Q3 2025 Riskified Ltd Earnings Call
Presentation, there will be a question and answer session to ask a question. During the session you will need to press star one on your telephone you will then hear an automated message advising that your hand is raised to withdraw. Your question. Please press star. One again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your first speaker today chat mendell.
Eido Gal: Sure. When we think about kind of expanding our market, we really do make a concentrated effort to go after specific verticals that we think are large in size and have our product as a good fit for them. As we've continued to expand the product, whether it's through Policy Abuse, Secure, CBMS, the different permutations of the chargeback product, we think that there's more value to different categories. We also tend to have a geographic view where we kind of say, hey, what other regions are there where we can kind of penetrate further? That also leads us to think about the categories in those regions. Probably also some other thoughts and internal deliberations we have are more around distribution. What is the value of going slightly more mid-market than the enterprise focus we have now? How do we get better distribution via partnerships?
<unk> head of Investor Relations. Please go ahead.
Good morning, and thank you for joining us today.
Speaker #2: Good day and thank you for standing by . Welcome to the RISKIFIED LTD. . Third Quarter 2020 Earnings At Call . this time , all participants are in a listen only mode .
Name is shut nando risk if I'm the head of Investor Relations. We are hosting today's call to discuss <unk> financial results for the third quarter of 2025.
Speaker #2: After the speaker's presentation , there will be a question and answer session . To ask a question during the session , you will need to press star one one on your telephone .
Participating on today's call are <unk> risk of either co founder and Chief Executive Officer, and argued though Teva provides chief financial officer.
Speaker #2: You will then hear an automated message advising that your hand is raised . To withdraw your question , press star one . please again .
We released our results for the third quarter of 2025 earlier today, our earnings materials, including a replay of today's webcast will be available on our Investor relations website at IR that risk of <unk> Dot com.
Speaker #2: Please be today's is being advised that recorded . I would now like to hand the conference conference over to your first speaker today , Head of Chett Mandel Investor Relations .
Certain statements made on the call today will be forward looking statements related to without limitation, our operating performance business and financial goals.
Speaker #2: Please go ahead .
Speaker #3: Good morning, and thank you for joining today. My name is Chett Mandel, head of Investor Relations. We are hosting today's discussion call to review the financial results for the third quarter of 2025.
But look as to revenues gross profit margin adjusted EBITDA profitability adjusted EBITDA margins and expectations is the positive cash flows which reflect management's best judgment based on currently available information and are not guarantees of future performance.
Speaker #3: Participating on today's call are Eido Gal RISKIFIED LTD. , founder and Chief Executive Officer and Aglika Dotcheva Chief Financial We released our results for the third quarter of 2025 earlier today .
Eido Gal: As we kind of go through the '26 planning cycle, those are all thoughts that we have and kind of going through.
We intend all forward looking statements to be covered by the safe Harbor provisions contained in the private Securities Litigation Reform Act of 1995.
Operator: Thank you. Our next question will be coming from Chris Kennedy of William Blair. Chris, your line is open.
Speaker #3: Our earnings materials , including a replay of today's webcast , will be available on our Investor Relations website at . A certain statements made today will be on the call forward looking Officer . statements to related , without limitation , our operating performance , business and goals financial .
Speaker #3: Our earnings materials , including a replay of today's webcast , will be available on our Investor Relations website at . A certain statements made today will be on the call forward looking Officer .
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.
Conor Passarella: Yeah, good morning. Thanks for taking the question. When you think about the—or can you give us an update on the revenue contribution from the non-Chargeback Guarantee products for 2025?
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.
Speaker #3: Outlook revenues , gross profit margin , adjusted profitability , EBITDA , adjusted , margins and expectations as to positive cash EBITDA flows which reflect management's best judgment based on currently available information and are not guarantees of future performance .
Eido Gal: Yeah, so far it's continued to be very strong, over 100%, and continue to be very pleased with the uptick in the market reception to that. It's been instrumental and very helpful in kind of gaining longer-term contracts with our existing clients at renewal. It's been helping us win new business at a higher rate. Overall, really pleased with being able to develop additions that generate meaningful ROI to our clients.
You should not put undue reliance on any forward looking statements. Please refer to our annual report on form 20-F for the year ended December 31, 2024, and subsequent reports, we filed or furnished with the SEC for more information on the specific factors that could cause actual results to differ materially from our expectations.
<unk>, we will discuss certain non-GAAP financial measures and key performance indicators on the call reconciliations to the most directly comparable GAAP financial measures are available in our earnings release issued earlier today and also furnished with the SEC on form 6K and in the appendix of our Investor Relations presentation, all of which are posted on our Investor relations.
Conor Passarella: Great, thank you for that. You talked about some of the investments in machine learning and driving efficiencies with your business. I mean, when you add that with the non-chargeback guarantee products, any way to think about the long-term margin profile of Riskified as you go forward? Thank you.
Speaker #3: not put undue reliance on looking statement . Please to our any forward refer on form 20 F for the year ended December 31st , 2020 .
Website.
I will now turn the call over to readout.
Thanks, Chad and Hello, everyone. We've built solid momentum this year, driven by disciplined execution and focus across the business.
Speaker #3: For and subsequent reports . We file or furnish with the more information SEC for on the factors specific actual could cause results to differ materially from our expectations .
Eido Gal: I think it just varies so much based on the mix of the different products. To us, it's just really focusing on how do we generate gross profit dollars in an increasing amount, and driving that number higher.
And that progress is especially clear in our third quarter results, where we delivered a meaningful turnaround in non-GAAP gross profit improving from a 4% decline in the first half of the year to 5% growth in Q3.
Speaker #3: Additionally , we will discuss certain non-GAAP financial measures and key performance indicators on the call . Reconciliations to the most directly comparable GAAP financial measures are available in our earnings release issued earlier today , and also furnished with the SEC on form six K and in the appendix of our Investor Relations all of presentation , posted on our Investor which are Relations website .
Conor Passarella: Thanks.
Operator: Our next question will be coming from Will Nance of Goldman Sachs. Will, your line is open.
While the first half of the year reflected some temporary softness the actions we took during the period have laid the foundation for a higher gross profit trajectory and expanding profitability in the back half of 'twenty five and beyond looking ahead, we expect an even stronger step up in the fourth quarter supported by improved technical model performance.
Will Nance: Hey, thanks for taking the question. I just wanted to follow up on that last question on the gross margin. It sounded like you've had some recent model improvements that have led to several prior cohorts outperforming. As we think about the trajectory of gross margins into next year, is that something we should be thinking about in terms of kind of year-over-year gross margin improvement? It also sounded like maybe money transmitter was a small offset to that. Just how are you thinking about kind of those puts and takes on the gross margin into 2026? Thank you.
Speaker #3: The call is now turning over to.
Speaker #4: Chet , and hello everyone . We've built solid momentum year , driven by disciplined Thanks , execution and focus business progress is . That especially clear in our third quarter results , where we a meaningful turnaround in non-GAAP gross across the profit , improving from a 4% decline in the first half of the year to 5% growth in Q3 .
In the seasonally stronger traditionally lower risk holiday period.
We've continued to invest heavily in our machine learning capabilities enhancing key features and expanding our autonomously trained model program to reinforce our market leading technology. So far in 'twenty five we have shifted approximately 70% of our models for manual to autonomous training and 100% of the autonomous we trained models.
Speaker #4: While the first half of the year reflected some temporary softness , the actions we took during the period have laid the foundation for a higher gross trajectory and expanding profitability in the back half of 25 and beyond .
Eido Gal: Hey, Will, thanks for the question. You definitely characterized it correctly, right? We saw that the ramping of new categories, specifically the money transfer and remittance in some of the newer geographies, kind of was a headwind at H1 2024 and that some of the modeling improvements that we made during the first half helped improve performance not only there, but also across the rest of the portfolio. We would anticipate that kind of flow through improved performance into Q4 2024 and beyond. At the same time, I do anticipate additional headwinds from newer regions and newer categories as well. I think that dynamic will stay constant.
