Q2 2024 Riskified Ltd Earnings Call

Robert Napoli,

Operator: Thank you for standing by. Welcome to Riskified's second quarter 2024 earnings call. At this time, all participants are in a listen-only mode.

Speaker Change: Ladies and gentlemen, thank you for standing by. Welcome to Riskified's second quarter 2024 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you would need to press star 11 on your telephone. You would then hear an automated message device and your hand is raised.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you would need to press star 1-1 on your telephone. You would then hear an automated message device, and your hand is raised.

Speaker Change: To withdraw your question, please press 411 again. Please be advised that today's conference is being recorded. I would like now to turn the conference over to Chett Mandel, Head of Investor Relations. Please go ahead.

Operator: To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would like now to turn the conference over to Chett Mandel, Head of Investor Relations. Please go ahead.

Chett Mandel: 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 Financial Results for the second quarter of 2024. Participating on today's call are Eido Gal, Riskified's Co-Founder and Chief Executive Officer, and Aglido Chiodo, Riskified's Chief Financial Officer. We released our results for the second quarter of 2024 earlier today. Our earnings materials, including a replay of today's webcast, will be available on our investor relations website at IR.Riskified.com.

Chett Mandel: Good morning and thank you for joining us today. My name is Chett Mandel, Riskified's Head of Investor Relations.

Speaker Change: We are hosting today's call to discuss Riskified's financial results for the second quarter of 2024. Participating on today's call are Eido Gal, Riskified's co-founder and chief executive officer, and Aglika Dotcheva, Riskified's chief financial officer.

Speaker Change: We released our results for the second quarter of 2024 earlier today. Our earnings materials, including a replay of today's webcast, will be available on our Investor Relations website at ir.riskify.com.

Chett Mandel: Certain statements made on the call today will be forward-looking statements related to 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 provision contained in the Private Securities and Litigation Reform Act of 1995.

Speaker Change: Certain statements made on the call today will be forward-looking statements related to our operating performance.

Speaker Change: 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.

Speaker Change: We intend all forward-looking statements to be covered by the safe harbor provisions contained in the Private Securities and Litigation Reform Act of 1995.

Chett Mandel: 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. He stole her looking statements as all risks, uncertainties, and other factors, some of which are beyond our control that could cause actual results to differ materially from our expectations.

Speaker Change: 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.

Speaker Change: 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.

Chett Mandel: 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, 2023, or in subsequent reports that 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.

Speaker Change: 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, 2023. In 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.

Chett Mandel: Additionally, we will discuss certain non-GAAP financial measures and key performance indicators on the call. Reconciliation, the most directly comparable GAAP financial measures, is available in our earnings release issued early today and also furnished with the SEC Ad Form 6K 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, Chet, and hello, everyone.

Speaker Change: Additionally, we will discuss certain non-GAAP financial measures and key performance indicators on the call.

Speaker Change: Reconciliation.

Eido: The most directly comparable GAAP financial measures are available in our earnings release issued early today and also furnished with the SEC ad form 6k 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.

Unknown Attendee: Thank you for standing by.

Unknown Attendee: Welcome to Riskified Second Quarter 2024 earnings call. At this time all participants are in a listen only mode.

Unknown Attendee: After the speaker's presentation there will be a question and answer session. To ask a question during the session you would need press star one one on your telephone. You would then hear an automated message of eyes in your hand is raised to withdraw your question. Please press star one one again.

Eido Gal: I am encouraged by our execution during the first six months of the year. We are growing profitably on an adjusted EBITDA basis and believe that we are investing in the right people, products, and projects to deliver for the benefit of our merchants and our shareholders. I remain positive about the trajectory of the company. Once again, our revenue growth during the second quarter was primarily driven by the execution of our go-to-market strategy, which contributed to 8% year-over-year growth.

Eido: Thanks, Chett, and hello, everyone.

Eido: I am encouraged by our execution during the first six months of the year. We are growing profitably on an adjusted EBITDA basis, and believe that we are investing in the right people, products, and projects to execute for the benefit of our merchants and our shareholders. I remain positive about the trajectory of the company.

Unknown Attendee: Please be advised that today's conference is being recorded.

Chett Mandel: I would like now to turn the conference over to Chett Mandel, Head of Invest Relations. Please go ahead. Good morning. Thank you for joining us today. My name is Chett Mandel, Riskified Head of Investor Relations. We are hosting today's call to discuss Riskified Financial Results for the second quarter of 2024.

Eido: Once again, our revenue growth during the second quarter was primarily driven by the execution of our go-to-market strategy.

Eido: which contributed to 8% year-over-year growth. For the first half of 2024, our revenue increased by 10% and our GMV grew 15% year-over-year. Our technology, platform, and differentiated merchant capabilities are resonating within our large addressable market.

Eido Gal: For the first half of 2024, our revenue increased by 10%, and our GMV grew 15% year-over-year. Our technology, platform, and differentiated merchant capabilities are responding within our large addressable market. Our competitive win rates remained high during the quarter, and our industry and geographic expansion efforts, combined with our product platform sales motion, are contributing to a solid pipeline of merchant activity. We had improved performance sequentially with our non-chargeback wins, and we expect a strong end to the year with further multiproduct adoption.

Chett Mandel: Participating on today's call, Eido Gal, Riskified Co-Founder and Chief Executive Officer, and Aglido Cheva, Riskified's Chief Financial Officer. We released our results for the second quarter of 2024 earlier today. Our earnings materials, including a replay of today's webcast, will be available on our Investor Relations website at ir.riskified.com.

Eido: Our competitive win rates remained high during the quarter, and our industry and geographic expansion efforts, combined with our product platform sales motion, are contributing to a solid pipeline of merchant activity.

Eido: We had improved performance sequentially with our non-chargeback wins, and we expect a strong end to the year with further multiproduct adoption.

Eido Gal: As we think through the back half of the year, we've begun to see some softness in the third quarter and are anticipating softer third and fourth quarters largely due to certain macro headwinds, including worsening consumer spending trends. This is primarily impacting our high-growth fashion, tickets, and travel and home industries.

Chett Mandel: Certain statements made on the call today will be followed looking statements related to 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 provision contained in the private security's litigation reform act of 1995.

Eido: As we think through the back half of the year, we've begun to see some softness in the third quarter and are anticipating softer third and fourth quarters, largely due to certain macro headwinds, including worsening consumer spending trends.

Eido: This is primarily impacting our high-end fashion, tickets and travel, and home industries.

Agil: That being said, we anticipate a strong second half of new business activity, which would help to partially offset these macro headwinds. We expect the benefit of this anticipated new business activity to primarily flow through in the fourth quarter. I will walk you through the impact of these factors on our 2024 guidance.

Chett Mandel: 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.

Eido Gal: That being said, we anticipate a strong second half of new business activity, which would help to partially offset these macro headwinds. We expect the benefit of this anticipated new business activity to primarily flow through in the fourth quarter. Aguil will walk you through the impact of these factors on our 2024 guidance. We expect the benefit of this anticipated new business activity to primarily flow through in the fourth quarter. We are managing our operational levers to optimize our gross profit and adjust the dbGaL performance across all types of growth environments.

Agil: We are managing our operational levers to optimize our gross profit and adjust the EBDAP performance across all types of growth environments. Our non-GAAP gross profit growth of 11% in the second quarter and 14% the first half of the year remain strong and continue to outpace our revenue growth.

Eido Gal: Our non-GAAP gross profit growth of 11% in the second quarter and 14% in the first half of the year remain strong and continue to outpace our revenue growth. Combined with ongoing expense discipline, we continue to bring our top-line growth to the bottom line. Over each of the last three quarters, we have improved our year-over-year adjusted EBDAL margin by nearly 1,000 basis points on average, and we anticipate generating further adjusted EBDAL margin expansion in the back half of the year. However, we are not just focused on maximizing short-term leverage in the business.

Chett Mandel: Please refer to our annual report on phone 20F for the year ended December 31, 2023, in 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'll discuss certain non-gap financial measures and keep performance indicators on the call. Reconciliation, the most directly comparable gap financial measures are available in our earnings release issued early today, and also furnish with the SEC on 4.6K and in the appendix of our investor relations presentation, all which are posted on our investor relations website.

Agil: Combined with ongoing expense discipline, we continue to bring our top line growth to the bottom line. Over each of the last three quarters, we have improved our year-over-year adjusted EB-DAL margin by nearly 1000 basis points on average, and we anticipate generating further adjusted EB-DAL margin expansion in the back half of the year.

Agil: However, we are not just focused on maximizing short-term leverage in the business. We maintain a long-term view on how to improve our technology, how to expand our TAM and market share, and how to convert our single-product merchants to multi-product users.

Eido Gal: We maintain a long-term view of how to improve our technology, how to expand our TAM and market share, and how to convert our single-product merchants to multi-product users. We believe that the best way to accomplish these goals is by building a market-leading platform of products that helps us solve real problems for our merchants at all levels of the transaction funnel and to continue penetrating the large e-commerce white space in front of us by aligning our go-to-market sales motion to offer and cross-sell this platform.

Agil: We believe that the best way to accomplish these goals is by building a market-leading platform of products that helps us solve real problems for our merchants at all levels of the transaction funnel.

Eido Gal: I will now turn the call over to we doubt. Thanks, Chet, and hello, everyone. I am encouraged by our execution during the first six months of the year. We are growing profitably on an adjusted EBDA basis, and believe that we are investing in the right people, products, and projects to execute for the benefit of our merchants and our shareholders. I remain positive about the trajectory of the company. Once again, our revenue growth during the second quarter was primarily driven by the execution of our growth and market strategy, which contributed to 8% year over year growth.

Agil: and to continue penetrating the large e-commerce white space in front of us by aligning our go-to-market sales motion to offer and cross all this platform.

Eido Gal: On the chargeback guarantee front, our ability to customize unique merchant-specific models to guarantee the highest degree of performance and specificity is why we believe our merchants receive great performance and value. In one recent head-to-head pilot with a newly-onboarded multibillion GMV merchant, we were able to reduce the merchant's fraud cost by more than 20% while simultaneously boosting their approval rate by over 3% when compared to their incubant solution provided by one of our key competitors. This is not an isolated example. Several other recent head-to-head pilots

Speaker Change: On the chargeback guarantee front, our ability to customize unique, merchant-specific models to guarantee the highest degree of performance and specificity is why we believe our merchants receive great performance and value.

Speaker Change: In one recent head-to-head pilot with a newly onboarded multibillion GMV merchant, we were able to reduce the merchant's fraud cost by more than 20%, while simultaneously boosting their approval rate by over 3% when compared to their incubant solution provided by one of our key competitors.

Eido Gal: For the first half of 2024, our revenue increased by 10% and our GMV grew 15% year over year. Our technology, platform, and differentiated merchant capabilities are resonating within our large addressable mark. Our competitive win rage remained high during the quarter and our industry and geographic expansion efforts combined with our product platform sales motion are contributing to a solid pipeline of merchant activity. We had improved performance sequentially with our non-charge backwinds and we expect the strong end for the year with further multi-product adoption.

Eido Gal: We were able to outperform both the merchant's internal teams and other newer generation competitors by delivering superior performance for the merchant. We believe that these types of results drive expansion opportunities for Riskified. Overall, these data-driven group points are a testament to the power of our machine learning factory and the main reason we win in competitive deals. To further broaden our product offerings, we continue to enhance our integrations and data sharing capabilities with major global issuing banks.

Speaker Change: This is not an isolated example.

Speaker Change: Several other recent head-to-head pilots, we were able to outperform both the merchant's internal teams and other newer generation competitors by delivering superior performance for the merchant.

Speaker Change: We believe that these types of results drive expansion opportunities for Riskified. Overall, these data-led proof points are a testament to the power of our machine learning factory and the main reason we win in competitive deals.

