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Fraud Prevention Software Firm Riskified Explores Sale

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Riskified, a New York-based company specializing in fraud prevention software for e-commerce, is exploring strategic options, including a potential sale, after attracting interest from multiple parties, according to sources familiar with the matter. The company, originally founded in Israel, is working with investment bank Qatalyst Partners to evaluate takeover approaches, with discussions remaining in the early stages.

Potential buyers for Riskified include digital payment processing firms, online shopping platforms, cybersecurity companies, and private equity firms. However, the sources cautioned that a deal is not assured. Following the news, Riskified’s stock price rebounded, surging nearly 9% on Wednesday.

Riskified, which went public nearly four years ago through an initial public offering, is currently valued at around $860 million. The company has faced significant challenges, with its stock plummeting more than 80% from its peak in September 2021 to its close on Tuesday. Despite its success in providing fraud prevention software for retailers, Riskified has not been profitable since its shares began trading.

For the quarter ending December 31, the company reported a widened net loss of $4.1 million, compared to a loss of $3.3 million in the previous year. This financial setback was partially attributed to the loss of several large customers in some of its key sectors.

Founded in 2013, Riskified provides fraud prevention services to e-commerce businesses, helping retailers protect digital transactions from fraudsters. Notable clients include luxury fashion brand Prada, online travel platform Booking.com, and jewelry brand Swarovski.

Shopify Reports Strong Holiday Sales, But Profit Outlook Disappoints

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Shopify (SHOP.TO) experienced its strongest quarterly revenue growth in three years on Tuesday, driven by robust consumer spending and the company’s integration of AI features aimed at supporting its sellers. The Canadian e-commerce giant reported a 31% year-over-year revenue increase, reaching $2.81 billion for the fourth quarter, surpassing analysts’ expectations of $2.73 billion.

The company’s success was fueled by strong holiday sales and the launch of its AI-driven tools, known as ‘Shopify Magic,’ which assist merchants with tasks such as inventory management and image generation. These AI tools are available to all subscription tiers for free, further attracting merchants to the platform.

Despite the strong revenue growth, Shopify’s shares fell approximately 2% in early trading. Investors expressed concerns over the company’s weaker-than-expected profit forecast for the current quarter. The company’s high investments in technology, marketing, and global expansion, coupled with rising cloud and infrastructure hosting costs, have led to concerns about margin growth.

Shopify’s CFO, Jeff Hoffmeister, acknowledged that while these costs may not significantly impact future quarters, the company plans to continue investing heavily in research and development. This expansion strategy includes venturing into new markets, which, while promising, could put pressure on profitability in the short term.

The company’s forecast for gross profit growth in the current quarter—projected to be in the low-twenties percentage range—falls below analysts’ expectations of a 24.2% increase. Additionally, Shopify’s forecast for operating expenses as a percentage of revenue, which is expected to be between 41% and 42%, also exceeded analysts’ expectations, further contributing to investor concerns about potential profitability challenges.

JD.com Enters China’s Competitive Food Delivery Market

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Chinese e-commerce giant JD.com (9618.HK) is expanding into the country’s food delivery sector, announcing on Tuesday its move to recruit restaurants for its new service, JD Takeaway. The company posted an invitation on its official Weixin account, offering a compelling incentive for restaurants: “Join us now, zero commissions all year round!”

Merchants who sign up with JD Takeaway before May 1 will enjoy a full year of commission-free services. JD.com aims to provide extensive support to these businesses, promoting the sustainable and healthy development of the food delivery industry.

China’s food delivery market is highly competitive, with two major players dominating the space: Meituan (3690.HK), the market leader, and Eleme, owned by Alibaba (9988.HK). JD.com’s entry into this market comes at a time when the company is facing intense competition in the broader e-commerce industry, dominated by giants like Alibaba Group and PDD Holdings (PDD.O), as well as rising platforms such as Douyin.

To stay competitive amid an economic slowdown and declining consumer spending power, JD.com has rolled out discount campaigns. However, these efforts have contributed to a decline in the company’s share price. Despite this, JD.com continues to leverage its robust, self-run logistics network, offering same-day or next-day delivery across most regions of China.