Riskified (RSKD) Q3 2025: Money Transfer Category Doubles, Powering Margin Expansion
Riskified’s Q3 results mark a decisive shift, as disciplined execution and machine learning investments drive a return to gross profit growth and robust margin expansion. The money transfer and payments vertical, up 100% YoY, is now a clear growth engine, offsetting softness in legacy categories and supporting a raised outlook. Management’s focus on automation, product innovation, and international expansion positions Riskified for further operating leverage and resilience as agentic commerce and new payment rails reshape the fraud landscape.
Summary
- Machine Learning Automation Accelerates: Autonomous model adoption now covers 70% of models, driving outperformance and scalability.
- Money Transfer Category Emerges as Growth Engine: 100% YoY growth in this vertical highlights successful expansion beyond discretionary e-commerce.
- Margin Expansion Signals Operating Leverage: Disciplined cost control and product mix improvements set up for further profitability gains into Q4 and 2026.
Performance Analysis
Riskified delivered a clear inflection in Q3, with revenue up 4% YoY to $81.9 million and gross profit growth returning to positive territory after softness in the first half. The company’s non-GAAP gross profit margin improved to 51%, up from 50% in H1, reflecting the benefits of technical model upgrades and a growing contribution from new product lines. The standout was the money transfer and payments category, which doubled YoY and is on track to nearly double revenue for the full year, driven by new merchant wins and upsell activity.
While the core tickets and travel category (the largest segment) grew 6% YoY, it faced tougher comps due to last year’s record activity. Fashion and luxury rebounded with 13% growth, benefiting from both new business and improvements among large clients, though high-end fashion remains pressured. The home category continued to contract sharply, down 70% YoY, but is expected to return to growth in Q4 as comps normalize. International markets outperformed, with APAC up 55%, EMEA up 19%, and the Americas ex-US up 18%, offsetting a 12% decline in US revenue tied to home category weakness.
- Margin Expansion Outpaces Revenue Growth: Adjusted EBITDA margin jumped 560 basis points YoY to 7%, with Q4 expected to reach 15%, highlighting operating leverage.
- Free Cash Flow Strengthens Balance Sheet: Q3 free cash flow of $13.4 million and a cash position of $325 million support ongoing buybacks and flexibility.
- Share Repurchases Reduce Dilution: 5.2 million shares bought back in Q3, with full-year outstanding shares expected to decline by at least 5%.
Riskified’s execution on expense discipline and automation is enabling it to invest in product development while maintaining flat operating expenses, supporting a structurally higher margin profile as the business scales.
Executive Commentary
"We've built solid momentum this year, driven by disciplined execution and focus across the business. That progress is especially clear in our third quarter results, where we delivered a meaningful turnaround in non-GAAP gross profit, improving from a 4% decline in the first half of the year to 5% growth in Q3. While the first half of the year reflected some temporary softness, the actions we took during the period have laid the foundation for a higher gross profit trajectory and expanding profitability in the back half of 25 and beyond."
Ido Gal, Co-founder and Chief Executive Officer
"Our GMV for the third quarter was $37.8 billion and $108.4 billion for the first nine months, reflecting a 9% and 7% increase year-over-year, respectively. We achieved record third-quarter revenue of $81.9 million, up 4% year-over-year... Our non-GAAP gross profit of $41.5 million increased 5% year-over-year in the third quarter. This translates to a non-GAAP gross profit margin of approximately 51% and improvement of 1% from the same period in the prior year."
Agi Doceva, Chief Financial Officer
Strategic Positioning
1. Machine Learning and Automation as Leverage
Riskified’s shift to autonomously trained models (70% of models now automated, all outperforming prior manual versions) is a structural lever for both scalability and gross profit improvement. Autonomous model program, a system for real-time retraining and performance optimization, allows the company to react swiftly to emerging fraud signals and redeploy data science resources to higher-value initiatives. This automation underpins margin expansion and supports the company’s ambition to scale with high operating leverage.
2. Diversification Beyond Discretionary E-commerce
The money transfer and payments vertical now serves as a primary growth engine, nearly doubling YoY and expected to double full-year revenue. This category’s expansion—driven by new logos and upsells—reduces Riskified’s historical dependence on discretionary categories such as tickets and travel or fashion and luxury, which are more exposed to macro swings. Non-discretionary category focus, a strategy to target verticals less sensitive to consumer cycles, is proving effective in stabilizing growth.