Now outperformed their previous manual production models, we believe that this automation will allow us to continue scaling the business with high leverage our autonomous program allows for real time retraining when early fraud signals appear freeing up our data scientists to focus on developing new features that further boost performance.
Speaker #4: Looking ahead , we expect an even profit step up in the fourth quarter , supported by improved technical model the performance and seasonally stronger , traditionally risk holiday lower period .
Speaker #4: We’ve continued to invest heavily in our machine learning capabilities, enhancing features and autonomously expanding our model to reinforce our market-leading technology.
On the revenue side, our push into more non discretionary categories continues to deliver I want to highlight the strong momentum in our money transfer and payments category, which grew 100% in the third quarter. We believe we are on track to nearly double the absolute revenue dollars in this category for full year 'twenty five as compared to <unk>.
Speaker #4: So far in 25 , we have shifted approximately 70% of our models from manual to autonomous training and 100% of the autonomously models .
Will Nance: Okay, that's helpful. Maybe just one for Agi. I was wondering if you could elaborate on the one-time expense impact that you mentioned in the script on Q3, and if you could just share a couple more details on what drove that. Thank you.
Speaker #4: trained Now outperform their previous manual production We this believe that allow us to continue scaling the business with high leverage . models . autonomous Our program allows for real time retraining when early fraud signals appear , freeing up our data scientists to focus on developing new features further boost that performance on the revenue side , our push into more non-discretionary categories continues to deliver .
Last year this.
This growth is being driven primarily by new business activity, both our top new logo, one and the largest upsell during the third quarter were in this category and we believe that merchants in this vertical or transaction speed and superior fraud capabilities are paramount are increasingly recognizing the performance and ROI that risk if I'd offer.
Chett Mandel: Yeah, sure. Thank you for the question, Will. With any given quarter, there's always ins and outs. Specifically for this quarter, we saw some positive impacts related to some payroll adjustments, more around vacation accrual and reserve duties, specifically for our Israeli office, and maybe some movements of some events. As we kind of shared in our prepared remarks, I do expect a range of around $39 million and change, or $39 million for Q4, and that's a better representation of the run rates of the OpEx.
Speaker #4: I want to highlight the strong momentum in our money transfer and payments category , which grew 100% in the third quarter . We believe we are on track to nearly double the absolute revenue dollars in this category for full year 25 , as compared to last year .
We also returned to meaningful adjusted EBITDA margin expansion in the third quarter, improving by near by roughly 560 basis points year over year and it's arguable cover we expect a further step up in our Q4 margin approximating a 15% adjusted EBITDA margin, reflecting the operating leverage of our model the scalability.
Speaker #4: This growth driven by new business activity . Both are top new logo , one and the largest upsell third quarter during the were in this category , and we believe merchants in this vertical were primarily transaction speed and superior fraud capabilities .
Speaker #4: This growth driven by new business activity . Both are top new logo , one and the largest upsell third quarter during the were in this category , and we believe merchants in this vertical were primarily transaction speed and is being paramount .
We have our platform and the efficiency gains achieved over the past few years.
Will Nance: Okay. Appreciate it. All the color. Thanks, guys.
Operator: Thank you. Our next question will be coming from Ryan Tomasello of KBW. Ryan, your line is open.
<unk> financial performance, we executed well against our 25 product roadmap. It's now been several quarters since we launched adaptive checkout. The advanced configuration of our chargeback guarantee engine adaptive checkout uses AI to raise conversion rates by adding friction only when it is truly needed in removing and where exemptions apply there.
Speaker #4: Our increasingly recognizing the performance and ROI that Riskified offers . We also returned to that meaningful adjusted EBITDA margin expansion in the third quarter , improving by by roughly year 560 basis points over year .
[Analyst] (KBW): Hi, this is Juan on for Ryan, and thanks for taking the questions. How do you envision the potential for growing stablecoin adoption and stablecoin payment rails to alter the fraud management landscape? Is the company currently exploring any opportunities to capitalize on this?
Speaker #4: And as I will cover , we expect a further step up in our Q4 margin approximating a 15% adjusted EBITDA margin , reflecting the operating of our leverage model .
Results have been impressive one use ticketing merchant increased total conversion by 5% by using selective onetime password friction to recover declined orders in EMEA and electronics merchant lifted conversion by 26% by removing unnecessary three D secure friction through risk if I its exemption in pre.
Eido Gal: Sure. I think as we think about stablecoins, crypto, and agentic kind of more broadly, we see that these are introducing additional complexity to our merchants, and added requirements about what they need to be able to support. We've found historically that whenever this added complexity is kind of presented to the merchant, it both introduces new vectors of fraud, and it makes it more challenging for them to solve it on a standalone basis, requiring an outside partner. Kind of year to date, what we've been seeing is that these have been net positive drivers for the business, and we anticipate that to continue.
Speaker #4: The scalability of our platform and the efficiency gains achieved over the past few years, beyond financial performance, we executed well against our 25 product roadmap.
Speaker #4: It's now been several quarters since we adaptive launched an advanced checkout . The configuration of our chargeback guarantee engine , adaptive checkout uses AI raise conversion to rates by adding friction only when it's truly needed , removing and adware exemptions apply .
The authorization analysis and as adoption grows adaptive checkout continues to raise the bar for intelligent risk management and positions us to capture more share in the global ecommerce market.
We're also very focused on the rise of agenda Commerce. Our research shows that many shoppers already use AI somewhere in their shopping journey, but very few complete purchases through large language models today and AI agents begin making purchases on behalf of consumers critical data that fraud teams depend on can disappear.
Speaker #4: The results have been impressive. One U.S. ticketing merchant increased total conversion by 5% by using selective one-time recovery friction for password-declined orders in EMEA, and the merchant lifted conversion in electronics by 26% by removing unnecessary 3D Secure friction through Riskified exemption and preauthorization analysis. As adoption grows, these improvements are becoming more evident.
[Analyst] (KBW): Right. Just to double-click on that, you called on the prepared remarks and increased emphasis on those agentic commerce solutions. Has this driven any kind of notable uptick in prospect inbounds or new business discussions in general?
Producing many of the risks merchants have worked hard to eliminate the.
And the results can be higher charge backs and disputes and policy abuse, we're positioning risk effect to help merchants navigate this shift safely through a combination of strategic partnerships innovative technology and enhanced infrastructure, our collaborations bring together fraud prevention expertise with secure agenda protocols to deliver.
Speaker #4: Adaptive checkout continues to raise the bar for intelligent risk management and positions us to capture share in the global e-commerce market . Agentic focused also very of commerce .
Eido Gal: Yeah. I mean, when you think about the complexity that merchants face when they try to solve this, right? A merchant suddenly gets in a transaction for five big screen TVs. They have no idea where this transaction came from. They have limited data. We're really helping them both identify that this came from kind of an agentic shopper on behalf of someone else.
Speaker #4: Our research We're on the rise shows that many shoppers already use AI their shopping somewhere in journey , but very few complete purchases through large language models .
Accurate decisions and better business outcomes and this new ecommerce environment as.
Speaker #4: Today . agents begin making purchases on of behalf And as consumers , data that fraud can depend on disappear . Reintroducing many of the risks merchants have worked hard to teams eliminate .
Speaker #4: Today . agents begin making purchases on of behalf And as consumers , data that fraud can depend on disappear . Reintroducing many of the risks merchants have worked hard to teams eliminate more The result can be higher chargebacks , disputes and policy abuse .
As we head towards the end of the year, our third quarter has provided momentum as we approach the peak year end holiday season, our internal data continues to show resilient consumer spending with October tracking in line with our expectations. We are seeing solid performance in our three largest categories ticketing travel fashion and luxury and money.
