1. Investment Snapshot
2. Thesis
3. Valuation & Price Target
4. Business & Product Moat
5. People & Governance
6. Market & Macro
7. Financial Quality
8. Risk Register
9. Prediction Market
10. 𝕏 Posts
Discussion
1. Investment Snapshot
2. Thesis
3. Valuation & Price Target
4. Business & Product Moat
5. People & Governance
6. Market & Macro
7. Financial Quality
8. Risk Register
9. Prediction Market
10. 𝕏 Posts
Discussion
1. Investment Snapshot
2. Metrics vs Peers
3. Price Chart
4. Valuation
5. Offer Terms
6. Financial Statements
Discussion
Research report, target price, DCF and forensic scores are for subscribers. View plans
Symbol
RSKD
Listed on
2021-07-29
Sector
Industrials
Subsector
Commercial Services & Supplies
Offer Price
$21.00
first filed $18.00–$20.00Shares Offered
17.5M
157.63M
$3.3B
11.1%
Implied Upside vs Midpoint
Description
Our Mission Empowering businesses to realize the full potential of eCommerce by making it safe, accessible, and frictionless. We have built a next-generation eCommerce risk management platform that allows online merchants to create trusted relationships with their consumers. Leveraging machine learning that benefits from a global merchant network, our platform identifies the individual behind each online interaction, helping merchants—our customers—eliminate risk and uncertainty from their business. We drive higher sales and reduce fraud and other operating costs for our merchants and strive to provide superior consumer experiences, as compared to our merchants’ performance prior to onboarding us. We believe legacy fraud platforms and rules-based, in-house solutions are frequently slow, inaccurate, expensive, and inflexible. They can often produce the wrong decision—by rejecting good transactions or accepting fraudulent ones—which causes merchants to either lose revenue or incur unnecessary expenses in the form of chargebacks and other fees. We believe the slow manual processes that some legacy fraud platforms depend on can also produce poor shopping experiences, and their outdated infrastructure may prevent merchants from adapting to fast-changing consumer preferences and fraud techniques. Our eCommerce risk management platform is built to solve these problems with proprietary machine learning models that drive an automated decisioning engine. We have designed our platform to be fast, accurate, scalable, and cost-effective. It supports our core chargeback guarantee product—which optimizes merchant approval rates—as well as other products that mitigate similar eCommerce risks for those same merchants. All of our products are designed to generate additional revenue or cost savings for merchants, while improving the online shopping experience for their consumers. Our products include the following: • Chargeback Guarantee: Our core product, the Chargeback Guarantee, automatically approves or denies online orders with guaranteed performance levels that vary in accordance with our merchants’ priorities. • Policy Protect: Policy Protect helps merchants identify consumers that may be taking advantage of a merchant’s policies in ways that are abusive and expensive to the merchant. • Deco: Deco helps merchants combat bank authorization failures during the checkout process. • Account Secure: Account Secure helps prevent a consumer’s saved account with a merchant from being compromised by a fraudster. • PSD2 Optimize: PSD2 Optimize enables merchants to minimize the effect of the European Union’s Payment Service Directive 2 regulations on their eCommerce business. Our eCommerce risk management platform is designed to provide the following benefits to merchants: • Increase sales: We allow merchants to generate higher revenues by increasing their approval rates for online transactions. Our platform can increase merchant sales approval rates by, in some cases, more than 20%. • Reduce fraud: Our platform automatically identifies and rejects fraudulent online transactions that would result in unnecessary expenses for our merchants. We also assume the cost of fraudulent transactions if they are approved. Net of our fees, our platform can reduce these costs for our merchants, in some cases, by more than 60%. • Reduce operating costs: We replace antiquated systems and labor intensive, costly fraud fighting methodologies with automated algorithms that save our merchants significant time and money. By reducing the operating costs our merchants incur, we free resources that can be redirected towards growing their businesses. • Optimize consumer experiences: Higher approval rates mean lower consumer drop-off and fewer false declines of legitimate consumers. Our product gives merchants the ability to take full advantage of emerging omnichannel flows such as buy-online-pickup-in-store and buy-online-pickup-at-curb without increasing the risk of fraudulent sales. In addition, we enable merchants to maintain consumer-friendly policies by preventing policy abuse and malicious account logins. This builds a stronger, long-term relationship between merchants and consumers, driving more sales to merchants over time. We generate substantial return on investment for our merchants through the revenue and cost savings they realize. On average, our ten largest merchants that provided data to us of their