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Klarna losses quadruple

Klarna losses quadruple

Embattled BNPL giant Klarna saw its net losses nearly quadruple in the first half of 2022 on higher credit defaults, increased employee costs and investment in market expansion.

In a letter to shareholders, CEO Sebastian Siemiatkowski says the firm has been "operating in a very different environment" in the first half of 2022 as it faced up to the fallout from Russia's invasion of Ukraine, the economic downturn and a "huge shift in investor sentiment".

First half revenue was $950 million, up 24% on H1 2021, driven largely by growth in the US. However, net losses for the period were $581 million, compared to $141 million the previous year.

The firm says the losses were caused by rising defaults on borrowing and the cost of integrating recently acquired price comparison site PriceRunner.

Employee costs also rose. In May, the company said it would cut 10% of staff but the effect of this has not yet been seen.

Klarna rode the BNPL wave during the pandemic, hitting a $46 billion valuation last summer, before crashing down this year, forced to raise funds at huge discount.

Writes Siemiatkowski: "We’ve had a few years now where growth has been really heavily prioritised by investors. Now, understandably, they want to see profitability."

Comments: (1)

A Finextra member
A Finextra member 01 September, 2022, 09:021 like 1 like

Yes the investors want to see profitability - from a company where growth trumped prudence and credit was available to all comers.... fraudsters, minorities, the uncredit-worthy, Millenials and i am sure a predominance of the younger GenZ crowd....  Unfortunately the perfect inflationary storm is now blowing across the credit world and a failure to have hatches to batten down, may be a fatal flaw.  Triples all round?  maybe not this time!