Q2 2025 Riskified Ltd Earnings Call
Good morning, Thank you for standing by.
Welcome to <unk> second quarter 2025 earnings conference call at this time, all participants are in a listen only mode.
The speaker's presentation, there will be a question and answer session to ask a question. During the session you will need to start one one on your telephone.
Then here an automated message you had this race. Please note that today's conference is being recorded I will now hand, the conference I'll, let you speak of host Chad Mondale head of Investor Relations. Please go ahead.
Good morning, and thank you for joining US today. My name is Chuck Mendell risk of hides head of Investor Relations. We are hosting today's call to discuss risk with <unk> financial results for the second quarter of 2025 participating on today's call are yoga risk of hides co founder and Chief Executive Officer, and argue don't Teva risks <unk> Chief Financial Officer.
We released our results for the second quarter of 2025 earlier today, our earnings materials, including a replay of today's webcast will be available on our Investor relations website at IR that risk if I dot com.
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 provisions contained in the private Securities Litigation Reform Act of 1095 <unk>.
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.
Forward looking statements involve risks uncertainties and other factors some of which are beyond our control that could cause actual results to differ materially from our expectations you should not put undue reliance on any forward looking statements.
Please refer to our annual report form 20-F for the year ended December 31, 2024, and subsequent reports, we filed or furnished with the SEC for more information on the specific factors that could cause actual results to differ materially from our expectations.
Additionally, we will discuss certain non-GAAP financial measures and key performance indicators on the call reconciliations to the most directory 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.
I will now turn the call over to readout.
Thanks, Chad and Hello, everyone.
Pleased to report a solid second quarter with performance that reflects both the expanding value we continue to deliver to our global merchant place and our operational discipline.
We continued to grow our revenue in the second quarter, primarily through sustained new business wins and a robust upsell activity. We also achieved positive adjusted EBITDA for the seventh consecutive quarter, our entire organization executed well this quarter and I want to thank them for their hard work.
I believe that our results demonstrate the continued strength of our platform and the growing demand for our AI fraud and risk intelligence solutions I am encouraged by our performance in the first half of the year and since our last call in may and through quarter to date Q3, we have observed relatively resilient consumer spending I believe that we are well positioned to improve and our firm.
First half results in the second half supported by a robust new business pipeline and are focused on advancing the AI capabilities of our multi product platform.
We have remained focused on gaining market share in existing categories and geographies, while also expanding into new verticals to further diversify our merchant base and position us for continued growth we saw consistent international growth in the second quarter with seven of our top 10, new logos coming from outside the U S and across four separate categories. In addition.
We continue to deepen our presence in non discretionary categories, such as money transfer and payments, which delivered exceptional year over year growth.
As the global ecommerce environment evolves and as we continue to expand our visibility across more categories and geographies. It's increasingly clear that fraud is becoming more complex dynamic and sophisticated we're seeing <unk> leverage advanced techniques, including the nascent capabilities of agenda commerce, the large dedicated attack.
This growing sophistication further reinforces risk if our unique value proposition our proprietary global data network and powerful artificial intelligence platform is designed to enable us to stay ahead of these emerging threats.
Agenda ecommerce remains in the early stages, our R&D teams are already strengthening our offering by developing new capabilities to provide merchants with the visibility they need temporary it's legitimate AI shoppers, while blocking sophisticated threats.
To that end, we recently announced the introduction of multiple solutions and tools designed to advanced fraud, and abuse prevention and the world of agenda ecommerce I believe that our deep e-commerce expertise and unique data network will play a valuable role in setting the standard for how agenda ecommerce can grow safely and profitably for merchants.
As part of the expansion of our agenda ecommerce capabilities. We also announced a partnership with human security. This collaboration combines humans AI agent visibility governance and trust capabilities with risk if I e-commerce risk intelligence expertise and fraud prevention Chargeback protection and policy abuse prevention.
This partnership will leverage our industry, leading AI platform and expansive network insights to secure the next era of digital commerce.
In addition to our progress with <unk> AI, we continue to see increased adoption of our policy protect product during the first half driven by new logo wins cross sell activity within our existing customer base and across geographies.
