Swedish fintech giant Klarna has reported a decrease in operating losses for the last quarter of 2022, indicating optimism about its path to profitability. The company posted operating losses of SEK3.51 billion (£279 million), a 43% decrease from the previous year. However, its net loss for the full year widened from SEK7.1 billion to SEK10.4 billion.
Despite laying off a significant number of employees last year, Klarna remains a popular choice among fashion companies and recently enlisted Paris Hilton as the face of its new global campaign. In Q4, the company saw net losses decrease to SEK1.9 billion and credit losses fall 18% to SEK1.4 billion. The increase in gross merchandise volume (GMV) of its loans by 22% to SEK242 billion highlights the growing popularity of buy now, pay later options. Klarna’s consumer base has now reached 150 million globally, with the US surpassing Germany as its largest market in terms of revenue in December, with a 71% year-on-year increase in GMV.
Co-founder and CEO Sebastian Siemiatkowski attributed the rise in GMV to the success of the company’s strategy. However, Klarna has faced criticism and pressure to address irresponsible spending. To combat this, Klarna has announced the introduction of late payment charges for UK customers to discourage loan defaults. Starting midway through this month, customers who miss payments will face fees of up to £5. Fees will be capped at 25% of the order value, with a maximum of two fees per order.
While Klarna continues to operate at a loss, its efforts to reduce losses and increase profitability demonstrate its commitment to long-term success in the competitive buy now, pay later market. Klarna’s ability to adapt and face challenges positions it as a prominent player in the fintech industry, influencing the future of retail financing.
Useful links:
1. Klarna’s official website
2. What is Fintech? – Investopedia
