Riskified Ltd. — FY2021 Form 20-F Summary
Reporting period: Fiscal year ended December 31, 2021, compared principally with FY2020. This is an annual filing, not a standalone Q4 report; it provides no clear standalone Q4 revenue or profit figure. Financial statements use U.S. GAAP and U.S. dollars.
Business context
Riskified provides an eCommerce risk-management platform using machine learning to assess online transactions. Its core Chargeback Guarantee product assumes eligible fraud-related chargeback costs for approved transactions. Revenue is primarily linked to the value of transactions approved and guaranteed, with guarantee-related revenue recognized over the guarantee period.
Key financial metrics
| Metric | FY2021 | FY2020 | Change / context |
|---|---|---|---|
| Revenue | $229.1 million | $169.7 million | Up 35% |
| Gross profit / margin | $123.0 million / 54% | $92.8 million / 55% | Margin down 1 percentage point |
| Operating expenses | $178.4 million | $99.6 million | Up 79% |
| Operating loss | $55.4 million | $6.8 million | Loss widened |
| Net loss | $178.9 million | $11.3 million | Includes significant warrant and tranche-right remeasurement expense |
| Adjusted EBITDA (non-GAAP) | $(19.5) million | $2.5 million | Deteriorated |
| Operating cash flow | $(20.3) million | $(3.1) million | Cash used increased |
| Free cash flow (non-GAAP) | $(33.8) million | $(6.1) million | Cash use increased; includes capital spending |
| GMV reviewed | $89.1 billion | $63.4 billion | Up 40% |
Year-end cash and cash equivalents were $418.1 million, with short-term deposits of $85.1 million; together these totaled $503.3 million. Restricted cash was an additional $7.0 million. The company reported no debt outstanding. Current liabilities were $62.4 million and total liabilities were $71.8 million.
Material changes and unusual items
- Revenue growth was attributed to increased platform adoption and activity from existing merchants, new merchant additions, and higher consumer use of merchants’ digital channels. GMV increased by $25.7 billion.
- Cost of revenue rose 38%, mainly with higher chargeback costs and platform hosting expenses. Gross margin was broadly stable.
- Research and development, sales and marketing, and general and administrative expenses rose 51%, 71%, and 142%, respectively, reflecting hiring, growth investments, and higher share-based compensation.
- Other expense was $122.5 million, primarily reflecting pre-IPO remeasurement losses on convertible preferred share warrant liabilities and tranche rights. This materially amplified the GAAP net loss; adjusted EBITDA excludes these remeasurement effects.
- Share-based compensation expense increased to $33.4 million from $7.9 million.
- The July 2021 IPO generated approximately $392.3 million in net proceeds. Convertible preferred shares converted to ordinary shares upon the IPO.
- Approximately 30% of FY2021 revenue was earned in Q4; the filing does not provide a clear standalone Q4 revenue amount.
Outlook, commentary and risks
- No specific revenue, earnings, or cash-flow guidance is provided. Management expects adjusted gross profit margin to decrease in 2022, citing industry-mix shifts and investment in infrastructure optimization.
- Management expects available cash, cash equivalents, short-term deposits, and anticipated operating cash flows to meet working-capital and capital-expenditure needs for at least 12 months from the filing date, while noting possible future financing needs.
- Management views continued eCommerce adoption and increasing fraud complexity as growth opportunities, but notes potential moderation in online growth as stores reopen, ongoing weakness in travel and ticketing, and supply-chain disruption affecting merchant transaction volumes.
- Key risks include merchant concentration (the top three merchants generated 30% of FY2021 revenue), chargeback-guarantee exposure, model accuracy in a downturn, competition, cybersecurity and privacy regulation, and payment-rule changes including PSD2. European-consumer transactions represented about 15% of billings in FY2021.
- Outstanding indemnification guarantees were $48.4 billion at year-end; this is the aggregate exposure measure, not an estimate of expected losses. Net chargeback expenses were $85.5 million in FY2021, and the company states historically it paid approximately 0.1% of guarantees issued.
- The filing reports no legal proceedings expected to have a significant effect on financial position or profitability. It also identifies regulatory and compliance exposure, including that Riskified had not fully complied with certain Israeli cross-border data-transfer regulations.
- Disclosure controls were assessed as effective at year-end. The filing did not include management’s internal-control effectiveness assessment or an auditor attestation, citing the transition period for newly public companies.
Important facts for investors to verify
- Whether transaction growth and merchant expansion can sustain revenue growth while keeping chargeback costs and gross margins controlled.
- The assumptions behind the $48.4 billion guarantee exposure, related chargeback provisions, and the timing and sensitivity of loss estimates.
- How much of the FY2021 net loss reflects noncash pre-IPO remeasurement and share-based compensation, and the continuing impact of equity awards on dilution and expenses.
- Whether the expected 2022 adjusted gross margin decline, merchant concentration, PSD2 effects, and travel-sector recovery develop as management describes.
- Cash consumption, committed lease and purchase obligations, and the company’s stated liquidity runway; confirm the distinction between unrestricted cash/deposits and restricted cash.
- Progress on internal controls and privacy-law compliance, particularly as the company’s public-company reporting obligations and regulatory exposure evolve.