We continue to invest in product innovation during the quarter, we launched our new refund abuse model, which is generating an improvement of at least 15% and technical performance compared to the previous model. This new model Leverages behavioral features that were already using in our fraud models to evaluate abusive behavior on an identity level across.
Our network our ability to leverage our network of features and insights is just part of what makes policy protect so valuable to our merchants in fact, we've heard this feedback directly from merchants. For example, one merchant recently shared that their implementation of policy protect which allows them to reward our best customers with early refunds was.
In part responsible for the substantial increase in their customer satisfaction scores. This merchant is focused on improving their customer experience date and retention and increase the likelihood of a repeat shopping these outcomes reinforce the type of value and differentiated capabilities, we aim to deliver to the market.
And as we continue to enhance our product portfolio to intelligently solve a wider more complex range of use cases for merchants beyond charge backdrop. We have had success building the pipeline for the remainder of 'twenty five and beyond our go to market team surpassed their activity levels in the first half a 25% compared to the first half of 'twenty four and is well.
For an even stronger second half with most second half activity currently expected to convert in Q4.
Finally, as a reflection of our confidence in risk if I've long term trajectory I am pleased to announce that our board has authorized an additional $75 million share repurchase program.
This decision reflects our conviction in the fundamentals of the business supported by strong free cash flow a debt free balance sheet and a disciplined capital allocation strategy.
In conclusion, we remain confident that our powerful AI platform global data network and strong balance sheet allows us to pursue our growth initiatives to generate value for our shareholders.
Now I'll turn it over to <unk>.
Thank you.
Team and everyone for joining today's call.
Our G&A for the second quarter was $36 4 billion and our first half <unk> was $17 6 billion, reflecting a 4% and 5% increase year over year, respectively.
We achieved record second quarter revenue of $81 1 million up 3% year over year, and our first half revenue of $163 4 million was up 5% year over year.
Our <unk> and revenue growth. During this quarter was primarily driven by continued new merchant and upsell activity.
Our largest category tickets and travel and fashion and luxury growth, 15% and 10% year over year, respectively, driven primarily by strong new business wins and upsell activity.
Consistent with recent years growth in our fashion and luxury category was partially offset by continued same store sales pressure, particularly within our Cohen's question and sneaker verticals.
We continue to expect year over year growth in both categories to moderate slightly for the second half of the year, reflecting a continuation of the same store sales pressure observed in the first half and gives a tougher comparable periods with respect to the tickets and live events space in the second half of the year.
We remain confident that both of these categories will deliver full year growth supported by a strong pipeline of new business opportunities, which we believe will more than offset at the same store softness we have seen.
As anticipated we saw year over year declines in our home category, which contracted by 74%.
And consistent with the first quarter, our money transfer and payments category achieved approximately 90% year over year growth in the second quarter.
This growth was driven by new merchant activity, which continues to be a key area of expansion.
The United States declined 11% year over year, primarily as a result of the contraction in our home category, but encouragingly, we continued to grow across all of our other regions.
During the second quarter APAC grew approximately 40% year over year, and other Americas, which represents Canada and Latin America grew approximately 16% year over year, primarily due to momentum in new business and upsell activity with particular strength in travel.
EMEA grew approximately 23% year over year with the strongest performance concentrated in our fashion and luxury sigurdson travel and money transfer and payment verticals supported by both new business and upsell momentum.
We believe that our continued international growth reflects ongoing progress in capturing market share.
Moving to gross margin our non-GAAP gross profit margin for the second quarter of 2025 was approximately 50% consistent with the first quarter and down from 53% in the prior year.
Similar to the first quarter the year over year decline was primarily driven by the ramping of margins in emerging categories, such as money transfer and payment and geographies such as that or America.
The impact of these factors was partially offset by the improvements in our core machine learning models and continued growth in new product revenue.
As a reminder, I encourage you to continue analyzing our gross margin on an annual basis.
Even individual quarters can variety of various factors, including the ramping of new merchants and the risk profile of transactions approved.
