Q3 2024 Riskified Ltd Earnings Call

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Unknown Attendee: Good day and thank you for standing by.

Speaker Change: Good day, and thank you for standing by walking through the risk of our third quarter 2024 earnings call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question during the session will need to press star one on your telephone.

Unknown Attendee: Welcome to the Riskified third quarter 2024 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message device when your hand is raised. To withdraw your question, please press star 11 again. Please be advised that this conference is being recorded.

Speaker Change: Here, an automated message about your hand is raised to withdraw your question. Please press star. One again. Please be advised today's conference is being recorded I would now like.

Chett Mandel: I would like to hand the conference over to your speaker today, Chett Mandel, Head of Investor Relations.

Chat Mendell: You had the conference over to your speaker today chat Mendell head of Investor head of Investor Relations. Please go ahead.

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

Chuck Mandel: Good morning, and thank you for joining US today My name is Chuck Mandel risk <unk> head of Investor Relations. We are hosting today's call to discuss <unk> financial results for the third quarter of 2024.

Chett Mandel: We are hosting today's call to discuss Riskified's financial results for the third quarter of 2024. Participating on the call today are Eido Gal, Riskified's Co-Founder and Chief Executive Officer, and Aglika Dotcheva, Riskified's Chief Financial Officer. We released our results for the third quarter of 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.

Chuck Mandel: Speaking on the call today are you don't golf risk of Heights, co founder and Chief Executive Officer, and argue don't Shaver rescue packs Chief Financial Officer.

Chuck Mandel: We released our results for the third 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 that rest of our dot 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 all reflect management's best judgment based on currently available information and are not guarantees of future performance. We intend all forward-looking statements to be covered by the safe harbor provisions contained in the Private Security Litigation Reform Act, 1995. These forward-looking statements reflect our expectations as of the date of this call and except as required by law, we undertake no obligation to revise this information as a result of new developments that may occur after the time of this call.

Chuck Mandel: Certain statements made on the call today will be forward looking statements relate to our operating performance business and financial goals outlook as to revenues gross profit margin adjusted EBITDA profitability, adjusted EBITDA margins and expectation that the positive cash flows, which all reflect management's best judgment based on currently available information and are not guarantees.

Chuck Mandel: As a teacher performance, we intend all forward looking statements to be covered by the safe Harbor provisions contained in the private Securities Litigation Reform Act 1995.

Chuck 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.

Chett Mandel: 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.

Chuck Mandel: 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.

Chuck Mandel: Should not put undue reliance on any forward looking statement.

Chett Mandel: Please refer to our annual report on Form 20-F for the year ended December 31st, 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 will discuss our non-GAAP financial measures and key performance indicators on the call. Reconciliations to the most directly comparable GAAP financial measures are available in our earnings release issued earlier today and also furnished with the SEC on Form 6K and in the appendix of our Investor Relations presentation, all of which are posted on our Investor Relations website.

Chuck Mandel: Please refer to our annual report on form 20-F for the year ended December 31, 2023, and subsequent reports, we filed or furnished with the SEC for more information on the specific factors that could cause actual results to differ materially from our expectations.

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

Chuck Mandel: Conciliations to the most directly comparable GAAP financial measures are available in our earnings release issued earlier today and also furnished with the SEC on form 6K and in the appendix of our Investor Relations presentation, all of which are posted on our Investor Relations website.

Eido Gal: I will now turn the call over to Eido. Thanks, Chet, and hello, everyone. Our revenue growth during the third quarter and first nine months of 24 continued to be primarily driven by the execution of our go-to-market strategy, which contributed to 10% year-over-year revenue growth in both periods. For the first nine months of 24, we've achieved GMV growth of 16%, and our non-GAAP gross profit growth of 17% year over year outpaced our revenue growth, demonstrating our ongoing commitment to adjust the DPDEL margin expansion. I am pleased that we are flowing through some of the ad performance that we've seen in the third quarter to the annual guide.

Chuck Mandel: I'll now turn the call over to readout.

Speaker Change: Thanks, Chad and Hello, everyone.

Speaker Change: Our revenue growth during the third quarter and first nine months of 'twenty four continued to be primarily driven by the execution of our go to market strategy, which contributed to a 10% year over year revenue growth in both periods.

Speaker Change: For the first nine months of 'twenty, four we've achieved GMB growth of 16% and our non-GAAP gross profit growth of 17% year over year outpaced our revenue growth.

Speaker Change: Demonstrating our ongoing commitment to adjusted EBITDA margin expansion.

Speaker Change: I am pleased that we are flowing through some of the outperformance that we've seen in the third quarter to the annual guide.

Eido Gal: We are executing on our goal of expanding our merchant base through new logo wins. Our top 10 new logos added in the third quarter included key wins across each of our six verticals, further broadening our network. We continue to add to our portfolio of merchants in our more established areas, such as fashion and luxury, and tickets and travel, and capture share in newer areas, such as remittance and food. I want to highlight an important win in a newer subvertical for us. During the third quarter, we went live with our core chargeback guarantee product with our first traditional grocery merchant who has GMV of over one billion.

Speaker Change: We are executing on our goal of expanding our merchant base through new logo wins are top 10, new logos added in the third quarter included key wins across each of our six verticals further broadening our network.

Speaker Change: We continue to add to our portfolio of merchants in our more established areas such as fashion and luxury and tickets in travel and captured share in newer areas, such as remittance and food.

Speaker Change: I wanted to highlight an important win in our newer sub vertical for us.

Speaker Change: During the third quarter, we went live with our core chargeback guaranteed product with our first traditional grocery merchant who has GMB of over $1 billion. We have helped this merchant reduce its fraud costs by approximately 40% by fully automating their fraud efforts and upon initial contract captured after eligible charge back off volume.

Eido Gal: We have helped this merchant reduce its fraud cost by approximately 40 percent by fully automating their fraud efforts and upon initial contract captured all of their eligible chargeback volume for a multi-year term. As the way consumers shop continues to migrate towards online channels, we are being strategic in how we focus our go-to-market efforts towards both discretionary and especially non-discretionary areas. Overall, I am excited about the expansion in our food category. Year-to-date, we've been successful with our new business generation. I believe that our focus on strong merchant performance combined with the sophistication and accuracy of our platform continues to differentiate us from our competitors.

Speaker Change: For a multiyear term.

Speaker Change: As the way consumers shop continues to migrate towards online channels, we are being strategic in how we focus our go to market efforts towards both discretionary and especially non discretionary areas overall I am excited about the expansion in our food category.

Speaker Change: Year to date, we've been successful with our new business generation I believe that our focus on strong merchant performance combined with the sophistication and accuracy of our platform continues to differentiate us from our competitors in the third quarter, we closed more new business than in each of the first and second quarters and we.

Eido Gal: In the third quarter, we closed more new business than in each of the first and second quarters, and we anticipate a similarly strong fourth quarter. Notably, in the first nine months of the year, we have already matched the number of new business contracts with an annual value of 1 million or more that we achieved throughout all of 23. We believe that our pipeline for 25 is robust and that we are well positioned to further diversify our revenue across verticals, geographies, and product lines. It is important to note that we have made this progress against an uneven backdrop in a recent uptick in competitive pressure.

