Swedish payments company Klarna has announced a substantial increase in its operating loss for the first half of the year. The company attributes this loss to various factors, including higher employee costs, increased credit losses, and continued investments in market expansion. The operating loss amounted to SEK6.17 billion ($578.52 million), compared to SEK1.76 billion in the same period last year. Additionally, total credit losses rose to SEK2.85 billion, up from SEK1.85 billion in the previous year.

Klarna, famous for its “buy now, pay later” (BNPL) service, saw rapid growth during the pandemic. However, the business sentiment has worsened due to factors such as inflation and the ongoing war in Ukraine. To combat these challenges, Klarna reduced its workforce by around 10% in May. Last month, the company raised $800 million at a valuation of $6.7 billion, a significant decrease from its previous valuation of $46 billion.

Sebastian Siemiatkowski, the Chief Executive of Klarna, acknowledged the shift in investors’ priorities. While growth was prioritized in recent years, investors now emphasize profitability. Consequently, Klarna has adjusted its plans for 2022 and will take prudent measures to address the evolving challenges.

Despite the operating loss, Klarna reported positive growth in other areas. The company’s revenue increased by 24% to SEK9.1 billion, and its gross merchandise value rose by 21% to SEK396 billion. However, total operating expenses before credit losses also saw a significant increase, reaching SEK10.81 billion from SEK6.26 billion.

Klarna’s platform boasts 150 million consumers across 45 markets, with Germany, the US, and Sweden being its top markets. Despite the setbacks, the company remains committed to its market expansion goals. Klarna will now prioritize achieving profitability while continuously providing innovative payment solutions for its customers.

Helpful links:

1. Klarna website
2. Forbes article on Klarna’s losses