Riskified Ltd. (RSKD): 5 FORCES Analysis [Nov-2025 Updated]

You're trying to get a clear-eyed view of Riskified Ltd.'s market position as they guide toward $341 million in 2025 revenue, and frankly, the competitive landscape is a mixed bag. While their 50% Non-GAAP gross margin in Q2 2025 shows they're managing costs, the power held by their large enterprise customers and the heat from specialized rivals are defintely real pressures. Before you decide on your next step, you need to see exactly where the friction lies across all five forces, especially with their projected $22 million Adjusted EBITDA as a defense. Keep reading; we've mapped out the risks and advantages below.

Riskified Ltd. (RSKD) - Porter's Five Forces: Bargaining power of suppliers

When you look at the Bargaining Power of Suppliers for Riskified Ltd., you see a mixed bag, which is typical for a high-tech, data-driven service provider. You have to separate the commodity inputs from the truly unique ones.

For undifferentiated cloud and compute providers, the power is definitely low. Riskified Ltd. operates in a market where hyperscalers offer commodity infrastructure, meaning switching costs for the basic compute layer aren't prohibitively high, and alternatives abound. This keeps the pressure from that segment of the supply chain in check.

Conversely, the power held by the specialized AI and data science talent pool is high. These are the people who build and refine the proprietary models that are the core value proposition. If you can't hire and retain top-tier machine learning engineers, your product stagnates, so their leverage is significant.

The most critical component, however, is the core supplier: the proprietary transaction data network itself. Riskified Ltd. controls this network, which is built from the cumulative, anonymized transaction data of its global merchant base. This creates a powerful internal moat, effectively neutralizing the bargaining power of an external data supplier because the data asset is owned and continuously improved by the company.

The financial evidence suggests that the cost of revenue, which includes supplier costs like cloud spend, is manageable relative to the value captured. For the second quarter of 2025, Riskified Ltd. reported a Non-GAAP gross profit margin of 50%. This level of margin indicates that while costs exist, they are not eroding the core profitability of the service delivery significantly. To be fair, this margin was down from 53% in the prior year for Q2 2025, and the six-month margin for the period ending June 30, 2025, was 50%, down from 54% the year before. Still, the company showed a return to gross profit growth in Q3 2025, with a Non-GAAP Gross Profit Margin of 51% and a 5% year-over-year growth in Non-GAAP Gross Profit.

Here's a quick look at how these margins stack up against the company's operational strength:

The company's strong balance sheet, being debt-free with $339 million in cash, deposits, and investments as of June 30, 2025, also provides a buffer against any unexpected cost escalations from suppliers. This financial flexibility means Riskified Ltd. doesn't have to accept unfavorable terms out of immediate necessity.

The overall supplier power dynamic is therefore tempered by internal control over the most valuable input-the data-and the company's solid financial footing, even as they manage the variable costs associated with cloud infrastructure and specialized labor.

You can see the impact of this on their operational leverage:

• Non-GAAP operating expenses as a percentage of revenue declined year-over-year from 50% to 47% in Q2 2025.
• The company expects an annual Non-GAAP gross profit margin of approximately 52% for the full year 2025, at the low end of the target.
• The Money Transfer and Payments category saw 100% year-over-year revenue growth in Q3 2025, showing successful monetization of new vertical expertise.

Finance: draft 13-week cash view by Friday.

Riskified Ltd. (RSKD) - Porter's Five Forces: Bargaining power of customers

You see the power dynamic shift when a significant portion of your revenue base is concentrated among a few very large merchants. Riskified Ltd. definitely has this dynamic at play.

The sheer size of some customers gives them inherent leverage. We are talking about approximately 50 global ticketing, online travel, and ecommerce merchants each processing annual Gross Merchandise Value (GMV) exceeding $1 billion. When a customer represents that scale of volume, their ability to push on pricing, even for a guaranteed service like Chargeback Guarantee, is real.