Speaker Change: A similarly strong fourth quarter.

Speaker Change: Notably in the first nine months of the year, we have already matched the number of new business contracts with an annual value of $1 million or more that we achieved throughout all of 'twenty three.

Speaker Change: We believe that our pipeline for 'twenty five is robust and that we are well positioned to further diversify our revenue across verticals geographies and product lines.

Speaker Change: It is important to note that we have made this progress against an uneven backdrop and a recent uptick in competitive pressure.

Eido Gal: We were recently made aware that a large merchant, which makes up a significant portion of our home category, would be leaving the Riskified Network at the end of October. We are taking this opportunity to refine our pricing and product bundling strategies, enhance our go-to-market coverage, and strengthen our contract renewal process. in order to best position the business to win and retain customers. I want to highlight that during the third quarter, we achieved 100% renewal rate across our top 20 contracts up for renewal. And outside of this turn event, we anticipate a similarly strong fourth quarter of renewal activity as well.

Speaker Change: We were recently made aware that the large merchant, which makes up a significant portion of our home category would be leaving the risk if I network at the end of October.

Speaker Change: We are taking this opportunity to refine our pricing and product bundling strategies enhance our go to market coverage and strengthen our contract renewal processes in order to best position the business to win and retain customers.

I want to highlight that during the third quarter, we achieved 100% renewal rate across our top 20 contracts up for renewal and outside of this churn event, we anticipate a similarly strong fourth quarter of renewal activity as well.

Eido Gal: I believe that our underlying business fundamentals remain strong. I believe that we have developed one of the most powerful and differentiated AI platforms in the market. This platform is powered by our advanced machine learning intelligence models, which are built from proprietary and vast data sets, comprising billions of historical transactions, hundreds of billions of data attributes, and repeat interaction histories for hundreds of millions of consumers captured over a more than 10 year period. I believe that this large global merchant network has created a unique data advantage for us and is what sets us apart. Our algorithms learn from every transaction by being fed back into the system for model training, creating a constant feedback loop that strengthens our platform's predictive capabilities, generating strong performance for our merchants.

Speaker Change: I believe that our underlying business fundamentals remain strong.

Speaker Change: I believe that we have developed one of the most powerful and differentiated AI platforms in the market. This platform is powered by our advanced machine learning intelligence models, which are built from proprietary and vast datasets comprising billions of historical transactions hundreds of billions of data attributes and repeat interaction histories for hunter.

Speaker Change: Millions of millions of consumers captured over a more than 10 year period I believe that this large global merchant network has created a unique data advantage for us and is what sets us apart our algorithms learn from every transaction by being fed back into the system for model training trading a constant feedback loop that strengthens our platform.

Speaker Change: Predictive capabilities generating strong performance for our merchants, we believe that by focusing on improvements to our technology. We are continuing to strengthen the accuracy and performance of our artificial intelligence.

Eido Gal: We believe that by focusing on improvements to our technology, we are continuing to strengthen the accuracy and performance of our artificial intelligence. As has been reported widely, scammers are now leveraging artificial intelligence tools in areas beyond typical card-not-present fraud. Just as an example, we are now seeing scammers use chatbots to automate return and refund requests, generate phony tracking numbers, and find other vulnerabilities in merchants' back-end systems to deliberately return empty boxes while keeping goods for themselves. It's imperative for merchants to fight bad actors and outmatch these fraudsters by leveraging the technological capabilities of advanced next-generation solutions like Riskified.

Speaker Change: As has been reported widely scammers are now leveraging artificial intelligence tools in areas beyond typical card not present fraud. Just as an example, we are now seeing scammers use chat box to automate return and refund requests generate phoning tracking numbers and find other vulnerabilities and merchants backend.

Speaker Change: Them till deliberately return empty boxes, while keeping goods for themselves.

Speaker Change: Its imperative for merchants to find bad actors in a match these fraudsters by leveraging the technological capabilities of <unk>.

Speaker Change: <unk> next generation solutions like risk if I'd, that's why I'm really excited about the enhanced suite of tools that we've recently released for policy protect which are aimed at preventing this type of behavior.

Eido Gal: That's why I'm really excited about the enhanced suite of tools that we recently released for Policy Protect, which are aimed at preventing this type of behavior. These sophisticated tools place our machine learning network directly in our merchants hands by providing automated self service capabilities for the creation, simulation, and management of customer facing policy decisions. We are able to deliver unmatched flexibility and precision in automating and setting policies based on Riskified's identity and risk model. These enhancements, in part, have contributed to a rise in platform adoption. I am excited that in the third quarter, we went live with the largest Policy Protect deal since launch, worth nearly $2 million in annual contract value.

Speaker Change: These sophisticated tools place our machine learning network directly in our merchant's hand by providing automated self service capabilities for the creation stimulation and management of customer facing policy decisions.

Speaker Change: We're able to deliver unmatched flexibility and precision and automating in setting policies based on risk if I'd identify and risk models. These.

Speaker Change: These enhancements in part have contributed to our horizon platform adoption I am excited that in the third quarter. We went live with the largest policy protect deal since launch worth nearly $2 million in annual contract value, we have been able to deliver value to the merchant by blocking an incremental 7% of abuse of returns.

Eido Gal: We have been able to deliver value to the merchant by blocking an incremental 7% of abusive returns while working to keep customer complaints in line with the merchant's target. Overall, I believe that we have the best product in a huge market and are well positioned to capture more market share. As we continue to layer in additional capabilities to help enterprise e-commerce merchants manage their businesses better, become more profitable, and further understand their customers, we are only extending our leadership position. I am proud of our ability to execute on our gross profit objective as we scale our global network.

Speaker Change: While working to keep customer complaints in line with the merchants target.

Speaker Change: Overall, I believe that we have the best product and a huge market and are well positioned to capture more market share as we continue to layer in additional capabilities to help enterprise ecommerce merchants manage their businesses better become more profitable and further understand their customers were only extending our leadership position.

Speaker Change: I am proud of our ability to execute on our gross profit objectives as we scale our global network, we have improved our adjusted EBITDA outlook for the third consecutive quarter and are working towards delivering further adjusted EBITDA margin expansion in the quarters and years to come we are generating meaningful free cash flow and our strong cash reserves.

Eido Gal: We have improved our Adjusted EB Dow outlook for the third consecutive quarter and are working towards delivering further Adjusted EB Dow margin expansion in the quarters and years to come. We are generating meaningful free cash flow and our strong cash reserves with no debt empower us to utilize our capital strategically. We are assessing product bolt-on M&A to help accelerate growth and expand our platform. And we are looking for opportunities for potential consolidation of smaller players to drive scale and synergy. We have a high bar for M&A and will always weigh shareholder value when assessing potential M&A opportunities.

Speaker Change: With no debt empower us to utilize our capital strategically.

