Riskified Ltd.RSKDNYSE
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Operator: Good day, and thank you for standing by. Welcome to the Riskified Ltd. Fourth Quarter 2025 Earnings Call. At this time, participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. You will then hear an automated message device and your hand is raised. To withdraw your question, please be advised today's conference is being recorded. I would now like to turn the call over to your speaker today, Chet Mandel, Head of Investor Relations. Please go ahead.
Chet Mandel: Good morning, and thank you for joining us today. My name is Chet Mandel, Riskified Ltd.’s Head of Investor Relations. We released our results and are hosting today's call to discuss Riskified Ltd.’s financial results for the fourth quarter and full year 2025. Our earnings materials, including a replay of today's webcast, will be available on our Investor Relations website at ir.riskified.com. Participating on today's call are Eido Gal, Riskified Ltd.’s Co-Founder and Chief Executive Officer, and Aglika Dotcheva, Riskified Ltd.’s Chief Financial Officer. Certain statements made on the call today will be forward-looking statements related to, without limitation, 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 1995. These forward-looking statements reflect our expectations as of the date of this call, and except as required by law, we undertake no obligation to revise this information as a result of new developments that may occur after the time of this call. These forward-looking statements involve risks, uncertainties, and other factors, some of which are beyond our control, that could cause actual results to differ materially from our expectations. You should not put undue reliance on any forward-looking statement. Please refer to our Annual Report on Form 20-F for the year ended 12/31/2024 and subsequent reports we file or furnish with the SEC for more information on the specific factors that could cause actual results to differ materially from our expectations. Additionally, we will discuss 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 6-K and in the appendix of our investor relations presentation, all of which are posted on our investor relations website. I will now turn the call over to Eido.
Eido Gal: Thanks, Chet, and hello, everyone. Ended the year strong, and this momentum positions us for continued success in 2026. Our fourth quarter non-GAAP gross profit of $57.3 million represented strong year-over-year growth of 16%, and our adjusted EBITDA of $17.7 million translated to a margin of 18%, demonstrating the scale and strength of the business. This quarterly amount alone exceeded our full-year adjusted EBITDA of $17.2 million in 2024. Our fourth quarter revenues of nearly $100 million were a record since inception, and contributed to our first ever quarter of GAAP profitability. These results are the culmination of consistent, high-quality execution across the year. In 2025, both annual dollar retention (ADR) and net dollar retention (NDR) improved year over year. ADR reached approximately 100%, up from 96%, and NDR significantly improved to 105% from 96% in 2024. Our go-to-market team had another successful year with particularly strong results in the fourth quarter of 2025. During the quarter, we won the highest quarterly amount of new business since our IPO, which represented approximately 55% of the total new business won for the year, and was driven by high competitive win rates of over 75%. This year, we won and onboarded several leaders across industries and geographies, including Aerolineas Argentinas, Abounds, Adastria, Ace Hardware, Bangsa, Qasem, David's Bridal, NetEase, Nintendo, Temu, TripAdvisor, and XTool. In addition, merchants such as Iberia Airlines, Meta, Fast Retailing, Viva Aerobus, Vivid Seats, and Zepz were all upsold in 2025, after landing on the platform over the past few years. We believe this demonstrates the power and ROI that our platform delivers to our merchants, once onboarded onto the Riskified Ltd. network. We have processed approximately $750 billion in GMV, and have over 1 billion unique customer interactions in our network since inception. I believe that this data moat has created a structural competitive advantage and that we are well positioned to capture even more of the large opportunity in front of us. That is why we are focusing our efforts on deepening our geographic presence, and growing faster in our newer verticals while identifying additional verticals to penetrate for continued market share gains. From a geographic standpoint, our non-U.S. regions collectively grew 22% year over year, driving faster, more diversified growth. Notably, APAC and LATAM were key regions of outperformance. We plan to expand further in these regions by developing localized products and features to boost pipeline generation. We have scaled our presence in the payments and money transfer category as evidenced by 66% growth in 2024, and 90% growth in 2025. Based on the current pipeline and the annualization of new business won in 2025, end-to-vertical I expect another strong year of activity in 2026. As we capture more data and payment types, leading to more refined models and bespoke features targeted to this vertical, I believe we are positioned to continue penetrating the significant white space. According to recent industry studies, there was a 27% year-over-year increase in fraud losses related to online transactions. The total losses attributed to fraud are expected to more than double in the next five years, well outpacing the expected growth of ecommerce. In addition, over two-thirds of U.S. companies experienced an increase in AI-related fraud attempts in 2025. We are witnessing escalating complexity of fraud schemes, which now target every touchpoint across the customer journey from account creation and stored value credentials all the way through the return, customer service, and dispute portals. Every part of the transaction process is at risk. Progress varies across payment types, including ACH, credit cards, digital wallets, crypto and stablecoins, agentic checkout, and other methods. We need to be prepared to support and manage risk across the full payment landscape. We are leveraging the capabilities of our AI ecosystem that has been continuously advanced for over a decade. This increase in fraud has further elevated Riskified Ltd.’s role, solidifying our positioning as a key partner for our merchants. I believe that the combination of a more pronounced and complicated fraud landscape, enhanced platform features and functionality, and a deliberate effort to expand the top of our front deal funnel has contributed to an increase in our new business lead generation of approximately 50% year over year. Furthermore, in line with our expectations at the beginning of the year, I am pleased that we generated nearly $10 million in aggregate annual revenues from Policy Protect, AccountSecure, Dispute Resolve in 2025. And we plan to continue to grow our revenues outside of our core fraud services in 2026. As we have expanded our offering, the benefits of having a platform are becoming even more pronounced. First, we saw an approximately 50% increase in the number of merchants who are now using more than one product during the year. This multiproduct approach has made us stickier. Second, each transaction processed across our suite of products strengthens our flywheel by expanding the breadth and depth of our datasets. This integrated dataset compounds across the network, enhancing our identity engine, and enabling us to develop dynamic components that can be utilized across the platform. Third, these cross-platform synergies lead to better performance for our merchants. This strong performance with differentiated capabilities allowed us to regularly outperform our competition. And fourth, merchants utilizing more than one product generally leads to higher contribution profit for those merchants. This is part of the reason why in 2026, we are focused on driving gross profit growth versus optimizing primarily for revenue growth. As Aglika will discuss shortly, we expect non-GAAP gross profit growth to accelerate double digits at the midpoint in 2026, demonstrating the continued leverage in our model.