3. Product Innovation and Adaptive Checkout
Adaptive Checkout, Riskified’s AI-driven checkout optimization tool, is gaining traction, delivering conversion rate gains of 5% to 26% for pilot merchants by intelligently applying friction only when necessary. This supports not only merchant ROI but also strengthens client stickiness and Riskified’s value proposition as fraud risks and checkout complexity rise with new payment methods and agentic commerce.
4. International Expansion and Share Gains
International markets, especially APAC and EMEA, are outpacing the US, driven by targeted go-to-market and product localization. This regional diversity is buffering the company against US-centric category declines and broadens Riskified’s total addressable market, especially as new payment rails and agentic commerce adoption accelerate globally.
5. Agentic Commerce and New Payment Rails
Agentic commerce, the rise of AI agents making purchases for consumers, and new payment rails like stablecoins are introducing complexity and new fraud vectors. Riskified is positioning itself as a critical partner for merchants navigating these shifts, leveraging its bot detection, policy suite, and risk engine to differentiate legitimate transactions from fraud in limited-data environments. Early merchant conversations signal growing demand for solutions that address these emerging risks.
Key Considerations
Riskified’s Q3 highlights a business at an operational and strategic crossroads, balancing automation-driven efficiency with targeted investment in growth verticals and international markets.
Key Considerations:
- Automation Drives Cost Efficiency: Autonomous model adoption frees up talent and improves fraud detection, supporting scalable growth.
- Product Mix Shifts Underpin Resilience: Rapid expansion in non-discretionary verticals like money transfer reduces macro sensitivity.
- Expense Discipline Enables Investment: Operating expenses remain flat as Riskified reallocates spend to development capacity and growth initiatives.
- International Outperformance Offsets US Declines: APAC and EMEA growth is critical as US home category contracts sharply.
- Capital Returns Support Valuation: Aggressive share buybacks and zero debt strengthen per-share value and flexibility.
Risks
Key risks include ongoing churn and contraction in legacy categories, especially the home vertical, which could weigh on US revenue. The rapid expansion into new verticals and geographies introduces execution risk and potential gross margin volatility as merchant ramping and risk profiles evolve. Emerging agentic commerce and payment rails, while an opportunity, could also outpace Riskified’s ability to adapt, especially if fraud patterns shift faster than model retraining cycles. Competitive intensity in fraud prevention, regulatory shifts, and merchant IT budgets also remain watchpoints.
Forward Outlook
For Q4, Riskified guided to:
- Revenue of $338 million to $346 million for the full year (midpoint $342 million)
- Adjusted EBITDA of $21 million to $27 million (midpoint $24 million)
Management expects:
- Further margin expansion, with Q4 adjusted EBITDA margin approaching 15%
- Free cash flow to exceed $30 million for the full year
Raised guidance reflects confidence in holiday demand, technical model performance, and continued cost discipline.
Takeaways
- Growth Engine Shift: Money transfer and payments now anchor Riskified’s top-line growth, reducing reliance on cyclical categories.
- Margin Story Strengthens: Automation, disciplined expense management, and product innovation are driving sustained margin expansion and free cash flow.
- Strategic Watchpoint: Investors should monitor execution in new verticals, the pace of agentic commerce adoption, and the durability of international momentum as key drivers into 2026.
Conclusion
Riskified’s Q3 marks a return to profitable growth, powered by vertical diversification, automation, and disciplined execution. The company is well-positioned to capitalize on the evolving e-commerce fraud landscape, though execution risk in new markets and technologies will remain pivotal to sustained outperformance.
Industry Read-Through
Riskified’s results reinforce several industry themes. The surge in money transfer and payments fraud prevention demand signals a secular shift as digital payments proliferate and regulatory scrutiny intensifies. Machine learning automation is becoming table stakes for operating leverage and competitive differentiation in risk management. The rise of agentic commerce and stablecoin rails is creating both new attack surfaces and a premium on adaptive, real-time fraud solutions—an emerging battleground for all e-commerce infrastructure providers. Competitors and adjacent players should note the growing importance of vertical and international diversification to buffer against macro and category-specific volatility.