Speaker Change: We are assessing the product bolt on M&A to help accelerate growth and expand our platform and we are looking for opportunities for potential consolidation of smaller players to drive scale and synergies.

Speaker Change: We have a high bar for M&A, and we'll always weigh shareholder value when assessing potential M&A opportunities.

Eido Gal: That being said, in the near term, we believe that we have capital available to accomplish these capital allocation goals, while also leveraging our large cash position to opportunistically repurchase shares. To this end, our board has recently approved an additional $75 million buyback authorization. Given our past buyback activity and our current intent to strategically utilize our strong cash position for additional repurchases, we believe that we have the capacity to remove approximately 10 to 15% of our shares outstanding annually over the coming years. Putting this all together, I'm confident that our business is resilient, and that we have the best team in place to attack the opportunities in front of us.

Speaker Change: That being said in the near term, we believe that we have capital available to accomplish these capital allocation goals, while also leveraging our large cash position to opportunistically repurchase shares.

Speaker Change: To this end our board has recently approved an additional $75 million buyback authorization.

Speaker Change: Given our past buyback activity and our current intent to strategically utilize our strong cash position for additional repurchases. We believe that we have the capacity to remove approximately 10% to 15% of our shares outstanding annually over the coming years.

Speaker Change: Putting this all together I am confident that our business is resilient and that we have the best team in place to attack the opportunities in front of us as we head into the holiday season, I am looking forward to driving value for our merchants and shareholders now over target.

Eido Gal: As we head into the holiday season, I am looking forward to driving value for our merchants and shareholders.

Aglika Dotcheva: Now, over to Agi. Thank you EDAW team and everyone for joining today's call. Our GNV for the third quarter was $34.7 billion, reflecting a 17% increase year over year. We achieved record third quarter revenue of $78.8 million, up 10% year over year. Our GMV and revenue growth during this quarter was primarily driven by continued new merchants and upsell activity. Consistent with the first half of the year, our growth in our fashion and luxury vertical was primarily driven by new business activity and growth in fast fashion. This growth was partially offset by continuous same-store sales pressures within our high-end fashion subverticals.

Speaker Change: Thank you <unk>.

Speaker Change: And everyone for joining today's call our G&A for the third quarter were $34 7 billion, reflecting a 17% increase year over year.

Speaker Change: We achieved record third quarter revenue of $78 8 million up 10.

Speaker Change: 1% year over year.

Speaker Change: <unk> revenue growth. During this quarter was primarily driven by continued new merchant and upsell activity.

Speaker Change: Consistent with the first half of the year our growth in our fashion and luxury vertical was primarily driven by new business activity and growth in fast fashion margin.

Speaker Change: This growth was partially offset by continued same store sales pressure within our high end fashion some protocol.

Aglika Dotcheva: Overall, our fashion and luxury category grew by a low single digit in the third quarter, which represents a good proxy for the expected growth in this vertical for the full year. Our tickets and travel vertical grew over 20% in the third quarter, an acceleration from the first half of the year, primarily due to new business activity, seasonal strong performance in the live event space, and better than expected summer travel. Based on activity levels in October and early November, we're expecting this acceleration to continue into the fourth quarter. This is being driven by better the anticipated activity across both travel and live events, fueled by continuous strength of new business in this category.

Speaker Change: Overall, our fashion and luxury category grew by low single digits in the third quarter, which represents a good proxy pretty expected growth in this vertical critical ear.

Speaker Change: Our speakers on the travel vertical grew over 20% in the third quarter, an acceleration from the first half of the year, primarily due to new business activity seasonally strong performance in the live events space and better than expected summer travel.

Based on activity levels in October and early November were expecting the acceleration to continue into the fourth quarter.

Speaker Change: This is being driven by better than anticipated activity across both travel and live event viewer.

Speaker Change: <unk> strength of new business in this category.

Aglika Dotcheva: Our general vertical, which includes both food and general retail merchants, grew 15% in the third quarter, primarily driven by growth in our food subvertical, offset by weakness in our general retail subvertical. In addition, we saw over 70% growth in our payments and money transfer category, driven predominantly by new business activity, which remains a key area of expansion. The home category declined by 2% year over year.

Speaker Change: Our general vertical which includes both food and general retail merchants grow 15% in the third quarter, primarily driven by growth in our <unk> towards the vertical offset by weakness in our general retail separate accounts.

Speaker Change: In addition, we saw over 70% growth in our payments and money transfer category driven predominantly by new business activity, which remains a key area of expansion.

The home category declined by 2% year over year going forward as a result of the churn event that <unk> referenced earlier, we expect to have non comparable periods interest category until the fourth quarter of 2025.

Aglika Dotcheva: Going forward, as a result of the churn event that Eido referenced earlier, we expect to have non-comparable periods in this category until the fourth quarter of 2025. Finally, we also saw revenue growth across all geographies. Our third quarter revenue in the United States, our largest region, grew by 14% year-over-year, and we experienced 9% year-over-year growth in EMEA, exceeding our expectations. I'm excited about the growth experience in the outer Americas, which represents Canada and Latin America and the APEC region, which grew by 9% and 25% respectively, both fueled by market share gains achieved through the addition of new loggers.

Speaker Change: Finally, we also saw revenue growth across all geographies, our third quarter revenue in the United States, Our largest region grew by 14% year over year, and we experienced 9% year over year growth in EMEA exceeding our expectation.

Speaker Change: I'm excited about the growth we experienced in the outer America, which represents Canada, and Latin America and APAC.

Speaker Change: Region, which grew by 9% and 25% respectively.

Speaker Change: Fueled by market share gains for <unk>.

Speaker Change: Through the addition of new logos.

Aglika Dotcheva: Moving to the discussion of our gross profit margin, operating expenses, and adjusted EBITDA. Unless otherwise noted, I will be referencing non-cap financial measures with respect to this metric. We have provided our conciliation of GAAP to non-GAAP financial measures in our earnings release. As a reminder, I encourage you to continue analyzing our gross margin on an annual basis, given individual quarters can vary due to many factors, including the ramping of new merchants and the risk profiles of transactions approved. Our gross profit margin for the third quarter of 2024 was 50% in line with our expectations. 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 up significant new merchants and quarterly variability in our revenue mix.

Speaker Change: Moving to the discussion of our gross profit margin operating expenses and adjusted EBITDA.

Speaker Change: Unless otherwise noted I'll be referencing non-GAAP financial measures with respect to these metrics.

We have provided a reconciliation of GAAP to non-GAAP financial measures in our earnings release.

Speaker Change: As a reminder, I encourage you to continue analyzing our gross margin on an annual basis, given individual quarters can variety to many factors, including the ramping of new merchants and the risk profiles of transactions approach.

Speaker Change: Our gross profit margin for the third quarter of 2024 with 50% in line with our expectations.

Speaker Change: We continue to come back, it's coming programs and our overall core machine learning models and the positive impact of new product revenue.