Eido Gal: As we think through the back half of the year, we've begun to see some softness in the third quarter and our anticipating softer third and fourth quarters largely due to certain macro headwinds, including worsening consumer spending trends. This is primarily impacting our high-end fashion, tickets and travel, and home industries. That being said, we anticipate a strong second half of new business activity which would help to partially offset these macro headwinds. We expect the benefit of this anticipated new business activity to primarily flow through in the fourth quarter.

Speaker Change: To further broaden our product offerings, we continue to augment our integrations and data sharing capabilities with major global issuing banks.

Eido Gal: These integrations and partnerships involve sharing enriched order information and other Riskified signals with issuing banks in order to enhance our merchants' authorization rates on e-commerce transactions reviewed by Riskified. This feature comes baked into chargecrack guarantee and has the ability to meaningfully increase bank authorization.

Speaker Change: These integrations and partnerships involve sharing enriched order information and other Riskified signals with issuing banks in order to enhance our merchants' authorization rates on e-commerce transactions reviewed by Riskified.

Speaker Change: This feature comes baked into Charged Back Guarantee and has the ability to meaningfully increase bank authorization rates.

Eido Gal: Eligible chargeback guarantee merchants can see an increased authorization lift exceeding 100 basis points on segments where Riskified has the ability to influence the issuer's decision. We believe that our privileged access to merchant data puts us in a unique position to further collaborate between parties in the payment ecosystem to help our e-commerce merchants grow. I believe that our focus on evolving and investing wisely in our R&D is leading to an overall improvement in our technology offering. This improvement, in part, has been seen in strong performance for our merchants. While simultaneously, we were able to achieve a 54% gross profit margin in the first half of the year.

Aglido Cheva: Agu will walk you through the impact of these factors on our 2024 guidance. We're managing our operational levers to optimize our growth profit and adjust the DBGAP performance across all types of growth environments. Our non-GAP growth profit growth of 11% in the second quarter in 14% the first half of the year remains strong and continue to outpace our revenue growth. Combined with ongoing expense discipline, we continue to bring our top line growth to the bottom line.

Speaker Change: Eligible Charged Back Guarantee merchants can see an increased authorization lift exceeding 100 basis points on segments where Riskified has the ability to influence the issuer's decision.

Speaker Change: We believe that our privileged access to merchant data puts us in a unique position to further collaborate between parties in the payment ecosystem to help our e-commerce merchants grow.

Speaker Change: I believe that our focus on evolving and investing wisely in our R&D is leading to an overall improvement in our technology offering. This improvement, in part, was seen in strong performance for our merchants.

Aglido Cheva: Over each of the last three quarters, we have improved our year-over-year adjusted DBGAP margin by nearly 1,000 basis points on average and we anticipate generating further adjusted DBGAP margin expansion in the back half of the year. However, we are not just focused on maximizing short-term leverage in the business. We maintain a long-term view on how to improve our technology, how to expand our time and market share, and how to convert our single-product merchants to multi-product users.

Speaker Change: While we simultaneously were able to achieve a 54% gross profit margin in the first half of the year, I am pleased that we were able to slow this strong margin performance for the annual range, which resulted in an improvement to our adjusted EBDA guidance for the second consecutive quarter.

Eido Gal: I am pleased that we were able to flow this strong margin performance for the annual range, which resulted in an improvement to our adjusted EBDAG items for the second consecutive quarter. Overall, I remain optimistic about our positioning despite the challenging macro environment. We have great demand for our product, and by strengthening our machine learning advantage to solve additional use cases beyond chargeback fraud, I am confident that our durable business will continue to perform for merchants and our shareholders. Now, over to Agi. Thank you, EIDL team and everyone, for joining today's call.

Speaker Change: Overall, I remain optimistic about our positioning despite the challenging macro environment. We have great demand for our product, and by strengthening our machine learning advantage to solve additional use cases beyond chargeback fraud, I am confident that our durable business will continue to perform for merchants and our shareholders.

Aglido Cheva: We believe that the best way to accomplish these goals is by building a market-leading platform of products that helps us solve real problem for our merchants at all levels of the transaction funnel and to continue penetrating the large e-commerce white space in front of us by aligning our go-to-market sales motion to offer and cross all this platform. On the charge back guarantee front, our ability to customize unique merchant-specific models to guarantee the highest degree of performance and specificity is why we believe our merchants receive great performance and value.

Aglika: Now, over to Aggie.

Aggie: Thank you EIDL team and everyone for joining today's call. Our GMV for the second quarter was $35 billion, reflecting a 13% increase year-over-year. We achieved second quarter revenue of $78.7 million, up 8% year-over-year.

Aglido Chiodo: Our GMV for the second quarter was $35 billion, reflecting a 13% increase year-over-year. We achieved second quarter revenue of $78.7 million, up 8% year-over-year. Our GMB and revenue growth during the quarter was primarily driven by continued new merchant and upsell activity. In the second quarter, our home category grew 21% year over year. We anticipate a different comparison period in the second half of the year, as we have now fully left a large upsell period during the second quarter of 2023.

Aglido Cheva: In one recent head-to-head pilot with a newly onboarded multi-billion GMV merchant, we were able to reduce the merchant's broadcast by more than 20 percent while simultaneously boosting their approval rate by over 3 percent when compared to their incubation solution provided by one of our key competitors. This is not an isolated example. Several other recent head-to-head pilots, we were able to outperform both the merchant's internal teams and other newer generation competitors by delivering superior performance for the merchant.

Aggie: Our GNV and revenue growth during the quarter was primarily driven by continued new merchant and upsell activity.

Aggie: In the second quarter, our home category grew 21% year-over-year. We anticipate a different comparison period in the second half of the year, as we have now fully left a large upsell one during the second quarter of 2023.

Aglido Chiodo: Our general vertical, which includes both food and general retail merchants, grew 7% in the second quarter, primarily driven by growth in our food sub-vertical, offset by weakness in our general retail sub-vertical. In addition, we saw over 40% growth in our payments and money transfer category, driven predominantly by new business activity, a key area of expansion. Our Fashion and Luxury category grew by 5% in the second quarter, up from low single digits in the first quarter, primarily due to new business activity and growth in the fast fashion merchant.

Aggie: Our general vertical, which includes both food and general retail merchants, grew 7% in the second quarter, primarily driven by growth in our food subvertical, offset by weakness in our general retail subvertical.

Aglido Cheva: We believe that these types of results drive expansion opportunities for riskified. Overall, these data-led proofpoints are a testament to the power of our machine learning factory and the main reason we win in competitive deals. The further broad in our product offerings, we continue to augment our integrations and data sharing capabilities with major global issuing banks. These integrations and partnerships involve sharing enriched order information and other riskified signals with issuing banks in order to enhance our merchant's authorization rates on e-commerce transactions reviewed by riskified.

Aggie: In addition, we saw over 40% growth in our payments and money transfer category, driven predominantly by new business activity, a key area of expansion.

Aggie: Our fashion and luxury category grew by 5% in the second quarter up from low single digits in the first quarter, primarily due to new business activity and growth in the fast fashion merchants.

Aggie: This growth was partially offset by continued same-store sales pressures within our high-end fashion subvertical, consistent with the first quarter.

Aglido Chiodo: This growth was partially offset by continued same-store sales pressures within our high-end fashions of VertiCo, consistent with the first quarter. We now expect the same same-store sales pressures to continue in the back half of the year across all geographies. This is consistent with the outlooks of many of our luxury merchants and broader market commentary regarding discretionary spending. In addition, our tickets and travel vertical grew 8% in the second quarter, primarily due to new business activity.

Aglido Cheva: This feature comes based into chargeback guarantee and has the ability to meaningfully increase bank authorization rates. Eligible chargeback guarantee merchants can see an increased authorization lift exceeding 100 basis points on segments where riskified has the ability to influence the issuers decision. We believe that our privileged access to merchant data puts us in a unique position to further collaborate between parties and the payment ecosystem to help our e-commerce merchants grow. I believe that our focus on evolving and investing wisely in our R&D is leading to an overall improvement in our technology offering.

Aggie: We now expect the same store sales pressures to continue in the back half of the year across all geographies.

Aggie: This is consistent with the outlooks of many of our luxury merchants and broader market commentary regarding discretionary spending.

Speaker Change: In addition, our tickets and travel vertical grew 8% in the second quarter, primarily due to new business activity. We're now expecting softer trends in this category in the second half of the year.

Aglido Chiodo: We're now expecting softer trends in this category in the second half of the year. In particular, we're anticipating lower travel volumes from our AMEA merchants, and as a result, currently expect our overall AMEA region to be relatively flat for the year. The United States, which is our largest region, grew by 11% during the second quarter, and APAC grew approximately 35%. The Outer Americas, which represents Canada and Latin America, were approximately 9%, primarily just new and upsell activity.

Speaker Change: In particular, we're anticipating lower travel volumes from our EMEA merchants, and as a result, currently expect our overall EMEA region to be relatively flat for the year.

Aglido Cheva: This improvement, in part, was seen in strong performance for our merchants. While we simultaneously were able to achieve a 54% gross profit margin in the first half of the year. I am pleased that we were able to slow this strong margin performance for the annual range which resulted in an improvement to our adjusted EBDAG items for the second consecutive quarter.

Speaker Change: The United States, which is our largest region, grew by 11% during the second quarter, and AIPAC grew approximately 35%.

Speaker Change: The other Americas, which represent Canada and Latin America, were approximately 9%, primarily due to new and upsell activity.

Aglido Chiodo: I continue to be excited about our growth in Latin America and AFAC regions, which were fueled by market share gains achieved through the addition of new logos. We highlighted a large new logo in Japan in our press release about the fashion category during the quarter. This is an exciting cornerstone merchant, which we're hoping helps unlock further growth in the region. Moving on to the discussion of our gross profit margins, operating expenses, and adjusted EBITDA. Unless otherwise noted, I'll be referencing non-gap financial measures.

Eido Gal: Overall, I remain optimistic about our positioning despite the challenging macro environment. We have great demand for our product and by strengthening our machine learning and manage to solve additional use cases beyond chargeback fraud, I am confident that our durable business will continue to perform for merchants and our shareholders.

Speaker Change: I continue to be excited about our growth in LATAM and APAC regions, which were fueled by market share gains achieved through the addition of new logos.

Speaker Change: We highlighted a large new logo winning Japan in our press release in the fashion category during the quarter. This is an exciting cornerstone merchant which were hoping helps unlock further growth in the region.

Aglido Cheva: Now, over to Agi. Thank you, Edo's team and everyone for joining today's call. Our GNV for the second quarter was 35 billion, reflecting a 13% increase year-over-year. We achieved second quarter revenue of 78.7 million, up 8% year-over-year. Our GNV and revenue growth during the quarter was primarily driven by continuous new merchant and upsell activity. In the second quarter, our home category growth 21% year-over-year.

Speaker Change: Moving to the discussion of our Gross Profit Margin, Operating Expenses, and Adjusted EBITDA.

Speaker Change: Unless otherwise noted, I will be referencing non-GAAP financial measures.

Aglido Chiodo: We have provided a reconciliation of gaps and non-gap financial measures in our earnings release. Moving on, to gross profit margin. Our gross profit margin of 53% was up from 52% in the second quarter of the prior year. We continue to benefit from improvements in our overall core machine learning models and the positive impact of new product revenue. However, this is offset by the impact of ramping up significant new merchants and quarterly variability in our revenue. As a reminder, I encourage you to continue analyzing our growth margins on an annual basis. Given individual quarters can provide for many factors, including the ramping up of new merchants and the risk profiles of transactions approved.

Speaker Change: We have provided a reconciliation of gaps and non- GAAP financial measures in our earnings release.

Speaker Change: Moving on to gross profit margin. Our gross profit margin of 53% was up from 52% in the second quarter of the prior year.

Speaker Change: We continue to benefit from improvements in our overall core machine learning models and the positive impact of new product revenue.

Aglido Cheva: We anticipate a tougher comparison period in the second half of the year as we have now 40 laps a large upsell won during the second quarter of 2023. Our general vertical which includes both was in general retail merchants, grew 7% in the second quarter, primarily driven by growth in our food sub vertical, offset by weakness in our general retail sub vertical. In addition, we saw over 40% growth in our payments and money transfer category, driven predominantly by new business activity, a key area of expansion.

