Swedish Payments Provider Klarna Losses Quadruple in H1 2022

Losses at Swedish payments provider Klarna quadrupled in a bruising first half for Europe's one-time most valuable private tech company, as it prepares to slash costs in an effort to find a route back to profitability.

The payments company on Wednesday (September 1, 2022) reported a net loss of SKr6.2 billion ($581million) for the first half of 2022, compared with SKr1.4 billion a year earlier.

Klarna attributed the deepening losses to higher employee costs, investments in integrating newly acquired Swedish price comparison service PriceRunner and rising credit losses, reflecting the greater difficulty of underwriting new customers with limited credit histories.

Revenues increased 24% year on year to SKr9.1 billion, driven by growth in markets, including the US, where Klarna has built up 30 million users — a fifth of its global total. Its gross merchandise volumes grew 21% to SKr396 billion.

"Klarna has been operating in a very different environment in the first half of 2022," said Sebastian Siemiatkowski, chief executive and co-founder. "When we set our business plans for 2022 in the autumn of last year, it was a very different world than the one we are in today."

After several attempts to raise cash at higher valuations failed, the value of Klarna's shares slumped from $46 billion in last June to $6.5 billion in earlier this July​. Whereas, just over a week later, the payment provider announced on July 11 that it had closed a $800 million funding round at a $6.7 billion post-money valuation.

Klarna stated in May it would slash its workforce by 10% as it tries to cut costs.

Siemiatkowski said the company would look at tightening its lending, especially to new customers, although he said it would take some time for the impact of this decision to become apparent.

Source: Financial Times