Speaker Change: And by the impact of ramping a significant new margins and quarterly variety in our revenue mix.

Aglika Dotcheva: For modeling purposes, we continue to expect our non-GAAP gross profit margin to be between 52 1⁄2 to 53 1⁄2 for the full year and expect our Q4 margin to be above this range.

For modeling purposes, we continue to expect our non-GAAP gross profit margin to be between 52, and a half to at least the three and a half for the full year and expect our Q4 margins to be up Opex range.

Aglika Dotcheva: Moving to our operating expenses. We continue to manage the business in a focused and disciplined manner. Total operating expenses were $38.7 million for the third quarter, representing a year-over-year decline of 4%. We saw year-over-year operating expense declines in each of R&D, sales and marketing, and G&A. The absence of dollar expenses represented the lowest level in three years while continuing to grow our business. Our operating expenses, the percentage of revenue declined from 56% in the prior year period to 49% in the third quarter of 2024, reflecting leverage in the business model. For the fourth quarter of the year, we continue to expect approximately $39 million in expenses.

Speaker Change: Moving to our operating expenses.

We continue to manage the business in a focused and disciplined manner.

Speaker Change: Total operating expenses were $38 7 million for third quarter, representing a year over year decline of 4%.

We saw year over year operating expense declines in each of R&D sales and marketing and G&A.

Speaker Change: The absolute dollar expenses represented the lowest level in three years, while continuing to grow our business.

Speaker Change: Our operating expenses as a percentage of revenue declined from 56% in the prior year period to 49% in the third quarter of 2024, reflecting leverage in the business model.

Speaker Change: For the fourth quarter of the year, we continue to expect approximately $39 million in expenses.

Aglika Dotcheva: We achieved positive adjusted EBITDA of $0.9 million in Q3 of 2014 as compared to negative $8.4 million in Q3 of 2023, representing the ninth consecutive quarter of year-over-year improvement and the fourth quarter in a row achieving positive adjusted EBITDA. This quarter's positive adjusted EBITDA represents year-over-year margin improvement of approximately 1,300 basis points, which is on top of the approximately 1,000 basis points improvement achieved in each of the last three quarters.

Speaker Change: We achieved positive adjusted EBITDA of <unk> 9 million in Q3 of 24 as compared to negative $8 4 million in Q3 of 'twenty three representing the ninth consecutive quarter of year over year improvement in the fourth quarter in a row achieving positive adjusted EBITDA.

Speaker Change: This quarter's positive adjusted EBITDA represents year over year margin improvement of approximately 13 100 basis point, which is on top of the approximately 1000 basis points improvement achieved in each of the last three quarters.

Aglika Dotcheva: Moving to the balance sheet, we ended the third quarter with approximately 390 million of cash deposits and investments, and we carry zero debt. In the third quarter, we increased the base of our share repurchases from the previous two quarters. During the third quarter, we repurchased 8.6 million shares for a total price of approximately $47 million. As a result, total shares outstanding has decreased sequentially by approximately 6.5 million shares from the second quarter. For the first nine months of 2024, we have repurchased 21.8 million shares for a total price of approximately $116 million.

Speaker Change: Moving to the battery shape.

Speaker Change: We ended the third quarter, we had approximately 390 million of cash deposits and investment and we carry zero debt.

Speaker Change: In the third quarter, we increased the pace of our share repurchases from the previous two quarters.

Speaker Change: During the third quarter really purchased $8 6 million shares for a total price of approximately 47 million as a result total shares outstanding has decreased sequentially by approximately $6 5 million shares from the second quarter.

Speaker Change: For the first nine months of 2024, we have repurchased 21 8 million shares for a total price of approximately $160 million.

Aglika Dotcheva: As Eido just mentioned, I'm excited to announce that our Board of Directors has authorized an additional $75 million of shareable purchases, subject to the satisfaction of certain Israeli regulatory requirements. When combined with the amounts that remain available under our existing share repurchase authorization, our total standing authorization is approximately $85 million. As a result of our continued strong buyback activity and commitment to managing dilution to meaningfully lower levels than in prior years, we continue to expect our share counts to decline year over year. We continue to believe that our strong balance sheet and equity positions are valuable assets.

This is all just mentioned I'm excited to announce that our board of directors gets authorized an additional $75 million of share repurchases.

Speaker Change: Subject to the satisfaction of certain Israeli regulatory requirement.

Speaker Change: When combined with the amount that remained available under our existing share repurchase authorization. Our total outstanding authorization is approximately $85 million.

Speaker Change: As a result of our continued strong buyback activity and commitment to managing dilution to meaningfully lower levels than in prior years, we continue to expect our share count to decline year over year.

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

Speaker Change: All assets.

Aglika Dotcheva: We intend to remain thoughtful in how we utilize our capital to drive shareholder value. In addition, we continue to maintain a healthy cash flow model, and in the third quarter, we achieved quarterly free cash flows of $14 million, the highest in our history. As a result of our strong cash flow generation in the first nine months of the year, we now expect to exceed $35 million of positive free cash flow in 2024, up from $30 million previously.

Speaker Change: We intend to remain thoughtful in how we utilize our capital to drive shareholder value.

Speaker Change: In addition, we continue to maintain a healthy cash flow model.

Speaker Change: Third quarter, we achieved quarterly free cash flow of $14 million.

Speaker Change: In our history.

As a result of our strong cash flow generation in the first nine months of the year, we now expect to exceed $35 million of positive free cash flow in 2024 up from 30 million previously.

Aglika Dotcheva: Now turning to our outlook. I'm pleased that we're able to raise our 2024 guidance that we previously shared our last earnings call. We now anticipate revenue between $322 million and $327 million for the full year 2024, or $324.5 million at the midpoint. This improvement in our guide is primarily driven by anticipated outperformance in our new business activity and an improved outlook for our tickets and travel vertical in Q4, offset by continuous softness in our fashion and luxury vertical, and the expected impact of the recent uptick in competitive pressures we're currently seeing, including the churn event in the home category referenced earlier.

Speaker Change: Now turning to our outlook.

I am pleased that we're able to raise our 2024 guidance that we previously shared on our last earnings call.

Speaker Change: We now anticipate revenue between $322 million and $327 million critical year 2024.

Speaker Change: Or $324 5 million at the midpoint.

Speaker Change: This improvement in our guide is primarily driven by anticipated outperformance in our new business activity and an improved outlook for our tickets and travel vertical in Q4 offset by continued softness in our fashion and luxury vertical and the expected impact of the reason uptick in competitive pressures. We're currently seeing.

Speaker Change: Including the churn event in the home category you referenced earlier.

Aglika Dotcheva: As a result of our improved revenue outlook, we're also improving our adjusted EBITDA outlook. We now anticipate that our full-year adjusted EBITDA will be between $14 million and $20 million, or $17 million to the midpoint. The current midpoint of our Adjusted EBDA Guide represents additional margin expansion of approximately 900 basis points from the prior year, demonstrating leverage in the business model. Overall, we had a strong third quarter which led us to a healthy first nine months of the year. I continue to believe that our leading product platform and disciplined approach in managing the business will allow us to continue delivering value to our broad-based and diversified portfolio of merchants and ultimately to our shareholders.