Eido Gal: They need to be able to understand, hey, is this kind of a hallucinating LLM that's ordering five big screen TVs, or is this a reshipper, or is this a legitimate customer? When you think about the stack that we have, the capabilities we developed for bot detection, which are helpful in identifying these commerce agents, the capabilities we have around our policy suite of products, which are helpful in kind of identifying specific agents, result in more service-related chargebacks or what type of policies you want to enable to them. Obviously, just the risk engine with kind of via our network is able to much better differentiate in these limited data points. Is this actually a good transaction, or is this a stolen credit card being used here?
Speaker #4: We're positioning risk to help merchants navigate this shift safely through a combination of strategic partnerships, innovative technology, and enhanced infrastructure. Our collaborations bring together fraud prevention expertise with secure protocols to deliver agentic decisions and better, accurate business outcomes.
Transfer and payments, which collectively represent more than two thirds of our GMB, assuming steady activity through the year and we're consciously optimistic for another healthy holiday season combined with the solid first nine months of performance, we have the confidence to raise the bottom end of our revenue guidance for the second consecutive quarter.
Speaker #4: And this new e-commerce environment , as we head towards the end of the our third quarter has provided momentum as we year , approach the peak year end holiday season .
In conclusion, our global platform continues to lead in the e-commerce fraud and abuse prevention market. Our team remains focused on executing on the large new business opportunities ahead, and we are on track to close out the year strong and to enter 2006 with solid momentum a healthy new business pipeline and confidence in our growth.
Speaker #4: Our internal data continues to show resilient consumer spending with October line with tracking in our expectations . We are solid performance in our categories tickets and travel , and fashion luxury and money transfer seeing and payments , which collectively more than two thirds of our GMV .
Speaker #4: three largest steady activity Assuming the year end , we're cautiously optimistic for another healthy holiday season . Combined with a solid first nine months of performance .
Speaker #4: three largest steady activity Assuming the year end , we're cautiously optimistic for another healthy holiday season represent confidence to raise the bottom end of our revenue guidance for the second consecutive quarter .
Eido Gal: I would say that in reality, we're only seeing a handful of transactions right now, but merchants are definitely thinking about how to adapt to this new paradigm. It's helping from a conversation perspective.
Trajectory I will now turn it over to <unk>.
Thank you and the team and everyone for joining today's call.
<unk> for the third quarter was 37 8 billion and $108 4 billion for the first nine months, reflecting a 9% and 7% increase year over year, respectively.
[Analyst] (KBW): Great, thank you.
Operator: Our next question will be coming from Clark Wright of DA Davidson. Your line is open, Clark.
Speaker #4: In conclusion , our global platform continues to lead in the e-commerce fraud and Abuse Prevention Our team remains market . focused on executing on the large new business opportunities ahead , and we are on track to close out the year strong and to enter 26 with solid momentum .
We achieved record third quarter revenue of $81 9 million up 4% year over year.
Clark Wright: Thank you. Just wanted to maybe touch on the notable sequential increase in GMV this quarter versus historical trends for what we typically see in Q3. What were the key factors that drove this? Does the money transfer and payments growth reduce your typical seasonality trends that we've seen?
Revenue for the first nine months of $245 3 million increased 5% year over year.
Speaker #4: A new business healthy pipeline and our growth confidence in trajectory . I will now turn it Hagai over to .
Our Gms and revenue growth during this quarter was primarily driven by continuous new merchant and upsell activity.
Speaker #5: Ido Thank team you . joining today's call . and GMV for the third quarter Our was 37.8 billion and 108.4 billion for the first nine months , reflecting a 9% and 7% increase over year , respectively year We .
Our largest category tickets on travel grew 6% during the third quarter, driven primarily by strong new business wins and upsell activity.
Chett Mandel: Yeah, thank you for the question. When I think about our model, the GMV is kind of like an output of some of the revenue inputs. Having said that, we've shared before that we do expect there to be some spread between the GMV growth and the revenue growth. I think heading into the second half of the year, this is more evident and actually more aligned with what we've seen historically. It's great to see the GMV growth getting back to close to double digits. Yeah, overall, excited about the performance.
Offset by softness in our tickets and live events a protocol.
This is primarily just a tougher second half comparable periods versus 2024th record level of activity.
Speaker #5: record third quarter revenue of 81.9 million , up 4% year over year . Revenue for the first nine months 245.3 million , increased 5% year over year GMV and .
So strong growth in Q3 with anticipated momentum heading into the end of the year to support new business wins and stronger same store sales growth.
Speaker #5: growth revenue this quarter was primarily Our of driven by continued new during and merchant upsell activity largest . Our and category , travel , grew 6% third quarter , driven primarily by strong new business wins and upsell activity , offset by softness in tickets and live events .
The overall net effect is expected to result in similar year over year growth rates in the fourth quarter.
Our question on luxury category grew 13% during the third quarter, which was supported by continued momentum in new business activity and improvements in some of our largest merchants in this category.
Clark Wright: Got it. Maybe Agi, this would be a better one for you, but there's been disciplined expense management, and maybe this builds off some of the prior questions that have been asked around operating leverage. Would love to kind of understand how you're able to continue to invest while continuing to see operating expenses relatively flat and the fact that you're guiding to effectively flatten Q4. I guess that builds also off of Eido's comment around being able to invest in capacity. I guess how are you measuring your expense guardrails while also kind of managing to this margin expansion story that you're going to continue to see in 2026?
Speaker #5: our A vertical this is primarily due to tougher second half comparable periods versus 20/24 record level of activity . Travel saw strong growth in Q3 , with anticipated momentum heading into the end of the year due to business wins and stronger tickets store sales growth .
Partially offset by continued same store sales pressure, particularly within our high end fashion some vertical.
We're confident that this category will continue to grow for the year supported by a strong pipeline of new business opportunities that are expected to close in the fourth quarter and some anticipated microstat in this in a high end fashion for Franco.
Speaker #5: The is overall net effect expected to result in similar year over year growth rates in the fourth quarter . Our fashion and luxury both new category grew 13% during the third quarter , which was supported by continued business momentum in new activity and our largest merchants .
Our money transfer on payments category achieved approximately 100% year over year growth in the third quarter. This growth was driven by the new business activity, which continues to be a key area of expansion.
Chett Mandel: Yeah, I'm happy that we're able to continue to perform. As we kind of shared in the beginning of the year, we're focused on our expense and making sure that we kind of stay within the total annual guide. Besides that, there's always ins and outs between the quarters. This quarter just appeared to be kind of relatively low compared to other quarters, but Q4 is expected to be higher. Within that, within every single quarter, there's always ins and outs. We continue to invest in areas that are related to gross generating areas, and continue to optimize areas that are more like the operational part of the business. That has been the focus of us. Earlier on in the year, we kind of shared some of the offshoring activities that we've been kind of taking over, and we've been executing really well there as well.
As anticipated we saw year over year declines in our home category, which contracted by approximately 70%.
Speaker #5: In this improvements in some of offset by continued same store sales pressure , particularly within our high end fashion vertical . We're this category we will continue to grow for confident that the supported by a strong new business pipeline of opportunities that are expected to close in the fourth quarter and anticipated macro in the high end fashion .
I am encouraged that in the fourth quarter, we expect to revert to <unk> over year growth in this category as we lap the dynamic that impacted the first nine months of 2025.
In the United States revenue declined 12% year over year, primarily as a result of the contraction in our home category.
Speaker #5: steadiness . Our money and payments some category transfer achieved 100% year over year year , growth approximately third quarter . in the This growth was driven by the new business activity , which continues to a be key area of expansion as anticipated , we saw year over year declines in our home category , which contracted by approximately 70% .
Encouragingly, we continue to grow across all of our auto regions.
