On Thursday, Piper Sandler confirmed its Overweight rating on Riskified Ltd. (NYSE: NYSE:RSKD), with a constant price target of $7.00. The firm highlighted a rebound in the latter half of the year, with particular growth in tickets and travel, which saw an acceleration of over 20%. Additionally, Riskified's revenue in the US increased to 14% from 11% in the previous quarter.
The analyst noted the significance of Riskified's diversification across different industries and global regions. In the third quarter, Riskified added top new clients from six distinct sectors spread across four geographies. The company has also equaled the number of new $1 million-plus Annual Contract Value (ACV) agreements year-to-date with the total achieved in the entire year of 2023.
Despite these positive developments, Riskified experienced a setback with a significant merchant departure at the end of October, which is expected to create an $18 million near-term revenue headwind. Nevertheless, Piper Sandler remains positive regarding Riskified's performance and its ability to navigate these challenges.
The report also pointed out that Riskified is on track to achieve approximately 800 basis points of EBITDA margin expansion. This is in spite of headwinds in spending that have resulted in only a 9% growth for the year. Piper Sandler's reiterated price target reflects a continued confidence in Riskified's strategic execution and its potential for growth in its core business areas.
In other recent news, Riskified Ltd. reported growth and optimism in its third-quarter results for 2024. The company's revenue saw a 10% year-over-year increase to $78.8 million, and Gross Merchandise Volume (GMV) rose by 17% to $34.7 billion. The company also reported a positive adjusted EBITDA of $0.9 million, marking a substantial improvement from the previous year.
Riskified announced a $75 million share buyback program, targeting 10-15% of outstanding shares annually. Despite a churn event with a key merchant in the Home category, the management maintains confidence in its growth strategy and AI technology to combat e-commerce fraud.
Looking ahead, Riskified anticipates a strong performance in the fourth quarter and ongoing growth into 2025. The company has raised its full-year revenue guidance to between $322 million and $327 million, with adjusted EBITDA projected to be between $14 million and $20 million. The company is also strategically focusing on diversifying into resilient sectors like groceries and remittances.
InvestingPro Insights
To complement Piper Sandler's analysis, InvestingPro data provides additional context on Riskified's financial position. The company's market capitalization stands at $809.38 million, with a revenue of $318.05 million for the last twelve months as of Q3 2024. Despite the challenges mentioned in the article, Riskified has shown revenue growth of 8.61% over the same period.
InvestingPro Tips highlight that Riskified holds more cash than debt on its balance sheet, which could provide financial flexibility as the company navigates the revenue headwind from the recent merchant departure. Additionally, management has been aggressively buying back shares, potentially signaling confidence in the company's future prospects.
While Riskified is not currently profitable, with an operating income margin of -16.04%, analysts predict the company will be profitable this year. This aligns with Piper Sandler's positive outlook and the expected EBITDA margin expansion mentioned in the article.
For investors seeking a more comprehensive analysis, InvestingPro offers 6 additional tips for Riskified, providing a deeper understanding of the company's financial health and market position.
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