor Relations. Please go ahead.

Good morning, and thank you for joining us today. My name is Chett Mandel, Riskified's Head of Investor Relations. We released our results and are hosting today's call to discuss Riskified's financial results for the fourth quarter and full year 2025. Our earnings materials, including a replay of today's webcast will be available on our Investor Relations website at ir.riskified.com.

Participating on today's call are Eido Gal, Riskified's Co-Founder and Chief Executive Officer; and Agi Dotcheva, Riskified's Chief Financial Officer.

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 margin, adjusted EBITDA profitability, adjusted EBITDA margins and expectations as to positive cash flows, 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.

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-F for the year ended December 31, 2024, and subsequent reports we filed or furnished 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.

Thanks, Chett, and hello, everyone. We ended the year strong, and this momentum positions us for continued success in 2026. Our fourth quarter non-GAAP gross profit of $57.3 million represented strong year-over-year growth of 16% and our adjusted EBITDA of $17.7 million translated to a margin of 18%, demonstrating the scale and strength of the business. This quarterly amount alone exceeded our full year adjusted EBITDA of $17.2 million in '24.

Our fourth quarter revenues of nearly $100 million were a record since conception and contributed to our first ever quarter of GAAP profitability. These results are the culmination of consistent, high-quality execution across the year.

In '25, both annual dollar retention, or ADR, and net dollar retention, or NDR, improved year-over-year. ADR reached approximately 100%, up from 96% and NDR significantly improved to 105% from 96% in '24.

Our go-to-market team had another successful year with particularly strong results in the fourth quarter of '25. During the quarter, we won the highest quarterly amount of new business since our IPO, which represented approximately 55% of the total new business won for the year and was driven by high competitive win rates of over 75%. This year, we won and onboarded several leaders across industries and geographies, including Arena Star Peru, A Bounce, Adastria, ACE hardware, Vans, Kassam, David's Bridal, Nedis, Nintendo, Temu, TripAdvisor and XTO. In addition, merchants such as Iberia Airlines, Meta, Fast Retailing, Viva Airbus, Vivid Seats and ZEP were all up sold in '25 after landing on the platform over the past few years. We believe this demonstrates the power and ROI that our platform delivers to our merchants once onboarded on to the Riskified network.

We have processed approximately $750 billion in GMV and have over 1 billion unique customer interactions in our network sense inception. I believe that this data moat has created a structural competitive advantage and that we are well positioned to capture even more of the large opportunity in front of us. That is why we are focusing our efforts on deepening our geographic presence and growing faster in our newer verticals while identifying additional verticals to penetrate for continued market share gains.

From a geographic standpoint, our non-U.S. regions collectively grew 22% year-over-year, driving faster, more diversified growth. Notably, APAC and LATAM were key regions of outperformance. We plan to expand further in these regions by developing localized products and features to boost pipeline generation.

We have scaled our presence in the payments and money transfer category as evidenced by 66% growth in '24, 90% growth in '25. Based on the current pipeline and the annualization of new business won in '25 in this vertical, I expect another strong year of activity in '26. And as we capture more data on payment types, leading to more fine models and bespoke features targeted to this vertical, I believe we are positioned to continue penetrating the significant white space.

According to recent industry studies, there was a 27% year-over-year increase in fraud losses related to online transactions. The total losses attributed to fraud are expected to more than double over the next 5 years, well outpacing the expected growth of e-commerce. In addition, over 2/3 of U.S. companies experienced an increase in AI related fraud attempt in '25. We are witnessing escalating complexity of fraud schemes, which now target every touch point across the customer journey from account creation and stored value credentials, all the way through the return, customer service and dispute portals. Every part of the transaction process is at risk.

Progress varies across payment types, including ACH, credit cards, digital wallets, crypto and stable coins, agentic checkout and other methods. We need to be prepared to support and manage risk across the full payment landscape. We are leveraging the capabilities of our AI ecosystem that has been continuously advanced for over a decade.

This increase in fraud has further elevated Riskified's role, solidifying our positioning as a key partner for our merchants. I believe that the combination of a more pronounced and complicated fraud landscape, enhanced platform features and functionality and a deliberate effort to expand the top of our deal funnel has contributed to an increase in our new business lead generation of approximately 50% year-over-year.

Furthermore, in line with our expectations at the beginning of the year, I am pleased that we generated nearly $10 million in aggregate annual revenues from Policy Protect, Account Secure and Dispute Resolve in '25, and we plan to continue to grow our revenues outside of our core fraud services in '26.

As we have expanded our offering, the benefits of having a robust platform are becoming even more pronounced. First, we saw an approximately 50% increase in the number of merchants who are now using more than one product during the year. Multiproduct approach has made us stickier. Second, each transaction process across our suite of products strengthens our flywheel by expanding the breadth and depth of our data sets. This integrated data set compounds across the network, enhancing our identity engine and enabling us to develop dynamic components that can be utilized across the platform. Third, these cross-platform synergies lead to better performance for our merchants. And the strong performance with differentiated capabilities allowed us to regularly outperform our competition. And fourth, merchants utilizing more than one product generally leads to higher contribution profit for those merchants.

This is part of the reason why in '26, we are focused on driving gross profit growth versus optimizing primarily for revenue growth. As Agli will discuss shortly, we expect non-GAAP gross profit growth to accelerate to double digits at the midpoint in '26, demonstrating the continued leverage in our model.

Now on to a very topical theme, artificial intelligence. Allow me to discuss how we are observing AI impacting the market and how Riskified's product platform and internal operations are positioned for success in this environment. There are 2 main dynamics that we are seeing. First is the increased utilization of agentic commerce through general purpose LLMs, but still primarily only for discovery purposes and not checkout. The second is the rise of merchant native LLMs, which are advanced agents within a merchant's ecosystem designed to handle the full shopping journey from answering inquiries, to completing the purchase, closing the loop completely within their ecosystem. Both flows present unique transaction risks that our platform aims to solve.

In the first agentic flow, when customers do use general purpose LLMs for checkout, we have seen instances where fraudsters utilize AI to throw agentic traffic off script by generating synthetic IDs to bypass LLM verification. Our internal estimates indicate that approximately 30% to 40% of essential model features are lost when consumers transact through general purpose LLMs, increasing risk and escalating the prevalence of fraud like this. To combat this, we strive to help merchants by providing clear visibility into agentic traffic and emerging fraud MOs that they don't otherwise have on their own, proactively adjusting models based on low signal environments, segmenting order flows and rapidly developing features to identify emerging agentic fraud MOs.

In the second flow, merchants are building out their AI shopping assistance to offer deep personalization and loyalty programs based on customer preferences. Riskified provides a critical risk intelligence layer that helps make these transactions both smart and secure. This is especially critical when those interactions have financial implications. An example of this is providing merchant native AI agents with real-time risk signals while they are in the conversation with customers to offer instant refund or exchange decisions based on that individual customer's risk and eligibility. Because Riskified analyzes the complete purchase history of the end customer across an expansive global network of e-commerce brands, including exact product list, SKUs and cross-merchant behaviors, we can provide highly differentiated data that merchants cannot otherwise access on their own. We are able to provide a decision platform for their agents to make important and accurate financial decisions.

We are excited about the continuous expansion and enhancement of our agentic commerce offering. Merchants are actively preparing and ready to support agentic commerce across its various forms and flows. Our ability to not only service the dynamic needs of an evolving market but also to innovate in real time is generating an increase in merchant dialogue. I believe that this strategic engagement is a driver for our future business pipeline and growth.