The third quarter APAC, approximately 55% year over year, while our Americas, which represents Canada and Latin America grew approximately 18% year over year, primarily driven by momentum in new business and upsell activity with particular strength in the travel to vertical.
Speaker #5: I'm encouraged that in the fourth quarter , we to expect to year revert over year growth in this category as we lapped the dynamic that impacted the first nine months of 2025 .
<unk> grew approximately 19% year over year with the strongest performance concentrated in our fashion and luxury taken some travel and money transfer and payments vertical supported both new business and upsell momentum overall, we believe that our continued international growth reflect ongoing progress in capturing market share.
Chett Mandel: All in all, there's a lot of ingoing in a single quarter, but happy that we're able to show this focus on the numbers as well.
Speaker #5: In the United States , revenue 12% year over declined primarily as year , a result of the contraction in our home category . Encouragingly , we continue to grow across all of our other regions During the third quarter , APAC grew .
Eido Gal: Yeah, maybe just to add a bit of my perspective there. We recently started going through or are kind of mid-process of the '26 product planning, and we've actually increased our development capacity by almost 50%. That's a combination of being able to leverage better cost locations, but also reducing some KTLO work in other areas. We are consistently thinking constraint breeds creativity. How can we do more with less? Really proud of what the team has been able to achieve in that area.
non-GAAP gross profit of $41 $5 million increased 5% year over year in the third quarter.
Speaker #5: 55% year over year , while other Americas , which represents Canada and Latin America , grew approximately year , 18% year over primarily driven by momentum in new business and upsell activity with particular strength in the travel to vertical , EMEA grew approximately 19% year over year , with the strongest performance in our concentrated fashion and luxury tickets and travel and money transfer and payments verticals , supported by both new business and upsell momentum .
This translates to a non-GAAP gross profit margin of approximately 51% an improvement of 1% from the same period in the prior year.
Our third quarter 2025 margin represented a step up from 50% in the first half of the year.
The year over year growth was driven by meaningful improvements in our core machine learning models, along with the contributions from new product revenue.
Clark Wright: Thank you. Appreciate that.
This improvement was offset by the ramping of margins in your categories in particular with the money transfer payments category, which has experienced very strong growth in 2025.
Operator: Thank you. Our next question will be coming from Timothy Chiodo of UBS. Timothy, your line is open.
Speaker #5: Overall , we believe that our continued international growth reflects ongoing progress in capturing share . Our non-GAAP market gross profit of $41.5 million increased 5% year over year in the third quarter .
Will Nance: Great. Thank you. A really helpful blog post that you put out a few weeks ago around agentic. I just wanted to talk. In there, you mentioned almost two paths for the payment to be received by the merchant. One is the payment token is received. The other is the payment comes through one of the wallet providers. You specifically mentioned two pass-through wallets in Apple Pay and Google Pay. Two parts. I was hoping, number one, you could just recap for everyone the varying kind of who takes on the liability and why in those two different paths. You called this out a little bit in the blog.
Overall I'm encouraged that four of our last five cohorts expect an average of 5% year over year improvements in our <unk> debating demonstrating the success in our machine learning platform.
Speaker #5: This translates to a non-GAAP gross profit margin of approximately 51%, an increase of 1% from the same period in the prior year.
As a reminder, I encourage you to continue analyzing our gross margin on an annual basis, given individual quarters can vary due to various factors, including the ramping of new merchants and the risk profile transactions approved.
Speaker #5: Our third 2025 margin quarter represented a step 50% in the first half of the year . The year over year was growth driven by meaningful improvements in our core machine learning models , along with the new product revenue .
Speaker #5: This improvement was offset by the ramping merchants in of newer categories , in particular with the money in up from transfer payments category , which has experienced very strong growth 2025 .
I am encouraged about the sequential progress we have made throughout the year and continue to target an annual non-GAAP gross profit margin target of 52% moving.
Will Nance: Maybe more importantly, the second one, just from an industry perspective and what you're seeing, do you expect the wallet share of overall checkout within that channel to be roughly the same, higher, or lower than it is on the, call it, the traditional website checkout? Thanks a lot.
Moving to expenses, we continue to manage the business in a focused and disciplined manner.
Speaker #5: Overall , I'm encouraged that four of our last five cohorts expect an contribution from average in 5% year over year improvement in our chargeback to Billings , demonstrating the machine in our learning platform success .
Total non-GAAP operating expenses were $36 million for the third quarter down from $38 7 million in the prior year.
Speaker #5: As a reminder , I encourage you to continue analyzing our gross on an margin annual basis . Given individual quarters can vary due to various factors , including the ramping of new merchants and the risk profiles transactions approved of .
Largely just a several onetime positive impact in the period.
Our non-GAAP operating expenses as a percentage of revenue for the third quarter declined year over year from 49% to 44%, reflecting ongoing leverage in the business model.
Eido Gal: Sure. Happy to take that. I think just simply with the payment token, we think the liability more often would not sit with the merchant, whereas if it goes through the digital wallet, more often than not, it would sit with the issuing bank. Sorry, Tim, what was the second part of that question?
Speaker #5: I'm about the encouraged sequential progress we have made throughout year , continue the and to target an annual non-GAAP gross profit margin of 52% , moving to expenses , we continue to manage the business in a and disciplined focused manner .
We anticipate having quarterly non-GAAP operating expenses of approximately $39 million in fourth quarter.
We achieved positive adjusted EBITDA of $5 6 million in the third quarter a record for the third quarter.
Clark Wright: Sure. Mix. I'm just going to make up a fake number, but let's say in all of e-commerce, let's just say that all of digital wallets made up 20% of checkout. Would you expect that through the agentic channel, through sort of like a ChatGPT user interface, the digital wallet share of checkout would be higher than that 20%, about that same 20% that it is on regular websites, or maybe lower than that 20%? Then why would it be higher, lower, or the same?
Speaker #5: Total non-GAAP operating expenses were $36 million for the third quarter , down from 38.7 million in the prior year , largely due to several one time positive impacts in the period .
This represented approximately 560 basis points in margin expansion or a margin of approximately 7%.
Based on our implied guidance for the fourth quarter, which I will touch on shortly we expect a large step up in margin on a sequential basis and our fourth quarter adjusted EBITDA margins to approximate 15%.
Speaker #5: non-GAAP Our operating expenses percentage as a revenue for the third quarter declined year year over from 49% to 44% , reflecting of ongoing leverage in the business model .
Moving to the balance sheet.
Speaker #5: We anticipate having quarterly non-GAAP operating expenses of approximately 39 million in the fourth quarter . We achieved positive adjusted EBITDA of 5.6 million in record for the third quarter .
We ended the third quarter with $325 million of cash deposits and investments and we continue to carry zero debt.
Eido Gal: I think that's a really interesting question. I would need to think about it much deeper. The reality is that to date, there's only been kind of a handful of transactions. Obviously, there's potential for it to grow further, but based on that, it would be more of a guess than a data-based answer, which is what I would prefer to provide to you.
We maintain a healthy cash flow model, achieving quarterly free cash flow of $13 4 million in the third quarter.
Speaker #5: This represented approximately 560 basis points in margin expansion , or a margin of third quarter , approximately 7% . our implied the fourth which I will touch on shortly , we expect a large step a margin up in on a sequential basis , and our fourth quarter adjusted EBITDA margin to approximate 15% .
For the first nine months, we achieved $22 4 million and free cash flow and based on current conditions. We now expect over $30 million of positive free cash flow for the full year 2025.
Speaker #5: Based on guide for balance sheet , we ended the third quarter with 325 million of cash deposits and investments , and we continue to carry zero debt .
In the third quarter, we repurchased five 2 million shares for a total price of approximately $25 3 million.
Clark Wright: Okay. Thank you.
Operator: Our next question will be coming from Reggie Smith of JPMorgan. Your line is open, Reggie.