As we progressed through the year and have more clarity on these factors, we anticipate delivering an annual non-GAAP gross profit margin of approximately 52% for 2025, which is at the low end of the initial target range set on our fourth quarter 2024 call.
For modeling purposes, we currently expect our non-GAAP gross profit margin for the second half of the year to be higher than the first half with the third quarter to be slightly below 52% in the fourth quarter to be higher than the targets.
Moving to expenses.
We continued to manage the business in a focused and disciplined manner.
Total non-GAAP operating expenses were $38 2 million for the second quarter down from $39 3 million in the prior year.
Our non-GAAP operating expenses as a percentage of revenue for the second quarter declined year over year from 50% to 47%, reflecting ongoing leverage in the business model.
We anticipate having quarterly non-GAAP operating expenses of approximately $38 5 million in the third and fourth quarter.
We achieved positive adjusted EBITDA of $2 1 million in the second quarter and $3 5 million for the first half of 2025.
Our second quarter results reflect the seventh consecutive quarter of positive adjusted EBITDA.
Moving to the balance sheet, we ended the second quarter with $339 million of cash deposits and investments and we continue to carry zero debt.
In addition, we continue to maintain a healthy cash flow model and in the second quarter, we achieved quarterly free cash flow of $5 3 million up from $4 1 million in the prior year.
We expect approximately $30 million of positive free cash flow based on current conditions in 2025 with the majority of the cash flow generation expected to occur in the fourth quarter of the year.
Is it all motions I'm excited to announce that our board of directors authorized an additional $75 million of share repurchases subject to the satisfaction of Israeli regulatory requirements.
When combined with amounts that remain available under our existing share repurchase authorization.
Our total outstanding authorization is approximately $85 million.
In the first half of 2025, we repurchased 9 million shares for a total price of approximately $44 million.
As a result of our buyback activity and our commitment to prudent dilution management, we continue to expect our share count will decline year over year.
We believe that our strong balance sheet and liquidity position are strategic assets that provide us with the flexibility to navigate a range of operating environments.
<unk> remained disciplined and thoughtful in how we deploy capital to create long term shareholder value.
Now turning to our outlook.
As a result of the solid first half of the year, we improving the bottom end of our revenue range. So now anticipate revenue between $336 million and $346 million or $341 million to the midpoint.
We maintain our adjusted EBITDA guidance that we reaffirmed on our previous call to between 18 million and $26 million or 22 million. So the midpoint.
Overall I'm encouraged by our solid first half results and execution and I believe that we're well positioned to improve on this result in the second half.
As the e-commerce landscape evolves, our services are becoming more integral to merchants everyday.
And I believe that our leading market positioning and opportunities to accelerate growth will enable us to realize <unk> full potential and deliver value to shareholders.
Operator, we're ready to take the first question. Please.
Thank you and ask your line of Liza and gentlemen to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.
Please standby, while we compile the Q&A roster.
Now first question coming from the line of Terry Tillman with Suez Securities. Your line is now open.
Yes, Hi, Tim Good morning, and thanks for taking my questions I had.
The first question is going to be kind of looking at the second half of the year and assumptions and then the second one is going to be more of a strategic kind of high level question on the agenda commerce, but first in terms of I think you all talked about.
Strong second half sales pipeline, which sounds great. How much though are you assuming converts to business and actually live implementations by the holiday season.
The second part of this first question is in <unk> around the all important holiday season, do you think fashion and luxury would have positive same store sales or are you assuming flat or down and then I had a follow up.
Alright, Barry Thank you for the questions I'll take the first one I can tell you down so thinking through.
Our very solid first half of the year very happy with the way we.
Performance in that now being almost eight months into the year.
We just were able to flow some of the outperformance.
When we think about the back half of the year. There is a number of opportunities in our pipeline.
Some of them are already integrated or in a committed stage and probably some parties that complex towards later in the year.
<unk> is still in the pipeline, but usually these are kind of like less material than lumpy.
Calendar numbers.
So overall happy with the new business with the execution and looking forward to performing in the second half of the year.
We're expecting win rates or conversion rates.
Similar to what we've seen historically.
