Riskified Ltd. (RSKD) Earnings

Management highlights

- Overall Business Momentum * Delivered the strongest year-over-year revenue growth (22%) in over four years, accelerating from 7% growth in Q1 2026, driven by an increasingly complex global fraud environment and strong execution of the unified platform strategy. * New business momentum accelerated significantly in Q2, with diversified new logo acquisition across all four regions (five of the top ten new logos are headquartered outside the U.S. across five categories), and healthy upsell activity within the existing merchant base. Competitive win rates remained above 75% for the quarter. * Multi-product merchant adoption grew approximately 50% year-over-year, demonstrating strong traction for the platform strategy, as merchants expand product usage to capture more value from the shared network and identity data layer. - Product & Platform Strategy * Growing fraud sophistication (accelerated by agentic AI tools) has expanded fraud risk across the entire transaction lifecycle: fake account creation, account hijacking, fraud across all payment types, refund/return abuse, and friendly fraud. Merchants prefer a single unified platform over stitching together multiple point solutions, as shared signal across the transaction lifecycle improves overall fraud defense. * The Riskified risk intelligence platform covers the full e-commerce journey from account creation/login through checkout to post-purchase activity, powered by a shared global network, identity graph with billions of nodes, and AI capabilities. Key recent product improvements include expanded non-card payment fraud coverage: the ACH transaction value processed grew 19x year-over-year, with the new risk layer enabling low-cost ACH use with substantially reduced risk and instant payouts. * Identity intelligence is increasingly used beyond checkout to improve customer experience: dynamic risk profiles enable faster, higher-limit transactions for low-risk customers, and real-time risk scoring is embedded in customer service workflows. The AI assistant Aria has been embedded across the platform to help merchant risk teams investigate activity, identify trends, and act faster, with overwhelmingly positive merchant feedback. * A notable Q2 highlight was strong performance tied to the dense global live sports calendar (including the World Cup and NBA Finals), which drove elevated transaction volume for both the ticketing vertical and the Digital Finance (previously money transfer/payments) category, particularly for event contracts and gaming. - Financial Operational Highlights * Gross margin was 46% in Q2, with the year-over-year decline driven by mix shift (more new merchants that start at lower margins, and higher ticketing activity that has lower gross margins); existing merchant margin performance remains healthy due to ongoing core machine learning model improvements. * Non-GAAP operating expenses were $41.5 million (42% of revenue) in Q2, down from 47% of revenue in Q2 2025, reflecting sustained cost discipline as the business scales. Quarterly non-GAAP operating expenses are expected to remain between $42 million and $43 million going forward. * Ended Q2 with $223.6 million in cash, deposits, and investments, zero debt, and positive $12.9 million in free cash flow. Repurchased 13.7 million shares for $63.9 million in Q2, reducing total shares outstanding by 8%; since the buyback program launched, total shares have been reduced by 26%.

Guidance

- Full-year 2026 revenue guidance was raised to a range of $400 million to $407 million ($403.5 million midpoint), marking the second upward revision this year, driven by Q2 outperformance and improved visibility from early execution and elevated live event transaction volume. Third quarter 2026 revenue growth is expected to be approximately 27%. - Full-year 2026 adjusted EBITDA guidance was raised to a range of $33 million to $39 million ($36 million midpoint), up from the prior range of $28 million to $34 million. The implied adjusted EBITDA margin at the midpoint is approximately 9%, up from 8% in prior guidance. - Full-year 2026 gross profit growth guidance was raised to a range of 11% to 14% (12.5% midpoint), with third quarter gross profit growth expected to be similar to Q2 2026 levels. - Free cash flow for full-year 2026 is expected to exceed $40 million. - Net dollar retention is expected to remain around 105%, unchanged from prior guidance. Revenue contribution from newer products remains in line with earlier 2026 projections, with no changes.