Now on to a very topical theme: artificial intelligence. Allow me to discuss how we are observing AI impacting the market and how Riskified Ltd.’s product platform and internal operations are positioned for success in this environment. There are two main dynamics that we are seeing. First is the increased utilization of agentic commerce through general purpose LLMs, but still primarily only for discovery purposes and not checkout. The second is the rise of merchant-native LLMs, which are advanced agents within a merchant's ecosystem designed to handle the full shopping journey from answering queries to completing the purchase, closing the loop completely within their ecosystem. Both flows present unique transaction risks that our platform aims to solve. In the first agentic flow, when customers do use general purpose LLMs for checkout, we have seen instances where fraudsters utilize AI to throw authentic traffic off script by generating synthetic IDs to bypass LLM verification. Our internal estimates indicate that approximately 30% to 40% of essential model features are lost when consumers transact through general purpose LLMs, increasing risk and escalating the prevalence of fraud like this. To combat this, we strive to help merchants by providing clear visibility into agentic traffic and emerging fraud MOs that they do not otherwise have on their own, proactively adjusting models based on low-signal environments, segmenting order flows, and rapidly developing features to identify emerging agentic fraud MOs. In the second flow, merchants are building out their AI shopping assistants to offer deep personalization and loyalty programs based on customer preferences. Riskified Ltd. provides a critical risk intelligence layer that helps make these transactions both smart and secure. This is especially critical when those interactions have financial implication. An example of this is providing merchant-native AI agents with real-time risk signals while they are in the conversation with customers to offer instant refund or exchange decisions, based on that individual customer's risk and eligibility. Because Riskified Ltd. analyzes the complete purchase history of the end customer across an expansive global network of ecommerce brands, including exact product list SKUs and cross-merchant behaviors, we can provide highly differentiated data that merchants cannot otherwise access on their own. We are able to provide a decision platform for their agents to make important and accurate financial decisions. We are excited about the continuous expansion and enhancement of our agentic commerce offering. Merchants are actively preparing and ready to support agentic commerce across its various forms and flows. Our ability to not only service the dynamic needs of an evolving market, but also to innovate in real time is generating an increase in merchant dialogue. I believe that this strategic engagement is a driver for our future business pipeline and growth. Internally, we continue to adopt AI to automate and scale complex business workflows across departments. This is intended to help drive operational efficiency and productivity, lower costs, improve response times, and enhance service delivery. For our engineering teams, AI has become a force multiplier. Our developers have moved from basic coding assistance to agentic systems that span the entire development life cycle, from discovery and requirements assessment to automated root-cause analysis for production alerts. In addition, by using agentic flows for code review and observability, we are reducing technical debt while increasing release velocity. The impact on productivity is measurable. Between Q2 and 2025 many of our engineers saw more than 2x increase in tickets completed. This enables us to focus on developing new product enhancements and features, and to test, train, and deploy them more efficiently, strengthening our relationships with the hundreds of enterprise merchants in our network. We are seeing similar functional leverage across the other business units. In finance and analytics, we have moved several initiatives into production to automate processes that reduce human error and manual labor to drive merchant inbounds, and the go-to-market team has found success utilizing LLMs in high-end queries. We have also developed agents that automate time-consuming cost-benefit analysis of merchant prospecting, minimizing manual work to drive quicker and more accurate outreach. And while we are getting leverage from general purpose LLMs in our own business, I do not believe that those same LLMs pose a true threat to our decision engine. In our view, LLMs lack calibration in the precise probability intervals required for fraud engines. Additionally, LLMs are optimized for text and image, while traditional AI fraud models like ours are much better at analyzing structured data inputs. The data we collect includes browsing behavior, account activity, checkout data, and post-fulfillment signals for every transaction. Our models learn from over 5 billion historical nonpublic merchant network transactions that have been labeled and tagged. With this data, we create, update, and continuously deploy features to be used by our models that solve the increasing complexities of fraud. To that end, as we announced yesterday, we have recently developed features to address this problem. Within our PolicyProtect Decision Studio, merchants are able to identify and apply business rules to manage the risk of order volume coming from their native AI shopping agent. This control will allow merchants to confidently deploy their branded conversational AI agents without exposing themselves to programmatic refund claim abuse, reseller arbitrage, or promotional abuse. We also expanded our AI agent identity signals, allowing a merchant's AI shopping agent to directly query the Riskified Ltd. identity graph to retrieve associated risk indicators and resolve an identity programmatically. The breadth and sophistication of our platform allows us to train, test, and deploy merchant- or payment-specific models. We also use this platform to retrain models with updated data, new