Good day, and welcome to Riskified's First Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode.[Operator Instructions]  Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. Chett Mandel, Head of Investor Relations.

Good morning, and thank you for joining us today. My name is Chett Mandel, Riskified Head of Investor Relations. We are hosting today's call to discuss Riskified's financial results for the first quarter of 2024. The Participating on the call today are Eido Gal Riskified's Co-Founder and Chief Executive Officer; and Aglika Dotcheva, Riskified Chief Financial Officer. We released our results for the first quarter of 2024 earlier today. Our earnings materials, including a replay of today's webcast will be available on our Investor Relations website at ir.riskofy.com. Certain statements made on the call today will be forward-looking statements related to our operating performance, business and financial goals, outlook as to revenues, gross profit margin, adjusted EBITDA profitability, adjusted EBITDA, margins and expectations as to positive cash flows, which reflect management's best judgment based on currently available information and are not guarantees of future performance. We intend all forward-looking statements to be covered by the safe harbor provisions contained in the Private Securities Litigation Reform Act of 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 statements. Please refer to our annual report on Form 20-F for the year ended December 31, 2023, and subsequent reports we filed or furnished with the SEC for more information on the specific factors that could cause actual results to differ materially from our expectations. Additionally, we will discuss certain non-GAAP financial measures and key performance indicators in 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.

Thanks, Chett, and hello, everyone. This was truly a quarter of execution. During the first quarter, we achieved revenue growth of 11%, non-GAAP gross profit growth of 18%, improved our adjusted EBITDA margin by 1,200 basis points year-over-year and repurchased approximately 4% of our shares outstanding. While it is still very early in the year, we remain confident in executing on our 2024 goals across the organization. Our team is hard at work and focused on driving towards our annual near- and long-term targets. As discussed in depth on our previous calls and what remains unchanged today is our focus on landing new customers to drive vertical depth and geographic diversification, while continuing to upsell to our existing merchants. Allow me to highlight an interesting proof point of how we are successfully executing on this strategy. Historically, we have found that when we are able to onboard a significant number of merchants in the vertical and then perform well with those merchants, we can reach an inflection point where future sales in that vertical become easier, faster and more streamlined. As a result, we end up owning the category from a competitive standpoint. We believe that this is what we have achieved over the last 10 years in our fashion and luxury vertical through working with many of the world's most prestigious brands in this category. Now I believe that we are building a similar competitive moat in our ticket and live events up vertical. We identified the tickets and live event space about 5 years ago as an opportunity for expansion. We have executed on this opportunity as evidenced by our growth in this category over the last several years. Furthermore, in the first quarter, our top new logo win and our largest upsell were both in the tickets…

Thank you, Eido, team and everyone, for joining today's call. Our GMV for the first quarter was CNY 32 billion, reflecting a 17% increase year-over-year. We achieved first quarter revenue of $76.4 million, up 11% year-over-year. Our GMV and revenue growth during this quarter was primarily driven by continued new merchants and upsell activity. Maintaining the positive momentum from the fourth quarter. In the first quarter of 2024, we achieved 65% year-over-year growth in our home category, primarily driven by upsell activity. We also grew approximately 30% in our food category, primarily driven by growth from new merchants added during 2023. In addition, we saw over 30% growth in payments and money transfer driven by new merchant activity. Our 2 largest category, the fashion and luxury and tickets and travel each grew by low single digits, primarily due to new and upsell activity but were partially offset by same-store sales pressure. In particular, we saw continued softness within high-end fashion across all geographies, excluding APAC, and softer-than-expected performance with travel merchants in EMEA. This contributed to a minus 4% year-over-year decline in the region in the first quarter, but we're still expecting growth for the year. Outside of EMEA, the United States, which is our largest region, grew by 14% during the first quarter and APAC grew approximately 40%. The other Americas, which represents Canada and Latin America grew approximately 12%, primarily due to new and upsell activity, offset by increasing declines in high-end fashion in Canada. Despite this, I remain excited about the other Americas region due to our continued growth in LATAM fueled by market share gains achieved by adding new logos in that region. Moving on to gross margin. Our non-GAAP gross profit margin for the first quarter of 2024 was 56%, an improvement from 53% in…

 [Operator Instructions] Our first question will come from the line of Reggie Smith with JPMorgan.

Congrats on the quarter. So but you guys are are achieving a lot of your goals. My question, you mentioned in the press release, the policy protected the dispute resolved when potentially unlocking new entry point in the organisation. A question for you is the person at the organisation of the company that you're working with that you're selling, so is that different than who you typically speak to for those bigger products versus the traditional charge back guarantee? And then also maybe if you could talk a little bit about the selling cycles for those products. I would imagine that they're shorter, but yes, I just don't want to assume anything there.