Speaker Change: offset by the impact of ramping of significant new merchants and quarterly variability in our revenue mix.

Speaker Change: As a reminder, I encourage you to continue analyzing our growth margins on an annual basis.

Speaker Change: Given individual quarters can vary due to many factors, including the ramping of new merchants and the risk profiles of transactions approved.

Aglido Chiodo: That being said, I do want to know that our first half gross profit margin was approximately 54%, the highest half-year period since our IPO. This was driven by a truly collaborative effort across the organization. As a result of our strong start to the year, we're now targeting a growth profit margin between 52 and a half and 53 and a half for the full year, up from our previous range of 52 to 53.

Speaker Change: That being said, I do want to note that our first-half gross profit margin was approximately 54%, the highest half-year period since our IPO.

Aglido Cheva: Our fashion and luxury category grew by 5% in the second quarter, up from low single digits in the first quarter, primarily due to new business activity and growth in the fast fashion merchants. This growth was partially offset by continuous same-store sales pressures within our high end fashion sub vertical, consistent with the first quarter.

Speaker Change: This was driven by a truly collaborative effort across the organization.

Speaker Change: As a result of our strong start to the year, we're now targeting a gross profit margin between 52.5 to 53.5 for the full year, up from our previous range of 52 to 53.

Aglido Cheva: We now expect the same-store sales pressures to continue the back half of the year across all geographies. This is consistent with the outlooks of many of our luxury merchants and broader market commentaries regarding discretionary spending. In addition, our thickest and travel vertical grow 8% in the second quarter, primarily due to new business activity.

Aglido Chiodo: Directionally, for modeling purposes, we expect our Q3 gross profit margin to be approximately 50%, and we continue to expect Q4 margin to be above the range. Moving to our operating margin, we continue to manage the business in a focused and disciplined manner. Total Operating Dispenses were 39.3 million for the second quarter, representing a year-over-year decline of 7%.

Speaker Change: Directionally, for modeling purposes, we expect our Q3 gross profit margin to be approximately 50% and we continue to expect Q4 margin to be above the range.

Speaker Change: Moving to our operating expenses.

Speaker Change: We continue to manage the business in a focused and disciplined manner. Total operating expenses were $39.3 million for the second quarter, representing a year-over-year decline of 7%.

Aglido Cheva: We're now expecting softer trends in this category in the second half of the year. In particular, we're anticipating lower travel volumes from our enemy merchants and as a result, currency expires our overall and near region to be relatively flat for the year. The United States, which is our largest region, grew by 11% during the second quarter, and APEC grew approximately 35%. The Outer Americas, which represents Canada and Latin America, were approximately 9%, primarily due to new and upsell activity.

Aglido Chiodo: We saw year-over-year declines in each of our R&D, sales, and marketing, and G&A operating expenses. Our operating expenses as a percentage of revenue declined from 58% in the prior-year period to 50% in the second quarter of 2024, reflecting ongoing leverage in the business model. To highlight how much progress we have made in only a few short years, this percentage in the second quarter of 2022 was 75%. For the second half of the year, we now expect approximately 39 million in quarterly savings due to a focus on ongoing savings.

Speaker Change: We saw year-over-year declines in each of our R&D, sales and marketing, and G&A operating expenses.

Speaker Change: Our operating expenses, the percentage of revenue declined from 58% in the prior year period to 50% in the second quarter of 2024, reflecting ongoing leverage in the business model.

Aglido Cheva: I continue to be excited about our growth in Outer Americas and A-FAC regions, which were fueled by market share gains or cheesed through the addition of new logos. We highlighted a large new logo in Japan in our press release in the fashion category during the quarter. This is an exciting cornerstone merchant, which we're hoping helps unlock further growth in the region.

Speaker Change: To highlight how much progress we have made in only a few short years, this percentage in the second quarter of 2022 was 75%.

Speaker Change: For the second half of the year we now expect approximately $39 million in quarterly expenses due to a focus on ongoing savings.

Aglido Chiodo: We achieved positive adjusted EBITDA of 2.3 million in Q2 of 24 as compared to negative 4.6 million in Q2 of 23, representing the eighth consecutive quarter of year-over-year improvement. This quarter's positive adjusted EBITDA represents year-over-year adjusted EBITDA margin improvements of approximately 930 basis points. On top of the 1100 basis points of improvements achieved in both Q4 of 23 and Q1 of 24, we have been generating ongoing margin expansion through the continued growth of the business while managing expenses, and we're focused on slowing this leverage to the bottom line.

Speaker Change: We achieved positive adjusted EBITDA of $2.3 million in Q2 of 2024 as compared to negative $4.6 million in Q2 of 2023, representing the 8th consecutive quarter of year-over-year improvements.

Aglido Cheva: Moving to the discussion of our growth profit margin operating expenses and adjusted EBDA. Unless otherwise noted, are we referencing non-gap financial measures? We have provided our reconciliation of gaps and non-gap financial measures in our earnings release. Moving on to growth profit margin, our growth profit margin of 53% was up from 52% in the second quarter of the prior year. We continue to benefit from improvements in our overall core machine learning models and the positive impact of new product revenue, offset by the impact of ramping of significant new merchants and quarterly variability in our revenue mix.

Speaker Change: This quarter's positive adjusted EBITDA represents year-over-year adjusted EBITDA margin improvements of approximately 930 basis points, on top of the 1100 basis points improvements achieved in both Q4 of 2023 and Q1 of 2024.

Speaker Change: We have been generating ongoing margin expansion through the continued growth of the business while managing expenses, and we're focused on slowing this leverage to the bottom line.

Aglido Chiodo: Moving to the balance sheet. We ended the first quarter with approximately four hundred and twenty-two million in cash, the ball that's sending investments on the balance sheet, and we carry zero debt. [inaudible] In the second quarter, we repurchased 6.8 million shares for a total price of approximately $39 million. As a result, our total share of spending has decreased sequentially by approximately 4 million shares from the first quarter.

Speaker Change: Moving to the balance sheet.

Aglido Cheva: As a reminder, I encourage you to continue analyzing our growth margins on an annual basis. Given individual quarters can vary to many factors, including the ramping of new merchants, and the risk profiles of transactions approved, that being said, I do want to know that our first half growth profit margin was approximately 54%, the highest half-year period in our IPO. This was driven by truly collaborative efforts across the organization. As a result of our strong start to the year, we're now targeting a growth profit margin between 52 and a half to 53 and a half for the full year, up from our previous range of 52 to 53.

Speaker Change: We ended the first quarter with approximately $422 million of cash deposits and investments on the balance sheet, and we carry zero debt.

Speaker Change: In the second quarter, we repurchased 6.8 million shares for a total price of approximately $39 million.

Speaker Change: As a result, our total shares of spending has decreased sequentially by approximately 4 million shares from the first quarter.

Aglido Chiodo: As a result of our ongoing commitment to dilution management, as well as anticipated repurchasing activity in the second half of the year, we expect our year-end share accounts to decline year-over-year. We continue to believe that our strong balance sheet and liquidity position are underappreciated. We will continue to be thoughtful in how we utilize our capital to drive shareholder value. In addition, we continue to maintain a very healthy cash flow model and achieve free cash flows of $4.1 million in the second quarter. We continue to expect approximately $30 million of positive free cash flow in 2024. Malt is turning to our outfit.

Speaker Change: As a result of our ongoing commitment to dilution management, as well as anticipated repurchasing activity in the second half of the year, we expect our year-end share accounts to decline year-over-year.

Speaker Change: We continue to believe that our strong balance sheet and liquidity position are underappreciated assets.

Aglido Cheva: Directionally, for modeling purposes, we expect our Q3 growth profit margin to be approximately 50% and we continue to expect Q4 margin to be above the range. Moving to our operating expenses, we continue to manage the business in a focus and discipline matter. Total operating expenses were 39.3 million for the second quarter, representing a year over year decline of 7%. We saw year over year declines in each of our R&D, sales and marketing, and G&A operating expenses.

Speaker Change: We will continue to be thoughtful in how we utilize our capital to drive shareholder value.

Speaker Change: In addition, we continue to maintain a very healthy cash flow model and achieved free cash flows of $4.1 million in the second quarter.

Speaker Change: We continue to expect approximately $30 million of positive free cash flow in 2024.

Speaker Change: [inaudible]

Aglido Chiodo: We're updating our 2024 guidance that we previously shared on our Q1 call. As we mentioned, we're expecting headwinds in our high-end fashion, tickets, and travel, and home verticals to persist, which we expect will negatively impact our second half revenue. As a result, we now anticipate revenue between $320 million and $325 million for the full year 2024, or $322.5 million at the midpoint. As Eido mentioned, we remain optimistic that an anticipated strong second half of new local activity should result in an acceleration of growth in the fourth quarter. After previously factoring in some level of macroeconomic recovery in the back half of the year into our guidance, we no longer are including this recovery in our current assumptions at the new midpoint.

Speaker Change: Now, turning to our outlook, we're updating our 2024 guidance that we previously shared on our Q1 call.

Aglido Cheva: Our operating expenses, the percentage of revenue declines from 58% in the prior year period to 50% in the second quarter of 2024, reflecting on going leverage in the business model. To highlight how much progress we have made in only a few short years, this percentage in the second quarter of 2022 was 75%.

Speaker Change: As we mentioned, we're expecting headwinds in our high-end fashion, tickets and travel, and home verticals to persist, which we expect will negatively impact our second-half revenue.

Speaker Change: As a result, we now anticipate revenue between $320 million and $325 million for the full year 2024, or $322.5 million at the midpoint.

Aglido Cheva: For the second half of the year, we now expect approximately 39 million in quarterly expenses due to a focus on ongoing savings. We achieved positive adjusted EBDA of 2.3 million in Q2 of 24 as compared to negative 4.6 million in Q2 of 23, representing the 8 consecutive quarter of year over year improvements. This quarter's positive adjusted EBDA represents year over year adjusted EBDA margin improvements of approximately 930 basis points. On top of the 1100 basis points improvements achieved in both Q4 of 23 and Q1 of 24. We have been generating ongoing margin expansions for the continued growth of the business while managing expenses and we're focused on slowing this leverage to the bottom line.

Speaker Change: As Eido mentioned, we remain optimistic that an anticipated strong second half of new local activity should result in an acceleration of growth in the fourth quarter.

Eido: After previously factoring in some level of macroeconomic recovery in the back half of the year into our guidance, we no longer are including this recovery in our current assumptions at the new midpoint.

Aglido Chiodo: As always, we'll continue to monitor the performance and health of our merchants, consumer spending, and the broader e-commerce landscape and its impact on our results. Moving to our adjusted EBITDA output, as a result of our disciplined approach to managing the business and improved gross margin outlook, we now believe that our full-year adjusted EBITDA will be between $13 million and $19 million, or $16 million at the mid-point.

Eido: As always, we'll continue to monitor the performance and health of our merchants, consumer spending, and the broader e-commerce landscape and the impact on our results.

Eido: Moving to our adjusted video outlook.

Aglika Dotcheva: As a result of our disciplined approach to managing the business and improved gross margin outlook, we now believe that our full-year adjusted EBITDA will be between $13 million and $19 million, or $16 million to the midpoint.

Aglido Chiodo: This represents an improvement of 7% from our range provided on our Q1 call in May and 19% from our initial guides given on our Q4-23 earnings call in March. The new midpoint of our Adjusted EBITDA guide represents additional margin expansion of approximately 800 basis points from the prior year, demonstrating leverage in the business model. Overall, I'm encouraged by the first half of the year. I believe that our leading product platform and disciplined approach to managing the business will allow us to continue to progress towards our long-term goals while delivering value to our merchants and to our shareholders. Operator.

Aglika Dotcheva: This represents an improvement of 7% from our range provided on our Q1 call in May and 19% from our initial guide given on our Q4-23 earnings call in March.