Speaker Change: As a result of our improved revenue outlook, we're also improving our adjusted EBITDA outlook.

Speaker Change: We now anticipate that our full year, adjusted EBITDA between $14 million and $20 million or $17 million to the midpoint.

Speaker Change: The current midpoint of our adjusted EBITDA guidance represents additional margin expansion of approximately 900 basis points from the prior year demonstrating leverage in the business model.

Speaker Change: Overall, we had a strong third quarter, which led us to a healthy first nine months of the year.

Speaker Change: We continue to believe that our leading product platform and disciplined approach in managing the business.

Speaker Change: It will allow us to continue delivering value to our approach based and diversified portfolio of merchant and ultimately for our shareholders.

Unknown Attendee: Operator, we're ready to take the first question, please. Thank you, ladies and gentlemen. If you have a question or a comment at this time, please press star 1 1 on your telephone. If your question has been answered and you wish to move yourself from the queue, please press star 1 1 again. We'll pause for a moment while we compile our Q&A route.

Speaker Change: Operator, we're ready to take the first question. Please.

Speaker Change: Thank you ladies and gentlemen, if you have a question or comment at this time. Please press star one on your telephone. If your question has been answered you were seeing with yourself from the queue. Please press star one again, we will pause for a moment, while we compile the Q&A roster.

Ryan Tomasello: Our first question comes from Ryan Tomasello with KBW. Your line is open. Morning, everyone. Thanks for taking the questions.

Speaker Change: Our first question comes from Ryan Thomas <unk> with <unk>. Your line is open.

Speaker Change: Good morning, everyone. Thanks for taking the questions.

Ryan Tomasello: I just wanted to start out on the churn call out in the home category first, if there's any way to size the impact of that on a revenue or GNV basis, and if that's impacting the 4Q guidance at all. And then just broadly, any color you can provide on maybe what drove that merchant's decision to move off the platform, if they're moving to a competitor. And I think you also called out Eido taking this as an opportunity to review your pricing and bundling strategy. So, this may be elaborate on what you mean by that. If this is perhaps indicative of pricing pressure or changes you might need to make to your pricing strategy.

Speaker Change: I just wanted to start out on the churn callout in the home category.

Speaker Change: First if there's any way to size the impact of that on revenue, our GMB basis, if thats impacting the <unk> guidance at all.

Speaker Change: And then just broadly any color you can provide on maybe what drove that merchant's decision to move off the platform.

Speaker Change: If theyre moving to a competitor.

You also called out.

Speaker Change: Taking this as an opportunity to review your pricing and bundling strategy. So just maybe elaborate on what you mean by that if this is perhaps indicative of pricing pressure or changes you might need to make to our pricing strategy.

Eido Gal: Thanks.

Eido Gal: Hey, Ryan, thanks for the question. So I'll start with giving you more context, and then I'll hand it over to Agi to do some of the sizing. So look, for context, in the six years that we've been involved with this merchant, they've experimented with a lot of different setups for managing risk and fraud. I think they used about four different vendors, including an in-house model, and right now they're moving the volume in-house under a different model. This is something they've actually tried before. It was not successful, and that's when they ramped up usage of Riskified.

Speaker Change: Hey, Ryan Thanks for the question, so I'll start with giving you more context, and then I'll hand, it over to target to do some of the sizing.

Speaker Change: So look for context in the six years that we've been involved with this merchant they have experimented with a lot of different setups for managing risk and fraud.

Speaker Change: They used about four different vendors, including an in house model and right now Theyre moving the volume in house under a different model.

Speaker Change: This is something they've actually tried before it was not successful and thats when they ramped up usage of Frisco.

Eido Gal: I think it's important to mention that, most recently, this merchant had the highest approval rate and the lowest chargeback rate, at least in the six years that we've been working with them. So we definitely don't think it's a product issue, and we're going to stay close to this merchant to see if there's an opportunity to collaborate again. Some other items that might have influenced this decision is kind of the merchant's current financial profile, and also some personnel and leadership changes, especially in the areas and teams that we were working with. So that's just a bit more context on this specific merchant.

Speaker Change: It is important to mention that most recently this merchant had the highest approval rate and the lowest chargeback right at least in the six years that we've been working with them. So we definitely don't think it's a product issue and we're going to stay close to this merchant to see if theres an opportunity to collaborate again.

Speaker Change: Some other items that might have influenced this decision is kind of the merchants current financial profile and also some personnel and leadership changes, especially in the areas and teams that we were working with.

Speaker Change: So thats just a bit more context on this specific merchant when we think about how are we going to adapt to this moving forward.

Eido Gal: When we think about, you know, how are we going to adapt to this moving forward, you know, just being a public call, I don't want to go into all the tactical details of what we're going to be doing. But I think theoretically, we do want to lean into our product platform a bit more and make sure that it's easier to integrate go live and price for our largest clients, because we have seen great adoption and stickiness once we've been successful there. Another thing we're looking at, you know, the task force that the leadership team is focused on is how do we build better better incentives for kind of earlier and longer term renewals and leveraging the relationships that we've built over time in order to execute that.

Speaker Change: Being a public call I don't want to go into all of the tactical details of what we're going to be doing.

Speaker Change: But I think theoretically we do want to lean into our product platform a bit more and make sure that it's easier to integrate go live in price for our largest clients because we have seen great adoption and stickiness. Once we've been successful there. Another thing we're looking at the task force that the leadership team is focused on is how do we build a better.

Speaker Change: Sure.

Speaker Change: Better incentives for kind of earlier in longer term renewals and leveraging the relationships that we've built over time in order to execute that and Thats definitely a core focus for us moving forward.

Eido Gal: And that's definitely a core focus for us moving forward.

Aglika Dotcheva: And just to help you size the events right now, the biggest impact will be seen in 2025, as it was a partial event in Q4, or it was approximately 5 million in the fourth quarter. And without this, we'll have seen much higher growth rates in the fourth quarter, and obviously an acceleration from the third quarter. But I think the right way to think about for 2025 is probably around 18 million impact next year, and mostly lapping in Q4 of next year.

Speaker Change: And just to help us.

Speaker Change: So the bonds right now the biggest impact will be seen in 2025 is it was a partial rebound in Q4 or approximately $5 million in the fourth quarter.

Speaker Change: And with all this wolfcamp seeing much higher growth rates in the fourth quarter, and obviously an acceleration from the third quarter.

Speaker Change: But I think the right way to think about for 2025 is probably around $18 million impact next year and mostly lapping in Q4 next year.

Ryan Tomasello: Okay, got it. Thanks for all that color.

Speaker Change: Okay got it thanks for all that color and then.

Unknown Attendee: And then I guess, you know, congrats on the the large upsell to for the policy for policy protect any way you know you can size what that uplift represented to a CV for that client. I guess I'm just curious how this this meaningful when compares to what I think you've previously said is maybe like a 10 to 30% uplift that you think you can get from these additional products like policy protect and dispute resolve.