Internally, we continue to adopt AI to automate and scale complex business workflows across departments. This is intended to help drive operational efficiency and productivity, lower costs, improve response times and enhanced service delivery. For our engineering teams, AI has become a force multiplier. Our developers have moved from basic coding assistance to agentic systems that span the entire development life cycle, from discovery and requirements assessment to automated root cause analysis for production alerts.

In addition, by using agentic floats for code review and observability, we are reducing technical debt while increasing release velocity. The impact on productivity is measurable. Between Q2 and Q4 of '25, many of our engineers saw more than 2x increase in tickets completed. This enables us to focus on developing new product enhancements and features and to test, train and deploy them more efficiently, strengthening our relationships with the hundreds of enterprise merchants in our network.

We are seeing similar functional leverage across the other business units in finance and analytics. We have moved several initiatives into production to automate processes that reduce human error and manual labor and the go-to-market team has found success utilizing LLMs to drive merchant inbounds and high-end dead queries. We've also developed agents that automate time-consuming cost benefit analysis of merchant prospecting, minimizing manual work to drive quicker and more accurate outreach. And while we are getting leverage from general purpose LLMs in our own business, I don't believe that those same LLMs pose a true threat to our decision engine.

In our view, LLMs lack calibration and the precise probability intervals required for fraud engines. Additionally, LLMs are optimized for text and image while traditional AI fraud models like ours are much better at analyzing structured data inputs. That includes browsing behavior, account activity, checkout data and post fulfillment signals for every transaction. Our models learn from over 5 billion historical nonpublic merchant network transactions that have been labeled intact. With this data, we create, update and continuously deploy features to be used by our models that solve the increasing complexities of fraud. To that end, as we announced yesterday, we have recently developed features to address this problem.

Within our Policy Protect decision studio, merchants are able to identify and apply business rules to manage the risk of order volume coming from their native AI shopping agents. This control will allow merchants to confidently deploy their branded conversational AI agents without exposing themselves to programmatic refund claim abuse, reseller arbitrage or promotional abuse. We also expanded our AI agent identity signals, allowing a merchant's AI shopping agent to directly query Riskified identity graph to retrieve associated risk indicators and resolve an identity programmatically.

The breadth and sophistication of our platform allows us to train, test and deploy merchant or payment-specific models. We also use this platform to retrain models with updated data, new features and segment calibrations to protect from emerging fraud patterns across our network.

All this helps us drive optimized merchant performance, which at the end of the day is the key driver of merchant satisfaction. Our ability to rapidly adapt in the face of a shifting landscape does more than just protect our merchants. I believe it serves as the foundation for our sustained financial strength and disciplined execution.

Over the past 2 years, we have repurchased shares, representing approximately 2/3 of our current enterprise value. Based on our current expectations of improved free cash flow of approximately $40 million in we anticipate generating a free cash flow yield of approximately 10% relative to our current enterprise value.

Looking ahead, I believe that our momentum remains strong. As a reflection of our confidence in Riskified's long-term trajectory, I am pleased to announce that our Board has authorized an additional $75 million share repurchase program. This decision reflects our conviction in the fundamentals of the business, supported by strong free cash flow, a debt-free balance sheet and a disciplined capital allocation strategy that we believe will prove beneficial for our shareholders.

I want to thank our team again for their focus and strong execution against our '25 financial plan. Our results reflected the top of our revenue and adjusted EBITDA guidance ranges and we entered '26 in a position to accelerate our performance even further.

Now over to Agi.

Thank you, Eido, 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.

We achieved fourth quarter revenue of $99.3 million and full year revenue of $344.6 million, up 6% and 5% year-over-year, respectively. And while we don't plan on reporting our billings going forward, our fourth quarter billings of $103.3 million grew 9% year-over-year.

Our fourth quarter GMV of $46.7 billion was the highest quarter of volume reviewed in our history and represented growth of 18% as compared to the prior year period. For the full year of 2025, our GMV grew by 10% to $155.1 billion.

During the fourth quarter, revenue growth was partially driven by strong performance in our travel vertical, reflecting continued momentum from the third quarter. These gains were partially offset by softness in our ticket and live event subvertical, which declined year-over-year, primarily due to tougher second half comparable periods versus 2024's record level of activity and larger live events. Overall, the total tickets and travel vertical was slightly positive in the period.

Our money transfer and payments category grew 75% year-over-year, driven by new business wins and upsell activity.

Our fashion, cosmetics and luxury vertical grew 8% year-over-year. This was primarily driven by new business and upsell activity and 11% growth during the Black Friday through Cyber Monday period. This growth was partially offset by continued same-store sales pressure in our high-end and sneakers sub-verticals, similar to the first 9 months of the year. That being said, for the second quarter in a row, we did see year-over-year improvements in some of our largest merchants in this category.

Lastly, I'm encouraged that we reverted to a year-over-year growth in home category as we have now fully lapped the dynamic that impacted the first 9 months of 2025.

For the year, our money transfer and payments, fashion and luxury, tickets and travel categories were the largest contributors to our annual revenue growth. The combination of these verticals represented nearly 80% of total billings and are each expected to drive continued growth in 2026. For the full year, revenue in the United States declined 6% year-over-year, primarily as a result of the contraction in our home category. Encouragingly, we continue to grow across all of our non-U.S. regions with accelerated year-over-year growth as compared to 2024.

During 2025, APAC grew approximately 53% year-over-year, while other Americas, which represents Canada and Latin America, grew approximately 13% year-over-year, primarily driven by the momentum in new business and upsell activity with particular strength in the travel vertical.

EMEA grew approximately 18% year-over-year with the strongest performance concentrated in our money transfer and payments, tickets and travel and fashion and luxury verticals, supported by both new business and upsell momentum.

Our revenue derived from merchants headquartered outside of the U.S. was 46% in 2025, up from 39% in 2024. We believe that our continued international growth reflects ongoing progress in capturing global market share.

During the fourth quarter, we achieved record quarterly gross profit of $57.3 million, up 16% from the prior year and $180.3 million for the full year, representing a year-over-year growth of 4%. The full year gross profit growth of 4% was driven by meaningful improvements in our core machine learning models with great performance in our money transfer and payments category and within our 2024 cohort, which delivered the most pronounced year-over-year improvement across cohorts.

Our increased revenue from new products further contributed to our growth. This improvement was partially offset by the ramping of merchants in newer geographies such as Latin America and weaker performance in our 2022 cohort, which while still maturing, has yet to reach the performance levels of the broader portfolio.

As a reminder, I encourage you to continue analyzing our gross profit on an annual basis, given individual quarters can vary due to the various factors, including the ramping of new merchants and the risk profiles of transactions approved.

As it relates to 2026 for the full year, we're targeting non-GAAP gross profit growth of 7% to 12%, with each quarter at or near 10% growth at the midpoint. In addition, we estimate that each quarter in 2026 will approximate the same percentage of the total as they did in 2025.

Moving to our operating expenses. We continue to manage the business in a focused and disciplined manner. Total operating expenses were $39.6 million of the fourth quarter and $153.6 million for the full year, representing a decline of 2% from 2024. Our operating expenses as a percentage of revenue declined from 48% in 2024 to 45% in 2025, reflecting leverage in the business model.

We ended 2025 with 670 global employees, a decline of 3% from the prior year. This was achieved through the increased utilization of artificial intelligence tools to maximize output and increase efficiency and by strategically reducing headcount in areas that were less critical to our product development and growth strategy. Despite this nominal decline, we ended the year with an increase in our development capacity, which we believe is critical to advancing platform innovation, outperforming our competition and improving product accuracy and customer service to deepen our merchant relationships.