Aglido Cheva: Moving to the balance sheet, we ended the first quarter with approximately 40s and 22 million of cash deposits and investments on the balance sheet and we carried zero deaths. In the second quarter, we purchased 6.8 million shares for a total price of approximately 39 million. As a result, our total share of spending has decreased sequentially by approximately 4 million shares from the first quarter. As a result of our ongoing commitment to valuation management as well as anticipated repurchasing activity in the second half of the year, we expect our year and share accounts to decline year over year.

Aglika Dotcheva: The new midpoint of our Adjusted EBITDA Guide represents additional margin expansion of approximately 800 basis points from the prior year, demonstrating leverage in the business model.

Aglika Dotcheva: Overall, I'm encouraged by the first half of the year. I believe that our leading product platform and disciplined approach in managing the business will allow us to continue to progress towards our long-term goals while delivering value to our merchants and to our shareholders.

Operator: We're ready to take the first question, please. Thank you. As a reminder to ask a question, please press store 1-1 on your telephone and wait for your name to be announced. To withdraw the question, please press star 11 again.

Aglido Cheva: We continue to believe that our strong balance sheet and liquidity positions are under appreciated assets. We all continue to be thoughtful in how we utilize our capital to drive share of all their value. In addition, we continue to maintain a very healthy cash flow model and achieve free cash flow of 4.1 million in the second quarter.

Speaker Change: Operator, or ready to take the first question, please.

Speaker Change: Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw the question, please press star 11 again.

Operator: And the first question will come from Ramsey Elassel with Barclays. Your line is now open. This is Owen on behalf of Ramsey.

Speaker Change: And the first question will come from Ramsey Elassil with Barclays. Your line is now open.

Aglido Cheva: We continue to expect approximately 30 million of positive free cash flow in 2024.

Owen Callahan: I appreciate you taking our question this morning. I want to check in on the crowd strike out. It's earlier in July, the network said it had called that out as having an impact on Q31. And if your merchants had any technical issues, no, you largely operate on AWS, but any kind of, Unknown Attorney Inside there impact... Yeah, thank you for the question. There's no impact on Riskified or anything related that we understand from our merchants related to the general cross-strike issue.

Speaker Change: This is Owen on for Ramsey. I appreciate you taking our question this morning.

Aglido Cheva: Now starting to our outlook, we're updating our 2024 guidance that we previously shared on our Q1 call. As we mentioned, we're expecting headlines in our high-end fashion tickets and travel and home articles to persist, which we expect will negatively impact our second half revenue. As a result, we now anticipate revenue between 320 million and 325 million for the full year 2024 or 322.5 million at the midpoint.

Owen: I wanted to check in on the CrowdStrike outage earlier in July. The networks had called that out as having an impact on Q3. I wanted to see if...

Speaker Change: And if your merchants had any technical issues, know you largely operate on AWS, but any kind of insight there on impact on Q3 expectations might be helpful.

Speaker Change: Yeah, thank you for the question. There's no impacts on RISC-E5 or anything related that we understand from our merchants related to the general cross-strike issue.

Aglido Cheva: As you know, mentioned, we remain optimistic that an anticipated strong second half of new local activity should result in an acceleration of growth in the fourth quarter. After previously factoring in some level of macroeconomic recovery in the back half of the year into our guidance, we no longer are including this recovery in our current assumptions at the new midpoint. As always, we'll continue to monitor the performance and health of our emergence, consumer spending and the broader e-commerce landscape and the impact on our results.

Eido Gal: That's good to hear. And just a quick fall for me, just on that kind of more platform approach seems like you're making good progress on the cross-held some of those new products. Just wondering if you could give us an update on the penetration rate potentially of your kind of current client base and some of the kind of longer runway. You expect to kind of have any insight there? I'm happy to share an update there.

Speaker Change: Great. That's good to hear. And just a quick follow-up from me, just on the kind of more platform approach. Seems like you're making good progress on the cross-sell of some of those new products.

Speaker Change: Just wondering if you could give us an update on the penetration rate potentially of your kind of current client base and some of the kind of longer runway you expect to kind of have there. Any insight there would be helpful. Thanks.

Eido Gal: I'll tell you, look, as kind of a CEO, what gets me most energized is just speaking to our clients, seeing how they react to some of these newer additions and stuff we have in the pipeline, and also the ROI and the value that it brings them.

Speaker Change: Sure, happy to share an update there. I'll tell you, look, as kind of CEO , what gets me most energized is just speaking to our clients, seeing how they react to some of these newer additions and stuff we have in the pipeline.

Aglido Cheva: Moving to our adjusted EBDA outlook, as a result of our disciplined approach to managing the business and improved growth margin outlook, we now believe that our full year adjusted EBDA will be between 13 million and 19 million for 16 million to the midpoint. This represents an improvement of 7% from our range provided on our Q1 call in May and 19% from our initial guide given on our Q423 earnings call in March. The new midpoint of our adjusted EBDA guide represents additional margin expansion of approximately 800 basis points from the prior year, demonstrating leverage in the business model.

Eido Gal: I think just from a numbers perspective, you know, what we shared in the previous quarter, we've seen sequential improvements since then, but we're still in that zone of kind of a half a percent improvement to the gross profit margin, kind of three X growth. And we do have a fairly strong pipeline heading into the back half of the year. So I do expect kind of a good end to the year on the new product side. Our next question comes from Ryan Tomasello with KBW. Your line is open. Good morning, everyone.

Speaker Change: and also the ROI and the value that it solves them. I think just from a numbers perspective, you know, what we shared in the previous quarter, we've seen sequential improvements then, but we're still in that zone of kind of half a percent improvement to the gross profit margin, kind of 3x growth.

Speaker Change: And we do have a fairly strong pipeline heading into the back half of the year, so I do expect kind of a good end to the year on the new product side.

Speaker Change: Great, very helpful. Thank you.

Speaker Change: Our next question comes from Ryan Tomasello with KBW. Your line is open.

Aglido Cheva: Overall, I'm encouraged by the first half of the year. I believe that our leading product platform and discipline approach in managing the business will allow us to continue to progress towards our long-term goals, while delivering value to our merchants and to our shareholders.

Ryan Tomasello: Thanks for taking the question. Regarding the outlook, he was hoping you could put a finer point around what level of net dollar retention Current Guidance Reflects versus the original expectations at the beginning of the year. And if you can say how that breakdown looks between what you saw in the first half of the year in terms of net dollar retention versus what you're now looking for in the second half of the year. Yeah, of course. Thank you for the question. So, well, it's an annual number. It's at this point. It's not really a guide, but let me give you some directions.

Ryan Thomasello: Good morning, everyone. Thanks for taking the questions. Adi, regarding the outlook, I was hoping you can put a finer point around what level of net dollar retention

Ryan Thomasello: The current guidance reflects versus the original expectations at the beginning of the year. And if you can say how that breakdown looks between what you saw in the first half of the year in terms of net dollar retention versus what you're now looking for in the second half of the year. Thanks.

Unknown Attendee: Operator, we're ready to take the first question please. Thank you.

Unknown Attendee: As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw the question, please press star 11 again.

Aglido Chiodo: So we've previously shared on our Q1 earnings call that we've seen some trends kind of leading to a lower dollar amount than what we saw last year, and we kind of expected it to be closer to 100 than 105. Now because of the micro factors that we kind of shared in our community, we're going to be able to do that. We're going to be able to do that.

Speaker Change: Yeah, of course. Thank you for the question.

Owen Callahan: And the first question will come from Ramsey, Elassel with Barclays. Your line is now open. This is Owen on for Ramsey. I appreciate you taking our question this morning. Want to check in on the crowd strikeoutage earlier in July, the network had called that out as having an impact on Q3, one to see if any of your merchants had any technical issues. No, you largely operate on AWS, but any kind of insight there on impact on Q3 expectations might be, might be helpful. Yeah, thank you for the question. There's no impacts on Vickified or anything related that we understand from our merchants related to the general across strike issue.

Speaker Change: Well, it's an annual number at this point. It's not really a guide, but let me give you some direction. So we previously shared at our kind of Q1 earnings call that we've seen some trends kind of leading to a lower dollar retention than what we saw last year. We kind of expected to be closer to 100 than the 105.

Speaker Change: Now, because of the micro factors that we kind of shared in our

Aglido Chiodo: We're going to be able to do that, in our message just earlier. I think that a few percentage points below 100% is probably a fair assumption. And to give you a kind of understanding of what the main drivers are, I would say that number one is really the removal of the recovery trends that we kind of were baking into our numbers. And we just don't see that happening anymore.

Speaker Change: in our message just earlier, I think that a few percentage points below 100% is probably a fair assumption. And to give you kind of understanding of what are the main drivers, I would say that number one is really the removal of the recovery trends.

Aglido Chiodo: So now at the midpoint, we don't kind of expect any recovery numbers in the back half of the year, and we expect the back half to be kind of similar to the first half of the year. The second factor is probably our annual dollar extension rate. Again, we look at it annually. Just again, it's not a guide, but to give you some perspective, I think that I'm seeing just a slight uptick in loss volume. I do expect it to be very much kind of still in the ranges of last year. Last year it was 98.

Speaker Change: that we kind of were baking in our numbers and we just don't see that happening anymore. So now at the midpoint we don't kind of expect any recovery numbers in the back half of the year and we expect the back half to be kind of similar to the first half of the year.

Eido Gal: Great, that's good to hear. And just a quick fall from me just on the kind of more platform approach seems like you're making good progress on the cross sell that some of those new products was just wondering if you could give us an update on the penetration rate. And potentially of your kind of current client base and some of the kind of longer runway, you expect to kind of have there any insight there would be helpful.

Speaker Change: The second factor is probably our annual dollar expansion rate. Again, we look at it annually.

Eido Gal: Thanks. I'm happy to have you to share an update there. I'll say look as kind of CEO what gets me most energized is just speaking to our clients, seeing how they react to some of these newer additions and stuff we have in the pipeline. And also the ROI and the value that it solves them. I think just from a numbers perspective, you know what we share kind of previous quarter we've seen sequential improvements then, but we're still in that zone of kind of half a percent improvement to the gross profit margin kind of 3x growth. And we do have a fairly strong pipeline heading into the back half of the year. So I do expect kind of a good end to the year on the new product side.

Speaker Change: Just, again, it's not a guide, but to give you some perspective, I think that I'm seeing just slight uptick in loss volume. I do expect it to be very much kind of still in the ranges of last year. Last year, it was 98. Maybe I do expect to be closer to 97 this year.

Unknown Attendee: Great. Very helpful.

Aglido Chiodo: Maybe I do expect to be closer to 97 this year. And the last factor that might be impacting our meltdown retention rate is actually a positive one. This year, we've seen a lot more new revenue coming from new logos, which is great, which is something that we've been working kind of internally to create the right incentive structure to accomplish that and really kind of focusing on increasing our market share and penetrating different industries.

Unknown Attendee: Thank you.

Speaker Change: And the last factor that might be impacting our Nobel retention rate, actually it's a positive one, this year we've seen a lot more new revenue coming from new logos, which is great, which is something that we've been working on.

Speaker Change: kind of to internally to create the right incentive structure to accomplish that and really kind of focusing on increasing our market share and penetrating in different industries. But that has kind of impacted a little bit the upsell and just the

Aglido Chiodo: But that has kind of impacted the upsell a little bit and just had some effects on the net dollar retention. So overall, I think this is kind of like a very positive factor overall, but it does impact the net dollar retention. Great, I appreciate all that color.

Ryan Tomasello: Our next question comes from Ryan Thomas L.O, with KBW. Your line is open. Morning everyone. Thanks for taking the questions. Andy, regarding the outlook was hoping you can put a finer point around what level of net dollar retention, the current guidance reflects versus the original expectations at the beginning of the year. And if you can say how that breakdown looks between what you saw in the first half of the year in terms of net dollar retention versus what you're now looking for in the second half of the year.

Speaker Change: some effects on the net dollar retention. So overall, I think this is kind of like a very positive factor overall, but it does impact the net dollar retention.

