Business Context and Reporting Period
Company: Riskified Ltd. (NYSE: RSKD)
Filing Type: Form 20-F (Annual Report)
Reporting Period: Fiscal year ended December 31, 2025
Business Overview: Riskified operates an AI-powered ecommerce risk intelligence platform that helps online merchants eliminate fraud and chargebacks. Its core product, the Chargeback Guarantee, assumes the cost of fraud for approved transactions, incentivizing the company to maximize approval rates while minimizing losses. The company is incorporated in Israel with principal executive offices in New York.
Key Financial Metrics
| Metric (in thousands, except per share) | 2025 | 2024 | 2023 |
|---|---|---|---|
| Revenue | $344,638 | $327,516 | $297,610 |
| Gross Profit | $178,072 | $170,939 | $152,519 |
| Gross Margin | 52% | 52% | 51% |
| Net Loss | $(27,565) | $(34,922) | $(59,035) |
| Adjusted EBITDA | $26,724 | $17,194 | $(8,490) |
| Operating Cash Flow | $33,879 | $39,696 | $7,279 |
| Free Cash Flow | $33,069 | $39,059 | $5,924 |
| Cash & Equivalents (Year End) | $162,152 | $371,063 | $440,838 |
| Net Loss Per Share (Basic & Diluted) | $(0.18) | $(0.20) | $(0.33) |
Key Performance Indicators:
- Gross Merchandise Volume (GMV): $155.1 billion (up 10% YoY).
- Chargebacks-to-Billings (CTB) Ratio: 42% (up from 40% in 2024).
- Net Dollar Retention Rate: 105% (up from 96% in 2024).
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 5% to $344.6 million, driven by a 10% increase in GMV. Growth was fueled by new merchants in the "Money Transfer and Payments" and "Fashion and Luxury" verticals, partially offset by attrition in the "Home" vertical.
- Profitability: Net loss narrowed by 21% to $27.6 million. Adjusted EBITDA turned positive and grew 55% to $26.7 million, reflecting improved operational efficiency and expense discipline.
- Cost of Revenue: Increased 6% primarily due to higher net chargeback expenses ($143.2 million) associated with new merchant onboarding and GMV growth. Gross margin remained flat at 52%.
- Operating Expenses: Total operating expenses decreased 3% to $212.1 million. Sales and marketing expenses dropped 4% due to headcount reductions and lower share-based compensation. General and administrative expenses fell 7% for similar reasons.
- Liquidity: Cash and cash equivalents decreased significantly from $371.1 million to $162.2 million, primarily due to $106.2 million in share repurchases and increased investment in short-term securities.
Guidance, Outlook, and Risks
Management Commentary & Outlook:
- Management expects cost reduction efforts to drive decreases in operating expenses as a percentage of revenue in 2026.
- The company anticipates a negative impact on 2026 operating expenses of approximately $14.0 million due to the depreciation of the U.S. Dollar against the New Israeli Shekel (NIS), which has depreciated ~15% against the USD since the start of 2025.
- Share Repurchase Program: As of December 31, 2025, approximately $269 million of a $300 million authorization was utilized. On March 2, 2026, the Board authorized an additional $75 million, leaving approximately $85.1 million available pending regulatory procedures.
Key Risks and Contingencies:
- Geopolitical Instability: Ongoing conflicts in Israel (Hamas, Hezbollah, Iran) pose risks to operations, employee safety, and infrastructure, though facilities have sustained only minor damage to date.
- AI and Regulatory Risks: Evolving regulations regarding AI (EU AI Act, U.S. state laws) and data privacy (GDPR, CCPA, China's PIPL) could increase compliance costs or restrict data usage essential to the business model.
- Merchant Concentration: The top five merchants accounted for approximately 32% of revenue in 2025. Loss of a significant merchant could materially impact results.
- Chargeback Liability: The business model relies on accurately predicting chargebacks. A failure to detect new fraud patterns or a surge in "friendly fraud" could increase chargeback expenses and compress margins.
Investor Verification Checklist
- Chargeback Ratio Trend: Verify if the increase in the CTB ratio to 42% is a temporary anomaly due to new merchant onboarding or a structural shift in fraud patterns.
- Currency Hedging Effectiveness: Assess the company's ability to offset the projected $14 million NIS headwind in 2026 through hedging or operational adjustments.
- Share Repurchase Impact: Monitor the remaining $85.1 million repurchase authorization and its potential impact on liquidity and cash reserves.
- Merchant Churn: Review the specific drivers of attrition in the "Home" vertical and the sustainability of growth in "Money Transfer and Payments."
- Regulatory Compliance Costs: Evaluate the financial impact of upcoming AI and data privacy regulations in the EU, U.S., and China on operating expenses.