Klarna swings into profit as bosses plot blockbuster IPO
Buy-now pay-later firm Klarna has swung into the black for the first full quarter in four years after rolling out a major cost-cutting programme and slashing the number of borrowers defaulting on their debts.
The Swedish fintech firm said today it had booked an operating profit of SEK 130m (£9.63m) in the third quarter, up from a loss of SEK 2bn in the same period last year, in its first full quarter of profitability since 2019.
Revenues rose by over 30 per cent in the same period last year to SEK 6bn.
Profits for the firm come after boss Sebastian Siemiatkowski set the fintech on course for post-summer profitability mid-way through last year, amid a torrid time for the technology sector that forced firms to slash jobs and rein in their growth plans.
Klarna laid off ten per cent of its staff last year and was forced to rein in its valuation by 85 per cent to raise money from investors.
The push to profit has also been lifted by efforts to slash the amount of borrowers defaulting on their debts. Defaults have fallen by 56 per cent over the past 12 months.
In a statement today, Siemiatkowski the firm had “achieved exactly what we set out to do” and would now ramp up its investment.
“Our growth has accelerated in [the third quarter] and we will build on this momentum in [the fourth quarter] with further investments to drive value to our consumers and merchants alike,” he added.
Klarna has been rapidly pushing into the US since 2019 and said today its gross merchandise value, the total sales using its products, was up by nearly 50 per cent over the year. Wider GMV across the group surged some 22 per cent YoY to SEK 243bn.
The news comes as it was revealed that Klarna had set up a new UK-based holding company as a precursor to a shift in the public markets.
The restructuring has been agreed with the firm’s largest shareholders, including venture capital giants Sequoia and Heartland, and would essentially simplify its corporate structure ahead of an IPO. A spokesperson for the firm has said that the move does not signal that it will float in the UK, however.
“This is an administrative change that has been in the works for over 12 months and does not affect anyone’s roles, nor Klarna’s Swedish operations,” the firm said.