Breaking Down Riskified Ltd. (RSKD) Financial Health: Key Insights for Investors

As an investor, are you keeping a close watch on Riskified Ltd. (RSKD) and trying to gauge the company's financial stability? Did you know that Riskified exceeded its FY'24 revenue guidance and achieved a full year of positive adjusted EBITDA? In 2024, Riskified also surpassed its 2023 achievement in securing new business contracts valued at over $1 million annually by more than 70%. But what does this mean for the company's overall financial health, and is it a good time to invest? Read on to find out more about Riskified's financial performance, key metrics, and future outlook.

Riskified Ltd. (RSKD) Revenue Analysis

Understanding Riskified Ltd. (RSKD)'s revenue streams is crucial for investors seeking to assess the company's financial health and growth potential. A detailed breakdown reveals the primary sources of income, historical growth rates, and the contribution of different business segments to the overall revenue.

Primary Revenue Sources:

Riskified's primary revenue source is derived from providing chargeback guarantees and fraud prevention services to e-commerce merchants. The company's solutions are designed to help online retailers increase revenue by reducing fraud-related losses and improving the customer experience.

Year-over-Year Revenue Growth Rate:

Analyzing the year-over-year revenue growth rate provides insights into Riskified's ability to expand its business and capture market share. Here's a look at recent revenue trends:

• In 2021, Riskified reported revenue of $213 million, representing a 66% increase compared to 2020.
• For the year 2022, Riskified's revenue totaled $267.6 million, a 25.6% increase year-over-year.
• In 2023, the company’s revenue reached $287.4 million, reflecting a 7.4% growth rate from the previous year.
• The first quarter of 2024 saw Riskified generating $74.7 million in revenue, marking a 15% increase compared to the first quarter of 2023.

This data illustrates a fluctuating growth trajectory, with a significant surge in 2021, followed by a deceleration in subsequent years. The Q1 2024 results indicate a potential rebound in growth momentum.

Contribution of Business Segments:

Riskified operates primarily in one business segment: providing fraud and risk management solutions for e-commerce. Therefore, substantially all of its revenue is derived from this segment.

Significant Changes in Revenue Streams:

Recent developments indicate a strategic focus on expanding partnerships and enhancing product offerings. For instance, Riskified has collaborated with payment platforms and e-commerce enablers to broaden its market reach and integrate its solutions into existing ecosystems. These initiatives are aimed at driving revenue growth and diversifying the company's customer base.

Here is a summary of Riskified's financial performance:

Understanding these dynamics is essential for investors evaluating Riskified's financial trajectory and future prospects. For further insights into Riskified's investor profile, consider exploring: Exploring Riskified Ltd. (RSKD) Investor Profile: Who’s Buying and Why?

Riskified Ltd. (RSKD) Profitability Metrics

Analyzing Riskified Ltd. (RSKD)'s financial health requires a close examination of its profitability metrics. These metrics provide insights into the company's ability to generate earnings relative to its revenue, assets, and equity. Key profitability indicators include gross profit, operating profit, and net profit margins. By evaluating these ratios and their trends over time, investors can gain a better understanding of Riskified's financial performance and sustainability.

Gross profit is a crucial indicator of a company's efficiency in managing its production costs and pricing strategy. It represents the revenue remaining after deducting the cost of goods sold (COGS). The gross profit margin, calculated as (Gross Profit / Revenue) 100, indicates the percentage of revenue that exceeds the cost of goods sold. A higher gross profit margin suggests that a company is efficient in converting revenue into profit.

Operating profit, also known as earnings before interest and taxes (EBIT), reflects a company's profitability from its core business operations. It is calculated by subtracting operating expenses (such as selling, general, and administrative expenses) from gross profit. The operating profit margin, calculated as (Operating Profit / Revenue) 100, indicates the percentage of revenue that remains after accounting for both the cost of goods sold and operating expenses. This margin provides insights into how well a company manages its operational efficiency and cost control.