features, and segment calibrations to protect from emerging fraud patterns across our network. All this helps us drive optimized merchant performance which, at the end of the day, is the key driver of merchant satisfaction. Our ability to rapidly adapt in the face of a shifting landscape does more than just protect our merchants. I believe it serves as the foundation for our sustained financial strength and disciplined execution. Over the past two years, we have repurchased shares representing approximately two-thirds of our current enterprise value. Based on our current expectations of improved free cash flow of approximately $40 million in 2026, we anticipate generating a free cash flow yield of approximately 10% relative to our current enterprise value. Looking ahead, I believe that our momentum remains strong. As a reflection of our confidence in Riskified Ltd.’s 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 that we believe will prove beneficial for our shareholders. I want to thank our team again for their focus and strong execution against our 2025 financial plan. Our results reflected the top of our revenue and adjusted EBITDA guidance ranges, and we enter 2026 in a position to accelerate our performance even further. Now over to Aglika.
Aglika Dotcheva: Thank you, Eido, team, and everyone for joining today's call. Unless otherwise noted, this discussion will reference non-GAAP financial measures. We have provided a reconciliation of GAAP to non-GAAP financial measures in our earnings release. We achieved fourth quarter revenue of $99.3 million and full year revenue of $344.6 million, up 65% year over year, respectively. And while we do not plan on reporting our billings going forward, our fourth quarter billings of $103.3 million grew 9% year over year. Our fourth quarter GMV of $46.7 billion was the highest quarter of volume reviewed in our history, and represented growth of 18% as compared to the prior-year period. For the full year of 2025, our GMV grew by 10% to $155.1 billion. During the fourth quarter, revenue growth was partially driven by strong performance in our travel sub-vertical, reflecting continued momentum from the third quarter. These gains were partially offset by softness in our tickets and live events sub-vertical which declined year over year, primarily due to tougher second-half comparable periods versus 2024’s record level of activity and larger live events. Overall, the total tickets and travel vertical was slightly positive in the period. Our money transfer and payments category grew 75% year over year driven by new business wins and upsell activity. Our fashion, cosmetics, and luxury vertical grew 8% year over year. This was primarily driven by new business and upsell activity, and 11% growth during the Black Friday through Cyber Monday period. This growth was partially offset by continued same-store sales pressure in our high-end and sneaker sub-verticals, similar to the first nine months of the year. That being said, for the second quarter in a row, we did see year-over-year improvements in some of our largest merchants in this category. Lastly, I am encouraged that we reverted to year-over-year growth in the home category as we have now fully lapped the dynamic that impacted the first nine months of 2025. For the year, our money transfer and payments, fashion and luxury, and tickets and travel categories were the largest contributors to our annual revenue growth. The combination of these verticals represented nearly 80% of total billings and are each expected to drive continued growth in 2026. For the full year, revenue in the United States declined 6% year over year primarily as a result of the contraction in our home category. Encouragingly, we continue to grow across all of our non-U.S. regions, with accelerated year-over-year growth as compared to 2024. During 2025, APAC grew 53% year over year, while Other Americas, which represents Canada and Latin America, grew approximately 13% year over year, primarily driven by the momentum in new business and upsell activity, with particular strength in the travel sub-vertical. EMEA grew approximately 18% year over year with the strongest performance concentrated in our money transfer and payments, tickets and travel, and fashion and luxury verticals, supported by both new business and upsell momentum. Our revenue derived from merchants headquartered outside of the U.S. was 46% in 2025, up from 39% in 2024. We believe that our continued international growth reflects ongoing progress in capturing global market share. During the fourth quarter, we achieved record quarterly gross profit of $57.3 million, up 16% from the prior year, and $180.3 million for the full year, representing a year-over-year growth of 4%. The full-year gross profit growth of 4% was driven by meaningful improvements in our core machine learning models with great performance in our money transfer and payments category, and within our 2024 cohort which delivered the most pronounced year-over-year improvement across cohorts. Our increased revenue from new products further contributed to our growth. This improvement was partially offset by the ramping of merchants in newer geographies, such as Latin America, and weaker performance in our 2022 cohort, which, while still maturing, has yet to reach the performance levels of the broader portfolio. As a reminder, I encourage you to continue analyzing our gross profit on an annual basis given individual quarters can vary due to the various factors, including the ramping of new merchants and the risk profiles of transactions approved. As it relates to 2026, for the full year, we are targeting non-GAAP gross profit growth of 7% to 12%, with each quarter at or near 10% growth at the midpoint. In addition, we estimate that each quarter in 2026 will approximate the same percentage of the total as they did in 2025. Moving to our operating expenses. We continue to manage the business in a focused and disciplined manner. Total operating expenses were $39.6 million for the fourth quarter, and $153.6 million for the full year, representing a decline of 2% from 2024. Our operating expenses as a percentage