In 2026, we anticipate quarterly expenses to approximate $41 million to $42 million per quarter in the first half of the year and $42 million to $43 million per quarter in the second half. The primary driver of the increase from 2025 relates to FX headwind, mainly from the appreciation of the radical compared to the U.S. dollar. The FX headwind is approximately 400 basis points to our annual adjusted EBITDA margin. On a constant currency basis, we anticipate relatively flat expenses year-over-year as we continue to manage the business in a disciplined manner.

We achieved adjusted EBITDA of $17.7 million in the fourth quarter, the highest quarterly amount in our history, which translates to an adjusted EBITDA margin of 18%. We believe that this quarter's results demonstrate that the business is positioned for continued adjusted EBITDA margin expansion and can achieve scaled performance like this over time. For the full year, our adjusted EBITDA was $26.7 million, representing a year-over-year increase of over 55%.

On a GAAP basis, we achieved net profit of $5.8 million in the fourth quarter of 2025 as compared with negative $4.1 million in the prior year. I'm encouraged about the progress that we have made on achieving profitability on both GAAP and adjusted EBITDA basis.

Moving to the balance sheet. We ended the year with approximately $298 million of cash, deposits and investments and continue to carry 0 debt. In addition, we continue to maintain a healthy cash flow model. In the fourth quarter, we achieved free cash flows of $10.7 million and $33.1 million for the full year. Looking ahead, I'm encouraged that we expect our free cash flow to increase at least 20% and be approximately $40 million in 2026.

During 2025, we repurchased approximately 22 million shares for a total price of $105.9 million, which contributed to a reduction of 8% in shares outstanding. Since the inception of our buyback program in the fourth quarter of 2023, we have repurchased approximately 52 million shares for a total price of $259.5 million, which helped contribute to a 17% reduction in shares outstanding over that time period.

As Eido mentioned, I'm excited to announce that our Board of Directors has authorized up to an additional $75 million of share repurchases, subject to the satisfaction of this regulatory requirements. When combined with amounts that remain available under our existing share repurchase authorization, our total outstanding authorization is approximately $84 million.

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.

On the topic of share-based compensation and earnings per share. Share-based compensation expense of $51.6 million, declined from $57.8 million in the prior year. As a percentage of revenue, this amount decreased by approximately 300 basis points from 2024 levels. This was on top of a decline of 700 basis points over the prior 2 years. Looking ahead to 2026, we expect absolute share-based compensation dollars and as a percent of revenue to continue declining due to the gradual roll-off expense associated with large grants made in 2021 and 2022, as the awards fully vest throughout 2026.

Our total absolute share-based compensation dollars should approximate $40 million for the year. We expect our free cash flow generation to approximate our share-based compensation in the year. Our annual non-GAAP diluted net profit per share of $0.20 represents an increase of 18% in 2025.

Now turning to our outlook. As we look forward to 2026, we currently anticipate revenue of between $372 million and $384 million, representing growth of 8% to 11% within $378 million or 10% to the midpoint. Consistent with past years, we anticipate that our growth will continue to be driven primarily by new business activity and at the midpoint of our guidance, we're forecasting a similar net dollar retention rate as in 2025.

We currently expect all of the quarters in 2026 to reflect a similar percentage of the total revenue as they did in 2025 and growth to accelerate sequentially with each quarter throughout the year. The behavior of the micro environment, our success in retaining our merchants and the level of upsell activity relative to new logo wins only impact our net dollar retention rate and ultimately determine where we fall within our revenue range.

In addition, we feel confident about the new business activity levels, which is supported by a robust pipeline of new opportunities. Historically, the timing of when new merchants go live during the year can be difficult to predict and may have an impact on our calendar year revenues. As always, 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.

Now let me discuss our adjusted EBITDA outlook. We currently expect adjusted EBITDA to be between $26 million and $34 million or $30 million to the midpoint, representing a margin of 8%. This is inclusive of an approximate 400 basis point FX headwind to our adjusted EBITDA margin.

Overall, I'm encouraged by our AI advantage, market position and I'm confident that we can continue to execute on the elements within our operational control. We remain focused on identifying and executing on the many opportunities for long-term growth and our ability to deliver value to our shareholders.

Operator, we're ready to take the first question, please.

[Operator Instructions] Our first question comes from Terry Tillman with Truist Securities.

Congrats Eido, Agi and Chett. The first question, and hopefully, you can bear with me because it's so topical around agentic commerce. It's a multi-partner, and then I'll have a follow-up question. As it relates to agentic. I appreciate kind of how you talked about 2 types of kind of agentic use cases. I'm curious if you can quantify any early GMV from those 2 different scenarios? And then also, what would the monetization or take rate look like in transactions in that type of flow? And then how many merchants are you actually actively working with that are just trying this out at this point? And then I had a follow-up.

Sure. Terry, so I'll take that. So maybe taking a step back, right? We feel we're an advantage -- in a great position to talk to over 50 publicly traded companies and really understand what their agentic commerce strategy is. And the way they're laying it out to us is pretty clearly, there are 2 main flows. The first flow, what we call the merchant native AI agents where they continue to own the relationship with the customer. And I think they have a lot of -- shows a lot of promise in their mind, right? And here, you would have an AI agent on their website that can support the entire life cycle from discovery to check out, to returns and customer support interaction. And this entire experience is happening in their website.

So if they're a luxury fashion merchant, they can have the right type of images and product descriptions and kind of flows and recommendations. If they're an OTA, they can have the right type of filters that are appropriate for kind of traveling and routing. So I think they're putting a lot of emphasis on that area. What we're seeing there is, because LLMs are really -- it's easy to challenge them and get them to move off script and make financial decisions, that you did not intend them to make, we're serving really this guarded or intelligence layer that they're querying in real time to understand, "Hey, should I approve this transaction, what type of free fund should I provide to this customer?" And we're just really leveraging the entire network that we already have, making it even more unique, the value that we're providing in there. So that's kind of the merchant native AI agent.

The second flow is more kind of the general purpose LLM where it can either act as a good referral or do the purchasing on behalf of the consumer. There, to be clear, we're seeing predominantly referrals. Actually seeing agent traffic and purchasing is still extremely low and limited. From a take rate perspective, on the general purpose LLMs, we are seeing higher risk traffic there right now. So again, even if it's very small, whenever you have some of these New York flows broad tends to come in, because there's more limited data, there's lack of experience. There's less guardrails and controls in most cases. And so I think on average, the take rate there will probably be higher right now. But over time, that might kind of shift.

And just a more general question around traffic, I think merchants are in a stage where they're trying to prepare and make sure that they're ready for the changes and put their best foot forward, but the traffic is probably not there yet.

Very helpful. And I guess just a follow-up, maybe for Agi. -- it's helpful when you go through the different segments that you're serving in the growth rates. Money Transfer and payments, it was another exceptional year of growth as you're onboarding strategic accounts and they're growing. I'm curious, though, do you see that outsized type growth continuing in your guide for '26 on money transfer and payments versus the other end markets?

Terry, so money transfers and payments was an amazing category for us as the growth was really, really strong. Kind of looking into 2026, we have a number of opportunities in the pipeline. And I expect the category to continue to grow, but probably just to normalize in terms of like the total amount of growth.

Our next question comes from Ryan Tomasello with KBW.

