(corrects the number of laid-off employees in the second sentence of the second paragraph. It should read 700 not 7000.)
STOCKHOLM (Reuters) – Growth in the US and UK has given payment service provider Klarna an increase in revenue in the first nine months of the year.
Earnings and payment volume each increased by 22 percent year-on-year, the Swedish fintech announced on Wednesday. Klarna is still in the red: the net loss tripled from January to September to 8.34 billion Swedish crowns (around 760 million euros) compared to the previous year. In the third quarter, however, losses fell by 41 percent compared to the previous quarter.
The first half of the year did not go smoothly for Klarna due to the reluctance of consumers, who bought less in view of the war in Ukraine and rising inflation. In order to save money, the company laid off 700 employees and thus ten percent of the workforce, and the company’s valuation shrank. A year ago, investors valued the fintech at around 45 billion euros. The heavy losses in value at tech companies in the weakened economy pushed the valuation down by 85 percent to 6.5 billion euros in the summer.
Klarna boss Sebastian Siemiatkowski was nevertheless optimistic: In the second half of the coming year, the fintech should make monthly profits. “It’s important to distinguish that we could still make losses for the full year 2023.” Klarna is one of the largest European fintechs and was last in the black in 2018. He does not expect any further large waves of layoffs.
Revenues rose to 1.35 billion euros in the first nine months of the year and payment volume reached 58 billion euros thanks to the US business. US business volume is up 92 percent year-on-year but is under regulators’ scrutiny. The US Consumer Financial Protection Bureau wants to regulate providers of “Buy Now Pay Later” financial products more strictly in the future.
(Report by Supantha Mukherjee and Marta Orosz. If you have any questions, please contact our editorial team at [email protected] (for politics and the economy) or [email protected] (for companies and markets).)