of revenue declined from 48% in 2024 to 45% in 2025, reflecting leverage in the business model. We ended 2025 with 617 global employees, a decline of 3% from the prior year. This was achieved through the increased utilization of artificial intelligence tools to maximize output and increase efficiency, and by strategically reducing headcount in areas that were less critical to our product development and growth strategy. Despite this nominal decline, we ended the year with an increase in our development capacity, which we believe is critical to advancing platform innovation, outperforming our competition, and improving product accuracy and customer service to deepen our merchant relationships. In 2026, we anticipate quarterly expenses to approximate $41 million to $42 million per quarter in the first half of the year, and $42 million to $43 million per quarter in the second half. The primary driver of the increase from 2025 relates to FX headwinds, mainly from the appreciation of the Israeli shekel compared to the U.S. dollar. The FX headwind is approximately 400 basis points to our annual adjusted EBITDA margin. On a constant currency basis, we anticipate relatively flat expenses year over year, as we continue to manage the business in a disciplined manner. We achieved adjusted EBITDA of $70.7 million in the fourth quarter, the highest quarterly amount in our history, which translates to an adjusted EBITDA margin of 18%. We believe that this quarter's results demonstrate that the business is positioned for continued adjusted EBITDA margin expansion and can achieve scaled performance like this over time. For the full year, our adjusted EBITDA was $26.7 million, representing a year-over-year increase of over 55%. On a GAAP basis, we achieved net profit of $5.8 million in 2025 as compared with negative $4.1 million in the prior year. I am encouraged about the progress that we have made on achieving profitability on both GAAP and adjusted EBITDA basis. Moving to the balance sheet. We ended the year with approximately $298 million of cash, deposits, and investments, and continue to carry zero debt. In addition, we continue to maintain a healthy cash flow model. In the fourth quarter, we achieved free cash flow of $10.7 million and $33.1 million for the full year. Looking ahead, I am encouraged that we expect our free cash flow to increase at least 20% to be approximately $40 million in 2026. During 2025, we repurchased approximately 22 million shares for a total price of $105.9 million, which contributed to a reduction of 8% in shares outstanding. Since the inception of our buyback program in 2023, we have repurchased approximately 52 million shares for a total price of $259.5 million, which helped contribute to a 17% reduction in shares outstanding over that time period. As Eido mentioned, I am excited to announce that our board of directors has 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 $84 million. 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. We intend to remain disciplined and thoughtful in how we deploy capital to create long-term shareholder value. On the topic of share-based compensation and earnings per share, share-based compensation expense of $51.6 million declined from $57.8 million in the prior year. As a percentage of revenue, this amount decreased approximately 300 basis points from 2024 levels. This was on top of a decline of 700 basis points over the prior two years. Looking ahead to 2026, we expect absolute share-based compensation dollars and as a percent of revenue to continue declining due to the gradual roll-off of expense associated with large grants made in 2021 and 2022 as the awards fully vest throughout 2026. Our total absolute share-based compensation dollars should approximate $40 million for the year. We expect our free cash flow generation to approximate our share-based compensation in the year. Our annual non-GAAP diluted net profit per share of $0.20 represents an increase of 18% in 2025. Now turning to our outlook. As we look forward to 2026, we currently anticipate revenue of between $372 million and $384 million, representing growth of 8% to 11%, with $378 million or 10% at the midpoint. Consistent with past years, we anticipate that our growth will continue to be driven primarily by new business activity, and at the midpoint of our guidance, we are forecasting a similar net dollar retention rate as in 2025. We currently expect all of the quarters in 2026 to reflect a similar percentage of the total revenue as they did in 2025, and growth to accelerate sequentially with each quarter throughout the year. The behavior of the microenvironment, our success in retaining our merchants, and the level of upsell activity relative to new logo wins will impact our net dollar retention rate and ultimately determine where we fall within our revenue range. In addition, we feel confident about the new business activity levels which is supported by a robust pipeline of new opportunities. Historically, the timing of when new merchants go live during the year can be difficult to predict, and may have an impact on our calendar year revenues. As always, we will continue to monitor the performance and health of our merchants, consumer spending and the broader ecommerce landscape, and the impacts on our results. Now let me discuss our adjusted EBITDA outlook. We currently expect adjusted EBITDA to be between $26 million and $34 million, or $30 million at the midpoint, representing a margin of 8%. This is inclusive of an approximate 400 basis points FX headwind to our adjusted EBITDA margin. Overall, I am encouraged by our AI advantage and market position, and I am confident that we can continue to execute on the elements within our operational control. We remain focused on identifying and executing on the many opportunities for long-term growth and our ability to deliver value to our shareholders. Operator, we are ready to take the first question, please.
Operator: If your question has been answered and you wish to remove yourself from the queue, please press 1-1 again. Our first question comes from Terry Tillman with Truist Securities. Your line is open.