Just following up on the Agenda Commerce topic. Can you talk about how you think about the potential for rising adoption there to either structurally reduce or increase the level of fraud in the system over the long run, notwithstanding kind of early days here? And then just your thoughts on the potential second order impacts. There's a lot of talk on agentic agents -- agentic AI agents utilizing alternative payments rails like stable coins, just how you view that also impacting the structure of the system here.

Ryan, sure. Look, I think what we're seeing is that in order to be good at online commerce and payments specifically, you need to be doing a lot of things well. And right now, something like that, it is agentic kind of commerce. And you can add crypto and stable coin. So if historically, you would need to be able to manage credit cards and credit card acceptance you now need to be able to support ACH and digital wallets and crypto and stable coins and the agentic checkout.

And with agentic, we're talking about a few different flows. And you don't just need to think about just the checkout yields, I need to think about account creation and account login and you probably have some stored value in the account that people can transfer in and out. You obviously have the checkout experience, but you also have all these various post-checkout flows, returns, refunds, leveraging different discount codes and abusing that. You have the entire chargeback process, which is different between credit cards and ACH, check all the chargeback there, it's insufficient funds and you have issues around scans that are popping up.

So I think we're seeing an increase in complexity. And I would just tie in the agentic checkout into that overall increase in complexity, and we're seeing an overall increase in losses within the merchant ecosystem. And I think that as merchants are trying to solve these different use cases in these various fraud patterns. It just becomes more complicated, more quickly. So I think that's kind of a net benefit to risk of it is. We see this more complex environment increasing in the years ahead. On a bit more targeted and specifically on agentic, like we just mentioned, we do see an increase in fraud right now in agentic channel, specifically when you have general purpose LLMs.

It could be a combination because it's newer and fraud tends to shift to that area, and there's less control and saving there. So hard to say how that would kind of behave in kind of the quarters and years ahead as it gains more traction. But as of now, it's probably kind of net incremental to general take rates.

Great. Appreciate that. And then just an update, if you can provide on the mid-market expansion strategy, how that plays into your 2026 growth and just broader investment plans in that category?

Yes. I think one of the unique things about Riskified targeting the enterprises is that we're able to really customized to a high level, the modeling and the performance for each individual merchant. As we've been getting much better at completely automating the entire life cycle of doing that, I think that's going to present opportunities to kind of continue and find this model in more of a down market and referral strategy. That's not something that's expected within our guide for the year. So the more we can accelerate that, that would be upside to current guidance.

Our next question comes from Will Nance with Goldman Sachs.

And first of all, I hope all the teammates in Israel are at home and safe. I wanted to ask also on the agentic kind of topic of the day. I was wondering if you could just speak to status on integrating into some of the latest agentic protocols, we the kind of ICP strive, UCP Google and any of the other relevant ones. I know a big part of the model is kind of taking all the different signals from the user behavior in those channels. So just maybe wondering if you could speak to that and maybe shed a little bit more light on kind of like the value of the data that might come through those protocols and detecting fraud vectors?

Yes. I think -- by the way, and thank you for mentioning kind of the teammate in Israel. We appreciate that. I think the issue right now that the market is seeing is, to your point, there are a wide number of multiple protocols. And some of them, I think it's clear that they're already outdated in the month, maybe quarters ahead, there will be new protocols that are probably even kind of more updated that. So obviously, internally, we're doing everything we can to support everyone in that ecosystem, whether it's kind of AI agent approval, AWS marketplace, Google A2A protocol, just general rest APIs. We do see ourselves requiring to have that full spectrum to make sure we cover everything. Unfortunately, we do anticipate a somewhat continued fragmented approach here. So I think it's still early to say if there's anyone who's going to be a clear winner in that area. So there will probably need to be some kind of optimization between the various protocols.

Got it. That makes sense. And maybe just one for Agi. The FX headwind on the margin it's helpful quantifying that. Could you just remind us of the -- it sounds like it's the FX exposure in the cost base that we should be thinking about there, shekel and otherwise. I was wondering if you could just kind of update us on major currency waiting as we try to fine-tune the model.

Yes, I will. So I mean, first of all, I'm so excited about the quarter, the guide kind of the returning back to double-digit growth. And if I think about the FX headwinds, we kind of spelled it out, it's approximately 400 basis points or $14 million to adjusted EBITDA. And it's frustrating. I mean, over the years, we kind of focused and we kind of ran on a flat expense base for a period of time. And this FX headwind is really obscuring some of the progress. But the truth is that the underlying business momentum is strong and will continue to focus on optimizing. We'll continue to focus on growth, and I'm just excited about 2026.

Our next question comes from Chris Kennedy with William Blair.

Great. I'll just echo Will's comment regarding Israel. The revenues from newer products, policy protect account secure doubled in 2025. Can you talk about kind of the opportunity for that set of products in 2026?

Sure. So maybe just to refer back to kind of Ryan's question where we said, "Hey, we're seeing an increase in complexity forms of fraud." We're seeing it across different channels like ACH, digital wallets, stable coins, agentic checkout. And we're seeing it happen in different parts of the kind of shopping experience, not just checkout, but also account creation and abusive policy rules and things around dispute management. All this to say, I think it's leading to an environment where there is kind of more demand and more value and just basically more necessity for merchants to leverage the wider product platform.

So if I think about the revenue that we anticipate from kind of Policy, Account Secure, Dispute Resolve, some of the non-guaranteed payment flows that we now work with merchants on anywhere from $15 million to $20 million in '26, I think, is a good range at this point.

Right. And then just one for Agi. If you think about the 2024 cohort, the CTB ratio really improved. Can you give us a little bit more color on what drove that improvement there?

Yes, of course. I'm very excited about some of the improvements of this cohort, and we can sell already the result of that in Q4. So there's kind of some merchants there they're specifically about the money transfer and payment category. And we were able to kind of do significantly better there. It's kind of evident in the cohort. And I think it's like a great base for some of the merchants that are in the pipeline there and just continuing to kind of optimize incoming merchants as well.

Our next question comes from Timothy Chiodo with UBS.

This one -- we brought this up in the past, but I thought it would be a good 1 just to check in on to see if anything is different in the agentic channel. My guess, it's the same. But the question is really the services that you're providing to merchants, do you consider them and/or see them operating in addition to value-added services coming from the card networks or instead of value-added services coming from the card networks?

Tim. So sorry, could you rephrase our services in addition to the services from the card networks?

Sure. So if a merchant is working with Riskified, are they using Riskified in addition to some of the fraud-related value-added services coming from the card networks? Or are they using Riskified instead of some of the fraud tools that are coming from the card networks?

Okay. Thank you for clarifying. So look, I think there's no direct comparable in the stack of the card service providers right now to the spectrum of Riskified. One of them has more data-related features. So I think there a Master Card acquired a Cat, Visa probably has a Visa Verify. So those are kind of what we consider data features. One of them has a more older generation scoring tool that we don't really view as competitive. No one has a Policy Product. Definitely no one has kind of what we would consider a modern machine learning type solution for fraud prevention. I think the Dispute Product, also there's nothing comparable. On the Account side, there's nothing comparable. If you think about support for ACH, crypto, stable coin on kind of the FIA conversion and account storage, there's nothing comparable. On agentic checkout, there's definitely nothing that we've seen comparable to some of the releases we've recently made.

So I think overall, it's -- on the venn diagram, it's pretty and different. There could be different services that they provide maybe more towards the financial institutions, anything around tokenization and rails for really secure. That's less in our wheelhouse. But hopefully, that gives kind of a good mapping of what we do that they don't do.