Still, the platform's deep integration acts as a counterweight. Moving off the Riskified Ltd. platform means ripping out core fraud decisioning logic, which is not a trivial IT project. This technical entanglement creates friction, which translates directly into higher switching costs for the customer, effectively dampening their day-to-day negotiating power.

Here's a quick look at the scale of the business and recent growth that informs this power balance:

To be fair, customers definitely test the limits, especially around the Chargeback Guarantee component, which is a direct financial promise. They can point to competitive pilot results or rival offerings to negotiate better terms. However, Riskified Ltd.'s ability to win back volume or secure multi-product deals suggests their value proposition overcomes price pressure for many.

The stickiness is evident in the success of expanding the relationship beyond the initial service. You see this in the growth of the platform's overall footprint:

• Revenue from products beyond the core Chargeback Guarantee grew 190% year-over-year in Q1 2025.
• The Money Transfer and Payments category saw 100% year-over-year growth in Q3 2025.
• Management anticipates nearly doubling the absolute dollar revenues in Money Transfer and Payments for the full year 2025 versus the prior year.
• A large merchant in Ticketing and Live Events was upsold by taking all remaining volume from a competitor.
• New logos are being landed with multiple products upon contract signing, such as a key fashion retailer in Japan.

If onboarding takes 14+ days, churn risk rises, but successfully landing a key fashion retailer with multiple products right away shows the depth of the current sales motion, which helps lock in revenue streams.

Riskified Ltd. (RSKD) - Porter's Five Forces: Competitive rivalry

You're assessing the competitive heat in the fraud prevention space, and honestly, it's scorching. Riskified Ltd. faces high rivalry from specialized fraud vendors and, increasingly, from payment processors who are building out their own risk tools. This isn't a sleepy market; it's a fight for every major account.

Competition for large-volume customers is intense, which naturally leads to win/loss cycles as merchants test and switch providers. To counter this, Company is focused on vertical and geographic diversification to mitigate rivalry. For instance, in Q2 2025, the top ten new logos won were spread across four verticals and all four geographies the company tracks. Furthermore, seven of the top ten new Chargeback Guarantee logos signed in Q2 2025 were outside the United States, showing that geographic expansion is a key strategy.

Rivalry is fundamentally based on a few core, measurable factors: AI accuracy, the size of the data network, and the structure of guarantee pricing. The performance of the AI is critical; head-to-head pilot results against next-generation competitors have consistently shown lower chargeback rates and higher approval rates for Riskified Ltd.. The data network size is a powerful moat; Riskified Ltd. utilizes over 4 billion historical full-lifecycle eCommerce transactions and data on more than 950 million unique consumers across over 185 countries. That network effect is hard to replicate quickly.

To give you a quick look at the financial context surrounding this competitive environment, here are some key figures from the 2025 fiscal year outlook and performance:

The focus on new product adoption and specific verticals is a direct response to competitive pressures. For example, the money transfer and payments category is a major growth area, with the company on track to nearly double the absolute dollar revenues in this segment for the full year 2025 compared to the prior year. This targeted growth helps secure revenue streams less directly contested by legacy payment processors.

You can see the platform's stickiness in renewals. Riskified Ltd. achieved a 100% renewal rate among its top 20 contracts as of Q1 2025, with nearly half extended as multiyear agreements through 2027, which definitely helps smooth out some of that win/loss cycle volatility.

The gross margin performance also reflects competitive dynamics, as new merchant ramping in newer categories like money transfer and payments initially put pressure on margins, with the non-GAAP gross profit margin at 50% for the first half of 2025. However, by Q3 2025, the margin improved to approximately 51%, driven by better machine learning models and new product revenue.

• AI-powered platform analyzes the individual behind each interaction.
• New product revenue surged ~190% year-over-year in Q1 2025.
• Top new logo win in Q2 2025 was a key fashion retailer in Japan.
• The company is balancing growth between upselling existing merchants and acquiring new clients.