Terry Tillman: Yes. Thanks for taking my questions, and congrats Eido, Aglika, and Chet. The first question, and hopefully you can bear with me because it is so topical around agentic commerce. It is a multiparter. And then I will have a follow-up question. As it relates to agentic, I appreciate kind of how you talked about two types of kind of agentic use cases. I am curious if you can quantify any early GMV from those two different scenarios. And then also, what would the monetization or take rate look like in transactions in that type of flow? And then how many merchants are you actually actively working with that are just trying this out at this point? And then I had a follow-up.
Eido Gal: Sure. Hey, Terry. So I will take that. So maybe taking a step back. Right? We feel we are in a great position to talk to over 50 publicly traded companies and really understand what their agentic commerce strategy is. And the way they are laying it out to us is pretty clearly there are two main flows. The first flow, what we call the merchant-native AI agents, where they continue to own the relationship with the customer. And I think it shows a lot of promise in their mind. Right? And here, you would have an AI agent on their website that can support the entire life cycle from discovery to checkout to returns and customer support interaction, and this entire experience is happening on their website. So if they are a luxury fashion merchant, they can have the right type of images and product descriptions and flows and recommendations; if they are an OTA, they can have the right type of filters that are appropriate for traveling and routing. So I think they are putting a lot of emphasis on that area. What we are seeing there is, because LLMs are really—it is easy to challenge them and get them to move off script and make financial decisions that you did not intend them to make—we are serving really as this guardrail or intelligence layer that they are querying in real time to understand, hey, should I approve this transaction? What type of refund should I provide to this customer? And we are just really leveraging the entire network that we already have, making it even more unique, the value that we are providing in there. So that is kind of the merchant-native AI agent. The second flow is more kind of that general purpose LLM where it can either act as a good referral or do the purchasing on behalf of the consumer. There, to be clear, we are seeing predominantly referrals. Actually seeing agent traffic and purchasing is still extremely low and limited. From a take rate perspective, on the general purpose LLMs, we are seeing higher risk traffic there right now. So again, even if it is very small, whenever you have some of these newer flows, fraud tends to come in because there is more limited data. There is lack of experience. There is less control in those cases. And so I think on average, the take rate there would probably be higher right now, but over time, that might, you know, kind of shift. And to just a more general question around traffic, I think merchants are in a stage where they are trying to prepare and make sure that they are ready for the changes and put their best foot forward. But the traffic is probably not there yet.
Terry Tillman: Very helpful. Thank you so much for that. And I guess just a follow-up, maybe for Aglika. It is helpful when you go through the different segments that you are serving and the growth rates. Money transfer and payments, it was another exceptional year of growth as you are onboarding strategic accounts, and they are growing. I am curious, though, do you see that outsized type growth continuing in your guide for 2026 on money transfer and payments versus the other end markets? Thank you.
Aglika Dotcheva: Hi, Terry. So money transfer and payments was an amazing category for us this year. The growth was really, really strong. Kind of looking into 2026, we have a number of opportunities in the pipeline, and I expect the category to continue to grow, but probably just to normalize in terms of the total amount.
Terry Tillman: Alright. Thank you.
Operator: One moment for our next question. Our next question comes from Ryan John Tomasello with KBW. Your line is open.
Ryan John Tomasello: Everyone, just following up on the agentic commerce topic. Can you talk about how you think about the potential for rising adoption there to either structurally reduce or increase the level of fraud in the system over the long run, notwithstanding kind of early days here? And then just your thoughts on the potential second-order impacts. There is a lot of talk on agentic AI agents utilizing alternative payments rails like stablecoins, you know, just how you view that also impacting, you know, structure of the system here. Thanks.
Eido Gal: Right. Sure. Look. I think what we are seeing is that in order to be good at online commerce, and payments specifically, you need to be doing a lot of things well. And right now, something that is added is agentic, you know, kind of commerce. And you can add crypto and stablecoin. So if historically, you would need to be able to manage credit cards and credit card acceptance, you now need to be able to support ACH, and digital wallets, and crypto and stablecoins, and the agentic checkout. And with agentic, we are talking about a few different flows. And you know, you do not just need to think about the checkout. You also need to think about account creation and account login, and you probably have some stored value in the account that people can transfer in and out. You obviously have the checkout experience, but you also have all these various post-checkout flows—returns, refunds, leveraging the different discount codes and abusing that. You have the entire chargeback process, which is different between credit cards and ACH. It is not called a chargeback there; it is insufficient funds. You have issues around scams that are popping up. So I think we are seeing an increase in complexity. And I would just tie in the agentic checkout into that overall increase in complexity, and we are seeing an overall increase in losses within the merchant ecosystem. And I think that as merchants are trying to solve these different use cases and these various fraud patterns, it just becomes more complicated more quickly. So I think that is kind of a net benefit to Riskified Ltd. as we see this more complex environment increasing in the years ahead. On a bit more targeted and specifically on agentic, like we just mentioned, we do see an increase in fraud right now in agentic channels. Specifically when you have general purpose LLMs. It could be a combination because it is newer, and fraud, you know, tends to shift to that area, there is less control and gating there. So hard to say how that would kind of behave in the quarters and years ahead as it gains more traction. But as of now, it is probably, you know, kind of net incremental to general take rates.
