Klarna, the prominent Swedish payments giant that offers buy now, pay later services, has reported a reduction in operating losses, demonstrating its progress towards profitability. While the company recorded a net loss of SEK10.4 billion for the full year, compared to SEK7.1 billion in the previous year, its operating losses for the last quarter of 2022 decreased by 43% to SEK3.51 billion. Despite these losses, Klarna remains a popular choice for fashion companies and recently enlisted Paris Hilton as the face of its new global campaign.

During the fourth quarter, net losses were reduced to SEK1.9 billion, down from SEK4.6 billion in the same period the previous year, and credit losses experienced an 18% decline to SEK1.4 billion. The gross merchandise volume (GMV) of Klarna’s loans rose by 22% to SEK242 billion, indicating the increasing popularity of its buy now, pay later services. Currently, the company has an impressive consumer base of 150 million globally. December marked a significant milestone for Klarna, as the United States overtook Germany to become its largest revenue-generating market, experiencing a 71% year-on-year increase in GMV.

Co-founder and CEO Sebastian Siemiatkowski views the rise in GMV as an encouraging sign of the success of their strategy. Additionally, Klarna has unveiled its plans to introduce late payment charges for customers in the United Kingdom, aiming to minimize loan defaults. Starting in the middle of the month, customers who miss payments will face fees of up to £5, with a maximum of two fees per order or up to 25% of the order value. Critics argue that Klarna’s no-fee approach facilitates irresponsible spending, thus justifying the need for such charges.

Despite the losses, Klarna’s growth trajectory and expanding user base underscore its continual triumph in the fiercely competitive buy now, pay later market. By establishing strategic partnerships with fashion brands and renowned celebrities, Klarna solidifies its position as a leader in the payments industry. The introduction of late payment charges for UK customers demonstrates the company’s commitment to responsible lending practices and efforts to mitigate loan defaults. As Klarna inches closer to achieving profitability, it is poised to further bolster its presence and influence within the global payments landscape.

Useful links:
1. Klarna Official Website
2. Klarna’s Progress Towards Profitability (source)