For the first nine months of the year, we repurchased 14 2 million shares for a total price of approximately $69 2 million.
Reggie Smith: Hey, good morning. Thanks for taking the question. Nice to see the acceleration in GMV. Kind of a follow-up on the agentic theme in the previous question. I'd love to get your view on how you think about both the opportunities and the threats as it relates to agentic commerce on your business. By that, I mean paint a picture for me where agentic increases the demand for your services and maybe another where it could possibly reduce it. I'm just trying to understand the bear and the bull case around agentic and how it relates to Riskified and your services. I have one follow-up.
Speaker #5: maintain a healthy cash flow model , achieving quarterly free cash We of flows 13.4 million in the third quarter . For the first nine months , we achieved 22.4 million in free cash flow , and based on current conditions , we now expect over 30 million of positive free cash flow for the full of 2025 .
As a result of this buyback activity and our ongoing commitment to prudent dilution management, we continue to expect shares outstanding to decline by.
<unk>, 5% year over year.
We believe that our strong balance sheet and liquidity position are strategic assets that provide us with the flexibility to navigate a range of operating environments.
Speaker #5: year In the third quarter , we repurchased for a 5.2 million shares total price of approximately 25.3 million . For the first year , nine months of the we repurchased 14.2 million shares for price a total of approximately 69.2 million .
Intend to remain disciplined and thoughtful in how we deploy capital to create long term shareholder value.
Now turning to our outlook as.
As a result of the solid first nine months of the year and cautious optimism around the upcoming holiday season, while improving the bottom end of our revenue range by the second consecutive quarter to now anticipates revenue of between $338 million and $346 million or $342 million. So the midpoint.
Speaker #5: As a this result of buyback activity and our ongoing commitment to prudent dilution management , we continue to expect shares outstanding to by at least 5% year over year .
Eido Gal: Sure. Happy to take that. The positive scenario, which is kind of similar to what I outlined before, is that merchants now need to deal with increasing complexity with agentic transactions. They need to understand that this is an agentic shopper. That's difficult. We can help them with that. They need to understand not only is this an agentic shopper, is it a legitimate one or a fraudulent one? We can help them with that. After they even understood that it's a legitimate one, they need to understand if it fits the various policies that they have, and they probably want to create some unique policies for agentic shopping. We can help them with that. I think in this scenario, it's a net positive for us because there's a lot of complexity, and we're good at solving complexity for our merchants.
Speaker #5: I believe that our strong decline provides us with the assets and flexibility to navigate a range of operating environments. We intend to be disciplined and thoughtful in how we deploy capital to create long-term shareholder value.
As a result of our disciplined and expected margin expansion in the fourth quarter. We now expect our adjusted EBITDA guidance to be between $21 million and $27 million or $24 million. So the midpoint.
I'd like to wrap up by thanking the <unk> team for their hard work and execution this quarter.
Speaker #5: Now , turning to our outlook result of the solid first nine months of as a the year and cautious optimism around the season .
Im encouraged that we meaningfully improved our results versus the first half of the year and I believe that we're well positioned to continue this momentum in the fourth quarter.
Speaker #5: Were holiday end improving the revenue for the second consecutive of our to now range anticipate revenue of quarter between 338 million and 346 million , or the midpoint as a result of our disciplined and expected margin expansion in the fourth quarter , we now expect our adjusted EBITDA guidance to be between 21 million and 27 million , or to the midpoint .
Speaker #5: Were holiday end improving the revenue for the second consecutive of our to now range anticipate revenue of quarter between 338 million and 346 million , or the midpoint as a result of our disciplined and expected margin expansion in the fourth quarter , we now expect our adjusted EBITDA guidance to be between 21 million and 27 million , or bottom team for their hard execution this quarter .
The foundation, we're building positions us for continued growth ahead, which will allow us to deliver ongoing value to our shareholders.
Eido Gal: It's a complex world right now where you have a multitude of standards, right? It's not like there's one standard. There are standards within us. If a single merchant is trying to solve all those problems, it's a huge issue for them. I think to me, that's the most likely outcome and what we're seeing so far merchants preparing for. The more negative potential could be if more transactions move away from enterprise e-commerce. I think you know some of the kind of blue chip names that we work with. If people don't shop on their site anymore and go to various agents and do an end-to-end purchasing within that LLM environment.
Operator, we are ready to take the first question. Please.
Certainly as a reminder to ask a question. Please 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 our Q&A roster.
Speaker #5: I'm encouraged that we meaningfully improved our results 342 million , to versus the year , and work and 24 million , believe that I we're well positioned to continue this first half of the fourth quarter .
And our first question will come from Connor Pasteurella of true Securities. Your line is open Connor.
Great. Good morning team so controversial on for Terry Tillman. Thank you for taking my questions.
Speaker #5: The foundation we're positions us growth continued ahead , building which will allow us to deliver ongoing value to our shareholders for .
The first one I just wanted to ask on the momentum as you exit this year. So just as we kind of think about the mix expectations exiting 'twenty five how are you thinking about the growth outlook as it relates to expanding with existing merchants via upsell and cross sell versus continuing to drive new business strength.
Reggie Smith: That makes sense. I guess two quick follow-ups. One, is there an opportunity to actually provide services to the AI labs? Secondarily, we've gotten a lot of questions the last couple of months about 2026 EBITDA targets. I guess in light of the gross margin momentum, the operating leverage, and the accelerating GMV growth, I'd love to hear how you guys are feeling about those targets and 2026, those EBITDA margin targets that you laid out previously. Feeling better, worse, or maybe a few months ago? Any color you could provide there would be helpful.
Speaker #2: please one on your telephone for your and wait name to be . To withdraw your announced press please star one one again . Please stand by while compile our Q&A we roster press and our first question will come from Connor star one Truist Securities .
Yes, I think we will see a continuous strong.
Performance on both sides, we always kind of have a new cohort of merchants that we're onboarding that we're selling the platform to.
But also really focused on gaining new clients.
Speaker #2: Your line
Speaker #2: open . Connor .
Really consistent with how it's been working in prior years.
Speaker #6: Teams, this is Connor Gray. Good on for Terry for taking my questions.
Okay, Great. That's helpful. And then maybe just you spoken about the money transfer and payments category as being a strong driver of expansion this year.
Speaker #6: to ask morning first one just wanted on the momentum as you exit this year . So just as we kind of think about the Tillman .
And <unk> activity has been really a key driver there just moving into 2026 are there any other emerging verticals that could be important for us to watch next year as well.
Eido Gal: Sure. Happy to take that. I think obviously the LLM providers can, of course, be Riskified clients. Like we help others, we can help them manage the fraud. That's a clear and easy number one. With regards to number two, we're happy that we're targeting 50% margins in Q4. I think we're really proud of the progress that we've made over the past two to three years since we set out this initial guidance for next year, and we continue to plan for double-digit growth next year. At the same time, I do think that some of the merchant events that happened in 2024 does mean that kind of the 15% margin would be pushed out by a few quarters, but kind of similar to what's already reflected in sell-side expectations.
Speaker #6: ?
Maybe that's starting to gain momentum with some of the new merchants and how do you think about prioritizing our resources to go after certain verticals. Thank you.
Speaker #4: see a continuous strong performance on both sides . We always kind of have a new cohort of merchants that we're onboarding , that we're selling the platform to , but also really focused
Sure. So when we think about kind of expanding our market, we really do make a concentrated effort to go after specific verticals that we think are large in size.
And have our product is a good fit for them as we've continued to expand the product whether it's through policy account secures the BMS the different permutations of the chargeback product, we think that there's more value to different categories. We also tend to have a geographic view, where we kind of say.
Speaker #6: great . That's that's helpful . And then maybe just you spoken about the money transfer and payments categories being a strong driver of this Thank you year and new version Yeah , activity has been really driver there .
