Klarna reports a decline in losses, forecasts profitability by summer
- Klarna's annual losses in 2022 were the largest in history as stated in its Q4'22 results.
- Its Q4'22 losses dropped YoY, with the firm forecasting profitability by summer.
Klarna Bank AB, commonly referred to as Klarna, recorded its largest annual loss in 2022 as seen in its Q4’22 results. Even so, its management maintains that the company is on track to profitability. In fact, it anticipates that the company will be profitable by this year’s summer on a month-on-month basis. The last time that the firm recorded a full year of profits was in 2018.
Klarna Q4’22 results
Klarna reported net losses of 1.9 billion kronor ($182 million) for the three months that ended in December 2022. Notably, this is a significant improvement from the 4.6 billion kronor losses recorded in the previous year at a similar period. Even with the losses, its revenue surged by about 20%.
The firm’s CEO, Sebastian Siemiatkowski stated, “we are making concrete progress towards profitability, simultaneously driving growth well ahead of e-commerce and reducing credit losses and costs”.
Klarna, which is a Swedish-based fintech firm, was once the highest-valued privately owned company in Europe. As a provider of buy now, pay later (BNPL) products, its growth was boosted by the heightened online shopping amid the COVID-19 pandemic. However, headwinds in the macro environment had it slash its workforce and valuation in the past year.
The American market
Despite the recorded losses, one of the areas that Klarna appears to be getting it right is the US market. Indeed, successfully expanding in this region has been one of the firm’s long-standing goals.
Notably, the US has become Klarna’s largest market with about 30 million customers. Besides, even with stiff competition from the likes of PayPal and Affirm, the US has become its top market in December with regard to revenue. It saw gross merchandise volumes in the country rise by 71% in 2022 compared to the previous year. This refers to the amount it processed for the retail customers.
With regards to this significant growth, Siemiatkowski noted, “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”.
The firm holds a similar view on other regions; especially the European market. In particular, it appears keen to expand its reach in Spain, France, and Italy as it has done in Germany and the UK.