Eido Gal: And then you don't want it for you, you know, as you continue to make progress building out the platform offering beyond just the chargeback guarantee. Can you say how the sales and go-to-market strategy is evolving at all to help support that initiative? I mean, Agi, I think you just alluded to, you know, a new incentive structure around new, new logos. You know, last quarter, you called out some of these, Key, Standalone Wins, Outside the Chargeback Guarantee, and Policy to Protect and Dispute Resolved.

Speaker Change: Great, appreciate all that color. And then, Eido, one for you, you know, as you continue to make progress building out the platform offering beyond just the charge-back guarantee,

Speaker Change: Can you say how the sales and go-to-market strategy is evolving at all to help support that initiative? I mean, Agi, I think just alluded to, you know, a new incentive structure around new logos. You know, last quarter you called out some of these

Ryan Tomasello: Thanks. Yeah, of course. Thank you for the question. So, well, it's an annual number. It's this point. It's not really a guide, but let me give you some directions. So we've previously shared that our kind of q1 earnings call that we've seen some trends kind of leading to a lower dollar retention than what we saw last year. And we kind of expected to be closer than 100 than the 105. Now because of the micro factors that we kind of shared in our.

Speaker Change: key standalone wins outside the chargeback guarantee and policy protect and dispute resolve. Is there, you know, a lot of focus that you're

Eido Gal: Is there, you know, a lot of focus that you're putting on Salesforce to emphasize those types of standalone deals? Just trying to understand, you know, how the go-to-market strategy is evolving here in light of the platform evolution. Sure. No, that's a great question.

Speaker Change: Putting it on the sales force to emphasize those types of standalone deals, just trying to understand how the go-to-market strategy is evolving here in light of the platform evolution. Thanks.

Eido Gal: I would say that at the start of the year, we definitely wanted to put a bigger focus on new logos, to have more revenue come from new logos than from us. So we think that's important just from a market share perspective, and we're happy to see some of the results there. I think that our platform approach enables us to sell to more stakeholders and achieve more ROI. And the value that we see there is a kind of higher win rates and competitive cycles. It means that, like you mentioned, we can sell to merchants that maybe are not looking for a chargeback solution right now, but they are interested in some of the other parts.

Speaker Change: Sure, no, that's a great question. I would say that at the start of the year we definitely wanted to put a bigger focus

Ryan Tomasello: In our message just earlier, I think that a few percentage points below 100% is probably a fairer assumption. And so, give you kind of understanding of what are the main drivers. I would say that number one is really the removal of the recovery trends that we kind of were baking in our numbers. And we just don't see that happening anymore. So now, at the mid points, we don't kind of expect any recovery numbers to the back half of the year and we expect the back half of to be kind of similar to the first half of the year.

Speaker Change: On new logos, to have more revenue come from the new logos.

Speaker Change: Men from also, we think that's important just from a market-langer perspective and we're happy to see some of the results there. I think that our platform approach enabled us to sell, you know, to more stakeholders and solve more ROI. And the value that we see there is kind of higher wind rates and competitive cycles. In means that, like you mentioned, we can sell into merchants that maybe are not looking for a charge-back solution right now, but they are interested in some of the other parts.

Eido Gal: But really, what we're seeing is more and more new deals taking multiple parts of the platform. I think we highlighted that large ticketing merchant that also started with dispute resolve. That large marquee client in Japan is actually starting with two clients, but is signed up with two products, but has already signed for the third one to go live with early next year.

Speaker Change: But really what we're seeing is more and more new deals are taking multiple parts of the platform. I think we highlighted that large ticketing merchant that also started with Dispute Resolve. That large marquee client in Japan is actually starting with two clients but is signed with two products but has already signed for the third one to go live with that early next year.

Ryan Tomasello: The second factor is probably our annual dollar extension rate again, we look at it annually. Again, it's not a guy, but to give us some perspective, I think that, and seeing just slides of taking loss volume, I do expect it to be very much kind of stealing the ranges of last year, last year, what 98 maybe it took expect to be closer to 97 this year. And the last factor that might be impacting our not the retention rate actually as a positive one this year, we've seen a lot more new revenue coming from new logos, which is great, which is something that we've been working kind of to internally to create the right incentive structure to accomplish that and really kind of focusing on increasing our market share and penetrating in different industries.

Speaker Change: So it's definitely helping there as well.

Speaker Change: Great, appreciate all the coverage.

Eido Gal: So it's definitely helping there as well. Great. I appreciate all of you. The next question comes from Chris Kennedy with William Blair. Your line is open.

Speaker Change: i

Speaker Change: And the next question comes from Chris Kennedy with William Blair. Your line is open.

Cristopher Kennedy: Great. Thanks for taking the question. You talked about accelerating growth in the fourth quarter. Is there any way to think about or put a framework around 2025 given the new sales activity? I think it might still be a bit too early for us to really think through and model out 2025.

Chris Kennedy: Great, thanks for taking the question. You talked about accelerating growth in the fourth quarter. Is there any way to think about or put a framework around 2025 given the new sales activity?

Aglido Chiodo: I think the acceleration we're seeing into the 4th quarter is just based on some of the new business activity and the growth in those areas that are helping accelerate that. But just to recap, you know, kind of what we mentioned based on some of the earnings from some of the clients, the public clients that we work with, everyone's kind of expecting a slower second half of the year, especially around fashion travel.

Ryan Tomasello: But that hit kind of impact it a little bit to the upsell and and just the some effects on the network attention. So overall, I think this is kind of like a very positive factor overall, but it does impact the network attention. Great, appreciate all that color.

Speaker Change: I think it might be still a bit too early for us to really think through and model out 25. I think the acceleration we're seeing into the fourth quarter is just based on some of the new business activity and the growth in those areas that are helping accelerate there.

Speaker Change: But just to recap, you know, kind of what we mentioned based on some of the earnings from some of the clients, the public clients that we work with.

Eido Gal: And then you don't want for you, you know, as you continue to make progress building out the platform offering beyond just the charge back guarantee. Can you say how the sales and go to market strategy is evolving and all to help support that initiative. I mean, I think just alluded to, you know, a new incentive structure around new new logos. You know, last quarter, you called out some of these key standalone wins outside the charge back guarantee in policy protect and just to resolve.

Speaker Change: Everyone's kind of expecting a slower back half of the year, especially around fashion, travel, sneakers, the home category, and we've been seeing that quarter to day to small, right? So that's kind of creating that lower outlook for the back half.

Aglido Chiodo: Uh, sneakers, the home category, and we've been seeing that quarter to data small, right? So that's kind of creating that lower outlook for the back half. Um, within the 4th quarter, based on some of those goals that are already happening right now in the 3rd, that's going to offset some of that consumer spending. Great. Okay. Thank you.

Speaker Change: within the fourth quarter based on some of those goal lines that are already happening right now, and the third, that's going to offset some of that consumer spending weakness.

Aglido Chiodo: And then it's great to see the continued expansion of margins. Are you still comfortable with your 2026 EBITDA margin target of 15% to 20%? And can you just remind us of the roadmap to get there? Thank you. Yeah, sure. We're still fairly in line and very confident in those midterm targets. Like we mentioned, we have various levers that we understand how to pull in order to get there.

Speaker Change: Great. Okay. Thank you. And then it's great to see the continued expansion of margins. Are you still comfortable with your 2026 EBITDA margin target of 15% to 20%? And can you just remind us of the roadmap to get there? Thank you.

Eido Gal: Is there, you know, a lot of focus that you're putting on the sales force to emphasize those types of standalone deals, just just trying to understand, you know, how to go to market strategy is evolving here and light of the platform evolution. Thanks. Sure. Now, that's a great question. I would say that at the start of the year, we definitely wanted to put a bigger focus on new logos to have more revenue, come from new logos.

Speaker Change: Yeah, sure, we're still fairly in line and very confident in those midterm targets. Like we mentioned, we have various levers that we understand how to pull in order to reach there, and the results of this program, the guideline I'm sending, still squarely in line, 100%.

Aglido Chiodo: And the results of this quarter, from the guideline I was sending, still squarely in line, 100%. Great, thank you. And the next question comes from Terry Tillman with Truist. Your line is open. Yeah. Hey, team.

Eido Gal: Then from also, we think that's important just from a market Lancer perspective and we're happy to see some of the results there. I think that our platform approach is to be able to sell, you know, to more stakeholders and solve more ROI and the value that we see there is kind of higher win rates and competitive cycles. It means that like you mentioned, we can sell into merchants that maybe are not looking for a charge back solution right now.

Speaker Change: Great. Thank you.

Speaker Change: And the next question comes from Terry Tillman with Truist. Your line is open.

Terrell Tillman: Thanks for taking my questions. Maybe just the first question relates to whether, if we just take the challenges within the installed base store sales activity aside and just the macro assumptions in the second half of the year, you are talking about new sales or upselling activity being resilient or relatively strong. I'm just curious what you've been doing internally, you know, more recently or over the intermediate term to, you know, enhance your go-to-market. So whether it's field sales or marketing and branding, you know, what are some of the things that you've been doing that you could call out to us that maybe could continue to drive this new business success going forward? And then add a follow-up. You know, I think it's a team effort, right?

Terry Tillman: Yeah. Hey, team. Thanks for taking my questions. Maybe just the first question relates to, if we just take the challenges within the installed basing store sales activity aside and just the macro assumptions in the second half of the year. You are talking about new sales or upselling activity being resilient or relatively strong. I'm just curious what you've been doing internally, you know, more recently or over the intermediate term to, you know, enhance go to market. Whether it's field sales or marketing and branding, you know, what are some of the things that you've been doing that you could call out to us that maybe could continue to drive this new business success going forward?

Eido Gal: But they are interested in some of the other parts, but really what we're seeing is more and more new deals are taking multiple parts of the platform. I think we highlighted that large ticketing merchant that also started with this keep resolved. That large marquee client in Japan is actually starting with two clients, but it's signed with two products, but it's already signed for the third one to go live with that early next year. So it's definitely helping there as well.

Unknown Attendee: The next question comes from Chris Kennedy with William Blair. Your line is open. Great, thanks for taking the question. You talked about accelerating growth in the fourth quarter. Is there I think it might be still a bit too early for us to really think through and model out 25. I think the acceleration we're seeing into the fourth quarter is just based on some of the new business activity and the growth in those areas that are helping accelerate there.

Eido Gal: It's having the best product that allows you to show in POCs that you're the most accurate solution. It's having a differentiated product that has certain components around policy and disputes that are not available at competitors. But it's also having the best sales force that's able to explain and sell in the best way, the right marketing collateral, and the right training. You know, in that sense, it takes a village, and I think we continuously try to have better execution across all aspects. Yep.

Speaker Change: and then add a follow-up.

Speaker Change: You know, I think it's a team effort, right? It's having the best product that allows you to show in POCs that you're the most accurate solution. It's having a differentiated product that has certain components around policy and dispute that are not available at competitors.

Speaker Change: But it's also having the best sales force that's able to explain and sell in the best way, the right marketing collaterals, the right training, you know, so in that sense, it takes a village. And I think we continuously try to have better execution across all aspects.

Terrell Tillman: And maybe just a follow-up question, you know, the concept of growth three acceleration, I think you talked about it in the fourth quarter just based on the book of business you're signing, and it's starting to roll out. I'm assuming you're probably not getting a whole full fourth quarter revenue contribution from some of this new business activity recently or in the near term, but maybe you could comment on that. And then the second part of that is going forward, assuming there's not a market decline from what you're assuming in the macro, do you think at some point you could grow through the same store sales issues, and that could actually help growth re-accelerate just because of the broad book of business that you're bringing on? Thank you.

Speaker Change: Yep, and maybe just a follow up question, you know, the concept of the growth three acceleration, I think you talked about it in the fourth quarter, just based on the book of business you're signing and it's starting to roll out.