Excellent. That's a great answer. My follow-up is around -- you were talking around some of the other forms of payment, whether it be account to account, basically alternative payment methods in general. I know that it's early, but in your experience and with your position in the industry, do you have any reason to believe that the card mix within the agentic channel would be any different than the card mix is in traditional e-commerce? So whatever you believe the mix is to be in traditional e-commerce, do you think through the agentic channel that it would be roughly the same, maybe the card mix is a little lower or maybe the card mix is a little higher? And what would be the reason that would lead you to believe the answer to the question?

Yes. Thank you. I think that's a great question and obviously a lot of debate on that. I think there are specific industries in probably payments, remittance, kind of brokerages, which would probably see an increase over time on whether it's kind of a stable coins, crypto, those are also direct ACH connections just because exchange fees, FX rates, everything that we know. So I think they're probably is the potential for more to migrate maybe with long-term subscriptions as things like ACH and others become easier, maybe merchants would have an easier time transferring some customers for kind of various discounts to that area.

But overall, by and large, in most categories, I would not anticipate a shift. I think that overall consumer preference for cards or rewards continues to be incredibly high, and I think merchants adapt to that. I don't see that changing based on kind of the LLM channel or merchant native AI agents. I think merchants already have the ability to capture with extremely low interchange fees, debit cards. I think when you think about things like reward cards, the customer gets so much value from that, they have a clear preference. I think large merchants also have the ability to issue their own reward cards and take a meaningful portion of that interchange fee and usually through agreements with kind of network or issuers also take some kind of the potential float or value of kind of installments or like payments there.

So from an ecosystem perspective, I think cards are still around to stay in most categories, but there's probably a few specific areas where we'll see an increased adoption in alternative payments. And I don't see a clear difference between kind of general purpose LLMs or merchant native AI that would make them specifically work on kind of stable coins or anything else relative to the existing rails.

Our next question comes from Reggie Smith with JPMorgan.

Congrats on the quarter and achieving GAAP profitability. I got another question about agentic as well. So I did, and I appreciate that there's not a lot of transaction flow coming from, I guess, third-party LLMs today, and so it's early days. definitely get that. But I'm thinking about someone asked earlier about like how pricing may work here. I'm curious just like how that would roll out in general.

And specifically, like when merchants need separate contracts more agentic or would it just be rolled into their standard e-commerce that occurs in our website. And then kind of beyond that, as you think about this new surface and these new potential risks, like how are you -- does that give you any pause at all or concern around like what early losses could be like? And what kind of differentiates you there, given that you won't have like a 13-year head start or back-testing history that you have on the traditional commerce side? So just curious like how you're thinking about that and like tactically how this could actually roll out to customers and yes.

Sure. Thanks, Reggie. That's a great question. So I think there are 2 ways this can go. One is with the client that's on various submission plans and not getting everything right now to Riskified. And usually, they would proactively come and say, "Hey, we're opening up this agentic channel or we're seeing some initial kind of traffic or maybe we're even reaching out to them." And then they say, we would want you to manage this definitely as -- who are not prepared to do that. And we've seen some of the larger clients that we work with approach us proactively with that. We're also in contact directly with some of our other merchants. And the pricing there, it's just slightly more flexible pricing to start. I think merchants are very open to having a higher price initially, both because they understand there's an increased fraud in this day 1 and also because the absolute dollar amounts are still so small. It's less of an issue. And obviously, we would kind of better negotiate mutually the fees once we understand the actual risk profile and the volume there. So that's one instance.

The other one is merchants that already exist and are providing all their volumes of Riskified. Yes, it continues to be the case that we would just see this traffic. And based on the risk profile there, if there's a significant increase, we might need to have a discussion with the merchant what that means from a commercial perspective.

As I think about how do we anticipate some of this fraud, on the one hand, you're right to say that it's still early stage and a single merchant might only see a single transaction. But by that same token, we're seeing it across the network of some of the largest merchants, and we're seeing some of the newer fraud MOs happen. And if you think about our system overall, what's unique and great about our system is that we're able to see fraud MOs in real time in one place and then adapt features or create new segments and deploy that relatively quickly to other parts in the model.

So even though this is something that's kind of newer, our system really is adapt at learning new fraud rings, new fraud MOs, and pushing updates to the rest of the system based on that. It's what we've done is we've expanded into Lat Am into kind of other APAC regions, and you can continue to see that. I think Agi mentioned on some of the PPP cohort some of that continued quick improvements there and agentic behaves the same, right? There's like new fraud trends, you need to stop with leading there and then solve it for the rest of the portfolio.

Got it. Okay. And if I could ask one quick one on kind of FX. I appreciate that you guys are paid in dollars. But I was curious, is there any FX benefit, the GMV growth next year? Or is that in U.S. dollars as well? FX was not much strong suit. Is there anything you could share there would be helpful.

Reggie, I'll take this one. So specifically, the way I kind of view the FX, the fluctuations over the years have been able that we were able to absorb, specifically this year, where I see the FX impact and kind of isolated it in this 400 basis points. Effect on adjusted EBITDA is around the strengthening of the Israeli currency, the shekel versus the dollar. And since half of our expenses approximately are in Israel, it's impacting it more materially. So that's the main kind of FX impact that I talked about, it's worth mentioning. Without this, as I mentioned, on a constant currency basis, our expenses would have been flat year-over-year.

Got it. And so I guess just to put a finer point on it. Will there be a FX tailwind to revenue from the dollar just being weaker in general? Clearly, you've isolated the expense side, but I'm just curious, like is there anything we should think about at the revenue line?

On the revenue line, it's probably much minor. I'd imagine it's, if anything, probably from the euro, but that will be probably less than 0.5%, and it's something that's we've already incorporated in projections as kind of like we're basing our projections on what we see today.

Our next question comes from Clark Wright with D.A. Davidson.

Agi, on the beginning -- or I believe this is actually might be Eido, you spoke about the fact that your strategy is more oriented going forward on gross profit growth versus revenue growth. What does that mean from a go-to-market perspective and your risk tolerance for specific product categories?

Yes. Thanks for that question. Look, we've seen internally, I mean, we've always focused as a management team on gross profit, gross profit dollars, gross profit dollar growth. but it's probably been more of a focus recently over the past few quarters and will be over the next few quarters, just because we're seeing more demand and more bundling strategies for the kind of wider product portfolio. And overall, there's a different margin profile within those products. So for us, it's clear, we really want to focus on the gross profit dollars and that growth.

From a sales perspective, anything from how they target accounts to how they think about -- how we think about commission structures is more oriented in this direction now.

Awesome. Appreciate that. And then just on another topic that was already discussed partially earlier, but I just wanted to understand the penetration rate on the nonchargeback guarantee products and the assumptions that you have for the 2026 guide. You referenced the $15 million to $20 million. But what does that mean in terms of the overall customer base and their willingness to accept or to adopt these offerings?

Yes. I think we shared in the script that we were seeing good progress of over...

Around 50%.

Around 50% kind of increase in adoption. We haven't really spelled it out by the specific product or what's dual product, what struggle product. We'll think about the best way to represent that to make it easier for investors to follow. But right now, we think that kind of revenue is probably the best proxy for that. And like we mentioned, went from -- I think it was really low single-digit millions to $10 million, and we think we can continue to grow that to $15 million to $20 million this year.

And I'm not showing any further questions at this time. I'd like to turn the call back over to Eido for any further remarks.

Thank you. Just before I conclude, I want to send my support to our team members in Israel and their families. Thank everyone for their hard work. And with that, just thank you, everyone, for joining us on today's call. I look forward to continuing to update you on our progress throughout the year.