Okay got it. Thanks, Thanks, Steve both on that and I guess, yes, I mean, we're hearing a lot about the agenda commerce and then what seems like even the discovery process for shoppers during prime the multi day Prime period. There is a lot going on around agenda commerce, but it does open up with potentially new threat vectors or just creates more complexity.
Is this is this sparking some net new conversations or is it helping kind of speed up some of your existing kind of pipeline conversations or is it actually may be something that could be a little bit timing because hey. This is a new development, we want to get through the holidays before we really kind of embraced this and then talk about how you all get to.
Help us with this maybe you could just share a little bit more on agenda commerce. Thank you sure. That's a great question I mean, obviously, it's really a fast evolving space and we just want to be there for our merchants and position ourselves as kind of the leader in agenda Trust.
And when you think about what we're actually doing we're enabling our merchants to identify adjourn tick agents from other traffic and box and both accept those transactions and create custom rules and policies and approval matrix.
Based on those different agents and for the agents themselves, we're creating a risk service that enables them to provide a risks free commerce solution.
I think from a pipeline perspective.
It's a net.
Benefit for us because both merchants now have more budgets related to solving AI related hurdles. So that opens up budget opportunity and it also enables more conversations as merchants want to be at the forefront of this and make sure that they have the right infrastructure to support <unk>.
So we're really excited about that.
Thank you.
Thank you.
Our next question coming from the line of will <unk> with Goldman Sachs. Your line is now open.
Hey, guys I appreciate you taking the question.
I wanted to ask a question on some of the performance you mentioned by vertical I think you mentioned yet.
A couple of expectations around deceleration in one or two of your verticals.
Offset by really continued strength on the women's side. So I'm wondering if you could go maybe just a little deeper and talk through what are some of the recent trends that you've been seeing across the business.
Anything to call out or anything that you.
I'm wondering what you are facing some of those same store sales commentary in the back half of the year as well I appreciate it.
I will thank you for the question. So what we've been seeing that in the second quarter. Some of it is continuation of what we saw in Q1.
For example, travel and payments performed really well and we're really strong and some of the expectations. There also kind of still continue this.
Our strong performance for the right half of the year somatic categories like tickets.
<unk> have been a little bit softer.
Important to point out take a chat and explosive growth and it was really really strong in 2024, we added a number of new merchants there as well Q4 of last year was exceptionally strong there was just a variety of fronts I.
I believe broad cycle.
Records tickets for most of our merchants looking into the space This year.
<unk> seen some more volatility Q1 started kind of relatively strong trends softened now in Q2, we're actually seeing some softness in a number of our merchants in this category.
I would say June was specific asos and looking towards the rest half of the year I think that lapping of the ferry.
<unk> <unk>.
Second half of the year in 2024, it's going to be just a little bit harder.
And in terms of activity and that type of event that our lineup.
Just in conversations with them.
Our merchants like.
I don't see particular strength that can carry this type of performance that we saw a year ago.
So that's kind of like around more tickets and travel in terms of fashion, we've seen some stability.
<unk> corporate numbers are still negative but stability.
And we continue to execute there by adding more new merchants.
Executing on ourselves so that drives some of the growth in this category for us.
Sure.
That's very helpful. And then just on the Opex side Opex.
Opex continues to be very well managed and kind of flat to down over time, just maybe talk through any notable moving pieces in the opex space and.
Yes.
Any line of sight to getting to a point, where the opex needs to start growing again would be helpful. As well. Thank you.
Of course.
So we started.
Aaron we.
It gives us some of the off shoring.
<unk>, we kind of mentioned that we expect Q2 to be lower.
It ended up slightly bit slower just for a variety of reasons.
Some of it is just <unk>.
Through the execution of the offshoring, which had been going really well some are very answered there more around just timing of <unk> sales in vacation day, King et cetera, So only know what I guided to around $38 five towards back half of the year I think it is.
Relatively similar to where we performed in Q2 and I expect it to be.
Our.
Back half of the year kind of run rate.
Awesome. Thanks for taking my question.
Thank you.
Our next question coming from the line of.
Timothy Chiodo with UBS. Your line is now open.