Ryan John Tomasello: Great. Appreciate that. And then you know, just an update if you can provide on the mid-market expansion strategy—how that plays into your 2026 growth and just broader investment plans in that category? Thanks.
Eido Gal: Yeah. I think one of the unique things about Riskified Ltd. targeting the enterprises is that we are able to really customize to a high level the modeling and the performance for each individual merchant. As we have been getting much better at completely automating the life cycle of doing that, I think that is going to present opportunities to kind of continue and refine this model in more of a down-market and referral strategy. That is not something that is expected within our guide for the year. So the more we can accelerate that, that would be upside to current guide.
Operator: One moment for our next question. Our next question comes from Will Nance with Goldman Sachs. Your line is open.
Will Nance: First of all, I hope all the teammates in Israel are home and safe. I wanted to ask also on the agentic kind of topic of the day. I was wondering if you could just speak to status on integrating into some of the agentic protocols. So there are—you know, it is kind of—ICP, it is Stripe, GCP, Google, and any of the other relevant ones. I know a big part of the model is kind of taking all the different signals from the user behavior in those channels. So just maybe wondering if you could speak to that and maybe shed a little bit more light on kind of, like, the value of the data that might come through those protocols in detecting fraud vectors?
Eido Gal: Yeah. Thank you for mentioning the team in Israel. We appreciate that. I think the issue right now that the market is seeing is, to your point, there are a wide number of multiple protocols and, you know, some of them, I think it is clear that they are already outdated. In the months, maybe quarters ahead, there will be new protocols that are probably even more updated than that. So, obviously, internally, we are doing everything we can to support everyone in that ecosystem, whether it is, you know, kind of AI agent-approved, AWS Marketplace, Google, you know, A2A protocol, just general RESTful APIs. We do see ourselves requiring to have that full spectrum to make sure we cover everything. Unfortunately, we do anticipate a somewhat continued fragmented approach here. So, you know, I think it is still early to say if there is anyone who is going to be a clear winner in that area. So there will probably need to be some optimization between the various protocols.
Will Nance: Got it. That makes sense. And maybe just one for Aglika. The FX headwind on the margin is helpful quantifying that. Could you just remind us of the—it sounds like it is the FX exposure in the cost base that we should be thinking about there, shekel and otherwise. I was wondering if you could just update us on major currency weightings as we try to fine-tune the model. Thank you.
Aglika Dotcheva: I will. So, I mean, first of all, I am so excited about the quarter, the guide, kind of the returning back to double-digit growth. And when I think about the FX headwinds, we kind of spelled it out as approximately 400 basis points, or $14 million to adjusted EBITDA. And it is frustrating. I mean, over the years, we focused and we kind of ran on a flat expense base for a period of time, and this FX headwind is really obscuring some of the progress. But the truth is that the underlying business momentum is strong, and we will continue to focus on optimizing. We will continue to focus on growth. And I am just excited about 2026.
Will Nance: Yep. Got it. Appreciate it. Thank you.
Operator: One moment for our next question. Our next question comes from Chris Kennedy with William Blair. Your line is open.
Chris Kennedy: Great. Thanks for all the details and for taking the question. I will just echo Will's comment regarding Israel. The revenues from newer products—Policy Protect, AccountSecure—doubled in 2025. Can you talk about kind of the opportunity for that set of products in 2026?
Eido Gal: Sure. So maybe just to refer back to kind of Ryan’s question where we said, hey, we are seeing an increase in complexity of forms of fraud. We are seeing it across different channels like ACH, digital wallets, crypto stablecoin, the agentic checkout. We are seeing it happen in different parts of the, you know, kind of shopping experience—not just checkout, but also account creation and abusive policy rules and things around dispute management. All this to say, I think it is leading to an environment where there is kind of more demand and more value and just basically more necessity for merchants to leverage the wider product platform. So if I think about the revenue that we anticipate from, you know, kind of PolicyProtect, AccountSecure, Dispute Resolve, some of the non-guaranteed payment flows that we now work with merchants on, you know, anywhere from $15 million to $20 million in 2026, I think, is a good range at this point.
Chris Kennedy: Right. Thanks for that. And then just one for Aglika. If you think about the 2024 cohort, the CTB ratio really improved. Can you give us a little bit more color on what drove that improvement there?
Aglika Dotcheva: Yeah. Of course. I am very excited about some of the improvements in that cohort, and we can see already the result of that in Q4. So there are some merchants there that are specifically about the money transfer and payments category, and we were able to kind of do significantly better there. It is kind of evident in the cohort. I think it is a great base for some of the merchants that are in the pipeline there, and just continuing to kind of optimize incoming merchants as well.
Chris Kennedy: Great. Thanks for taking the questions.
Operator: One moment for our next question. Our next question comes from Timothy Chiodo with UBS. Your line is open.
Timothy Chiodo: Thanks a lot for taking the question. This one, we have brought this up in the past, but I thought it would be a good one just to check in on to see if anything is different in the agentic channel. My guess is it is the same, but the question is really the services that you are providing to merchants, do you consider them and/or see them operating in addition to value-added services coming from the card networks or instead of value-added services coming from the card networks?
