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Klarna losses widen to $1 billion – profitability promised for Q3

Klarna losses widen to $1 billion – profitability promised for Q3

Yesterday we reported on Klarna and the company’s success in grabbing major market share in the US and UK – today we see at what cost.

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Klarna losses widen to $1 billion

The BNPL specialist has reported its biggest annual loss in its history, but maintained it was on track to return to profitability.

The privately held FinTech, whose valuation was slashed from $46 billion to $6.7 billion last year, reported an annual net loss of SKr10.4 billion ($1 billion), a 47% increase over 2021.

Net losses narrowed in Q4 to SKr1.9 billion from SKr4.6 billion a year earlier. Credit losses were SKr1.4 billion in the three months, an improvement of 18% on the same period in 2021.

“We are making concrete progress towards profitability, simultaneously driving growth well ahead of e-commerce and reducing credit losses and costs,” said chief executive Sebastian Siemiatkowski.

Siemiatkowski told the Financial Times in November 2022 that he expected the company to start making profits again by Q3 2023, although he warned it could still record an annual loss in 2023.

Klarna, which was founded in 2005 by a trio of business school friends in Stockholm, was regularly profitable until 2019 when it started an aggressive expansion in the US.

It last made an annual profit in 2018, a quarterly profit in Q2 of 2019 and a monthly profit in August 2020.

The company hailed two consecutive quarters of falling credit losses. Revenues in Q4 increased 19% to SKr5.6 billion.

Growth was particularly strong in the US where its gross merchandise volumes — how much it processes for its retail customers — increased 71% last year, making the country its biggest market by revenue in December despite competition from rivals such as Affirm and PayPal.

The post Klarna losses widen to $1 billion – profitability promised for Q3 appeared first on Payments Cards & Mobile.

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