Net profit represents a company's profit after all expenses, including interest, taxes, and other non-operating items, have been deducted from revenue. The net profit margin, calculated as (Net Profit / Revenue) 100, indicates the percentage of revenue that ultimately translates into profit for shareholders. A higher net profit margin suggests that a company is effective in managing all aspects of its financial operations. For deeper insights into Riskified's strategic direction, explore: Mission Statement, Vision, & Core Values of Riskified Ltd. (RSKD).

Analyzing trends in profitability over time is essential for assessing the sustainability of a company's financial performance. Consistent improvement in gross profit, operating profit, and net profit margins indicates that a company is becoming more efficient and profitable. Conversely, declining margins may signal underlying issues such as rising costs, increased competition, or ineffective management.

Comparing Riskified's profitability ratios with industry averages provides valuable context for evaluating its performance. If Riskified's margins are significantly higher than the industry average, it may indicate a competitive advantage or superior operational efficiency. On the other hand, lower margins compared to peers may suggest areas where the company needs to improve.

Operational efficiency plays a critical role in driving profitability. Effective cost management and favorable gross margin trends can contribute to higher profits. Companies that can minimize their production costs, streamline their operations, and optimize their pricing strategies are more likely to achieve sustainable profitability.

For example, let's consider a hypothetical scenario based on the 2024 fiscal year data:

In this example, Riskified has a gross profit margin of 60%, an operating profit margin of 30%, and a net profit margin of 20%. By comparing these margins to industry benchmarks and analyzing their trends over time, investors can assess Riskified's profitability and financial health.

Riskified Ltd. (RSKD) Debt vs. Equity Structure

Understanding Riskified Ltd.'s (RSKD) financial structure involves analyzing its approach to debt and equity. This assessment provides insights into the company's financial leverage, risk profile, and growth strategies. The balance between debt and equity is crucial for investors to gauge the company's stability and potential for returns. To delve deeper into Riskified Ltd.'s financial health, you can read more at: Breaking Down Riskified Ltd. (RSKD) Financial Health: Key Insights for Investors

Here's an overview of Riskified Ltd.'s debt levels:

• Long-term debt: An analysis of Riskified Ltd.'s long-term debt provides insights into its long-term financial obligations.
• Short-term debt: Examining the company's short-term debt reveals its immediate financial liabilities and liquidity position.

The debt-to-equity ratio is a key metric in assessing Riskified Ltd.'s financial leverage. It indicates the proportion of debt and equity the company uses to finance its assets. A higher ratio suggests a greater reliance on debt, which can amplify both profits and losses. It's essential to compare Riskified Ltd.'s ratio to industry standards to determine whether it's within a reasonable range.

Recent financial activities, such as debt issuances, credit ratings, or refinancing, can significantly impact Riskified Ltd.'s financial health. New debt issuances may provide capital for expansion but also increase financial risk. Changes in credit ratings can affect borrowing costs and investor confidence. Refinancing activities might indicate efforts to optimize the company's debt structure.

Riskified Ltd. strategically balances debt financing with equity funding to support its operations and growth initiatives. Equity funding, such as through stock offerings, reduces the company's reliance on debt and lowers financial risk. The company's approach to balancing these two forms of financing reflects its overall financial strategy and risk tolerance.

A table summarizing Riskified Ltd.'s debt and equity structure as of the latest fiscal year is below:

Analyzing Riskified Ltd.'s approach to debt and equity provides a comprehensive view of its financial strategy and risk management. Understanding these elements is essential for making informed investment decisions.

Riskified Ltd. (RSKD) Liquidity and Solvency

Assessing Riskified Ltd.'s financial health requires a close look at its liquidity and solvency positions. These metrics provide insights into the company's ability to meet its short-term obligations and long-term financial stability. The latest financial data is crucial for an accurate evaluation.

Liquidity Ratios:

Analyzing Riskified Ltd.'s liquidity involves examining key ratios that indicate its ability to cover short-term liabilities with its short-term assets.

• Current Ratio: This ratio measures a company's ability to pay off its current liabilities with its current assets. A current ratio of greater than 1 indicates that a company has more current assets than current liabilities.
• Quick Ratio: Also known as the acid-test ratio, this ratio measures a company's ability to meet its short-term obligations with its most liquid assets. The quick ratio excludes inventories from current assets, as inventories are not always easily converted into cash.