Eido Gal: Hey, Tim. So sorry. Could you rephrase—our services in addition to the services from the card networks?
Timothy Chiodo: Sure. So if a merchant is working with Riskified Ltd., are they using Riskified Ltd. in addition to some of the fraud-related value-added services coming from the card networks, or are they using Riskified Ltd. instead of some of the fraud tools that are coming from the card networks?
Eido Gal: Okay. Thank you for clarifying. So, look, I think there is no direct comparable in the stack of the card service providers right now to the spectrum of Riskified Ltd. One of them has more data-related features—so I think Mastercard acquired Ekata; Visa probably has Visa Verify. So those are, you know, kind of what we consider data features. You know, one of them has a more older-generation scoring tool that we do not really view as competitive. No one has a policy product. Definitely, no one has, you know, kind of what we would consider a modern machine learning type solution for fraud prevention. I think the dispute product also—there is nothing comparable. On the account side, there is nothing comparable. If you think about support for ACH, crypto stablecoin, you know, kind of the fiat conversion and account storage, there is nothing comparable. On agentic checkout, there is definitely nothing that we have seen comparable to some of the releases we have recently made. So I think overall, on the Venn diagram, it is pretty distinct and different. There could be different services that they provide, you know, maybe more towards financial institutions—anything around tokenization and rails for 3-D Secure. That is not in our wheelhouse. But hopefully that gives kind of a good mapping of what we do that they do not do.
Timothy Chiodo: Excellent. That is a great answer. Thank you so much. My follow-up is around—you were talking around some of the other forms of payment, whether it be account-to-account, stablecoin—basically, alternative payment methods in general. I know that it is early, but in your experience and with your position in the industry, do you have any reason to believe that card mix within the agentic channel would be any different than the card mix is in traditional ecommerce? So whatever you believe the mix is to be in traditional ecommerce, do you think through the agentic channel that it would be roughly the same—maybe the card mix is a little lower, maybe the card mix is a little higher—and what would be the reason that would lead you to believe the answer to the question?
Eido Gal: Yeah. Thank you. I think that is a great question, and obviously, a lot of debate on that. I think there are specific industries—and probably payments, remittance, you know, kind of brokerages—which would probably see an increase over time on whether it is kind of stablecoins, crypto. Those are also direct ACH connections, just because, you know, exchange fees, FX rates, everything that we know. So I think there probably is the potential for more to migrate. You know, maybe with long-term as things like ACH and others become easier, maybe merchants would have an easier time transferring some customers for, you know, kind of various discounts to that area. But overall, by and large, in most categories, I would not anticipate a shift. I think that overall consumer preference for cards, for rewards, continues to be incredibly high. And I think merchants adapt to that. I do not see that changing based on, kind of, you know, the LLM channel or merchant-native AI agents. I think merchants already have the ability, you know, to capture with extremely low interchange fees, debit cards. I think when you think about things like, you know, reward cards, the customer gets so much value from that. They have a clear preference. I think, you know, large merchants also have the ability to issue their own reward cards and take a meaningful portion of that interchange fee, and usually through agreements with, you know, kind of network or the issuers also take some, you know, kind of potential float or value of, kind of, installments or late payments there. So from an ecosystem perspective, I think, you know, cards are still around to stay in most categories. But there are probably a few specific areas where we will see an increased adoption in alternative payments. And I do not see a clear difference between kind of general purpose LLMs or merchant-native AI that would make them specifically work on, you know, kind of stablecoins or anything else relative to the existing rails.
Timothy Chiodo: Thank you so much. Really do appreciate that.
Operator: One moment for our next question. Our next question comes from Reginald Lawrence Smith with J.P. Morgan. Your line is open.
Reginald Lawrence Smith: Yes. Congrats on the quarter and in achieving GAAP profitability. I guess I have got another question about agentic as well. So, you know, I get it, and I appreciate that there is not a lot of transaction flow coming from, I guess, third-party LLMs today, and so it is early days. Definitely get that. But I am thinking about—someone asked earlier about, you know, like, how pricing may work here. I am curious just, like, how that would roll out in general. And specifically, like, would merchants need separate contracts for agentic? Would it just be rolled into their standard, you know, ecommerce that occurs on their website? And then, you know, kind of beyond that, as you think about, you know, this new surface and these new potential risks, like, does that give you any pause at all, or concern around, like, what early losses could be like and what kind of differentiates you there, given that you will not have, like, a 13-year head start or, you know, backtesting history that you do on the traditional commerce side. So I am just curious, like, how you are thinking about that and, like, practically how this could actually roll out to your customers.