Thank you. Ladies and gentlemen, this does conclude today's presentation. You may now disconnect, and have a wonderful day.

Good day, and thank you for standing by. Welcome to the Riskified Third Quarter 2025 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Chett Mandel, Head of Investor Relations. Please go ahead.

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 third quarter of 2025. 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 third quarter of 2025 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 margin, adjusted EBITDA profitability, adjusted EBITDA margins and expectations as to positive cash flows, 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.

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 statements. Please refer to our annual report on Form 20-F for the year ended December 31, 2024, 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.

Thanks, Chett, and hello, everyone. We've built solid momentum this year, driven by disciplined execution and focus across the business. That progress is especially clear in our third quarter results, where we delivered a meaningful turnaround in non-GAAP gross profit, improving from a 4% decline in the first half of the year to 5% growth in Q3. While the first half of the year reflected some temporary softness, the actions we took during the period have laid the foundation for a higher gross profit trajectory and expanding profitability in the back half of '25 and beyond. Looking ahead, we expect an even stronger step-up in the fourth quarter, supported by improved technical model performance and the seasonally stronger traditionally lower risk holiday period.

We've continued to invest heavily in our machine learning capabilities, enhancing key features and expanding our autonomously trained model program to reinforce our market-leading technology. So far in '25, we have shifted approximately 70% of our models from manual to autonomous training and 100% of the autonomously trained models now outperform their previous manual production models. We believe that this automation will allow us to continue scaling the business with high leverage. Our autonomous program allows for real-time retraining when early fraud signals appear, freeing up our data scientists to focus on developing new features that further boost performance.

On the revenue side, our push into more nondiscretionary categories continues to deliver. I want to highlight the strong momentum in our money transfer and payments category, which grew 100% in the third quarter. We believe we are on track to nearly double the absolute revenue dollars in this category for full year '25 as compared to last year. This growth is being driven primarily by new business activity. Both our top new logo won and the largest upsell during the third quarter were in this category, and we believe that merchants in this vertical where transaction speed and superior fraud capabilities are paramount, are increasingly recognizing the performance and ROI that Riskified offers.

We also returned to meaningful adjusted EBITDA margin expansion in the third quarter, improving by near -- by roughly 560 basis points year-over-year. And as Agi will cover, we expect a further step-up in our Q4 margin, approximating a 15% adjusted EBITDA margin, reflecting the operating leverage of our model, the scalability of our platform, and the efficiency gains achieved over the past few years.

Beyond financial performance, we executed well against our '25 product road map. It's now been several quarters since we launched an Adaptive Checkout, the advanced configuration of our chargeback guarantee engine. Adaptive Checkout uses AI to raise conversion rates by adding friction only when it's truly needed and removing it where exemptions apply. The results have been impressive. One U.S. ticketing merchant increased total conversion by 5% by using selective onetime password friction to recover declined orders.

In EMEA, an electronics merchant lifted conversion by 26% by removing unnecessary 3D Secure friction through Riskified's exemption and pre-authorization analysis. And as adoption grows, Adaptive Checkout continues to raise the bar for intelligent risk management and positions us to capture more share in the global e-comm market. We're also very focused on the rise of agentic commerce. Our research shows that many shoppers already use AI somewhere in their shopping journey, but very few complete purchases through large language models today. And as AI agents begin making purchases on behalf of consumers, critical data that fraud teams depend on can disappear, reintroducing many of the risks' merchants have worked hard to eliminate. The results can be higher chargebacks, disputes, and policy abuse. We're positioning Riskified to help merchants navigate this shift safely through a combination of strategic partnerships, innovative technology, and enhanced infrastructure. Our collaborations bring together fraud prevention expertise with secure agentic protocols to deliver accurate decisions and better business outcomes in this new e-commerce environment.

As we head towards the end of the year, our third quarter has provided momentum as we approach the peak year-end holiday season. Our internal data continues to show resilient consumer spending with October tracking in line with our expectations. We are seeing solid performance in our 3 largest categories: Tickets & Travel, Fashion & Luxury, and Money Transfer & Payments, which collectively represent more than 2/3 of our GMV. Assuming steady activity through the year-end, we're cautiously optimistic for another healthy holiday season. Combined with a solid first 9 months of performance, we have the confidence to raise the bottom end of our revenue guidance for the second consecutive quarter.

In conclusion, our global platform continues to lead in the e-commerce fraud and abuse prevention market. Our team remains focused on executing on the large new business opportunities ahead, and we are on track to close out the year strong and to enter '26 with solid momentum, a healthy new business pipeline, and confidence in our growth trajectory.

I will now turn it over to Agi.

Thank you, Eido, team, and everyone for joining today's call. Our GMV for the third quarter was $37.8 billion and $108.4 billion for the first 9 months, reflecting a 9% and 7% increase year-over-year, respectively. We achieved record third quarter revenue of $81.9 million, up 4% year-over-year. Revenue for the first 9 months of $245.3 million, increased 5% year-over-year. Our GMV and revenue growth during this quarter was primarily driven by continued new merchant and upsell activity.

Our largest category, Tickets & Travel, grew 6% during the third quarter, driven primarily by strong new business wins and upsell activity, offset by softness in our tickets and live events vertical. This is primarily due to tougher second half comparable periods versus 2024's record level of activity. Travel saw strong growth in Q3 with anticipated momentum heading into the end of the year due to both new business wins and stronger same-store sales growth. The overall net effect is expected to result in similar year-over-year growth rates in the fourth quarter.

Our Fashion & Luxury category grew 13% during the third quarter, which was supported by continued momentum in new business activity and improvements in some of our largest merchants in this category, partially offset by continued same-store sales pressure, particularly within our high-end fashion subvertical. We're confident that this category will continue to grow for the year, supported by a strong pipeline of new business opportunities that are expected to close in the fourth quarter and some anticipated macro steadiness in the high-end fashion subvertical.

Our Money Transfer & Payments category achieved approximately 100% year-over-year growth in the third quarter. This growth was driven by the new business activity, which continues to be a key area of expansion. As anticipated, we saw year-over-year declines in our home category, which contracted by approximately 70%. I'm encouraged that in the fourth quarter, we expect to revert to year-over-year growth in this category as we lap the dynamic that impacted the first 9 months of 2025.

In the United States, revenue declined 12% year-over-year, primarily as a result of the contraction in our home category. Encouragingly, we continue to grow across all of our other regions. During the third quarter, APAC grew approximately 55% year-over-year, while other Americas, which represents Canada and Latin America, grew approximately 18% year-over-year, primarily driven by momentum in new business and upsell activity with particular strength in the travel subvertical.

EMEA grew approximately 19% year-over-year with the strongest performance concentrated in our Fashion & Luxury, Tickets & Travel, and Money Transfer & Payments verticals, supported by both new business and upsell momentum. Overall, we believe that our continued international growth reflects ongoing progress in capturing market share.

Our non-GAAP gross profit of $41.5 million, increased 5% year-over-year in the third quarter. This translates to a non-GAAP gross profit margin of approximately 51%, an improvement of 1% from the same period in the prior year. Our third quarter 2025 margin represented a step-up from 50% in the first half of the year. The year-over-year growth was driven by meaningful improvements in our core machine learning models, along with the contribution from new product revenue. This improvement was offset by the ramping of merchants in newer categories, in particular with the money and transfer payments category, which has experienced very strong growth in 2025. Overall, I'm encouraged that 4 of our last 5 cohorts expect an average of 5% year-over-year improvement in our chargeback to billings, demonstrating the success in our machine learning platform.

