It was only six months ago that Klarna blew up the internet with stories of heavy H1 losses and serious cuts to the work force.
Klarna claims win in mammoth US market
Back then one eye-catching headline was the substantial losses made in the US.
At the time, Payments Cards & Mobile reported that during H1 of 2022 Klarna losses widened to SKr6.2 billion ($581 million) up from SKr1.8 billion in the same period a year ago.
Much of the ballooning expenses were blamed on the US market entry driven by administrative costs related to its rapid international expansion.
Klarna has entered 11 new markets since the start of 2020, and took a number of costly gambits to extend its foothold in the US and Britain, spending heavily on marketing and user acquisition in an effort to chip away at Affirm, its main rival stateside.
Now however, CEO and co-founder Sebastian Siemiatkowski says that they have successfully entered the US market – Klarna saw a 71% year-over-year increase in gross merchandise value (GMV) in the US last year compared to 2021.
The 71% jump in GMV is what helped push the US to overtake even countries in its home continent of Europe to become its largest market by revenue.
Today, Klarna has 34 million users in the US, and its retailer network in the country includes businesses across multiple verticals such as Instacart, Tractor Supply Company, Groupon, Samsung, Etsy and Fossil Group, joining the company’s network of over 500,000 retailers globally.
“In Germany, 80% of the adult population uses Klarna every year,” Siemiatkowski said in an interview with TechCrunch.
“So in the US, we believe we are still in the very early phase. And a lot of that is still up to us — how well we do with merchants and consumers.”
The company now boasts more than 8 million monthly active app users and 30 million total downloads in the US, which compares to 6 million monthly active app users in the US in February 2022.
Credit losses have also been a growing issue for Klarna. In August 2022 credit losses rose more than 50% to SRk2.9 billion.
Today its credit losses in the US have dropped 37%. As the company grows in that market and has more returning customers it is able to build a better risk profile — meaning the number of credit losses will only decline, despite a worsening macro trend in the US.
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