Unknown Attendee: But just to recap, you know, kind of what we mentioned based on some of the earnings from some of the clients, the public clients that we work with, everyone's kind of expecting a slower back and stuff of the year, especially around fashion, travel, sneakers, the home category. And we've been seeing that quarter today as well. And so that's kind of creating that lower outlook for the back half. Within the fourth quarter based on some of those goals that are already happening right now, and the third that's going to offset some of that consumer spending.

Speaker Change: I'm assuming you're probably not getting a hopeful fourth quarter.

Speaker Change: revenue contribution from some of this new business activity recently or in the near term, but maybe you could comment on that. And then the second part of that is

Speaker Change: Going forward, assuming there's not a market decline from currently what you're assuming in the macro, do you think at some point you could grow through the same store sales issues and that could actually help growth reaccelerate just because of the broad book of business that you're bringing on? Thank you.

Eido Gal: Yeah, we're definitely happy with the diversity of the book of business, even with some of the categories that we have, you know, a relatively high concentration in the category. It's across a wide range of merchants across, you know, a very wide range of geographies. And you're right to point out that right now, the macro is creating year over year declines. And even if we continue to see the current environment, at some point, you know, we expect to stop seeing that type of decline effect.

Speaker Change: Yeah, we're definitely happy with the diversity of the book of business, even in some of the categories that we have, you know, a relatively high concentration in the category, it's across a wide range of merchants, across, you know, a very wide range of geographies. And you're right to point out that right now, the macro is creating year over year declines. And even if we continue to see the current environment at some point, you know, we would anticipate to stop seeing that, that type of decline effect.

Unknown Attendee: Great. Okay, thank you. And then it's great to see the continued expansion of margins. Are you still comfortable with your 2026 EBITDA margin target of 15 to 20% and can you just remind us of the road map to get there? Thank you. Yeah, sure. We're still fairly in line and very confident in those midterm targets. Like we mentioned, we have various levers that we understand how to pull in order to reach there. And the results of this quarter and the guy on the standings still squarely in 100%. Great.

Unknown Attendee: Thank you.

Timothy Chiodo: Yeah, what's going on positively impacts us, and the next question comes from Timothy Chiodo with UBS, Your Line, and Soats. Great, thank you for taking the question. A few years ago, with PSD2 in Europe and the liability ship that was created there, it did create some headwinds, and we've since overcome that. It's less of a talking point these days, but at the time, there were certainly some transaction exceptions that you could still work on the transaction, you could still get the chargeback, the full chargeback liability products sold to the customer.

Speaker Change: and positively impact us.

Speaker Change: And the next question comes from Timothy Chiodo with UBS. Your line is open.

Carrie Tillman: And the next question comes from Carrie Tillman with Truist. Your line is open. Yeah, hey team. Thanks for taking my questions. Maybe just the first question relates to, if we just take the challenges within the installed basing store sales activity aside and just the macro assumptions in the second half of the year, you are talking about new sales, there were upselling activity being resilient or relatively strong. I'm just curious what you've been doing internally more recently or over the intermediate term to enhance go to market.

Timothy Kiodo: Great, thank you for taking the question. A few years ago, with the PSD2 in Europe and

Speaker Change: the liability ship that was created there. It did create some headwinds and we lapped that.

Speaker Change: It's less of a talking point these days, but at the time, there were certainly some transaction exceptions that you could still work on the transaction. You could still get the full chargeback liability products sold to the customer.

Eido Gal: There were also some other ways that you could support the merchants, whether it be policy abuse or other products. And at the time, there was also some thought of potentially even working with issuers, some of which sounds like you're doing now. I wanted to shift that same framework or discussion around Apple Pay, Google Pay, and other wallets that come with a similar liability shift, and just to talk about some of the other things you could do with merchants.

Speaker Change: There were also some other ways that you could support the merchants, whether it be policy abuse or other products. And at the time, there was also some thought of potentially even working with issuers, some of which sounds like you're doing now.

Carrie Tillman: So whether it's field sales or marketing and branding, what are some of the things that you've been doing that you could call out that maybe could continue to drive this new business success going forward? And then that'll follow up.

Speaker Change: I wanted to shift that same framework or discussion around Apple Pay, Google Pay, and other wallets that come with a similar liability shift. And just to talk about some of the other things you could do with merchants.

Eido Gal: You know, I think it's a team effort, right? It's having the best product that allows you to show in POCs that you're the most accurate solution and having a differentiated product that has certain components around policy and disputes that are not available at competitors. But it's also having the best sales force that they will explain and sell in the best way, the right marketing collateral, the right training. In that sense, it takes a village and I think we continue to try to have better execution across all aspects.

Eido Gal: As more and more volumes shift to Apple Pay and Google Pay, is it fair to assume that in some cases that kind of takes those transactions out of the TAM for chargeback guarantee? And are there still ways that you could work with the merchants on Apple Pay and Google Pay transactions? Hey Tim,

Speaker Change: As more and more volumes shift to Apple Pay and Google Pay, is it fair to assume that in some cases that kind of takes those transactions out of the TAM for chargeback guarantee? And are there still ways that you could work with the merchants on Apple Pay and Google Pay transactions?

Eido Gal: Thanks for that question. I'm happy to explain. We definitely see Apple Pay within our merchants, and the amount varies by category.

Speaker Change: Okay, thanks for that question. Happy to explain.

Eido Gal: So, for example, when you think about the food category, that's been very resilient and growing for us. I probably have a higher concentration of Apple Pay transactions relative to other industries like luxury fashion. The way we think about it is, hey, there's not always a guarantee or liability shift in those instances. For example, if it's a merchant-initiated transaction, there's no liability shift.

Speaker Change: We definitely see Apple Pay within our merchants, and the amount varies by the category. So, for example, when you think about the food category, that's been very resilient and growing for us. I probably have a higher concentration of Apple Pay transactions relative to other industries like luxury fashion.

Eido Gal: Yep, and maybe just to follow up questions, you know, the concept of the growth three acceleration, I think you talked about it in the fourth quarter just based on the book of business you're signing and it's starting to roll out. I'm assuming you're probably not getting a whole full fourth quarter revenue contribution from some of this new business activity recently or in the New York term, but maybe a good comment on that.

Speaker Change: The way we think about it is, A, there's not always a guarantee or liability shift in those instances. For example, if it's a merchant-initiated transaction, there's no liability shift. If you have various geographies or you exceed certain limits, then there's no liability shift.

Eido Gal: And then the second part of that is going forward, assuming there's not a market decline from currently what you're assuming in the micro, do you think at some point you could grow through the same store sales issues and that could actually help grow three accelerate just because of the broad book of business that you're bringing on. Thank you. Yeah, we're definitely happy with the diversity of the book of business, even some of the categories that we have, you know, a relatively high concentration in the category, it's across a wide range of merchants across, you know, a very wide range of geographies, and you're right to point out that right now, the macro is creating year over year declines, and even if we continue to see the current environment at some point, you know, we would anticipate to stop seeing that, that's a decline effect, positively impact us.

Eido Gal: If you have various geographies or you've seen certain limits, then there's no liability shift. And because of that, some of our merchants would prefer to send us those transactions for the guarantee, and some of our merchants would prefer to send us those transactions under what we call a scoring, a non-guaranteed model. We're very open to both of them, but there's less of an impact on total revenue for us in these scenarios. And let me give you a concrete example that happened a few weeks ago.

Speaker Change: And because of that, some of our merchants would prefer to send us those transactions for the guarantee.

Speaker Change: And some of our merchants would prefer to send us those transactions under what we call a scoring, a non-guaranteed model. We're very open to both of them. There's less of an impact on the total revenue for us in these scenarios. And let me give you

Eido Gal: We were in contract negotiations with a merchant, and we would either offer them a blended risk-adjusted fee of 30 basis points for all the volume, including Apple Pay, or there was an alternative offer that said a risk-adjusted fee of 35 basis points for all of the credit card volume with a fixed fee of $0.10 for, call it, Apple Pay transactions. So, because our pricing is risk-adjusted, we would assume that the comparable if Apple Pay is included or not nets out to something very, very similar, which is very different from the kind of the PSD2 example, which created the loss in volume.

Speaker Change: Let me give you a concrete example that happened a few weeks ago. We were in contract negotiations with a merchant, and we would either offer them a blended risk-adjusted fee of 30 basis points,

Timothy Chiodo: And the next question comes from Timothy Chiodo with UBS, your line is open. Great, thank you for taking the question. A few years ago with the PSD-2 in Europe and the liability ship that was created there, it did create some headwinds and we've slapped that. It's less of a talking point these days, but at the time, there were certainly some transaction exceptions that you could still work on the transaction, you could still get the charge back, the full charge back liability products sold into the, to the customer.

Speaker Change: for all the volume, including Apple Pay. Or there was an alternative offer that said, you know, a risk-adjusted fee of 35 basis points, right, for all of the credit card volume with a fixed fee of 10 cents for, you know, kind of call it Apple Pay transactions.

Speaker Change: So because our pricing is risk-adjusted, we would assume that the comparable, if AlphaPay is included or not, nets out to something very, very similar, which is very different than kind of the PSD2 example, which created the loss in volume.

Eido Gal: On the market size, look, when we think about, you know, e-commerce, travel, remittance, delivery, ride-hailing, that's probably an $8 trillion market today. Obviously, you need to, you know, cut some of those numbers to get to our true SAM. But you are right that the chargeback guarantee aspect of that is going to be a few trillion in volume. And there are a few hundred billion, maybe like low trillions right now, that are in alternative forms of payments where the liability might fit differently.

Speaker Change: On the market size, look, when we think about e-commerce, travel, remittance, delivery, ride hailing, that's probably an $8 trillion market today. Obviously, you need to haircut some of those numbers to get to our true SAM, but you are right that the chargeback guarantee aspect of that is going to be a few trillion in volume. And there are a few hundred billion, maybe like low trillions right now that's in alternative forms of payments.

Timothy Chiodo: There were also some other ways that you could support the merchants, whether it be policy abuse or other products, and at the time, there was also some thought of potentially even working with issuers, some of which sounds like you're doing now.

Eido Gal: I wanted to shift that same framework or discussion around Apple Pay, Google Pay, and other wallets that come with a similar liability shift. And just to talk about some of the other things you could do with merchants, as more and more volume shift to Apple Pay and Google Pay, is it fair to assume that in some cases, that kind of takes those transactions out of the tam for charge back guarantee? And are there still ways that you could work with the merchants on Apple Pay and Google Pay transactions?

Eido Gal: So, that's our kind of overall approach there. Okay, thank you. That's really helpful context on the apple pens. Also, the example that you gave.

Speaker Change: where the liability might fit differently. So that's our kind of overall approach there.

Speaker Change: Okay, thank you. That's a really helpful context on the Apple Pay, and also the example that you gave.

Timothy Chiodo: The next question is more of an industry question, just given the data that you have, and my understanding is the integrations are extremely thorough with your merchants, and therefore, you get to see a lot of information that maybe others in the payment system don't see. But this topic or category of autofill platforms, whether it be PayPal's Fastlane or Stripe Link or the Shop Anywhere offering, is gaining attention within the investment community.

Speaker Change: The next question is more of an industry question, just given the data that you have and my understanding is the integrations are extremely thorough with your merchants, and therefore you get to see a lot of information that maybe others in the payment system don't see.

Eido Gal: Jason, thanks for that question. Happy to explain. We definitely see Apple Pay within our merchants and the amount varies by the category. So, for example, when you think about the food category that's been very resilient and growing for us, I'd probably have a higher concentration of Apple Pay transactions relative to other industries like luxury dashes. The way we think about it is, hey, there's not always a guarantee or liability shift in those instances.

Speaker Change: But this topic or category of autofill platforms, whether it be PayPal's Fastlane,

Speaker Change: jumps, or Stripe blank.

Speaker Change: or the Shop Anywhere offering. It's gaining attention within the investment community. And what did you see from your

Timothy Chiodo: And what did you see from your seat, if you had any thoughts on either uptick or advantage or conversion or whether there's any liability, a shift that's involved with any of those offerings? I'm sorry, I would have to say that I'm tangentially familiar with it, but it's definitely not something that I have any numbers or analysis that I would feel comfortable sharing right now, just without digging a bit deeper into that.