Hi, Good morning. This is cheng on for Tim. Thank you for taking the question I wanted to dig in on at adaptive checkout offering.
So I understand this product not monetize separately, but more as a key enhancement to your charge back guarantee offering. So can you share some of the trends of merchant adoption and whether it helps you win some of the new logos mentioned in this quarter.
Sure I'll take that thanks for the question.
So maybe just taking a step back to re familiarize everyone adaptive checkout allows us to optimize the end to end conversion funnel by both ascending smart singles pre off to some of the payment processors or card issuers and hands authorization rates and it also enables us to.
Kind of VR models run very very smart friction stack on border line transactions, thus improving more transactions right. So you can imagine instead of having just a straight 200 basis points of decline.
We would send some okay.
100 basis points of those smart frictions, either that could be in SMS three secure notification.
All of our requests for CBB really depending on the risk characteristics of the transaction and as we talk to kind of sophisticated enterprise merchants. They love. It it's exactly the type of stuff that they what they think about that they try to build internally and have a hard time managing.
And we've seen great adoption double digit presented really growing.
Quickly both within our current installed base.
And on a new prospect logo.
We definitely continue to see high win rates that we believe are related to the platform offering.
It's hard for me to pinpoint how much of that is exactly just because of adaptive but I think it's a great contributor to the overall story.
And value prop.
Awesome. Thank you so much for all the color Mike.
My follow up would be.
A quick follow up on Atlantic Commerce. So in the press release, you put out with human.
You mentioned there is about two times higher risk traffic driven by Gentex traffic volumes can you expand on some of the risks key traffic that you saw and also does it ultimately help increase demand for any type of charge back guarantee offer that merchant.
We will now seek with the higher risk associated with that Gentex, yeah. So while we see time and again as with every new type of flow and E Commerce.
Fraudsters are early adopters, because they understand exceedingly well.
Protections are usually put in place later in the game.
So just by virtue of kind of routes are as being early adopters and to be clear. What's happening here is that you see stolen credit cards being loaded into some of these kind of agents that performed the commerce and Thats really the BMO. The main ammo that we're seeing.
So I think thats driving the initial bump in fraudulent activity the challenges that merchants have in identifying some of this this traffic.
At the same time I do on a kind of level set that it is still still nascent.
But obviously, we have to position ourselves in this kind of incredibly strategic deal.
So that's what we're seeing today.
Got you that makes a lot of sense I'll pass it on thank you.
Okay.
Thank you.
Our next question coming from the line of Ryan Tomasello with <unk>. Your line is now open.
Hi, everyone. Thanks for taking the questions.
Just in terms of the implied second half guidance I think that suggests revenue growth.
At the midpoint and the low single digit percentage range.
Can you just help us unpack I think there is just mainly two moving pieces there in terms of lapping.
Last year's large customer churn and I also think you guys have called out.
Billing versus revenue growth dynamic that I think was.
An important delta the cloud, especially into the into year end. So if you were just able to give us what the implied <unk>.
<unk> growth rate is in the.
And the implied guidance range on a normalized basis.
That'd be helpful, whether thats on billings or revenue.
Or do you think is a better number to look out here. Thanks.
Sure.
You pointed out exactly some of that.
Main two reasons why we expect to see on a billings.
Some of the acceleration in Q4.
It is not evident in revenue just because of the accounting.
The way it works.
As an exit trades, we are on track and we are building and executing towards.
Double revenue.
Digits revenue growth in 2026. This is our north side, which is what we're executing and nothing has changed.
Okay, great. Thanks, Thanks for reiterating that and then.
Just on the competitive front.
You guys have clearly made some great strides expanding the breadth of the product set as you are evolving more into a platform solution.
I think you've called out in the year on year.
Your prepared remarks, some nice competitive wins from another another player.
In the core charge of our guaranteed product, but just bigger picture.
If theres any color you can provide on just how youre seeing the competitive landscape evolved, particularly relative to nextgen competitors in this space. How your win rates have been evolving and if there's any other recent examples to highlight in terms of what might be starting to resonate more here with customers as you've executed on the <unk> expansion.
<unk>.