Riskified Ltd. (RSKD) - Porter's Five Forces: Threat of substitutes

You're assessing Riskified Ltd. (RSKD) in late 2025, and the threat of substitutes is definitely a major factor in their competitive positioning. We need to look at what merchants can use instead of a dedicated, advanced solution like Riskified's, especially given their recent $81.9 million in Q3 2025 revenue and updated full-year guidance projecting up to $346 million.

Moderate threat from in-house merchant fraud teams.

Honestly, some larger merchants build out their own internal teams. They have to, especially with regulatory pressure increasing; the FCA's final guidance in April 2025 made it clear that failure to maintain adequate fraud prevention procedures can lead to legal accountability, not just operational headaches. These internal teams can tailor detection settings to block suspicious card-based transactions, but their scope is often limited. For instance, some in-house systems leveraging external alerts only detect fraudulent activities before chargebacks for purchases made using credit or debit cards. Building a team capable of handling the complexity of modern fraud, especially with AI-driven threats, requires significant, continuous investment in talent and technology, which keeps the threat level only moderate for a company like Riskified Ltd. (RSKD).

• Internal teams face liability for fraud under new guidance.
• In-house tools often lack network effect data scale.
• Building expertise requires constant, high-cost talent acquisition.

High threat from basic fraud tools offered by payment gateways (e.g., Stripe, Adyen).

This is where the threat gets serious. Payment gateways offer built-in tools that are 'good enough' for many smaller or less complex merchants, especially since these platforms process massive volumes-Stripe hit about $1.4 trillion in TPV in 2024, and Adyen was close with €1.29 trillion. For a merchant processing a fraction of that, the convenience and low initial friction of a built-in tool can outweigh the need for a specialized third party. The trade-off is often in customization and the speed of model maturity. Stripe's Radar works immediately using network data, but Adyen's custom RevenueProtect model needs 2-4 weeks of transaction data before it truly understands your specific buyer patterns.

New AI-driven 'Agentic Commerce' creates a new type of risk that could substitute current models.

The rise of autonomous shopping agents is fundamentally changing the signal landscape. When an agent makes a purchase, the traditional human-centric signals that fraud models rely on vanish, creating a new risk category that might be better served by entirely different protocols, potentially substituting Riskified Ltd. (RSKD)'s current approach if it doesn't adapt quickly. Fraudsters are weaponizing these agents, and the scale is already visible: Visa reported a 25% increase in malicious bot-initiated transactions globally, including a 40% jump in the U.S., as these agents mimic bot activity or are outright hijacked. This shift to 'person-not-present' transactions means that if a merchant believes a new, emerging standard like Model Context Protocol (MCP) will be adopted industry-wide, they might wait for that native solution rather than paying for a current-generation AI defense.

Merchants may substitute guaranteed protection for lower-cost, non-guaranteed risk scoring.

You're always balancing cost against certainty. Riskified Ltd. (RSKD) offers guaranteed protection, which is premium. However, merchants can substitute this for lower-cost, non-guaranteed risk scoring, effectively accepting a higher internal fraud loss budget in exchange for lower service fees. Consider the chargeback recovery example: a specialized third-party service integrated via a platform like Adyen might achieve a 40% chargeback win rate, whereas a more basic tool might only manage 20%. If a merchant is only paying for a score and takes on the chargeback liability themselves, they might opt for the cheaper scoring service, betting their internal team can recover the difference, or simply absorb the loss to save on the premium for guaranteed protection. The Global Fraud Detection and Prevention Market size is projected to hit $63.90 billion in 2025, showing massive spending on solutions, but the split between guaranteed and non-guaranteed services is where this substitution pressure is felt most acutely.

Finance: draft a sensitivity analysis on the impact of a 100 basis point fee reduction on Riskified Ltd. (RSKD)'s projected $21 million to $27 million adjusted EBITDA range by next Tuesday.