Speaker Change: I guess congrats on the large upsell to the policy for policy protect anyway.

Speaker Change: Size.

Speaker Change: <unk> Dot uplift represented two HCV for that client I guess I'm just curious how this this meaningful win compares to what I think you've previously said is maybe like 10% to 30% ACB uplift that you think you can get from these additional products like policy protect them dispute resolved. So just generally what you are.

Unknown Attendee: So just generally what you're seeing as you start to find more of a rhythm in these cross cells in terms of. You're right. I think historically we've said kind of 10 to 20%, maybe on the higher end it was 10 to 30%. This specific deal is actually much bigger than that as a percent of the ACV.

Speaker Change: Seeing as you start to find more of a rhythm and these cross sells in terms of the ECB. Okay. Thanks.

Speaker Change: I think historically, we've said kind of 10% to 20% maybe on the higher end of what is 10% to 30%. This specific deal is actually much bigger than that on a as a percent of the ACB.

Unknown Attendee: I wouldn't get ahead of our skis and go updating all the models. We think it's a great proof point, but it's not something that we're seeing as common right now.

Speaker Change: I wouldn't get ahead of our skis and go updating all the models we think it's a.

Speaker Change: Great proof points, but it's not something that we're seeing as common right now I think the more maybe the more interesting opportunity is that this is a very large merchant, where we actually have a subset of the charge back volume.

Unknown Attendee: I think maybe the more interesting opportunity is that this is a very large merchant where we actually have a subset of the chargeback volume. So, we think potentially, as we scale policy and becomes more successful, there's definitely more bundling opportunities and platform opportunities, which can drive acceleration on both ends. So, I think that's really exciting for us.

Speaker Change: We think potentially we scale policy and it becomes more successful theres definitely more bundling opportunities and platform opportunities, which can drive acceleration on both and so I think that's really exciting for us.

Unknown Attendee: Great, thanks for taking the question. One moment for our next question.

Speaker Change: Great. Thanks for taking the questions.

Speaker Change: One of them before our next question.

Speaker Change: Sure.

Speaker Change: Yes.

Owen Callahan: Our next question comes from Ramsey LFL with Barclays, your line is open. Hi, this is Owen on for Ramsey. I appreciate you taking our question this morning. You call that weakness and kind of luxury and home goods, but you also have some good wins in newer categories, such as remittances, seeing good growth with kind of grocers come to the platform as well.

Speaker Change: Our next question comes from Ramsey El <unk> with Barclays. Your line is open.

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

Speaker Change: You called out weakness in kind of luxury and home goods, but you also have some good wins in newer categories, such as remittances seeing good growth rate kind of grocers come to the platform as well just interested in your kind of capacity to grow wallet share on your kind of land and expand strategy with within those sort of faster growing new logo verticals any.

Eido Gal: Just interested in your kind of capacity to grow a wallet share on your kind of land and expand strategy with within those sort of faster growing new logo verticals, any kind of context there would be be helpful. So I would say broadly, we're really happy with how the new business has been tracking. And if you remember, I think we mentioned a few quarters ago that we're making a conscious effort to diversify from kind of the discretionary areas to have a more kind of resilient and diversified business. And some of these categories, groceries, food and remittance that we focused on, we're definitely starting to see the success there.

Speaker Change: Context, there would be would be helpful.

Speaker Change: Sure. So I would say broadly we're really happy with how the new business has been tracking and if you remember I think we mentioned a few quarters ago that we're making a conscious effort to diversify from kind of the discretionary areas to have a mark on our resilient and diversified business and some of these categories groceries food and remittance that we focused on.

Speaker Change: Definitely starting to see the success there.

Eido Gal: And in areas where we have had this initial success, historically, like live events and like luxury fashion, we've been able to build a very kind of unique and differentiated network. So, you know, kind of leveraging the early successes to capture more. I think the dynamics around increasing wallet share within our existing clients and also adding newer clients are very similar right now with grocery and remittance to some of the other categories. So, yeah.

Speaker Change: And in areas, where we have had this initial success historically like live events like luxury fashion, we've been able to build a very kind of unique and differentiated network.

Speaker Change: So you are kind of leveraging the early successes to capture more I think the dynamics around.

Speaker Change: Increasing wallet share within our existing clients and also adding in your clients are very similar right now with grocery and remains to some of the other categories. So.

Speaker Change: Yes.

Eido Gal: Understood. And just a quick follow up on that kind of implied Q4 revenue growth rate, just interested, you called out maybe kind of 5 million from that merchant getting kind of pulled out, but just interested on kind of anything that's else that's baked into kind of that Q4, some of that macro deceleration that you called out last quarter, anything else as we exit into 2025 would be helpful as Yeah, of course, Owen, thank you for the question. So when we reported in Q2, in August 30, in our list, We talked about some trends that we've seen around travel and fashion, and I was actually pleasantly surprised at the end of the quarter, things reversed a bit, especially in the live events space, but also in travel, things started to be much more active than we thought, and that helped us actually outperform in the quarter.

Speaker Change: Understood and just a quick follow up on that kind of implied Q4 revenue growth rate just interested.

Speaker Change: That may be kind of $5 million from that that merchant getting kind of pulled out but just interested on kind of anything thats, Alex that's baked into kind of that Q4, some of that macro deceleration that you've called out last quarter or anything else as we exit into 2025 would be helpful as well. Thanks.

Speaker Change: Yes of course, I don't think you for the question so.

Speaker Change: When we reported.

Speaker Change: Q2 in August.

Speaker Change: The Sterling list.

Speaker Change: We talked about some trends, but we've seen around travel and fashion and I was actually pleasantly surprised by the end of the quarter. Thanks for the rest of it.

Speaker Change: Especially in the live events.

Speaker Change: Space, but also in travel.

Start up to be much more active than we thought and that's helped us actually outperforming the quarter.

Eido Gal: Also, positively kind of thinking and looking at the first few weeks in November and the month of October, we've seen this activity continue to persist and this is like overall positive trends for for this category and for the year kind of helping us push through some of the outperformance towards the annual guide in terms of fashion.

Speaker Change: Also positively kind of thinking and looking at the first few weeks in November and the month of October we have seen this activity continue to persist.

Speaker Change: And this is like overall positive trends for this category for the year kind of helping us push through some of the outperformance towards the annual guide.

Eido Gal: And I think that we've just seen maybe more of the same, maybe kind of a little bit worse actually than than what we previously said. So, and it's just in the same categories that we've been mentioning like high end fashion and sneakers. It's it's difficult in this category and we're kind of like factoring in this in Q4 as well.

Speaker Change: In terms of fashion I think Richard theme, maybe more of the same maybe kind of a little bit worse actually them than what we previously said.

Speaker Change: So and it's just in the same categories.

Speaker Change: We have been mentioning like high end fashion sneakers.

Speaker Change: It's difficult in this category and we are kind of like factoring in this up in Q4 as well.