Speaker Change: seat, if you had any thoughts on either uptick or advantage or conversion or if there's any liability of shift that's involved with any of those offerings.

Eido Gal: For example, if it's a merchant initiated transaction, there's no liability shift. If you have various geographies or you've seen certain limits, then there's no liability shift. And because of that, some of our merchants would prefer to send us those transactions for the guarantee. And some of our merchants would prefer to send us those transactions under what we call a scoring or non-guaranteed model. We're very open to both of them. There's less of an impact on the total revenue for us in these scenarios.

Speaker Change: I'm sorry, I would have to say that I'm tangentially familiar, but it's definitely not something that I have any numbers or analysis that I would feel comfortable in sharing right now, just without digging a bit deeper into that.

Timothy Chiodo: Okay, not a problem. I thought it was worth asking, but thank you for taking the other. I'll drop back. Thanks. And the next question comes from Reggie Smith with JPM. Your line is open. Hey, good morning.

Speaker Change: Okay, not a problem, I thought it was worth asking, but thank you for taking the other, I'll drop back, thanks.

Eido Gal: And let me give you a concrete example that happened a few weeks ago. Right? We were in contract negotiations with the merchant, and we would either offer them a blended risk of just to see a 30 basis points for all the volume, including Apple Pay. Or there was an alternative offer that said, you know, a risk-adjusted fee of 35 basis points for all of the credit card volume with a fixed fee of 10 cents for kind of call it Apple Pay transactions.

Speaker Change: Robert Napoli.

Speaker Change: And the next question comes from Reggie Smith with JPM. Your line is open.

Reginald Smith: And thanks for taking the question. Congratulations on the Jack Japan retailer win. I guess this is going to be a tough question, but I'm curious if you can contextualize or quantify, provide a little more color around your implementation pipeline for the back half of the year, this year versus last year, maybe talk about that, like, on a volume or expected volume basis. Just curious. We're trying to, you know, better understand, like, what the growth stats kind of look like. So any color you can provide there would be helpful.

Reggie Smith: Hey, good morning, and thanks for taking the question. Congrats on the Japan retailer win.

Speaker Change: I guess it.

Reggie Smith: This is going to be probably a tough question, but I'm curious if you can contextualize or quantify

Eido Gal: So because our pricing is risk-adjusted, we would assume that the comparable if Apple Pay is included or not nets out to something very, very similar, which is very different than kind of the PSD2 example, which created a loss in volume. On the market size look, when we think about e-commerce, travel, remittance, delivery, ride-hailing, that's probably an 8 trillion market today. Obviously, you need to haircut some of those numbers to get to our true Sam.

Speaker Change: provide a little more color around your implementation pipeline, I guess, for the back half of the year, this year versus last year. Maybe talk about that like on a volume, expected volume basis. Just curious, we're trying to...

Speaker Change: You know, better understand like what the growth stats kind of look like. So any color you can provide there would be helpful.

Eido Gal: I think that trend is definitely seeing more diversification across products and geographies, which again is anticipated and makes sense. We have more mature products. We have more success and better presentation in some of the near geographies and more marquee clients. Using that Japan example, being able to onboard one of those top 10 merchants that's an extremely well-known brand really helps us in the domestic Japan market to have more success there.

Speaker Change: I think the trend is definitely seeing more diversification across products and geographies, which, again, is anticipated to make sense. We have more mature products.

Eido Gal: But you are right that the chargeback guarantee aspect of that is going to be a few trillion in volume. And there are a few hundred billion, maybe like low trillions right now, that's in alternative forms of payments where the liability might sit differently. So that's our kind of overall approach there. Okay, thank you. That's a really helpful context on the Apple Paynes, also the example that you gave.

Speaker Change: We have more success and better representation in some of the near geographies and more marquee clients using that Japan example

Speaker Change: Being able to onboard one of those top 10 merchants that's an extremely well-known brand really helps us.

Aglika Dotcheva: and the domestic Japan market to have more success there. So I'm seeing that. I think Agi mentioned that we're seeing more new business wins, new logo activity as compared to upsell. So that was a big focus for us. So that's definitely something that you can feel within the pipeline. Unknown Speaker

Eido Gal: So I'm seeing that, I think Aggie mentioned that we're seeing more new business and new logo activity as compared to upsell. So that was a big focus for us. So that's definitely something that you can feel within the pipeline. And I think that's kind of a good color and how I would characterize it.

Unknown Attendee: The next question is more of an industry question, just given the data that you have and my understanding is the integrations are extremely thorough with your merchants. And therefore, you get to see a lot of information that maybe other others in the payments because of some don't see. But this topic or category of autofill platforms, whether it be paid out staff plane or strike blank or the shop anywhere offering, it's gaining attention within the investment community and was to see from your seat if you had any thoughts on either uptick or advantage or conversion or if there's any liability of shift that's involved with any of those offerings.

Aglika Dotcheva: And I think that's kind of good color and how I would characterize it.

Eido Gal: Yeah, I guess following up on that. I mean, when I think about, you know, the holiday season, I generally think that I could be totally all based here, that merchants don't want to do much before the holidays. These signings that you're talking about, are they expected to be implemented? In the back after this year, or is that more of 2025? We definitely have a robust pipeline that we anticipate going live between now and the end of the year. You're right; there are definitely some merchants, especially ones that have seasonality built into them. They have code freezes at some point, and that's taken into account.

Speaker Change: Yeah, I guess, following up on that, I mean, when I think about, you know, the holiday season.

Speaker Change: I generally think, and I could be totally off base here, that merchants don't want to do much before the holidays. These signings that you're talking about, are they expected to be implemented in the back half of this year, or is that more of a 2025?

Speaker Change: We definitely have a robust pipeline that we anticipate to go live between now and the end of the year. You're right that definitely some merchants, especially ones that have seasonality built into them, they have code freezes at some point and that's taken into account. Other merchants, by the way, in different categories are less impacted by that.

Reginald Smith: And then one last question, maybe you can help me understand. Looking at the comparisons from last year, you're stepping into optically easier comparisons in the back half of the year. I can appreciate that the macro is getting sensitive, but maybe help us kind of put all of that together. You know, my math, and there may be some noise in here, is that the sequential comparison for growth in the back half of the year is probably 10 points easier.

Unknown Attendee: I'm sorry, I would have to say that I'm gingerly familiar, but it's definitely not something that I have kind of any numbers or analysis that are feel, you know, comfortable and sharing right now, just without digging a bit deeper into that. Okay, another problem, those worth asking, but thank you for taking the other. I'll drop back. Thanks.

Speaker Change: And then one last question, maybe you can help me understand. Looking at the comparisons from last year, you're stepping into optically easier compares in the back half of the year. I can appreciate that the macro is getting sensitive, but maybe help us kind of.

Eido Gal: And the next question comes from Reggie Smith with JPM, your line is open. Hey, good morning, and I think you're taking the question congrats on the on the jet, just paying a retailer when I guess this is going to be probably a tough question, but I'm curious if you can contextualize the quantify. Provide minimal color around your implementation pipeline, I guess, for the back half of the year, this year versus last year, maybe talk about that like on a volume expected volume basis.

Speaker Change: Put all of that together. My math, and there may be some noise in here, is that the sequential compare for growth in the back half of the year is probably 10 points easier. So I'm just trying to square that. I know

Reginald Smith: So I'm just trying to square that. I know if we had the Beyonce and Taylor Swift thing last year, what more can you kind of tell us in terms of comparison to kind of square those numbers a little bit? That's all I have.

Speaker Change: If we had the Beyonce and Taylor Swift thing last year, what more can you kind of tell us in terms of comparison to kind of square those numbers a little bit? That's all I have. Thank you.

Aglido Chiodo: Yeah, sure. So if I think about, you're right, the back half of the year, last year, we saw some softness already starting to emerge, especially in high fashion and just fashion, and the overall holiday seasons were more muted. So it should be a better and easier comparison this year. And maybe the other factor as well is,

Speaker Change: Yeah, sure. So if I think about, you're right, the back half of the year, last year, we saw some softness already starting to kind of to emerge, especially in high fashion and just fashion and the overall holiday seasons.

Eido Gal: Just curious, we're trying to, you know, better understand what the growth stats kind of look like. Any color to provide there would be helpful. I think that trend is definitely seeing more diversification across products and geographies, which again, it anticipated makes sense, we have more mature product, we have more success and better presentation and some of the near geographies and more marquee clients using that. Japan example, being able to onboard one of those top 10 merchants that's extremely well known brand really helps us in the domestic Japan market to have more success there.

Speaker Change: We're more muted. So it should be a better and easier comparable this year. And maybe the other factor as well is like is the home industry last year at the home industry, we were kind of going through a very large upsell. So.

Aglido Chiodo: It's the home industry Last year, the home industry, we were kind of going through a very large upsell. So, home was very strong, but in Q4 specifically, home doesn't have this uptick as in it's some of the kind of the other industries. So potentially, they should be easier as well.

Speaker Change: Holm was very strong, but in Q4, specifically, Holm doesn't have like this uptick as in some of the other industries. So potentially, they should be easier as well in terms of effect on Q4.

Eido Gal: So I'm seeing that I think Aggie mentioned that we're seeing more new business wins new logo activity, as compared to upsell, so that was a big focus for us, so that's definitely something that you can feel within the pipeline.

Aglido Chiodo: In terms of effect on Q4, and the next question comes from Clark Wright with D.A. Davidson. Your line is open. Appreciate the update around the new logo trend. So wanted to understand some of the feedback you got from the Ascend conference this year, if that translated to any of the new business momentum you noted this quarter. Terrell, thanks for that.

Speaker Change: And the next question comes from Clark Wright with DA Davidson. Your line is open.

Clark Wright: Thanks, we appreciate the update around the new logo trend. So wanted to understand some of the feedback you got from the Ascend conference this year, if that translated to any of the new business momentum you noted this quarter.

Eido Gal: And I think that's kind of good color and how I would characterize it. Yeah, I guess following up on that, I mean, when I think about, you know, the holiday season, I generally think that I could be totally all based here that merchants don't want to do much before the holidays. These, these signings that you're talking about, are they expected to be implemented in the back half of this year or is that more of a 2025 type thing?

Clark Wright: So let me just recap what a send is in case not everyone is familiar. It's the annual Riskified User Conference, which we had at this past quarter, best to send. We've ever had more merchants, more products, more industry partners, and the feedback was really outstanding. That was a great learning experience and networking experience for our merchants for us. It was a great way to receive some of this feedback. And it definitely was a catalyst for a lot of new business conversations. I think people left with a different appreciation for the depth and scope of the offering and the ultimate values.

Speaker Change: Terrell, thanks for that. So let me just recap what a send is.

Speaker Change: In case not everyone is familiar, it's the annual Riskified User Conference.

Speaker Change: We just had it this past quarter.

Speaker Change: Best to send. We've ever had more merchants, more prospects, more industry partners.

Eido Gal: You know, we don't have a robust pipeline that we anticipate to go live between now and the end of the year. You're right that definitely some merchants, especially ones that have seasonality built into them. You know, they have code phrases at some point, and that's taken into account. Other merchants by the way in different categories are less impacted by that. And then one last question, maybe you can help me understand. Looking at the comparison from last year, you're stepping into optically easier compares in the back half of the year, I can appreciate that the macro is getting sensitive, but maybe help us kind of put all that together.

Speaker Change: And the feedback was really outstanding. That was a great learning experience and networking experience for our merchants. For us, it was a great way to receive some of this feedback. And it definitely was a catalyst for a lot of new business conversations. I think people came out with a different appreciation on

Eido Gal: So we do see, you know, create our work for them. We look forward to continuing with this event and other regional events in the future. Thank you for that. And then I guess lastly, you mentioned, I think it was Agni who mentioned, you're excited about some of the Americas in the APAC growth, where the company is gaining share. Could you maybe explain, you know, what you mean by gaining share? I mean, who's this coming from, you know, green shoot opportunities, from homegrown solutions, or is this more competitive?