Segment performance

By product vertical: Digital Finance grew 180% year-over-year, driven by new merchant ramp in event contracts/gaming verticals and existing merchant upsells, and is expected to grow significantly faster than the company average for the full year. Tickets and Travel grew 23% year-over-year (accelerated from 18% in Q1 2026), with ticketing as the primary driver from strong same-store sales momentum across large ticketing merchants, while travel delivered growth despite a tough year-over-year comparison. Fashion and Luxury grew 4% year-over-year, driven by new and upsell activity and same-store performance. Collectively, these three verticals are expected to account for approximately 80% of total 2026 billings. By region: United States (the company's largest region) grew 38% year-over-year (up from 10% in Q1 2026), driven by ticketing trends and new digital finance merchants. APAC grew 42% year-over-year, with healthy underlying regional demand. Other Americas grew 21% year-over-year (up from 11% in Q1 2026), driven by new business activity. EMEA grew 3% year-over-year against a strong prior year comparable period in the travel vertical. Overall company Q2 2026 revenue was $98.7 million, up 22% year-over-year; non-GAAP gross profit was $45.4 million, up 13% year-over-year; adjusted EBITDA was $3.9 million, up 84% year-over-year.

Risks & headwinds

Forward-looking statements on the call are subject to inherent uncertainty, and actual results may differ materially from expectations due to various factors including: the timing and ramp speed of new merchant go-lives and existing merchant upsells, merchant retention rates, broader macroeconomic and market conditions, foreign currency exchange rate fluctuations (which impacted GAAP other expenses in Q2), and the evolving pace of fraud sophistication that could change market demand dynamics. No material operational failures or new unforeseen risks were discussed on the call.

Analyst Q&A

• Q: Is recent new logo momentum a steady continuation of past trends, or a notable inflection driven by AI-related fraud growth? Can you also comment on confidence in maintaining solid cost-to-benefit ratios? /

  A: Momentum reflects a convergence of factors: the company has spent multiple quarters expanding its product platform to address new fraud methods across categories and geographies, while AI tools have accelerated fraud sophistication and velocity. This quarter saw all factors align, leading to faster pipeline conversion, strong global expansion, more upsells and new logos. Management remains confident in the company's ability to outperform other solutions, and notes that even if newer categories/geographies start with higher cost-to-benefit ratios, they improve over time similar to prior merchant cohorts.

• Q: What drove the higher-than-expected revenue take rate in Q2, and how should we expect take rates and gross margins to trend in the second half of 2026? /

  A: Take rate is an output of business mix, and Q2's higher take rate reflects the higher risk profile of new business added this quarter, which is mostly a timing effect. Take rates will likely fluctuate and be slightly lower for the rest of the year, with some divergence between GMV and revenue growth. Gross margin declines in Q2 were also driven by mix shift: higher new merchant activity (which starts at lower margins) and more ticketing volume (which has lower margins). This is not structural, and all new merchant cohorts are expected to improve gross margins over time.

• Q: Where is the strongest demand for identity intelligence beyond checkout, and does this open new customer budgets beyond traditional fraud teams? /

  A: The biggest demand comes from merchants that want to use identity risk data to improve experiences for low-risk good customers, not just block fraud. Use cases include instant refunds, personalized service in CRM and customer support workflows, and dynamic account limits based on verified identity. This expands the conversation beyond fraud teams, as the platform delivers value by improving conversion and customer experience, not just risk reduction.

• Q: Can you explain the mechanics and revenue model for the recent Marketa partnership on the issuer side? /

  A: The partnership addresses post-authorization transaction declines, which can happen at multiple points in the payment chain even after Riskified approves a transaction. By sharing risk data with Marketa, the company can increase approval rates for merchants whose cards are issued/processed by Marketa by several percentage points. The partnership is monetized indirectly by strengthening Riskified's competitive positioning, improving win rates for new merchants, and boosting retention for existing clients, rather than through direct separate revenue from Marketa.