As a reminder, I encourage you to continue analyzing our gross margin on an annual basis, given individual quarters can vary due to various factors, including the ramping of new merchants and the risk profiles of transactions approved. I'm encouraged about the sequential progress we have made throughout the year and continue to target an annual non-GAAP gross profit margin target of 52%.

Moving to expenses. We continue to manage the business in a focused and disciplined manner. Total non-GAAP operating expenses were $36 million for the third quarter, down from $38.7 million in the prior year, largely due to several onetime positive impacts in the period. Our non-GAAP operating expenses as a percentage of revenue for the third quarter declined year-over-year from 49% to 44%, reflecting ongoing leverage in the business model. We anticipate having quarterly non-GAAP operating expenses of approximately $39 million in the fourth quarter.

We achieved positive adjusted EBITDA of $5.6 million in the third quarter, a record for the third quarter. This represented approximately 560 basis points in margin expansion or a margin of approximately 7%. Based on our implied guide for the fourth quarter, which I will touch on shortly, we expect a large step-up in margin on a sequential basis and our fourth quarter adjusted EBITDA margin to approximate 15%.

Moving to the balance sheet. We ended the third quarter with $325 million of cash, deposits, and investments, and we continue to carry 0 debt. We maintain a healthy cash flow model, achieving quarterly free cash flow of $13.4 million in the third quarter. For the first 9 months, we achieved $22.4 million in free cash flow. And based on current conditions, we now expect over $30 million of positive free cash flow for the full year of 2025.

In the third quarter, we repurchased 5.2 million shares for a total price of approximately $25.3 million. For the first 9 months of the year, we repurchased 14.2 million shares for a total price of approximately $69.2 million. As a result of this buyback activity and our ongoing commitment to prudent dilution management, we continue to expect shares outstanding to decline by at least 5% year-over-year. 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.

Now turning to our outlook. As a result of the solid first 9 months of the year and cautious optimism around the upcoming holiday season, we're improving the bottom end of our revenue range for the second consecutive quarter to now anticipate revenue of between $338 million and $346 million or $342 million to the midpoint. As a result of our discipline and expected margin expansion in the fourth quarter, we now expect our adjusted EBITDA guidance to be between $21 million and $27 million or $24 million to the midpoint.

I'd like to wrap up by thanking the Riskified team for their hard work and execution this quarter. I'm encouraged that we meaningfully improved our results versus the first half of the year, and I believe that we are well-positioned to continue this momentum in the fourth quarter. The foundation we're building positions us for continued growth ahead, which will allow us to deliver ongoing value to our shareholders.

Operator, we are ready to take the first question, please.

[Operator Instructions] And our first question will come from Connor Passarella of Truist Securities.

This is Connor Passarella on for Terry Tillman. The first one, I just wanted to ask on the momentum as you exit this year. So just as we kind of think about the mixed expectations exiting '25, how are you thinking about the growth outlook as it relates to expanding with existing merchants via upsell and cross-sell versus continuing to drive new business strength?

Yes. I think we'll see a continuous strong performance on both sides. We always kind of have a new cohort of merchants that we're onboarding, that we're selling the platform to, but also really focused on gaining net new clients, really consistent with how it's been working in prior years.

And then maybe just you've spoken about the money transfer and payments categories being a strong driver of expansion this year and new merchant activity has been really a key driver there. Just moving into 2026, are there any other emerging verticals that could be important for us to watch next year as you maybe have started to gain momentum with some of the new merchants? And how do you think about prioritizing resources to go after certain verticals?

Sure. So when we think about kind of expanding our market, we really do make a concentrated effort to go after specific verticals that we think are large in size and have our product is a good fit for them. As we've continued to expand the product, whether it's through policy Account Secure, CPMS, the different permutations of the chargeback product, we think that there's more value to different categories. We also tend to have a geographic view where we kind of say, hey, what other regions are there where we can kind of penetrate further. And that also leads us to think about the categories in those regions.

And probably also some other thoughts and internal deliberations we have are more around distribution, what is the value of going slightly more mid-market and the enterprise focus we have now? How do we get better distribution via partnerships. So as we kind of go through the '26 planning cycle, those are all thoughts that we have and kind of going through.

And our next question will be coming from Chris Kennedy of William Blair.

When you think about -- or can you give us an update on the revenue contribution from the non-chargeback guarantee products for 2025?

Yes. So far, it's continued to be very strong, over 100% and continue to be very pleased with the uptick in the market reception to that. It's been instrumental and very helpful in kind of gaining longer-term contracts with our existing clients at renewal. It's been helping us win new business at a higher rate. So overall, really pleased with being able to develop additions that generate meaningful ROI to our clients.

And then you talked about some of the investments in machine learning and driving efficiencies with your business. I mean when you add that with the non-chargeback guarantee products, any way to think about the long-term margin profile of Riskified as you go forward?

I think it just varies so much based on the mix of the different products. To us, it's just really focusing on how do we generate gross profit dollars and an increasing amount and driving that number higher.

And our next question will be coming from Will Nance of Goldman Sachs.

I just wanted to follow up on that last question on the gross margin. It sounded like you've had some recent model improvements that have led to several prior cohorts outperforming. As we think about the trajectory of gross margins into next year, is that something we should be thinking about in terms of kind of year-over-year gross margin improvement? And it also sounded like maybe money transmitter was a small offset to that. So just how are you thinking about kind of those puts and takes on the gross margin into 2026?

Hello, Will, thanks for the question. You definitely characterized it correctly, right. We saw that the ramping of new categories, specifically the money transfer and remittance in some of the newer geographies kind of was a headwind in H1 and that some of the modeling improvements that we made during the first half helped improve performance not only there, but also across the rest of the portfolio. And we would anticipate that to kind of flow through improved performance into Q4. And beyond, at the same time, I do anticipate additional headwinds from newer regions and newer categories as well. So I think that dynamic will stay constant.

And then maybe just one for Agi. I was wondering if you could elaborate on the onetime expense impacts that you mentioned in the script on 3Q? And if you could just share a couple more details on what drove that?

Yes, sure. Thank you for the question, Will. So with any given quarter, there's always ins and outs. Specifically for this quarter, we saw some positive impacts related to some payroll adjustments more around vacation accrual and reserve duty, specifically for our Israeli office. And maybe some movements of some events. But as we kind of shared in our prepared remarks, I do expect a range of around $39 million and change or $39 million for Q4, and that's like a better representation of the run rate of the OpEx.

And our next question will be coming from Ryan Tomasello of KBW.

This is [ Juan ] on for Ryan. How do you envision the potential for growing stablecoin adoption and stablecoin payment rails to alter the fraud management landscape? And is the company currently exploring any opportunities to capitalize on this?

Sure. I think as we think about stablecoins, crypto and Agentic kind of more broadly, we see that these are introducing additional complexity to our merchants and added requirements about what they need to be able to support. And we've found historically that whenever this added complexity is kind of presented to the merchant, it both introduces new vectors of fraud and it makes it more challenging for them to solve it on a stand-alone basis, requiring an outside partner. So kind of year-to-date, what we've been seeing is that these have been kind of a net positive drivers for the business, and we anticipate that to continue.

Right. And just to double-click on that, you called out in the prepared remarks an increased emphasis on those Agentic commerce solutions. Has this driven any kind of notable uptick in prospect inbounds or new business discussions in general?