Speaker Change: The depth and scope of the offering and the ultimate value. So we do see, you know, great ROI for that. And we look forward to continuing with this event and other regional events in the future.

Eido Gal: You know, my math and then maybe some noise in here is that the sequential compare for growth in the back half of the year is probably 10 points easier. So I'm just trying to square that. I know if we have to be honest with you have a swift thing last year. What more can you kind of tell us in terms of comparison to kind of square those numbers a little bit. That's a lot.

Speaker Change: Thank you for that. And then I guess lastly, you mentioned, I think it was Agni who mentioned you're excited about some of the Americas and the APAC growth.

Speaker Change: for the company's gaining share to you. We explain what you mean by gaining share. I mean, who's this is coming from, you know, green sheet opportunities from homegrown solutions, or this is more competitive displacement.

Eido Gal: I'll say that I'm very happy with some of the growth that we've seen in this region. So again, these are kind of smaller categories compared to some of the U. S. region, which is the largest category for us. But being able to show destruction and continue growth is something that is significant. No, and I would just highlight that I think there might be some slight nuances between geographies and who the exact competitor set is. But the overall thesis is the same. We work with large enterprises. Large enterprises have internal teams to manage this process.

Speaker Change: I'll say that I'm very happy with some of the growth that we've seen in this region, so again these are kind of smaller

Eido Gal: Thank you. Yeah, sure. So if I think about your rights, the back half of the year last year, we saw some softness already started to go out of three margins, especially in high fashion and just fashion and the overall holiday seasons were more muted. So it should be a better and you're comparable this year. And maybe the other factor as well is like, it's the home industry last year, the home industry, we were kind of going through a very large upsell. So home was very strong, but in Q4 specifically, home doesn't have like this uptick as in it's some of the kind of the other industry.

Eido Gal: So potentially this should be easier as well in terms of effect on Q4.

Speaker Change: categories compared to some of the U.S. region, which is the largest category for us, but being able to show this traction and continued growth is something that is significant.

Eido Gal: These internal teams use a variety of solutions, some of them more modern, some of them kind of more legacy. And we see that across all geographies. Thank you. And our next question comes from Clark Jeffries with Piper Sandler. Your line is open.

Speaker Change: No, and I would just highlight, I think there might be some slight nuances between geographies and who the exact competitor set is, but the overall thesis is the same. We work with large enterprises. Large enterprises have internal teams to manage this process. These internal teams use a variety of solutions, some of them more modern, some of them kind of more legacy, and we see that across all geographies.

Speaker Change: Thank you, appreciate it.

Speaker Change: And our next question comes from Clark Jeffries with Piper Sandler. Your line is open.

Clark Jeffries: Hello, thank you for taking the question. First question is, you know, clarification. Given the disparity in the growth rates that you're seeing in regions, I wanted to clarify the softness that you saw in Q3 and the sort of reflected change in the full-year guidance. Were there specific regions that stuck out in terms of softness? Is it heavily weighted to say North America or a certain region? Or was there an assumption change across all regions? In the back half, and then one fall below.

Clark Jeffree's: Hello, thank you for taking the question. First question is...

Clark Wright: And the next question comes from Clark, right with DA Davidson. Your line is open. Thank you. Appreciate the update around the new logo trend, but want to understand from the feedback you got from the sense conference this year. If that's translated to any of the new business momentum, you know, this quarter. Sure, thanks for that.

Clark Jeffree's: You know, clarification, you know, given the disparity in the growth rates that you're seeing in the region, I wanted to clarify

Speaker Change: The softness that you saw in Q3 and the sort of.

Speaker Change: Reflected change in the full year guidance. Were there specific regions that stuck out in terms of softness? Is it heavily weighted to say North America or a certain region or was there assumption change across all regions in the back half and then one follow-up?

Eido Gal: So let me just recap what it's in case not everyone is familiar with the annual risk of our user conference, which has had at this past quarter, best to send, we've ever had more merchants, more prospects, more industry partners. And the feedback was really outstanding. That was a great learning experience and networking experience for our merchants for us. It was a great way to receive some of this feedback. And it definitely was a catalyst for a lot of new business conversations. I think people away, people came out with a different appreciation on the depth and scope of the offering and the ultimate values. So we do see, you know, create our life with that.

Aglido Chiodo: You know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, Yeah, thank you for the question. So I'll say that we called out EMEA as being softer. We kind of like previously projected that it's going to grow slightly. Now, we project that it's going to be kind of sluggish for the year. And the primary reason for for this category compared to for this deal compared to other geos is really the weighting of the industries of some of the merchants there. Like, we do have a composition of merchants in EMEA with a high weighting from fashion from travel.

Aglido Chiodo: And these are the categories that I called out as being the softer and impacting kind of numbers. Perfect. And then a follow-up is just, you know, some of those product announcements that came out of Ascend, Policy Decisions, and Decision Studio. Can we get the timing of GA, if they're not already GA, and maybe some of the benefits of that more self-serve functionality, and how explicit were some of these product innovations from the sort of recommendation of customers, or you sort of pushing the envelope of where you want to take the solution long

Speaker Change: Yeah, thank you for the question. So I'll say that we called out EMEA as being softer. We kind of like previously projected that it's going to grow slightly. Now we project that it's going to be kind of

Speaker Change: Sluttish for the year, and the primary reason...

Speaker Change #100: for this category compared to, for this geo compared to other geos, it's really the weighting.

Speaker Change #100: Unknown Attendee of the Industry. So some of the merchants there, like, we do have a composition of merchants in EMEA, with a high weighting from fashion, from travel. And these are the categories that I called out as being softer and impacting kind of the numbers.

Eido Gal: We look forward to continuing with this event and other regional events in the future. Thank you for that.

Speaker Change #101: Perfect. And then a follow-up is just, you know, some of those product announcements that came out of Ascend Policy Decisions and Decision Studio, if we get the timing of GA, if they're not already GA, and maybe

Eido Gal: And then I guess lastly, you mentioned, I think as I can mention, you're excited about some of the Americans in the A back growth over the company is gaining share to you, maybe explain. You know, what you mean by gaining share to me, who's this is coming from, you know, greed should opportunities from home growth solutions, or this is more competitive displacement. I'll say that I'm very happy with some of the growth that was in in this region.

Speaker Change #102: some of the benefits of that more self-serve functionality and how explicit were some of these product innovations from the sort of recommendation of customers or you sort of push an envelope of where you want to take the solution long-term. Thank you.

Eido Gal: So again, these are kind of smaller categories compared to some of the US region, which is the largest category for us, but being able to show destruction and continued growth. It's something that it's significant. No, and I would just highlight, I think there, there might be some slight nuances between geographies and who the exact competitor set is. But the RL thesis is the same. We work with large enterprises, large enterprises have internal teams to manage this process. These internal teams use a variety of solutions, some of them more modern, some of them kind of more legacy. And we see that across all geographies. Thank you, appreciate it.

Aglido Chiodo: Thank you. No, no problem. So the Policy Studio that you're mentioning is part of our overall policy product, which enables merchants to individually tailor their policy decisions but also leverage some of our network and machine learning capabilities in order to do that.

Speaker Change #103: No, no problem. So the Policy Studio that you're mentioning is part of our overall policy product, which enables merchants to individually tailor their policy decisions, but also leverage some of our network and machine learning capabilities in order to do that. That product has not been kind of officially as a, as a,

Eido Gal: That product has not been kind of officially released as a GA yet, but we're definitely looking forward, based on the feedback, to release it soon. And some of the other parts that we have launched, you know, I think we mentioned in the release today, the Operate Enhance and the value that we've been seeing there. We also mentioned that in the send, which is where we can package and share enriched information with the card issuing bank, seeing over a hundred basis points of improvement on participating merchants and banks. So there's definitely kind of a mix there of stuff that's already been released and providing value and stuff that's kind of coming up soon.

Speaker Change #103: GAA, but we're definitely looking forward based on the feedback to release it soon. In some of the other parts, now we have launched, you know, I think we mentioned on the release today, the operating hand since the value that we've been seeing there. We also mentioned that in the sense, which is where we can package and share in-risk information with a card issuing bank.

Speaker Change #103: Seeing over 100 basis points and improvements on participating merchants and banks. So there's definitely kind of a mix there of stuff that's already been released and providing value and stuff that's kind of coming up soon.

Clark Jeffries: And our next question comes from Clark Jeffries with Piper Sandler. Your line is open. Hello, thank you for taking the question. First question is, you know, clarification, you know, given the disparity in the growth rates that you're seeing in the region. I wanted to clarify the softness that you saw on Q3 and the sort of reflected change in the full year guidance. Were there specific regions that stuck out in terms of softness?

Eido Gal: Thank you. I show no to the questions at this time. I would now like to turn the call back to Eido Gal for closing remarks. Thank you everyone for joining our call. We look forward to updating you in the quarters ahead.

Speaker Change #104: Thank you.

Speaker Change #104: I show no further questions at this time. I would now like to turn the call back to Eido Gal for closing remarks.

Eido Gal: Thank you, everyone, for joining our call. We look forward to updating you in the quarters ahead.

Eido Gal: This does conclude today's conference call. Thank you for participating. You may now disconnect.

Speaker Change #106: This does conclude today's conference call. Thank you for participating. You may now disconnect.

Clark Jeffries: Is it heavily weighted to say North America or a certain region? Or was there assumption change across all regions in the back half? And then one follow up. Yeah, thank you for the question. So I'll say that we called out in Mia, it's being softer. We kind of like previously projected that it's going to grow slightly now with projected. It's going to be kind of flatish for the year. And the primary reason for this category compared to for this deal compared to other geos.

Clark Jeffries: It's really the waiting of the industries of some of the merchants there. Like we do have a composition of merchants in India. With a high waiting from fashion from travel and these are the categories that I called out as being softer and impacting kind of the numbers.

Eido Gal: Perfect. And then a follow up is just, you know, some of those products announced and came out of a send policy decisions and decision studio. We get the timing of GA if they're not already GA and maybe some of the benefits of that more self serve functionality and how how explicit were some of these product innovations from the sort of recommendation of customers or. I'm pushing on the love of where you want to take the solution long term.

Speaker Change #106: Robert Napoli,

Eido Gal: Thank you. No, no problem. So the policy studio, the mentioning is part of our overall policy product which enables merchants individually tailor their policy decisions, but also leverage some of our network and machine learning capabilities in order to do that. That product has not been kind of officially as a GA yet, but we're definitely looking for based on the feedback to release it to. And some of the other parts that we have launched, you know, I think we mentioned on the release today, the offer it enhance the value that we've been seeing there.

Eido Gal: We also mentioned that in the sense, which is where we can package and share and rich information with a card issuing bank seeing over 100 basis points and improvements on participating merchants and banks. So there's definitely kind of a mix there of stuff that's already been released and providing value and stuff that's kind of coming up soon. Thank you.

Speaker Change #106: [inaudible]

Unknown Attendee: I show no further questions at this time.

Eido Gal: I would now like to turn the call back to either gal for closing remarks.

Eido Gal: Thank you everyone for joining our call. We look forward to updating you in the quarters ahead.

Unknown Attendee: This does conclude today's conference call. Thank you for participating.

Unknown Attendee: You may now disconnect. Thank you very much. [inaudible] I don't know. I don't know. [inaudible] I don't know. I don't know.

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Speaker Change #107: Thank you for watching!

Speaker Change #107: Thanks for watching!

Speaker Change #107: Thank you very much for watching!

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Unknown Attendee: Robert Napoli, Terrell Tillman, Brent Bracelin, Timothy Chiodo Robert Napoli, Terrell Tillman, Brent Bracelin, Timothy Chiodo, Robert Napoli, Terrell Tillman, Brent Bracelin, Robert Napoli, Terrell Tillman, Brent Bracelin, Robert Napoli, Terrell Tillman, Brent Bracelin, . .