For the fiscal year 2024, these ratios provide a snapshot of Riskified Ltd.'s immediate financial health. While specific 2024 figures would be needed for a precise calculation, we can analyze trends from previous years to understand potential liquidity strengths or weaknesses.

Working Capital Trends:

Working capital, calculated as current assets minus current liabilities, is a measure of a company's short-term financial health. Monitoring the trends in working capital can reveal whether a company is efficiently managing its short-term resources. An increasing working capital balance generally indicates improving liquidity, while a decreasing balance may signal potential liquidity issues.

Cash Flow Statements Overview:

The cash flow statement provides a detailed look at all the cash inflows and outflows a company experiences during a reporting period, categorized into operating, investing, and financing activities.

• Operating Cash Flow: This section reflects the cash generated from the company's core business activities. A positive operating cash flow indicates that the company is generating enough cash from its operations to sustain and grow its business.
• Investing Cash Flow: This section includes cash flows related to the purchase and sale of long-term assets, such as property, plant, and equipment (PP&E).
• Financing Cash Flow: This section involves cash flows related to debt, equity, and dividends.

Analyzing these cash flow trends helps investors understand how Riskified Ltd. is managing its cash and whether it is relying on external financing to support its operations.

Potential Liquidity Concerns or Strengths:

Based on the analysis of liquidity ratios, working capital trends, and cash flow statements, potential liquidity concerns or strengths can be identified. For instance:

• If Riskified Ltd. has a consistently high current and quick ratio, it indicates strong liquidity.
• A positive trend in operating cash flow suggests the company is effectively generating cash from its core operations.

Conversely, declining liquidity ratios and negative operating cash flow may raise concerns about the company's ability to meet its short-term obligations.

For further insights into Riskified Ltd.'s strategic direction, explore: Mission Statement, Vision, & Core Values of Riskified Ltd. (RSKD).

Riskified Ltd. (RSKD) Valuation Analysis

Determining whether a company is overvalued or undervalued requires a multifaceted approach, incorporating various financial ratios, market trends, and analyst insights. This analysis delves into key valuation metrics for Riskified Ltd. (RSKD) to provide investors with a comprehensive overview.

Price-to-Earnings (P/E) Ratio:

As of April 2025, Riskified's P/E ratio is -23.45. This negative value indicates that the company is currently not profitable, as the P/E ratio is calculated by dividing the stock price by earnings per share (EPS). A negative P/E ratio suggests that the company has negative earnings, which can occur when a company is experiencing losses.

Price-to-Book (P/B) Ratio:

The Price-to-Book (P/B) ratio, another critical valuation metric, stands at 1.54. The P/B ratio compares a company's market capitalization to its book value of equity. A P/B ratio of 1.54 suggests that the market values Riskified at 1.54 times its book value. Generally, a lower P/B ratio may indicate that a stock is undervalued, while a higher ratio could suggest overvaluation. However, it is essential to consider industry benchmarks and the company's financial health when interpreting this ratio. A higher P/B ratio could be justified if the company has strong growth prospects or high returns on equity.

Enterprise Value-to-EBITDA (EV/EBITDA) Ratio:

Riskified's EV/EBITDA ratio is -4.39. The Enterprise Value-to-EBITDA (EV/EBITDA) ratio is a valuation metric that compares a company's enterprise value (total market value plus net debt) to its earnings before interest, taxes, depreciation, and amortization (EBITDA). A negative EV/EBITDA ratio, as seen with Riskified, typically indicates that the company has negative EBITDA, meaning its earnings before interest, taxes, depreciation, and amortization are negative. This can happen when a company is unprofitable or facing significant operational challenges.

Stock Price Trends:

Over the past 52 weeks, Riskified's stock price has fluctuated between a low of $3.94 and a high of $6.645. As of April 2025, the stock is trading around $4.5. These fluctuations reflect market sentiment and company-specific events that have influenced investor confidence. The stock price change in the last 52 weeks is -8.67%.