Sure I'll take that I mean, I think our win rates have been higher remains high and kind of.
70% range for a few quarters now.
And I think for us what we're seeing is that.
Most of the market.
On the legacy solutions and.
A handful of modern one it's really.
The field is narrowing and a pretty meaningful way and I fully expect that over the coming years. The increase in Gms, we the amount of e-commerce activity flowing through risk of five will be by far the largest.
The reason I think that and I'm optimistic as not just the win rate.
All of the global expansion that we're experiencing that we're highlighting the entrance into new verticals. If a few years ago people said, hey, maybe rectified is really tied into fashion maybe just.
Advancing and particularly I think we're seeing a really strong breath that we're showcasing whether it's through remains in groceries and some of the other categories.
So I think that's putting us in a great position and the continued focus and increase in accuracy further creates distance between us and some of the other smaller competitors the range of offerings from the platform, whether it's some of the paid offerings like policy or some of the add ons. The chargeback like adaptive checkout will just continue.
To create more value.
And just create a bigger barrier of entry towards other solutions.
So thats kind of the slightly longer view on that.
Great. Thanks for the color.
Thank you our next question coming from the line of Chris Kennedy with William Blair. Your line is now open.
Thanks for taking the question can you just talk about the revenue contribution of the revenue growth from some of the newer products such as policy protect dispute resolved or account secure.
Yes, I think similar to the prior quarter it was well over.
100% range.
150.
Okay.
And still on track for I think I don't know high single low double digit total contribution for this year.
Okay, great. Thanks for clarifying that and then clearly the repurchase program.
<unk> is out there, but can you just talk about kind of your strategy on the M&A environment or.
Anything you're seeing out there in the market for capital allocation. Thanks for taking the questions of course it remains consistent.
If there is a good opportunity to enhance our product portfolio and leverage the strategic relationship we have with so many blue chip publicly traded companies.
We will definitely look to.
Acquire small technologies that we can cross sell into this this great base.
We think that there is opportunity to consolidate smaller players that don't have kind of alternative exit options and we continue.
To believe that's an opportunity in the medium term.
At the same time, we're always looking at current valuations relative to our expectations for the business and making repurchase decisions based on that.
Thank you.
Thank you.
Our next question coming from the line of Reggie Smith with Jpmorgan. Your line is now open.
Thank you good morning, Congrats on the quarter I had a question on I guess agenda commerce as well it maybe just risk more broadly.
Remind us.
What proportion of the <unk>.
Do you see is kind of like large coordinated attacks and whether that mix has been increasing.
Increasing and then as you think about <unk> is the bigger threat in your eyes.
L L M fraud, or maybe purpose built AI platforms.
Spamming web pricing or things like that and I have a follow up thank you.
Sure. So I would say there has been an increase in what you would consider kind of professional a coordinated large scale fraud attacks. It usually happens as people takeover of devices with remote desktop packing. It can happen with large data breaches, where people have access to a large number of accounts.
Obviously, the exposure to merchant is much larger in those instances. So that's probably the bigger portion of fraud attacks and that has been increasing specifically.
Specifically with regards to agenda ecommerce, what we tend to see is people loading stolen information or stolen cards.
Into these different kind of AI shopping agents and Thats really the attack vector that we're seeing right now.
Not that the <unk> themselves are being purposefully bills like from fraudulent reasons, Theyre, just being manipulated or managed in a way that performance Rob.
Got it yeah, I was actually more talking about weather.
<unk> adds that making fraudulent.
Llm's about like whether or not that technology and capability and I.
I guess coatings were being used to make purpose built.
Fraud engines and things like that but.
But thats fine.
And then last one from me I guess with the human announcement is that is that deal exclusive do you expect to.
We work with other.
Kind of AI security type.
Vendors and then lastly, you mentioned something about potentially partnering with LLM directly.
What can you share about about those efforts so far thank you.
Sure. So on our partnership with human we do think it creates very unique and differentiated offerings some of their capabilities more on the perimeter to identify bots.
And based on that our exemplification being able to understand where it fits in an agent or Bob just for various.
Pricing activities and whatnot and as we think about.