Speaker #6: Just a key moving into 2026 . Are there any expansion other emerging verticals that could be important for us to next watch year ?
Speaker #6: As you know , you maybe have started to gain momentum with some of the new merchants . And how do you think about prioritizing resources to go after certain verticals ?
What other regions are there, where we can kind of penetrate further.
Speaker #6: Thank you
That also leads us to think about the categories in those regions.
Speaker #4: Sure . So when we about kind of expanding our market , we really do make a
And probably also some other thoughts in internal deliberations, we have are more distribution.
Reggie Smith: Perfect. Thank you so much.
What is the value of growing slightly more mid market and the enterprise focus we have now how do we get better distribution via partnerships.
Speaker #4: and have , you know , product our is a for them . good fit As we've to continued expand the product , you know , whether large policy , account secure or the different cbms , permutations of the chargeback product , we think that there's more value different categories .
Operator: Thank you. I'm showing no further questions at this time. I would now like to turn the call back to Eido for closing remarks.
So as we kind of go through the 26 planning cycle. Those are all thoughts that we have.
Eido Gal: Thank you, everyone, for joining our call. We look forward to updating you on the progress in a few months. Thanks.
Kind of going through.
Speaker #4: We also tend to to geographic view where kind of say , hey , what other regions we . where we are there can kind of penetrate further , and that also leads think us to about the categories in those regions and probably also some other thoughts and internal deliberations .
Operator: This concludes today's program. Thank you for participating. You may now disconnect.
And our next question.
We will be coming from Chris Kennedy with William Blair, Chris Your line is open.
Yes. Good morning, Thanks for taking the question.
When you think about.
Can you give us an update on the revenue contribution from the non charge back guarantee products.
Speaker #4: We have are more distribution , you know , what is the value of slightly mid-market than the going enterprise have now ? How do we better get distribution via partnerships ?
For 2025.
Yes, so far it's continued to be very strong over 100% and continues to be very pleased with the uptick in the market reception to that.
Speaker #4: So as we kind of go through the 26 planning cycle , more those are all thoughts that we And , have . you know , kind of focus we through going .
It's been instrumental and very helpful.
Gaining longer term.
Contracts with our existing clients at renewal thats been helping us win new business at a higher rate.
Speaker #2: You and our next question will be coming from Chris Kennedy of William Blair. Chris, your line is open.
Speaker #7: Yeah . Good morning . Thanks for taking the question . When you think the can you give us an update on the revenue contribution from the non chargeback guarantee products for
So overall really pleased with being able to develop.
Additions that generate meaningful ROI to our clients.
Great. Thank you for that and then you talked about some of the investments in machine learning and driving efficiencies with your business I mean, when you add that with the non charge back guarantee products any way to think about the long term margin profile of risk of hide as you go forward.
Speaker #4: Yeah . So far it's about continued to be very strong . Over 100% and continue to be very pleased with the uptick in the market that reception to .
Speaker #4: been It's instrumental and
Thank you.
Speaker #4: with our existing clients at renewal . It's been helping us win new at a business higher rate overall , . So really pleased with , you know , being able to develop additions 2025 ?
I think it just varies so much based on the mix of the different products.
To us, it's just really focusing on how do we generate gross profit dollars and an increasing amount and driving that number higher.
Speaker #4: generate meaningful ROI to our clients .
Thanks.
Speaker #7: Thank you for And then you talked about some of the investments in machine learning and driving efficiencies with your business . I mean , when you add that with the non chargeback guarantee Great .
And our next question.
We will be coming from will Nance with Goldman Sachs will your line is open.
Hey, Thanks for taking the question I just wanted to follow up on that last question on the gross margin. It sounded like you've had some recent model improvements that have led to several prior cohorts outperforming.
Think about the trajectory of gross margins into next year is that something we should be thinking about in terms of kind of year over year gross margin improvement and it also sounded like maybe money transmitter was.
Small offset to that so just how are you thinking about kind of those puts and takes on the gross margin.
Into 2026, thank you.
Hey, well. Thanks for the question you definitely characterize that correctly right. We saw that the ramping of new categories, specifically the money transfer and remains in some of the newer geographies.
Kind of was a headwind in <unk> and that some of the modeling improvements that we made during the first half.
<unk> improved performance not only there, but also across the rest of the portfolio.
And we would anticipate that kind of flow through improved performance into Q4 and beyond at the same time I do anticipate additional headwinds from newer regions in newer categories as well.
So I think that dynamic will stay constant.
Okay. That's helpful. And then maybe just one for AG wondering if you could elaborate on the onetime expense impacts that you mentioned in the script on.
<unk>.
If you could just share a couple of more details on what drove that thank you.
Yeah sure. Thank you for the question well so with any given quarter. There is always is announced specifically for this quarter. We saw some positive impact related to some payroll adjustments more around vacation accrual and reserve duty specifically for our Israeli office and.
And maybe some movements of some events.
But as we kind of shared in our prepared remarks, I do expect the range of around $39 million and change our 39 million for Q4.
Okay. That's helpful. And then maybe just one for AG wondering if you could elaborate on the onetime expense impacts that you mentioned in the script on <unk>.
Better representation of the run rates.
<unk>.
Hey, Alex.
If you could just share a couple of more details on what drove that thank you.
Okay I appreciate all the color thanks, guys.
Yes.
Yes sure. Thank you for the question well so with any given quarter. There is always is announced specifically for this quarter. We saw some positive impact related to some payroll adjustments more around vacation accrual and reserve duty specifically for our Israeli office and.
And our next question.
We will be coming from Ryan Thomas L. L. K VW Ryan Your line is open.
Hi, This is Colin on for Ryan Thanks for taking the questions.
Do you envision the potential for growing stable coin adoption and stable Quinn payment rules to alter the fraud management landscape and as the company currently exploring any opportunities to capitalize on this.
And maybe some movements of some events.
But as we kind of shared in our prepared remarks, I do expect the range of around $39 million and change our 39 million for Q4.
I think as we think about stable coins crypto and agenda kind of more broadly.
A better representation of the run rates.
We see that these are introducing additional complexity to our merchants and added requirements about what they need to be able to support.
Hey, Alex.
Okay I appreciate all the color thanks, guys.
Yes.
And our next question.
We will be coming from Ryan Thomas Halo of VW, Ron Your line is open.
And we've found historically that whenever this added complexity is presented to the merchant it's both introduces new vectors of fraud.
Hi, this is calling on for Ryan Thanks for taking the questions.
Do you envision the potential for growing stable coin adoption stable claim payment rails through alternative fraud management landscape and as the company currently exploring any opportunities to capitalize on this.
And it makes it more challenging for them to solve it on a standalone basis, requiring an outside partner. So so kind of year to date, what we've been seeing is that these have been kind of a net positive drivers for the business.
I think as we think about stable coin script, Dow and then genentech kind of more broadly.
We anticipate that to continue.
We see that these are introducing additional complexity to our merchants and added requirements about what they need to be able to support.
Right and just to double click on that.
You called out in the prepared remarks, an increased emphasis on those agents that commerce solutions has driven any kind of a notable uptick in prospect inbounds or new business discussions in general.
And we have found historically that whenever this added complexity is gone and presented to the merchant. It's both introduces new vectors of fraud.
Yes, I mean, when you think about the <unk>.
<unk> merchants face when they try to solve this right.
And it makes it more challenging for them to solve it on a standalone basis, requiring an outside partner. So so kind of year to date, what we've been seeing is that these have been kind of a net positive drivers for the business.
Merchant suddenly Justin.
Transaction for five big screen Tvs, They have no idea, where this transaction came from they have limited data.
And we're really helping them both identified that this came from kind of a.
We anticipate that to continue.
Right and just to double click on that.
Genentech shopper on behalf of someone else.