Eido Gal: And lastly, I'm very happy with our performance from our new logos, continuing to kind of expand our penetration in new markets. And this is kind of seen in the numbers where predominantly the growth continues to be kind of driven by new merchant generation. for Helpful.

Speaker Change: Mostly I'm very happy with our performance from our new logos continuing to kind.

Speaker Change: Kind of expand our penetration in your markets and this is kind of seeing in the numbers were predominantly the growth continues to be kind of driven by you.

Speaker Change: Merchant generation.

Unknown Attendee: Thank you. One moment for our next question.

Speaker Change: That's super helpful. Thank you.

One moment for our next question.

Speaker Change: Yes.

Chris Kennedy: Our next question comes from Chris Kennedy with William Blair. Your line is open. Thanks for taking the questions.

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

Speaker Change: Okay. Thanks for taking the questions just to follow up on the last question any way to think about the growth profile in 2025, given the customer loss and some of the emerging categories.

Eido Gal: Just to follow up on the last question, any way to think about the growth profile in 2025, given the customer loss and some of the emerging categories? Hey Chris, sure. So let me start off. The things that are working well are the new Merchant Wins and additions, right? I think we mentioned that already nine months into the year, we've already increased the amount of new logos worth over 1 million, diversification of the client base, so seeing a lot of good success there. On the net of this kind of one-off churn event, seeing a slightly more competitive environment overall, and probably just a bit more related to an uneven kind of macro landscape.

Speaker Change: Hey, Chris sure. So let me start off the things that are working well are the new merchant wins, then additions right I think we mentioned that.

Chris Kennedy: Already nine months into the year, we've already increased the amount of if you are getting new logos worth over 1 million diversification of the client base.

Chris Kennedy: We are seeing a lot of good success there.

On the net of this kind of.

Chris Kennedy: One off churn event has seen a slightly more competitive environment overall.

And probably just a bit more related to an uneven kind of macro landscape.

Eido Gal: And I think that on the macro side, I don't think there's any kind of difference or anticipation into 25 on our end, obviously hoping for improvements, but nothing baked into the model.

Chris Kennedy: And I think that on the macro side I don't think theres any kind of difference or anticipation into 25 on our end, obviously, hoping for improvements, but nothing baked into the model. So I think that's how we're thinking about the bill for next year right now.

Eido Gal: So I think that's how we're thinking about the bill for next year right now.

Eido Gal: Okay, and any updated thoughts on your 2026 EBITDA margin goals of 15 to 20%? Thanks for taking the question. Sure, no, I would say that's definitely still kind of our North Star and marching order. Again, obviously, this is, you know, this merchant term would be a setback to that. But we still think it's achievable based on some of the strength and success we've had in other areas.

Chris Kennedy: Okay.

Speaker Change: Any updated thoughts on your 2026 EBITDA margin goal of 15% to 20% thanks for taking the questions.

Speaker Change: Sure No I would say, that's definitely still kind of our north star and marching order. Okay and obviously this is this merchant churn would be a setback to that but we still think its achievable based on some of the strength and success. We've had in other areas and then kind of over two years, we have to achieve those targets. We continue to feel confident in our ability to read.

Unknown Attendee: And in kind of over two years, we have to achieve those targets, we continue to feel confident in our ability to reach One moment for our next question.

Speaker Change:

Speaker Change: Thank you.

One moment for our next question.

Terry Tillman: Our next question comes from Terry Tillman with Trua Securities.

Speaker Change: Our next question comes from Terry Tillman with true Securities. Your line is open.

Connor Passarella: Your line is open. Great morning, Tim.

Connor Passarella: This is Connor Passarella on for Terry. Appreciate you taking the question. Just curious, the first one, any indication so far about the strength of the holiday season? Just any comments you can provide on what maybe merchants are seeing or what they expect to see in terms of consumer strength, and then maybe how that impacts your thoughts around growth into the end of the year, versus, you know, continued new logo activity being strong.

Speaker Change: Great. Good morning, Tim just comment pasteurella on for Terry I. Appreciate you taking the question.

Speaker Change: I'm just curious the first one any indications so far about the strength of the holiday season.

Speaker Change: Commentary you can buy them, what maybe merchants are seeing or what they expect to see in terms of consumer strength and then maybe how that impacts your thoughts around growth into the end of the year versus continued new logo activity being strong.

Eido Gal: Yeah, Terry, thank you for the question. So I'm just looking at what we see on our end, broadly for Q4, but also some of the industry reports that can be reporting for the holiday season. All I know, we expect a healthy season, a healthy holiday season, and I wouldn't call it extraordinarily strong, but overall positive. And I don't have enough views to understand how the sales season is going to be aligned in terms of timing. Sometimes there's pre-sales that kind of last longer, and maybe the few days that it's just the actual holiday are softer, but I don't have a view of this yet.

Speaker Change: Alright. Thank you for the question. So just looking at what do we see on our end broadly or Q4, but also some of the industry reports that have been reporting.

Speaker Change: For the holiday season.

Speaker Change: Expect a healthy seasons are healthy holiday season.

Speaker Change: And I wouldn't call it like extraordinarily strong are.

Speaker Change: But overall positive.

Speaker Change: And I don't have.

Speaker Change: You have to understand how the sales season, it's kind of been aligned in terms of timing, sometimes theres breaks out the kind of last longer and maybe the fewer days that it's just the actual holiday.

Speaker Change: Our software, but I don't have a deal of this yet but all in all we do expect a healthy holiday season.

Eido Gal: But all in all, we do expect a healthy holiday season. Got it. Okay.

Eido Gal: And then as a follow up just around the operating expense discipline and the focus investment there, can you maybe just speak to where you're investing, what kind of projects you're seeing having a pretty high ROI, either from a go to market perspective, or maybe a product platform perspective? I would say, just taking a step back, I think over the past 2 years, we've really been focused on, you know, kind of increasing throughput, whether it's leveraging AI tools internally to increase productivity, looking at all the various bottlenecks and automating them so that we have more throughput from our existing team.

Speaker Change: Got it Okay, and then as a follow up just around the operating expense discipline and the other folks' investment there could you maybe just speak to where you're investing what kind of projects youre seeing having pretty high ROI either from a go to market perspective, or maybe a product platform perspective.

Speaker Change: I will say just taking a step back I think over the past few years, we've really been focused on kind of increasing throughput, whether it's leveraging AI tools internally to increase productivity looking at all the various bottlenecks and automating them. So that we have more throughput from our existing team. So I think overall thats.

Eido Gal: So I think overall, that's been like a very successful enterprise for us.

Speaker Change: Been a very successful enterprise for us more most of our investments right now on the product side is definitely on expanding the platform.

Eido Gal: Most of our investments right now on the product side is definitely on expanding the platform. And, you know, just based on the demand that we're seeing, investing in those products and in the key areas that are showing the most success. And when I think about probably the sales and marketing team, a lot of it has been on, you know, kind of growth and lead generation, especially in those newer verticals and attacking some of those non-discretionary areas as well.

