Klarna presents (still) mixed results

Klarna has just presented its business results for the first half of 2022. While the BNPL giant underlines its American success and the growth of its activities, it must also face a fourfold increase in its losses. This information underlines the difficulties that the player has experienced in the face of the explosion of the cost of risk, but also its plan to balance its business.

FACTS

• Klarna reports growth in its US registered transaction volume of an estimated 109% in the US.

• The BNPL giant also highlights the fact that the frequency of purchases by US consumers using Klarna has increased by 37%. Klarna now has 30 million US users who can use its services at 49 of the top 100 US retailers.

• And globally, Klarna currently estimates that its revenue has grown by 24%. The Swedish group now has 150 million consumers and over 450,000 retail partners in 45 countries.

• At the same time, Klarna's losses have increased dramatically. The losses are getting worse, even though Klarna was already breaking records last March. The fractional payment specialist finally recorded 581 million dollars in losses in the first half of 2022, a fourfold increase compared to the previous period.

CHALLENGES

• While its half-year operating losses have more than quadrupled compared to the same period in 2021, they are notably weighed down by :

  • higher staff costs, which Klarna hopes to control by reducing its workforce by 10% last May

  • higher credit losses,

  • new acquisitions,

  • Continued investment by Klarna to expand into new markets.

• The challenge is to regain investor confidence: the sharp drop in the fintech's valuation illustrates the market downturn in a very volatile and anxiety-inducing market. Since last spring, Klarna has been working to regain this confidence through numerous corrective measures. In particular, it has improved scoring, lowered the acceptance rate and increased transparency in the communication of its offers. In this context, the strong growth of its American business should help it to do so.

MARKET PERSPECTIVE

• In 2021, the presentation of Klarna's financial results, and the official announcement of its losses, had played against it and led to its devaluation. Today, the situation is even more tense as institutions are looking into the case of fractional payments, in order to limit their explosion.