pre-Riskified performance by Billings experienced an 8% increase in revenue after integrating with our eCommerce risk management platform. On average, those same merchants experienced a 39% decrease in fraud-related operating costs and chargeback expenses, net of our fees. As a result of this value add to our merchants, we have high merchant revenue retention. For the year ended December 31, 2019 and 2020, we had an Annual Dollar Retention Rate of 99% and 98%, respectively, out of a maximum possible 100%. Excluding merchants from tickets and travel, our Annual Dollar Retention Rate was 99% for each of the years ended December 31, 2019 and 2020. --- We have differentiated access to our merchant’s transaction data through deep integrations into their mission-critical infrastructure, including their eCommerce, order management, and customer relationship management systems. Collecting relevant data across our merchant network allows us to identify complex transaction and behavior patterns that are not easily identifiable by merchants on their own. Our ability to help our merchants stems from the fact that we continuously feed this real-time training data into our sophisticated machine learning models. We service merchants of all sizes, from multi-billion dollar global omnichannel retailers to small pure play merchants on Shopify. However, we focus on supporting enterprise merchants, which we define as merchants generating over $75 million in online sales per year. Our merchants include some of the largest eCommerce brands in the world, including Wayfair, Macy’s, and StockX. Our merchants operate in a variety of verticals, including multiline retail and marketplaces, travel, fashion, digital goods, and luxury. We are also able to power the anti-fraud offerings embedded in popular payment methods such as Buy-Now-Pay-Later products. Our eCommerce risk management platform fuels a powerful flywheel effect. As we add more GMV, we collect more data, which strengthens the predictive power of our decisioning engine and fuels product innovation. We then leverage this improved return on investment, or ROI, for merchants and our enhanced product suite to attract more online merchants, which drives more transactions to our platform and fuels further organic growth. Our business benefits from the overall growth in eCommerce transaction volumes, growing consumer preferences for frictionless shopping experiences, and the heightened focus on combating online fraud. According to eMarketer, global eCommerce is expected to grow from approximately $4.3 trillion in 2020 to approximately $6.4 trillion by 2024. At the same time, consumers increasingly expect frictionless, omnichannel experiences and merchants are experiencing growing operating costs associated with fraud. According to Juniper Research, merchant losses to online eCommerce fraud will exceed $25 billion in 2024, up from $17 billion in 2020. We have grown and scaled our business rapidly in recent periods. Between 2018 and 2020, our revenue grew at a CAGR of 51% from $74.3 million for the year ended December 31, 2018 to $169.7 million for the year ended December 31, 2020. Our gross profit grew from $35.7 million for the year ended December 31, 2018 to $92.8 million for the year ended December 31, 2020 and gross profit margin grew from 48% for the year ended December 31, 2018 to 55% for the year ended December 31, 2020. Our gross profit grew from $17.5 million for the three months ended March 31, 2020 to $28.6 million for the three months ended March 31, 2021 and gross profit margin grew from 53% for the three months ended March 31, 2020 to 56% for the three months ended March 31, 2021. For the years ended December 31, 2019 and 2020, our total GMV increased 60%, from $39.7 billion to $63.4 billion. For the three months ended March 31, 2020 and 2021, our total GMV increased 77%, from $10.7 billion to $18.9 billion. For the years ended December 31, 2019 and 2020, our revenue increased 30%, from $130.6 million to $169.7 million. For the three months ended March 31, 2020 and 2021, our revenue increased 54%, from $33.2 million to $51.1 million. For the years ended December 31, 2019 and 2020, our net loss improved by 20%, from a net loss of $14.2 million to a net loss of $11.3 million. For the three months ended March 31, 2020 and 2021, our net profit decreased $45.9 million, from $2.3 million of net profit to $43.7 million of net loss, primarily due to remeasurement losses related to our convertible preferred share warrant liabilities and convertible preferred share tranche rights due to increases in the fair value of the underlying instruments. For the years ended December 31, 2019 and 2020, our Adjusted EBITDA increased 230%, from a loss of $1.9 million to income of $2.5 million. For the three months ended March 31, 2020 and 2021, our Adjusted EBITDA improved 90%, from a loss of $3.1 million to a loss of $0.3 million. --- We are incorporated in Israel under the Companies Law, 5759-1999, or the Companies Law. Our principal executive offices are located at 30 Kalischer Street, Tel Aviv 6525724, Israel. Our website address is www.riskified.com. Our agent for service of process in the United States is Riskified, Inc., located at 220 5th Avenue, 2nd Floor, New York, New York 10001.