So on dispute resolve, it's usually similar people in the organization and the sales process there is pretty straightforward and shorter with less integration complexity. When you think about policy, that usually incorporates more people within the organisation, so a wider spectrum of decision-makers because you are making pretty critical decisions around the consumer. And there we see the sales cycle be at a similar lane to the charge back R&T.

And I guess implicit in that, there's usually very little pushback or hesitancy on the dispute result? Is that fair to say?

That's correct.

One moment for our next question. And that will come from the line of Will Nance with Goldman Sachs.

Wondering if you could talk a little bit about, I guess, the linearity of some of the ongoing macro impacts that you discussed in the quarter and then it sounds like are also continuing into April and May. I guess I know you guys have been flagging kind of macro headwinds for a while in some of these verticals, and we've seen that elsewhere. But I'm just wondering if you could talk about what you're seeing in the most recent quarter and into April and May. Is it worse than what you have been seeing in the past, particularly in areas like luxury and apparel? And just if you could talk about any notable geographic trends that you observed during the quarter, that would be great.Â

  So let me break it down. If I think about some of the strengths in the quarter, as we mentioned, we see very good performance from our coal food and payments category, is primarily driven by continued execution about adding new business there. Related to fashion and travel tickets and travel, these are our largest categories. This -- they grew in Q1, and this is kind of positive and encouraging. I would say that what was a little bit different than what we expected is maybe some of the kind of the growth or recovery there was a little bit weaker than we thought, especially in luxury fashion. I would say that sequentially things improved there, but what we start seeing in the back half of March and kind of through April is more volatile. And there's a lot of new angles around different merchants, some merchants are recovering and doing while some of them are continuing to decline. But all in all, I still expect this category to kind of recover through the back half of the year, while there's still kind of different movements in the quarter. And regarding geos, I think we mentioned the particular kind of growth trajectory overall, happy with the performance. We still expect kind of like overall for the year, all of these deals to be growing. So that's kind of in a nutshell.

And then just you mentioned, I think, in the prepared remarks and also just now that you're expecting kind of a gradual recovery into the second half of the year. And then I heard you on some of the commentary on 2Q being a bit softer than expectations. I guess what's driving the confidence in the re-acceleration in the back half of the year? Is it just comps getting easier? Or is there explicit line of sight towards things improving?

 Yes. I mean if we kind of think about tickets and trial, I think there's kind of different trends there. Exiting Q4, travel had a great performance, industry reports kind of really pointing to an or 2024, another record year. Industry reports and just general is still showing like a strong expected summer travel back half of the year. In addition, we're continuing to add new merchants in all of these categories. So I mean there's a little bit nuances in the quarters, ups and downs, but overall, nothing has changed overall, the way we see this category for us.

One moment for our next question -- and that will come from the line of Terry Tillman with Truist Securities.

 This is Scott Bester Terry. First one, just another strong quarter of growth in the food category. It seems like your platform is really resonating with merchants there. Just kind of curious on how you're thinking about momentum continuing in this category throughout the year and maybe how it kind of stack ranks against some of the other ones as more of an upper comer?

Sure. Happy to take that. We do find continued success. And I think like we highlighted on the call, what we see happening is once we start seeing traction in specific category, we end up building more specific features and technology that are customized for that category. That helps us achieve some additional merchants because we have some of the better brand names and superior technology, which kind of leads to continued strength and growth. So we are seeing that in the food category. I think we highlighted that in the live events category. I'm not sure the exact breakdown kind of quarter-by-quarter on the upcoming when exactly we'll lap some of these larger merchants or not, but it is an area of focus, and we are very happy with the performance there.

And then just as a quick follow-up. Balance sheet remains really strong. Just with respect to capital allocation, how are you kind of thinking about M&A and evaluate potential acquisition targets there? Maybe as you move to more of this platform focused selling opportunity, could it make sense to, I guess, acquire new capabilities that could maybe enhance the super further?

It does make sense, and we're continuously looking. But at the end of the day, we're also trying to allocate capital and make the best use of that. And when we're looking at the cost and the opportunities out there relative to the cost and opportunity within Riskified so far, that's been the clear winner. But we are continuing to look, although we have a high bar to get something across the finish line.

One moment for our next question. And that will come from the line of Ryan Tomasello with KBW.

The call out on the large stand-alone policy protect and dispute resolve deals in the quarter seems notable for these noncharge back guarantee merchants. So just dovetailing on some of the earlier comments and questions. In general, how much of a focus are you placing in your go-to-market strategy for winning these new products without the Charge back guarantee? And if you can just elaborate on how the platform architecture and pricing and sales strategy have been evolving, particularly the latter 2 to make these stand-alone deals more seamless than before?

