Klarna Bank AB pared losses in the fourth quarter and said it’s on track to make a profit by this summer, as more of its growing customer base paid back their debts while the firm’s cost-cutting drive continued.
(Bloomberg) — Klarna Bank AB pared losses in the fourth quarter and said it’s on track to make a profit by this summer, as more of its growing customer base paid back their debts while the firm’s cost-cutting drive continued.
The Stockholm-based fintech reported a net loss of 1.9 billion Swedish kronor ($182 million) for the three months through December, down from 4.6 billion kronor in the same period a year ago. Revenue rose by about 20% to 5.6 billion kronor.
Klarna, once Europe’s most valuable startup, offers buy now, pay later credit for 150 million shoppers looking to spread the cost of online purchases. It said credit losses fell compared to a year ago to 1.4 billion kronor, even as the gross merchandise value of its loans rose by about a fifth to 242 billion kronor.
Chief Executive Officer Sebastian Siemiatkowski repeated the firm’s goal to be profitable on a month-by-month basis by this summer, boosted by the fintech’s growth in the US as well as a “tremendous agility” in underwriting new loans. “That’s the ambition. I still believe that we’ll be able to do that,” he said in an interview with Bloomberg News.
Operating expenses fell year-on-year for the quarter, though over 2022 they rose 35% to 21.5 billion kronor. Siemiatkowski said there could be “minor adjustments” to some offices or departments but did not expect further major cuts after last year’s downsizing. “I think maybe in a few months we can start saying it’s actually exciting,” he said.
US Growth
Klarna has targeted expansion in the US after raising $800 million last year, slashing its valuation to $6.7 billion from about $45.6 billion in the process. With 30 million customers, the US is now Klarna’s biggest market, with a 71% increase in volumes year on year.
“The US market is just crazy big and compared to what we are used to coming from a country like Sweden. So there’s a huge tremendous opportunity there,” Siemiatkowski said.
Still, he added there was more room for growth in the ecommerce app’s European market, particularly in France, Italy, and Spain where it’s yet to build the same scale as in the UK and Germany.
Klarna ended the year with 17.8 billion kronor in cash or equivalents, a decline of 1.7 billion kronor during 2022 even after its fundraising. Its cash flow from operating activities turned positive, thanks in part to customers using its savings accounts in Germany and Sweden.
–With assistance from Abhinav Ramnarayan.
(Updated with CEO comments throughout.)
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