Riskified Ltd. (RSKD) - Porter's Five Forces: Threat of new entrants

Assessing the threat of new entrants for Riskified Ltd. requires looking at the structural hurdles a newcomer would face in trying to replicate their position in the e-commerce risk intelligence space. Honestly, the barriers are significant, built on capital, data scale, and proven performance.

Moderate to high capital barrier needed to cover chargeback losses.

A new player can't just offer software; they often need to offer a guarantee, which means backing up their decisions with capital. The sheer scale of the problem suggests a massive financial commitment is required upfront. The entire e-commerce chargeback issue is estimated to be a $200 billion problem for the industry today. Furthermore, for merchants without strong prevention strategies, every $1 lost to fraud can cost them at least $3 in associated costs, and lost chargebacks can cost 2.5X the transaction amount. To compete with Riskified Ltd.'s established offerings, a new entrant would likely need substantial reserves to underwrite the risk they promise to eliminate or reduce, creating a high capital hurdle.

High barrier to entry for building a competitive, trained AI data network.

The core defense against new entrants is the network effect derived from proprietary data. Building a competitive, trained AI data network demands processing massive volumes of transaction data over time. Riskified Ltd. is operating at a significant scale, processing $36.4 billion in Gross Merchandise Volume (GMV) in the second quarter of 2025 alone, with a first-half 2025 GMV reaching $70.6 billion. This volume feeds their machine learning models, which are constantly improving. For instance, a new refund abuse model launched in Q2 2025 showed an improvement of at least 15% in technical performance over the previous model, a gain only possible with deep, proprietary data access. A newcomer starts from zero, needing years and billions in GMV to catch up to this level of insight.

The data scale barrier can be summarized:

New FinTech or cybersecurity firms could leverage next-gen AI to disrupt.

While the existing barriers are high, the pace of AI development means disruption is always a possibility. New FinTech or cybersecurity firms could potentially leapfrog established players by deploying fundamentally different, next-generation AI architectures that require less historical data to achieve high accuracy, or by focusing on a narrow, high-value niche. The rise of Agentic Commerce-where AI shopping agents transact-is a prime example of a new vector that requires novel solutions. Early data from Riskified Ltd.'s network shows this new traffic is inherently riskier; for example, LLM-referred traffic for one ticketing merchant was 2.3X more risky than Google search traffic, and for an electronics merchant, it was 1.8X riskier. Any new entrant that masters the trust layer for these agentic interactions first could gain rapid traction.

The emerging risks that new entrants might target include:

• Automated reseller arbitrage.
• Fraudulent activity from AI agents.
• Difficulty in applying rules-based fraud management.

Riskified's positive Adjusted EBITDA of $22 million (2025 guidance midpoint) is a good defense.

Financial strength acts as a powerful deterrent. Riskified Ltd. has demonstrated operational discipline, achieving its seventh consecutive quarter of positive Adjusted EBITDA in Q3 2025, with a record 7% margin for that quarter. The full-year 2025 guidance midpoint for Adjusted EBITDA is $22 million, with the Q3 result already hitting $5.6 million. This profitability, coupled with zero debt and $325 million in cash, deposits, and investments at the end of Q3 2025, allows the company to aggressively reinvest in R&D-like the new agentic commerce tools-while still delivering bottom-line results. This financial stability makes it harder for undercapitalized startups to compete on price or sustain long-term R&D investment.

Partnership with HUMAN Security is a proactive move against new fraud types.

Riskified Ltd. is actively closing potential entry points by collaborating with other leaders. The partnership announced in August 2025 with HUMAN Security is a direct, proactive defense against threats stemming from Agentic Commerce. This move combines HUMAN's AI agent visibility and governance (via HUMAN Sightline featuring AgenticTrust) with Riskified's expertise in transaction fraud and chargeback protection. By creating a unified security framework, they aim to set the standard for trust in this new channel, effectively co-opting a major emerging risk area before a pure-play cybersecurity firm can establish dominance there. Riskified is also rolling out its own tools to support this, including AI Agent Approve and AI Agent Intelligence dashboards.