Fintech & Ecommerce

Klarna Posts Narrower Full-Year Losses

Klarna shrank its net losses by 73% last year.

Klarna Posts Narrower Full-Year Losses

Currently, the mentioned fintech company, which is based in Stockholm and provides BNPL services, is preparing for one of the largest initial public offerings (IPO) of 2024. The revenue of this firm during 2023 showed an increase of 22% year-on-year. In monetary terms, the corresponding figure was 23.5 billion kronor ($2.3 billion). The company published its financial statements on Wednesday, February 28.

The fintech player from Sweden is demonstrating accelerated growth rates in preparation for the activation of its business in the financial services market of the United States. Currently, this country is the largest market for the company.

In the fourth quarter of last year, Klarna recorded losses of about 400 million kronor. In the previous three months, the company had been on a profitability trajectory. The firm’s total net losses were recorded at 2.5 billion kronor.

Klarna Chief Executive Sebastian Siemiatkowski said that as part of continuing the path to long-term profitability, the company decided to invest in growth during the peak shopping season in the fourth quarter of last year.

The firm is currently creating a kind of base for an IPO. The implementation of this intention will allow the company to gain new investors. Also, the listing may be a kind of the beginning of a new stage in the history of this fintech player after the previous two years, which were very turbulent for Klarna.

Media reported this week that the company is considering a valuation of about $20 billion. According to preliminary information, the firm is currently working on making a detailed plan for the listing of shares in the third quarter of 2024. However, in January, Sebastian Siemiatkowski hinted that an IPO in the United States could be an event of the near future. The mentioned statement, which does not contain specifics, but is a clear signal, indicates that an IPO in the United States may take place earlier than the third quarter.

The price tag of Klarna has recently shown a negative dynamic. In 2022, the corresponding figure dropped to $6.7 billion. Before the coronavirus pandemic, the company’s price tag was approximately $45.6 billion. The negative trend is the result of investors reconsidering the prospects for the growth of easy credits against the background of an increase in interest rates.

It is worth noting that the company’s price tag indicator has improved since 2022. According to Bloomberg Intelligence estimates, the corresponding figure was about $17.5 billion in January this year. The European fintech sector is currently in a state of recovery. The players in this area are focused on margin management and cost optimization.

Klarna’s financial results were released after Worldline SA reported its first annual loss as a public company.

Klarna’s operating expenses decreased by 16% in 2023, amounting to 14.5 billion kronor. At the end of last year, the number of employees of the company was 4,201 people. At the beginning of 2023, the firm employed 5,441 people. Reducing the workforce is a measure within the framework of actions to return the firm to profitability.

Klarna invests in generative artificial intelligence. The company reported that the corresponding decision allowed it to achieve the result in the form of some cost savings. The firm, using machine intelligence technologies, has made progress in automating the customer service process.

Klarna, once Europe’s most valuable startup, currently offers lending services to approximately 150 million customers worldwide. The company’s offers help reduce the cost of online purchases.

Last year, the value of goods sold using Klarna solutions increased by 17%. The company’s credit losses decreased by almost a third in 2023, amounting to 0.38% of the value of products sold. This result was achieved in the context of inflationary pressure on consumers in many markets.

This year Klarna launched a monthly subscription plan in the US. The company offers local consumers discounts on purchases and solutions to create a new source of income. Klarna currently serves 37 million consumers in the United States. Compared to 2022, this figure has increased by 44%.

In recent weeks, Klarna shareholders have been embroiled in a dispute on the board of directors related to the role of co-founder Victor Jacobsson at the firm. Sequoia, a major backer, called for the resignation of the company’s chairman, Michael Moritz, but changed this position and replaced its own representative on the board of directors.

As we have reported earlier, Klarna Wins Regulatory Approval in UK.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.