Happy to elaborate -- so look, I think what we try to do as a product organisation is to build capabilities that will enable our sales team to sell better to sell a more continuous motion. So we see ourselves as creating these capabilities for them and they're kind of coming out and saying, "Hey, this is helping me in these 2 specific instances, the merchant said, "Your charge-back guarantee product is really interesting. But actually, my biggest pain point and priority right now is different. It's around kind of dispute resolved or it was around the policy product. So let's integrate that first. And obviously, having the understanding about how they can strategically expand with us over the next few quarters and what further set of capabilities we have really helps them in choosing Riskified as their preferred vendor. -- okay? So that's how it's been helping in our go-to-market motion, just gives them a wider set of tools and capabilities in front of the merchants. When we think about the revenue and the attach rates, I would say that recently on policy, where we've been successful, we've probably been able to generate 10% to 20% of the Charge back deals. And obviously, that's at a higher gross margin point. Dispute resolved is probably lower than that, I would say, in the range of 5%, but they do help kind of overall package a more differentiated story. And we're looking forward to expanding the platform capabilities further in the years ahead.

 And then just a follow-up here, piecing together the comments you provided around the quarter-to-date trends. Any early guideposts you can provide around revenue and GMV growth in 2Q relative to 1Q? -- sounds like growth rates in the second quarter might be tracking lower than what you put up this past quarter. But any handholding from a modeling perspective would be helpful, just especially as we look to gain conviction in that second half ramp that you seem to be baking in?

Yes, of course. So I'll think that some of the kind of the delta between the revenue growth and GMV growth will persist throughout the year. And as I mentioned, we are kind of seeing some softer months now back half of March, April, but overall still lines or the annual guide.

One moment for our next question. And that will come from the line of Timothy Chiodo with UBS.

I know that you gave some good regional kind of around the various regions color during the prepared remarks. I wanted to dig in a little bit to some of the European trends. I ask only because PayPal had a slight acceleration in their branded checkout in Q1. And in part of their prepared remarks, mentioned strength in Continental Europe. However, Shopify, who -- when giving their 2Q guidance did mention a little bit of macro concern in Europe and specifically called out the U.K. So just putting those 2 together, I was hoping you could give a little bit of your context on what you're seeing within e-commerce trends in Europe. Less so about your underlying share gain share loss, but what your customers are seeing in the broader market given your position in the market.

[Indiscernible] I'll actually start with that, and then I'll hand it over to Agi I want to highlight that I'm not 100% certain that we define those regions the same. So for us, it's where the merchant is headquartered because we service the merchants and sometimes when it's more kind of consumer-oriented like PayPal brand and checkout and it might be where the checkout has happened, right? So for us, the merchant is headquartered in Europe, it sells globally and that's how we define it. So I'm not sure that's an apples-to-apples comparison. So just wanted to give that disclaimer before handing it over to Agi.

Yes. So overall, we've seen kind of Europe being softer compared to the rest of the regions. As Eido mentioned, we're looking at where the merchant is a better, but we've seen based across kind of a number of areas, the number of merchants specifically kind of what to restate highlighted around travel and client fashion. This is where we've kind of seen some softness.

 One moment for our next question -- and that will come from the line of Cris Kennedy with William Blair.

You mentioned tickets and travel becoming a much bigger piece of the business. Can you just talk a little bit about the economics of that vertical relative to kind of your core fashion and luxury vertical?

I'm happy to take that. So I think travel has always been a large industry for us, but we have seen continued growth, especially in the live events space over the past few quarters, and that's been continuing to grow and shows great signs of continuing growth. At this point, we're kind of similar -- we're seeing similar margin profile to the rest of the book of business, nothing unique to call out. I know that coming out of COVID, maybe we highlighted that, that was kind of maybe a different profile for some travel merchants. We don't believe that to be significant anymore, especially as we think about the live event space.

 And then just more broadly, charge back to billing trends. If you can just talk about kind of the trends by cohort and what you're seeing in the observations over the last couple of years.

 Yes, I would say similar to what we mentioned on the previous call, we're really happy with the improvements, both in the core modelling, whether it's the level of automation, autonomous training ability to deploy more models, general features that are integrated into the system. And I think we see it in the margin out performance this quarter and previous quarter. We're also starting to see some helpful increase in the margin based on the new products. So while they are kind of still small on a revenue perspective, they've already contributed, I think, slightly over 0.5% to this quarter's margin. And again, the offsets continue to be the ramping of new merchants, newer geographies, but overall happy with the performance and trajectory.

I'm showing no further questions in the queue at this time. I would now like to turn the call back over to Eido Gal for any closing remarks.

Thank you very much for joining our Q1 call. We look forward to continue updating you on our progress in the quarters ahead.

Thank you all for participating. This concludes today's program. You may now disconnect.