Eido Gal: Sure. Thanks, Reggie. That is a great question. So I think there are two ways this can go. One is with the client that is on various submission plans and not giving everything right now to Riskified Ltd., and usually they would proactively come and say, hey, we are opening up this agentic channel or we are seeing some initial, you know, kind of traffic, or maybe we are even reaching out to them, and then they say, you know, we would want you to manage this, definitely, because, you know, we are not prepared to do that. And we have seen some of the larger clients that we work with approach us proactively with that. We are also in contact, you know, directly with some of our other merchants. And the pricing there, it is just, you know, slightly more flexible pricing to start. I think merchants are very open to having higher price initially, both because they understand there is an increased fraud in this day one and also because the absolute dollar amounts are still so small. It is, you know, less of an issue. And, obviously, we would kind of better negotiate mutually the fees once we understand the actual risk profile and the volume there. So that is one instance. The other one is merchants that, you know, already are providing all their volumes to Riskified Ltd. Yes, it continues to be the case that we would just see this traffic, and, you know, based on the risk profile there, if there is a significant increase, we might need to have a discussion with the merchant what that means from a commercial perspective. As I think about, you know, how do we anticipate some of this fraud, you know, on the one hand, you are right to say that it is still early stage, and a single merchant might only see, you know, a single transaction. But by that same token, you know, we are seeing it across the network of the largest merchants, and we are seeing some of the newer fraud MOs happen. And if you think about our system overall, what is unique and great about our system is that we are able to see fraud MOs in real time in one place, and then adapt features or create new segments and deploy that relatively quickly to other parts in the model. So even though this is something that is, you know, kind of newer, our system really is adept at learning new fraud rings, new fraud MOs, and, you know, pushing updates to the rest of the system based on that. It is what we have done as we have expanded into LATAM, into, you know, kind of other APAC regions. And you can continue to see that. I think Aglika mentioned on, you know, some of the CPB cohorts, some of that continued quick improvements there. In agentic, you know, it behaves the same. Right? There is, like, new fraud trends. You need to stop bleeding there, and then solve it for the rest of the portfolio.
Reginald Lawrence Smith: Got it. Okay. And if I can ask one quick one on kind of FX. I appreciate that you guys are paid in dollars, but I was curious, is there any FX benefit to GMV growth next year? Or is that in U.S. dollars as well? Like, FX is not my strong suit. So anything you could share there would be helpful. Thank you.
Aglika Dotcheva: Alrighty. I will take this one. So, specifically, the way I kind of view the FX, the fluctuations over the years have been something that we were able to absorb. Specifically this year, where I see the FX impact and kind of isolated it in this 400 basis points effect on adjusted EBITDA is around the strengthening of the Israeli currency, the shekel, versus the dollar. And since half of our expenses approximately are in Israel, it is impacting it more materially. So that is the main kind of FX impact that I talked about and it is worth mentioning. Without this, as I mentioned, on a constant currency basis, our expenses would have been flat year over year.
Reginald Lawrence Smith: Got it. So, I guess, just to put a finer point on it, will there be a FX tailwind to revenue from the dollar just being weaker in general? Clearly, you have isolated the expense side, but I am just curious. Like, is there anything we should think about, you know, at the revenue line?
Aglika Dotcheva: The revenue line, it is probably much, much minor. I would imagine it is, if anything, probably from the euro, but that will be probably less than half a percent, and it is something that we have already incorporated in projections as kind of, like, we are basing our projections on what we see today.
Reginald Lawrence Smith: Okay. No. That is fine. Thank you so much.
Operator: One moment for our next question. Our next question comes from Clark Joseph Wright with D.A. Davidson. Your line is open.
Clark Joseph Wright: Thank you. At the beginning—or I believe this actually might have been Eido—you spoke about the fact that your strategy is more oriented going forward on gross profit growth versus revenue growth. What does that mean from a go-to-market perspective and your risk tolerance for specific product categories?
Eido Gal: Yeah. Thanks for that question. Look. We have seen internally—I mean, we have always focused as a management team on gross profit, profit dollars, gross profit dollar growth. But it has probably been more of a focus recently over the past few quarters and will be over the next few quarters, just because we are seeing more demand and more bundling strategies for the, you know, kind of wider product portfolio. And overall, you know, there is a different margin profile within those products. So for us, it is clear we really want to focus on the gross profit dollars and that growth. From a sales perspective, you know, anything from how they target accounts to how they think about—how we think about—commission structures is more oriented in this direction now.
Clark Joseph Wright: Awesome. Appreciate that. And then just on another topic that was already discussed partially earlier, but just wanted to understand the penetration rate on the non-chargeback guarantee products and the assumptions that you have for the 2026 guide. You referenced the $15 million to $20 million, but what does that mean in terms of the overall customer base and their willingness to accept, or to adopt these offerings?
Eido Gal: Yeah. I think we shared on the script that we were seeing good progress of around 50% kind of increase in adoption. We have not really spelled it out by the specific product or what dual product, what single product. We will think about the best way to represent that to make it easier for investors to follow. But right now, we think that, you know, kind of revenue is probably the best proxy for that. And like we mentioned, it went from, you know, I think it was really, you know, low single-digit millions to $10 million, and we think we can continue to grow that to $15 million to $20 million this year.
Clark Joseph Wright: Got it. Thank you.
Operator: And I am not showing any further questions at this time. I would like to turn the call back over to Eido for any further remarks.
Eido Gal: Thank you. Just before I conclude, I want to send my support to our team members in Israel and their families, and thank everyone for their hard work. And with that, just thank you everyone for joining us on today's call. I look forward to continuing to update you on our progress throughout the year.
Operator: Thank you, ladies and gentlemen. This does conclude today's presentation. You may now disconnect, and have a wonderful day.