Dividend Yield and Payout Ratios:

Riskified does not currently offer a dividend, therefore, dividend yield and payout ratios are not applicable.

Analyst Consensus:

The consensus among analysts is a 'Moderate Buy' rating for Riskified. The average 12-month price target is $5.61, suggesting a potential upside of 25.78% from the current price. However, it’s important to note that analyst ratings can vary, and investors should consider multiple sources before making investment decisions.

Here is a summary table of Riskified's valuation ratios:

Considering these factors, it is crucial for investors to conduct thorough due diligence and consider their individual investment objectives and risk tolerance before making any decisions regarding Riskified Ltd. (RSKD). You might be also interested in: Mission Statement, Vision, & Core Values of Riskified Ltd. (RSKD).

Riskified Ltd. (RSKD) Risk Factors

Riskified Ltd. (RSKD) faces a variety of internal and external risks that could significantly impact its financial health. These risks span across industry competition, regulatory changes, and overall market conditions.

Here's an overview of key risks:

• Industry Competition: The fraud prevention industry is highly competitive. New technologies and market entrants could erode Riskified's market share and pricing power.
• Regulatory Changes: Changes in data privacy laws and regulations related to online commerce could increase compliance costs and limit the effectiveness of Riskified's solutions.
• Market Conditions: Economic downturns can lead to reduced online spending, which in turn decreases the demand for fraud prevention services.

Operational, financial, and strategic risks are often highlighted in Riskified's earnings reports and filings. These include:

• Operational Risks: Maintaining the accuracy and effectiveness of fraud detection algorithms is critical. Failures in these systems could lead to financial losses for clients and damage Riskified's reputation.
• Financial Risks: Managing cash flow and maintaining profitability are ongoing challenges, especially as the company invests in growth initiatives.
• Strategic Risks: The need to adapt to evolving fraud tactics and technological advancements requires continuous innovation. Failure to do so could render Riskified's solutions obsolete.

Mitigation strategies and plans are essential for addressing these risks. While specific details may vary, common strategies include:

• Investment in Research and Development: Continuously improving fraud detection algorithms and developing new solutions to stay ahead of emerging threats.
• Diversification of Customer Base: Reducing reliance on any single customer or industry to mitigate the impact of customer attrition or industry-specific downturns.
• Geographic Expansion: Expanding into new markets to diversify revenue streams and reduce exposure to regional economic conditions.
• Compliance Programs: Implementing robust compliance programs to adhere to data privacy laws and other relevant regulations.

For further insights into Riskified's mission, vision, and core values, you can visit: Mission Statement, Vision, & Core Values of Riskified Ltd. (RSKD).

Riskified Ltd. (RSKD) Growth Opportunities

Riskified Ltd. (RSKD) operates in the e-commerce fraud prevention sector, a market driven by the continuous growth of online retail and the increasing sophistication of fraud attempts. The company's future growth prospects are closely tied to its ability to innovate its product offerings, expand into new markets, and maintain a competitive edge.

Key growth drivers for Riskified include:

• Product Innovations: Continuously enhancing its fraud detection and prevention technology using machine learning and AI.
• Market Expansion: Penetrating new geographic regions and industries beyond its core e-commerce focus.
• Strategic Partnerships: Collaborating with e-commerce platforms, payment processors, and other technology providers to broaden its reach and integrate its solutions.

While specific future revenue growth projections and earnings estimates for Riskified Ltd. (RSKD) beyond 2024 are not available, several factors suggest potential growth areas:

Strategic initiatives that may drive future growth:

• Expanding product offerings to cover a broader range of fraud types and risk management services.
• Increasing focus on enterprise clients and larger e-commerce businesses.
• Leveraging data and analytics to provide more personalized and effective fraud prevention solutions.

Riskified's competitive advantages that position the company for growth:

• Technology: Advanced machine learning algorithms that improve fraud detection accuracy.
• Data Network: A large and growing network of e-commerce transactions that provides valuable insights for fraud prevention.
• Business Model: A chargeback guarantee model that aligns its interests with those of its clients.

For more insights into the company's direction, explore: Mission Statement, Vision, & Core Values of Riskified Ltd. (RSKD).