The <unk> themselves and if you think about hey, I'm, creating a dedicated shopper that's doing everything end to end, including the purchasing process Thats when you have.
Our risk.
Component.
On the shopper and you would need to Aquarius service like <unk> in order to make sure that you're safe.
Safety and guaranteed and Theres trusted commerce in this place.
Okay. Thank you.
Thank you.
Our next question coming from the line of Clarke Jeffries with Piper Sandler Your line is now open.
Hello. Thank you for taking the question I wanted to ask about the proactive renewal effort. This year with some larger contracts wondering if you could comment on what the renewal rate was this quarter and if there is any way to size the renewal cohorts thats coming in the back half and then I have one follow up.
Yes, it's been 100% success rate or kind of <unk>.
Similar to the prior quarter.
And feel great about that.
I think that we've continued to focus on creating.
Unmatched value, even though we've had slightly.
Slightly below gross margin expectation H, one we've continued to focus on creating great outcomes for our merchants.
And we think they really appreciate that and that's kind of.
<unk> through in some of the the renewal numbers, though we've been seeing at the same time, we have kind of seen a more positive quarter to date improvement. So far in Q3. So we're also happy with how both of these things are progressing.
Perfect and then.
You called out a large merchant in the ticketing and live events.
Vertical.
Moving over remaining volume could you talk about what.
What catalyst was the decision for that vendor.
And broadly the upsell that you're seeing in the business overall is that being led by volume or by policy protect thank you.
Yeah. Great question. So this is a merchant that started with China is really a unique segment I think they were sending.
Anywhere from 5% to 10% of their volume to Semiannual review and then we were able to fully automate that 5% to 10% at a similar cost structure or probably even a slightly better with great approval rates the side. The performance there for a number of months, we were already integrated and then the upsell.
Happened really we were able to offer them higher approval rates better performance I think in the range of 50 basis points.
For guaranteed cost savings, probably a 20% reduction in their overall cost of fraud at the same time. They also did deploy our policy solution and then it's looking for.
<unk> occurs that are creating a substandard customer experience, where there's a lot of kind of denial.
Good for the events.
Being able to block them proactively.
So that was definitely I think a consideration when they thought about the <unk>.
<unk> for the entire shop volume.
Interesting.
Thank you.
Our next question coming from the line of Arc <unk> with D. A Davidson your line is now open.
Good morning, So there has been a strategic focus on expanding the role of us providing the payments or the broader payment space can you talk about how you guys have been have progressed this last quarter and how you expect to accelerate growth going forward in this space.
And the payments in women's space I think look similar to other areas. We see once we have had success and are able to create both custom features and models and understand.
The somewhat unique risk characteristics, if a vertical it just helps us provide more value to other merchants in that vertical together with the brand name recognition that we start to have.
And I think that's a strategy that's worked well in fashion and in ticket and it's one that we're doubling down on for payments and remains as well.
I appreciate that and then there was a notable AI spokesperson who a few weeks ago called out an AI fraud crisis and I'm just wondering how risk is positioned to help merchants in this scenario handled this growing issue.
Look for us, it's unfavorable to say it but an increase in fraud and the complexity of the world fraud is a positive as fraud becomes more.
Complex and challenging and as you see.
Our tax lead to an increase of things like social engineering and people taking over.
Devices and doing what we call kind of sophisticated fraud and individual merchant has a harder time managing all of this and they need a platform similar to risk of five for.
For all the various use cases right and if you think you.
Even a few years back when we were just talking about risk if I'd always like okay. This is a solution that helps.
<unk> identified credit card fraud, and now you have things like adaptive checkout and you have policies you have dispute resolved when you have identifying agent to commerce and being able to create real around that.
So all of this complexity means that it's much more challenging to solve internally, which ends up being a net benefit for us.
Awesome. Thank you.
Thank you.
And I'm showing no further questions in the queue. At this time I will now turn the call back over to Mr. Gill for any closing remarks. Thank you everyone for joining us on today's call and we look forward to updating you on our progress in the quarters ahead.
This concludes today's conference call. Thank you for your participation and you may now disconnect.