| Metric | Value | Peer median | Among peers | Trend |
|---|---|---|---|---|
EV / revenue | 18.9x | 7.9x | ||
Revenue growth | 30.0% | 39.1% | ||
Gross margin | 54.7% | 30.7% | ||
Operating margin | -4.0% | 2.4% | ||
Net margin | -6.7% | -2.9% | ||
Free cash flow margin | -2.7% | 7.5% | ||
Rule of 40 | 26.8% | 39.0% | ||
Net cash / market cap | 3.1% | 1.9% | ||
Debt / equity | 0.00 | 0.00 | ||
Current ratio | 3.15 | 2.02 | ||
Stock comp / revenue | 4.7% | 1.3% | ||
9 premium metrics: DCF value / price, Growth the price needs: how common, Last 12 months vs full year and 6 more Unlock | ||||
▲ Priced at $21.00, 11% above the midpoint of the first filed range ($18.00–$20.00, 2021-07-19).
Each filing is plotted ahead of the first trading day on the price chart.
| Filed | Form | Price range | Price | Shares offered | Deal size |
|---|---|---|---|---|---|
| 2021-07-19 | F-1/A | $18.00–$20.00 | — | 17,500,000 | $332.5M |
| 2021-07-23 | F-1/A | $18.00–$20.00 | — | 17,500,000 | $332.5M |
| 2021-07-28 | F-1/A | $18.00–$20.00 | — | 17,500,000 | $332.5M |
| 2021-07-28 | F-1/A | $18.00–$20.00 | — | 17,500,000 | $332.5M |
| 2021-07-30 | 424B4 | — | $21.00 | 17,500,000 | $367.5M |
Riskified Ltd. income statement and balance sheet, FY Dec 2022 to FY Dec 2025, as reported in SEC filings.
| Metric | FY Dec 2022after listing | FY Dec 2023after listing | FY Dec 2024after listing | FY Dec 2025after listing |
|---|---|---|---|---|
| Revenue | $261M | $298M | $328M | $345M |
| Gross profit | $135M | $153M | $171M | $178M |
| Operating income | ($109M) | ($76.8M) | ($47.9M) | ($34.0M) |
| Net income | ($104M) | ($59.0M) | ($34.9M) | ($27.6M) |
| Revenue growth | — | 13.9% | 10.0% | 5.2% |
| Gross margin | 51.7% | 51.2% | 52.2% | 51.7% |
| Operating margin | −41.6% | −25.8% | −14.6% | −9.9% |
| Net margin | −39.8% | −19.8% | −10.7% | −8.0% |
| Metric | FY Dec 2022after listing | FY Dec 2023after listing | FY Dec 2024after listing | FY Dec 2025after listing |
|---|---|---|---|---|
| Total assets | $609M | — | $496M | $411M |
| Total liabilities | $113M | — | $114M | $116M |
| Total equity | $496M | $492M | $382M | $295M |
| Cash & equivalents | $189M | $441M | $371M | $162M |