Speaker Change: And just based on the demand we're seeing investing in those products in the key areas that are showing the most success.

Speaker Change: And when I think about probably the sales and marketing team a lot of it has been on kind of growth in lead generation, especially in those newer verticals and attacking some of those non discretionary areas as well.

Unknown Attendee: Great, thank you.

Speaker Change: Great. Thank you.

Unknown Attendee: One moment for our next question.

Speaker Change: One moment for our next question.

Reggie Smith: Our next question comes from Reggie Smith with J.P. Morgan. Your line is open. Thank you. I guess I wanted to follow up on the on the client loss. And I wanted to confirm that it was an expiring contract and that, you know, just kind of a cancellation. Mid contract was curious when you heard about that loss. And I guess I'm asking because I was somewhat surprised at how quickly they were able to migrate off. And maybe any color you could add around that would be great. And I have a few follow-ups. Thank you. Sure.

Speaker Change: Our next question comes from Reggie Smith with Jpmorgan. Your line is open.

Reggie Smith: Thank you.

Reggie Smith: I guess I wanted to follow up on the on the client loss and I wanted to confirm that it was an expiring contract and that just kind of a cancellation.

Reggie Smith: Mid contract was curious.

Reggie Smith: When you heard about that loss and you can get the masking bitter I was somewhat surprised at how quickly.

Reggie Smith: They were able to migrate off.

Speaker Change: And maybe any any color you could add around that will be great and I have two follow ups. Thank you.

Eido Gal: So it was the end of a contract. It was not mid contract. We knew about it during this quarter, which is During Q4. And the last piece around the reduced submission. So like we mentioned, this is a client that's already tested a lot of different models over the years and had four to five different vendors integrated. So I think because of that, it was relatively easier for them to adapt this newer strategy. Got it. And thinking about it sounds like you guys are gonna stay close with them and they may come back if it doesn't work out.

Speaker Change: Sure so.

Speaker Change: It was an end of a contract that was not mid contract.

Speaker Change: We knew about it during this quarter.

Speaker Change: During Q4.

Speaker Change: And the last piece around the reduced submissions. So like we mentioned this is a client that's already tested a lot of different models over the years and had four to five different vendors integrated so I think because of that it was relatively easier for them to adapt this newer strategy.

Speaker Change: Got it and thinking about it sounds like you guys are going to stay close with them and they may come back or if it doesn't work out.

Speaker Change: Sure.

Eido Gal: The reintegration process, I've never kind of experienced that with you guys, but I know you guys integrate very deeply with the website and checkout experience. Would it be easier or relatively easy for you to reactivate that if they decided to come back? Yeah, so that would be similar to what we've already done with this merchant historically, where we've had these instances, correct. Okay.

Speaker Change: The re integration process never kind of experienced that with you guys, but I know you guys integrate very deeply with the website and check out experience would it be easier or easy relatively easy to reactivate that if they decided to come back.

Speaker Change: Yes, so that would be similar to what we've already done with this merchant historically, where we've had these instance, that's correct.

Eido Gal: And then one more just kind of big picture question. You know, with all the interest in AI and ML, I was curious if your capabilities could be repurposed, you know, beyond retail? If there's a use case or a expertise that could possibly be monetized in other ways? Obviously, you're doing policy for tech, but just, you know, thinking more broadly, is there something else that your capabilities lend themselves well to? Yeah, so taking a step back, we really believe that our capabilities are in machine learning, okay, or sorry, I should say AI right now, on building these models, leveraging our large data set and consortium of merchants, spinning up models, optimizing them, leveraging new data to update them.

Understood. Okay, and then one more just kind of big picture question.

With all of the interest in AI and ml was curious.

Speaker Change: If your capabilities could be repurposed.

Speaker Change: On retail.

Speaker Change: It doesn't use case.

Speaker Change: Expertise that they could possibly be monetize in other ways, obviously, you're doing policy protect but just thinking more broadly.

Speaker Change: There is some.

Speaker Change: Something else that you're capabilities lend themselves well to.

Speaker Change: Yes, so taking a step back we really believe that our capabilities are in machine learning or sorry, I should say AI right now on building. These models leveraging our large dataset and consortium.

Speaker Change: Merchants spinning up models, optimizing leveraging new data to update them. So we call that our machine learning factory and to your point right. Now we're focused on we initially started by focusing on looking at transactions and understanding if it is fraudulent or not and we've expanded that to look at a transaction or I should say on Ida.

Eido Gal: So we call that our machine learning factory. And to your point, right now, we're focused on, we initially started by focusing on looking at a transaction and understanding if it's fraudulent or not. We've expanded that to look at a transaction or I should say an identity and understanding if it's abusive or not. We're expanding that to give merchants self-service tools to leverage our identity engine to use that to build their own, you know, kind of policy and ways to manage their business. So we definitely see a lot of additional applications here.

And understanding if it's abusive or not we're expanding.

Speaker Change: Pending that could give merchants self service tools.

To leverage our identity engine to use that to build their own kind of policy and ways to manage their business.

Speaker Change: So we definitely see a lot of additional applications here.

Eido Gal: Again, just from a competitive perspective, I don't want to outline all of them right now, but that's how we think about it long-term, this suite of services enabled by AI for enterprise e-commerce clients. Yeah, is there anything like, potentially on the demand side? So like, knowing all the data or recognizing all the data that you have, like to drive incremental sales? Is anything on the roadmap? Or does that even make sense to you guys? Again, there are a lot of things that you could use the predictive capabilities and the data that we have to, you know, make a smarter outcome for these enterprise ecommerce clients.

Speaker Change: Just from a competitive perspective, I don't want to outline all of them right now, but that's how we think about it long term the suite of services enabled by AI for Enterprise E Commerce clients.

Is there anything like potentially on the demand side, so like knowing all of the data or recognizing all the data that you have like to drive incremental sales as anything on the roadmap or does that even make sense to you guys.

Speaker Change: Again, there are a lot of things that you can use the predictive capabilities and the data that we have.

Speaker Change: Make us smarter outcome for these enterprise ecommerce clients.

Eido Gal: And I think hopefully we can share more in the quarters ahead about the next big thing. Cool.

Speaker Change: Hopefully we can share more in the quarters ahead about the next big thing.

Unknown Attendee: Thank you.

Unknown Attendee: Sounds good. And I'm not showing any further questions at this time.

Cool Thank you sounds good.

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

Eido Gal: I'd like to turn the call back to Eido Gal for any closing remarks. All right, thank you everyone for joining this call and I look forward to updating you on our progress in the quarters ahead.

al: Alright. Thank you everyone for joining this call and I look forward to updating you on our progress in the quarters ahead.

Unknown Attendee: Ladies and gentlemen, this does conclude today's presentation.

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

Unknown Attendee: You may now disconnect and have a wonderful day.

Unknown Attendee: Go to Beadaholique.com for all of your beading supplies needs!

Speaker Change: Okay.

Speaker Change: [music].