Fintech & Ecommerce

Klarna Reports Earnings Results for First Half of 2023

Klarna has released the financial results of its operations for the first six months of 2023, which testified to the positive dynamics of the second quarter, which exceeded initial expectations.

Klarna Reports Earnings Results for First Half of 2023

This company, which is based in Stockholm, provides consumers with a global payment network and a virtual trading assistant based on artificial intelligence. The firm’s press release, which was published last Thursday, August 31, indicates that the brand was able to successfully implement its business strategy, which provides for a focus on achieving a high level of profitability and efforts aimed at ensuring business growth.

Klarna CEO Sebastian Siemiatkowski said he was proud of the company’s financial performance. According to him, the firm has already outstripped the goal, which was expected to be achieved at the end of this year.

The press release notes that one of the success factors of the company is its approach to guaranteeing short-term lending to consumers. This concept, which defines one of the aspects of the activity, combined with the seller-funded approach, contributed to the fact that credit losses showed a decrease of 41% year-on-year in the first half of the year. As a result, the global level of the firm’s credit losses for the first six months of 2023 was fixed at 0.39%.

The press release also contains information that Klarna’s gross sales in the second quarter increased by 14% compared to the result for the same period in 2022. This indicator exceeds the zero global growth rate of e-commerce.

The company’s revenue in the second quarter showed an increase of 17% year-on-year. The firm noted that the improved dynamic in this indicator is due to the expansion of the brand’s network of trading partners, which includes Airbnb, Boden, Deichmann, Selfridges, Juventus, Milan, and Uniqlo. The company’s revenue in monetary terms amounted to $50.3 billion.

Also, in the period from April to June of this year, the firm recorded a gross profit in the US market. The positive result of the brand in the United States is observed for the third quarter in a row. In part, the positive dynamic in this region is due to cooperation with Airbnb, which will spread to the European market in the coming weeks.

Sebastian Siemiatkowski says that many predicted that the firm would face serious difficulties since currently its activities are carried out in a macroeconomic space filled with problems, where high-interest rates are one of the main negative circumstances. The head of the company said that his experience of survival during the financial crisis of 2008 allowed him to understand that a strong and sustainable business model of Klarna will cope with external conditions unfavorable to development and growth. Sebastian Siemiatkowski says that the company did what it originally intended to do in an unstable situation.

Currently, the firm is also working on the implementation of initiatives related to the use of artificial intelligence. These projects are designed to increase the level of productivity and improve the service of the company’s 150 million customers living around the world. Some initiatives have already been successfully implemented. For example, an innovative solution within the customer support service increased the efficiency of dispute resolution between sellers and allowed saving more than 60,000 hours per year.

Klarna has also expanded its list of offers for consumers, presenting a search function based on artificial intelligence, and a digital shopping assistant Ask Klarna. These solutions provide users with access to the results of a selection of 10 million products.

The firm also stated that the use of artificial intelligence-based tools in the first half of 2023 contributed to a decrease in total operating expenses before deducting credit losses by 24% year-on-year.

The company’s press release states that the firm’s mission is to strive for the introduction of revolutionary innovations in the field of retail banking. The brand also stated its commitment to the idea of prioritizing the value of customers, not their income.

As we have reported earlier, Klarna Releases Donations and Other Tools for Climate Conscious Consumers.