Yes. I mean when you think about the complexity that merchants face when they try to solve this, right? Like a merchant suddenly gets a transaction for 5 big screen TVs. They have no idea where this transaction came from. They have limited data, and we're really helping them both identify that this came from kind of an Agentic shopper on behalf of someone else. They need to be able to understand, hello, is this kind of a hallucinating LLM that's ordering 5 big screen TVs? Or is this a re-shipper or is this a legitimate customer? And when you think about the stack that we have, the capabilities we developed for bot detection, which are helpful in identifying these commerce agents, the capabilities we have around our policy suite of products, which are helpful in kind of identifying specific agents result in more service-related chargebacks or what type of policies you want to enable them.

And obviously, just the risk engine with kind of via our network is able to much better differentiate in these limited data points. Is this actually a good transaction? Or is this a stolen credit card being used here? I would say that in reality, we're only seeing a handful of transactions right now, but merchants are definitely thinking about how to adapt to this new paradigm. So it's helping from a conversation perspective.

And our next question will be coming from Clark Wright of D.A. Davidson.

Just wanted to maybe touch on the notable sequential increase in GMV this quarter versus historical trends for what we typically see in 3Q. What were the key factors that drove this? And does the money transfer payments growth reduce your typical seasonality trends that we've seen?

Yes. Thank you for the question. When I think about our model, the GMV is kind of like an output of some of the revenue inputs. Having said that, we've shared before that we do expect there to be some spread between the GMV growth and the revenue growth. And I think kind of heading into the second half of the year, this is kind of like more evident and actually more aligned with what we've seen historically. It's great to see the GMV growth kind of like getting back to close to double digits. And yes, overall, excited about the performance.

And then maybe, Agi, this will be a better one for you, but there's been disciplined expense management and maybe this builds off of some of the prior questions that have been asked around operating leverage. But I would love to kind of understand how you're able to continue to invest while continuing to see operating expenses relatively flat and the fact that you're guiding to effectively flat in 4Q. And then I guess that builds also off of Eido's comment around being able to invest in capacity. So I guess, how are you measuring your expense guardrails while also kind of managing to this margin expansion story that you're going to continue to see in 2026?

Yes. I'm happy that we're able to continue to perform as we kind of shared in the beginning of the year, we are focused on our expense and making sure that we kind of still within the total annual guide. Besides that, there's always ins and outs between the quarters. So this quarter just appeared to be kind of relatively low compared to other quarters. But Q4 is expected to be higher. And within that, within every single quarter, there's always ins and outs. We continue to invest in areas that are related to growth-generating areas and continue to optimize areas that are more like on the operational part of the business. That has been a focus of us.

Earlier on in the year, we kind of shared some of the offshoring activities that we've been kind of like taking over and we've been executing really well there as well. So all in all, there's a lot of going in a single quarter, but happy that we're able to show this focus on the numbers as well.

Yes. And maybe just to add a bit my perspective there. We recently started going through or kind of mid-process of the '26 product planning, and we've actually increased our development capacity by almost 50%. And that's a combination of kind of being able to leverage kind of better cost locations, but also reducing kind of some KTLO work in other areas. So we are consistently thinking constraint breach creativity, how can we do more with less and really proud of what the team has been able to achieve in that area.

And our next question will be coming from Timothy Chiodo of UBS.

A really helpful blog post that you put out a few weeks ago around Agentic. I just want to talk -- in there, you mentioned almost 2 paths for the payment to be received by the merchant. One is the payment token is received. The other is the payment comes through one of the wallet providers, and you specifically mentioned 2 pass-through wallets in Apple Pay and Google Pay. So 2 parts. I was hoping, #1, you could just recap for everyone the varying, kind of like who takes on the liability and why in those 2 different paths, and you called this out a little bit in the blog. And then maybe more importantly, the second one, just from an industry perspective and what you're seeing, do you expect the wallet share of overall checkout within that channel to be roughly the same, higher, or lower than it is on the, call it, the traditional website checkout?

Sure. Happy to take that. So I think just simply with the payment token, we think the liability more often would not would sit with the merchant, whereas if it goes through the digital wallet, more often than not, it would sit with the issuing bank. And sorry, Tim, what was the second part of that question?

Sure. [ Nick ], so let's just -- I'm just going to make up a fake number. But let's say there's in all of e-commerce, let's just say that all of digital wallets made up 20% of checkout. Would you expect that through the Agentic channel through sort of like a ChatGPT user interface that the digital wallet share of checkout would be higher than that 20%, about that same 20% that it is on regular websites, or maybe lower than that 20%? And then why would that -- why would it be higher, lower, or the same?

I think that's a really interesting question. I would need to think about it much deeper. The reality is that to date, there's only been kind of a handful of transactions. Now obviously, there's potential for it to grow further. But based on that, it would be more a guess than a data-based answer, which is what I would prefer to provide to you.

And our next question will be coming from Reggie Smith of JPMorgan.

Nice to see the acceleration in GMV. Kind of a follow-up on the Agentic theme in the previous question. I'd love to get your view on how you think about both the opportunities and the threats as it relates to Agentic commerce on your business? And by that, I mean, paint a picture for me where Agentic increases the demand for your services and maybe another where it could possibly reduce it. I'm just trying to understand like the bear and the bull piece around Agentic and how it relates to Riskified in your services. Then I have one follow-up.

Sure. Happy to take that. So the positive scenario, which is kind of similar to what I outlined before is that merchants now need to deal with increasing complexity with Agentic transactions. They need to understand that this is an Agentic shopper. That's difficult. We can help them with that. They need to understand not only is this an Agentic shopper, is it a legitimate one or a fraudulent one. We can help them with that. After they understood that it's a legitimate one, they need to understand if it fits the various policies that they have, and they probably want to create some unique policies for Agentic shopping, so we can help them with that.

So I think in this scenario, it's a net positive for us because there's a lot of complexity, and we're good at solving complexity for our merchants. And it's a complex world right now where you have a multitude of standards, right? It's not like there's one standard, there's standards with MS. And if a single merchant is trying to solve all those problems, it's a huge issue for them. So I think to me, that's the most likely outcome and what we're seeing kind of so far merchants preparing for. The more negative potential could be if that more transactions move away from enterprise e-commerce, so I think you know some of the kind of blue-chip names that we work with if people don't shop on their site anymore and go to various kind of agents and do an end-to-end purchasing within that LLM environment.

And I guess 2 quick follow-ups. One, is there an opportunity to actually provide services to the AI labs? And then secondarily, we've gotten a lot of questions in the last couple of months about 2026 EBITDA targets. And I guess, in light of the gross margin momentum and the operating leverage and the accelerating GMV growth, I'd love to hear how you guys are feeling about those targets and '26 EBITDA margin targets that you laid out previously, feeling better, worse than maybe a few months ago. Any color you could provide there would be helpful.

Sure. Happy to take that. So look, I think, obviously, the LLM providers can, of course, can be Riskified clients. And like we help others, we can help them manage the fraud. So that's a clear and easy #1. With regards to #2, we're happy that we're targeting 50% margins in Q4. And I think we're really proud of the progress that we've made over the past 2 to 3 years since we set out this initial guidance for next year, and we continue to plan for double-digit growth next year.

At the same time, I do think that some of the merchant events that happened in '24 does mean that kind of the 15% margin would be pushed out by a few quarters, but kind of similar to what's already reflected in sell-side expectations.

I'm showing no further questions at this time. I would now like to turn the call back to Eido for closing remarks.

Thank you, everyone, for joining our call, and we look forward to updating you on the progress in a few months. Thanks.

And this concludes today's program. Thank you for participating. You may now disconnect.