Called out in the prepared remarks and increased emphasis on those agenda ecommerce solutions has driven any kind of a notable uptick in prospect inbounds or new business discussions in general.
They need to be able to understand hey is this kind of Ah hallucinating LLM, that's ordering five big screen Tvs or is this a reshape or is this a legitimate customer and when you think about the stack that we have.
Yes, I mean, when you think about the complexity that merchants face when they try to solve this right.
The capabilities, we've developed for bot detection, which are helpful. In identifying these commerce agents the capabilities, we have around our policy suite of products, which are helpful. In kind of identifying specific agents result in more service related charge backs or what type of policies you want to enable to them and obviously just the raw.
Merchants suddenly guessing.
Transaction for five big screen Tvs.
They have no idea, where this transaction came from they have limited data and we're really helping them. Both identified that this came from you know kind of.
Agenda shopper on behalf of someone else.
<unk> engine.
With kind of via our network is able to much better differentiate in these limited data points is this actually a good transaction or is this a stolen credit cards being used here.
They need to be able to understand hey is this kind of Ah hallucinating allo M. That's ordering five big screen Tvs or is this a reshape or is this a legitimate customer and when you think about the stack that we have.
I would say that.
In reality, we are only seeing a handful of transactions right now, but merchants are definitely thinking about how to adapt to this new paradigm. So it's helping from a conversation perspective.
The capabilities, we've developed for bot detection, which are helpful. In identifying these commerce agents the capabilities, we have around our policy suite of products, which are helpful. In kind of identifying specific agents result in more service related charge backs or what type of policies you want to enable to them and obviously just.
Great. Thank you.
And our next question.
We will be coming from Clark right of D. A Davidson your line is open Clark.
The risk engine.
Thank you just wanted to maybe touch on the notable sequential increase in <unk> this quarter versus historical trends for what we typically see in <unk> or the key factors that drove this and does the money transfer payments growth reduce your typical seasonality trends that we've seen.
<unk> kind of via our network is able to much better differentiate in these limited data points is this actually a good transaction or is this a stolen credit cards being used here.
I would say that in.
In reality, we are only seeing a handful of transactions right now, but merchants are definitely thinking about how to adapt to this new paradigm. So it's helping from a conversation perspective.
Yes. Thank you for the question.
Why do you think about our model the <unk> kind of like an outlet.
Great. Thank you.
Some of the revenue inputs, having said that we've shared before that we do expect.
And our next question.
We will be coming from Clark right of D. A Davidson your line is open Clark.
B.
The spread between the <unk> growth in the revenue growth on 18 kind of heading into the second half of the year. This is kind of like more evidence and actually more in line with what we've seen historically.
Thank you just wanted to maybe touch on the notable sequential increase in <unk> this quarter versus historical trends for what we typically see in <unk> or the key factors that drove this and does the money transfer payments growth reduce your typical seasonality trends that we've seen.
It's great to see.
The GMB growth kind of like getting back to close to double digits.
Yes, overall expect Im excited about the performance.
Got it and then maybe I'll just give you a better one for you but.
Yes. Thank you for the question.
I wanted to think about our models the <unk> kind of like an output some of the.
Theres been disciplined expense management and maybe this builds off of some of the prior questions have been asked around operating leverage but would love to sort of understand how you are.
Revenue inputs, having said that we've shared before that we do expect it to be.
Able to continue to invest while continuing to see operating expenses relatively flat and the fact that you're guiding to effectively flat in <unk> and then I guess that builds also off of vetoes.
Between the <unk> growth in the revenue growth and I think kind of heading into the second half of the year. This is kind of like more evidence and actually more in line with what we've seen historically.
It's great to see.
The GMB growth kind of like getting back to close to double digits.
Comment around being able to invest in capacity. So I guess how are you measuring.
Yes overall expected excited about the performance.
Your expense Guardrails, while also managing to this margin expansion story that you are going to continue to see in 2026.
Got it and then maybe obviously a better one for you but.
It's been disciplined expense management and maybe this builds off of some of the prior questions have been asked around operating leverage.
Yes, I'm happy that we're able to to continue to perform as we kind of shared at the beginning of the year, we're focused on on our expense and making sure that we.
Because I understand how you are.
We're able to continue to invest while continuing to see operating expenses relatively flat and the fact that you're guiding to effectively flat in <unk> and then I guess that builds also off of iOS.
So within.
The total annual guidance, besides that theres always being sent out between the quarter. So this quarter just appeared to be kind of relatively low compared to other quarters.
Q4 is expected to be higher and within that within every single quarter Theres always been announced we continue to invest in areas that are related to generating areas and continue to optimize areas that have more like the operational part of the business that has been the focus of that.
Comment around being able to invest in capacity. So I guess how are you measuring.
Your expense guard rails, while also managing to this margin expansion story that you are going to continue to see in 2026.
Yes, I'm happy that we're able to to continue to perform as we kind of shared at the beginning of the year, where Pakistan on our expense and making sure that we.
Earlier on in the year, we kind of shared some of the offshoring activities that we've been kind of like taking our.
We've been executing really well there as well so all in all there is a lot of in going into single quarter, but happy that we're able to show these public on the numbers as well.
Kind of style.
Total annual guide besides that Theres always Vincent out between the quarter. So this quarter just appeared to be kind of relatively low compared to other quarters, but.
And maybe just to add.
My perspective, there were.
But Q4 is expected to be higher and within that within every single quarter Theres always been announced we continue to invest in areas that are related to bras generating areas and continue to optimize areas that have more of the operational part of the business that have been the focus of that.
We recently started going through or kind of mid process of the 26 product planning.
And we've actually increased our development capacity by almost 50%.
And that's a combination of kind of being average.
Unable to leverage you know kind of better cost locations, but also reducing kind of them.
Earlier on in the year, we kind of shared some of the offshoring of Dvds.
Hello work in other areas. So we are consistently thinking.
Kind of like taking our.
We've been executing really well there as well so all in all there is a lot of it going into single quarter, but happy that we're able to show. These are public on the numbers as well and maybe just add.
Constraint breeds creativity, how can we do more with less I'm really proud of what the team has been able to achieve in that area.
Thank you I appreciate that.
My perspective, there, we recently started going through or kind of mid process of the 26 product planning.
And our next question will be coming from Timothy Chiodo of UBS Timothy Your line is open.
And we've actually increased our development capacity by almost 50%.
Great. Thank you.
Really helpful blog post that you put out a few weeks ago around <unk> I just wanted to talk in there you mentioned.
And that's a combination of kind of being average to being able to leverage.
Almost two paths for the payment to be received by the merchant. One is the payment token is received the other is the payment comes through one of the wallet providers and you specifically mentioned to pass through wallets and Apple pay and Google pay so two parts I was hoping number one you could just recap for everyone. The very.
But our cost locations, but also reducing kind of some <unk>.
<unk> work in other areas. So we are consistently thinking.
Constraint breeds creativity, how can we do more with less I'm really proud of what the team has been able to achieve in that area.
Thank you I appreciate that.
Who takes on the liability and why in those two different paths.
And our next question will be coming from Timothy Chiodo of UBS Timothy Your line is open.
And in you called this out a little bit in the blood and then maybe more importantly, the second one just from an industry perspective, and what Youre seeing do you expect the wallet share of overall checkout within that channel to be roughly the same higher or lower than it is on the call. It the traditional website checkout.
Great. Thank you.
Really helpful blog post that you put out a few weeks ago around <unk> I just wanted to talk in there you mentioned.
Most to pass for the payment to be received by the merchant. One is the payment token is received the other is the payment comes through one of the wallet providers and you specifically mentioned to pass through wallets and Apple pay.
Thanks, a lot.
Sure happy to take that so I think just simply was the payment token we think the liability more often would not would sit with the merchant, whereas if it goes through the digital wallet more often than not it would sit with the issuing bank.
