Swedish buy now, pay later firm Klarna reduced its losses by roughly 67% in the first half of 2023, as the company dramatically cut costs in a bid toward profitability.
The company reported overall net operating income of 9.2 billion Swedish krona ($843.5 million), up 21% year over year. Failing to record a half-year profit, the firm posted a net loss of 2.1 billion krona for the period, down 67% from 6.4 billion krona between January and June 2022.
Klarna did, however, say that it recorded one month of profitability in the first half of the year, ahead of its internal target to post profit on a monthly basis in the second half.
Klarna founder and CEO Sebastian Siemiatkowski hailed the firm’s profitability milestone, saying that its results “clearly rebut the misconceptions around Klarna’s business model, evidencing that it is incredibly agile and sustainable,” and supporting a “healthy consumer base.”
“Some claimed Klarna would face difficulties in the tough macro-economic climate with high interest rates, but having led the company through the 2008 financial crisis I knew we had a strong and resilient business model to see us through. Despite the volatile environment, we have done exactly what we set out to do,” Siemiatkowski said.
Credit losses, a measure of how much the company sets aside for customer defaults, sank by 39% to 1.8 billion krona from 2.9 billion krona.
Buy now, pay later, or BNPL, firms allow shoppers to defer payments to a later date or purchase things over installments on interest-free credit.
These firms are able to offer zero-interest loans by charging merchants, rather than customers, a fee on each transaction — but as interest rates have risen, the BNPL funding model has been challenged.
Siemiatkowski previously told CNBC the company was planning to achieve profitability on a monthly basis in the second half of 2023, suggesting that an aggressive cost-cutting strategy in 2022 — which included hundreds of redundancies — had paid…
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