And Google pay.
Two parts I was hoping number one you could just recap for everyone. The varying who takes on the liability and why in those two different paths.
And you called this out a little bit in the blood and then maybe more importantly, the second one just from an industry perspective, and what Youre seeing do you expect the wallet share of overall checkout within that channel to be roughly the same higher or lower than it is on the call. It the traditional website checkout.
And sorry, what was the second part of that question.
Sure mix, so I'm, just going to make up a big number, but let's say there is.
In all of ecommerce, let's just say that all of digital wallets made up 20% of checkout would you expect that through the agenda channel through sort of like a chat GPT user interface that the digital wallet share of checkout would be higher than that 20 about that same 'twenty than it is on regular websites.
Thanks, a lot.
Sure happy to take that so I think just simply with the payment token we think the liability more often would not would sit with the merchant, whereas if it goes through the digital wallet more often than not it would sit with the issuing bank.
Or maybe lower than that 2000, and then why would that why would it be higher lower or the same.
And sorry, what was the second part of that question.
I think that's a really interesting question and I will need to think about and much deeper the reality is that to date.
Sure the mix so, let's just I'm, just going to make up a big number, but let's say there is.
Theres only been kind of a handful of transactions now obviously there is potential for it to grow further but based on that it would it would be more of a guess than a databased answer which is what I would prefer to productive.
In all of ecommerce, let just say that all of digital wallets made up 20% of checkout would you expect that through the agenda channel through sort of like a chat GPT user interface that the digital wallet share of checkout would be higher than that 20 about that same 'twenty than it is on regular websites.
Okay. Thank you.
And our next question.
We will be coming from Reggie Smith of Jpmorgan. Your line is open rajeev.
Or maybe lower than that 20, and then why would that why would it be higher lower or the same.
Hey, good morning, Thanks for taking the question and nice to see the acceleration in CMV.
I think that's a really interesting question and I will need to think about and much deeper the reality is that to date.
Kind of a follow up on the agenda.
Theres only been kind of a handful of transactions now obviously there is potential for it to grow further but based on that it wouldn't it would be more of a guess than a databased answer which is what I would prefer to productive.
<unk> <unk>.
The previous question.
I'd love to get your your view on on how you think about both the opportunities and the threats.
As it relates to jet to commerce on your business and by that I mean paint a picture for me, where I can't take increases the demand for your services and maybe another where it could possibly reduce it I'm just trying to understand like the.
Okay. Thank you.
And our next question.
We will be coming from Reggie Smith of Jpmorgan. Your line is open rajeev.
<unk>.
Bear and Bull case, right now as it relates to our risk and your services.
Hey, good morning, Thanks for taking the question and nice to see the acceleration in CMV.
I have one follow up.
Sure happy to take that so the the positive scenario, which is kind of similar to what I outlined before is then merchants now need to deal with increasing complexity with the <unk> transaction they need to understand that this is an agenda shopper that's difficult we can help them with that they need to understand not only is this an agenda.
Kind.
A follow up on the agenda.
<unk>.
The previous question.
I'd love to get your your view on how you think about both the opportunities and the threats.
As it relates to just the commerce on your business and by that I mean peanut.
Paint a picture for me, where I can't take increases the demand for your services and maybe another where it could possibly reduce it I'm just trying to understand like the.
Or is it a legitimate one or a fraudulent one we can help them with that.
After the meeting and understood that it's a legitimate one they need to understand if you know.
<unk>.
Bear and Bull case, right now as it relates to our risk and your services.
It fits the various policies that they have and they probably want to create some unique policies for agenda shopping. So we can help them with that so I think in this scenario. It's a net positive for us because there's a lot of complexity and we're good at solving complexity for our merchants and it's a complex world right now where you have a multitude of stack.
I have one follow up.
Sure happy to take that so the the positive scenario, which is kind of similar to what I outlined before is then merchants now need to deal with increasing complexity with agenda transat.
Transactions they need to understand that this is an agenda shopper that's difficult we can help them with that they need to understand not only is this an agenda shopper is a legitimate one or a fraudulent one we can help them with that.
Anders right, it's not like there's one standard their standards with MFS.
And if a single merchant is trying to solve all those problems.
Huge issue for them.
So I think to me that's the most likely outcome and what we're seeing so far merchants preparing for the more negative potential could be if that more transactions move away from enterprise E Commerce.
After the meeting and understood that it's a legitimate one they need to understand if.
It fits the various policies that they have and they probably want to create some unique policies for agenda shopping. So we can help them with that so I think in this scenario. It's a net positive for us because there's a lot of complexity and we're good at solving complexity for our merchants and it's a complex world right now where you have a multitude of staff.
So I think you know some of the kind of Blue chip names that we work with if people don't shop on their site anymore and go to various kind of agents and <unk>.
And purchasing within that environment.
Anders right, it's not like there's one standard their standards.
That makes sense and I guess two quick follow ups. One is there an opportunity to actually provide services to the AI labs.
Yeah.
And if a single merchant is trying to solve all those problems.
Huge issue for them and so I think to me that's the most likely outcome and what we're seeing so.
And then secondarily, we've gotten a lot of questions. The last couple of months about 2026, EBITDA targets and I guess in light of the gross margin momentum in the operating leverage and accelerating GNP growth I'd love to hear.
So far our merchants preparing for the more negative potential could be if that more transactions move away from enterprise E Commerce.
So I think you know some of the kind of Blue chip names that we work with if people don't shop on their site anymore and go to various kind of agents and do an end to end purchasing within that environment.
You guys are feeling about those targets in 2000, <unk> EBITDA margin targets that you've laid out previously you feeling better worse than maybe a few months ago any any color you can provide there would be.
That makes sense and I guess two quick follow ups. One is there an opportunity to actually provide services too.
Helpful.
Sure happy to take that.
So look I think obviously the IOM providers can of course be can be risk if I'd clients like we help others, we can help them manage the fraud.
<unk> labs.
And then secondarily, we've gotten a lot of questions. The last couple of months about 2026, EBITDA targets and I guess in light of the gross margin momentum in the operating leverage in the accelerating GMT growth I'd love to hear.
So that's a clear and easy number one.
With regards to the number two we're happy that we're targeting 50% margins in Q4, and I think we're really proud of the progress that we've made over the past.
You guys are feeling about those targets in 2000, <unk> EBITDA margin targets that you've laid out previously you feeling better worse than maybe a few months ago any any color you could provide there would be.
Two to three years since we set out this initial guidance for next year and we continue.
Plan for double digit growth next year at the same time I do think that some of the merchant events that happened in 24 does mean kind of the 15% margin would be pushed out by a few quarters.
Praful.
Sure happy to take that.
So look I think obviously the ILM providers can of course be can be risk if I'd client and like we help others. We can help them manage the fraud.
But kind of similar to what is already reflected in sell side expectations.
So that's a clear and easy number one.
Regards to number two we're happy that we're targeting 50% margins in Q4, and I think we're really proud of the progress that we've made over the past.
Perfect. Thank you so much.
Thank you I'm showing no further questions at this time I would now like to turn the call back to <unk> for closing remarks.
Thank you everyone for joining our call and we look forward to updating you on the progress in a few months. Thanks.
Two to three years since we set out this initial guidance for next year and we continue.
Plan for double digit growth next year at the same time I do think that some of the merchant events that happened in 24 does mean that kind of the 15% margin would be pushed out by a few quarters.
And this concludes today's program. Thank you for participating you may now disconnect.
But kind of similar to what is already reflected in sell side expectations.
Perfect. Thank you so much.
Thank you.
Im showing no further questions at this time I would now like to turn the call back to <unk> for closing remarks.
Thank you everyone for joining our call and we look forward to updating you on the progress in a few months. Thanks.
And this concludes today's program. Thank you for participating you may now disconnect.
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