Finance
Buy now, pay later The Klarna company swings to a profit in the first half ahead of the IPO
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‘Buy now, pay later’ company Klarna aims to return to profit by the summer of 2023.
Jakub Porzycki | NurPhoto | Getty Images
Klarna said it posted a profit in the first half of the year after posting a loss last year, as the buy now, pay later pioneer moves closer to its long-awaited stock market debut.
In results published on Tuesday, Klarna said it made an adjusted operating profit of 673 million Swedish krona ($66.1 million) in the six months to June 2024, compared with a loss of 456 million krona in the same period a year ago. Revenue, meanwhile, grew 27% year-on-year to 13.3 billion kroner.
On a net income basis, Klarna reported a loss of SEK 333 million. However, Klarna cites adjusted operating profit as its key measure of profitability as it better reflects the ‘underlying business activity’.
Klarna is one of the largest players in the so-called buy now, pay later sector. Next to peers PayPal, Block‘s Afterpay, and To confirmthese companies offer consumers the option to pay for their purchases through interest-free monthly installments, with sellers paying the service fees through transacreimbursements.
Sebastian Siemiatkowski, CEO and co-founder of Klarna, said the company saw strong sales growth especially in the US, where revenue rose 38% thanks to an increase in seller onboarding.
“Klarna’s vast global network continues to expand rapidly, with millions of new consumers and 68,000 new merchant partners,” Siemiatkowski said in a statement on Tuesday.
Using AI to cut costs
The company achieved its adjusted operating profit “by focusing on sustainable, profitable growth and leveraging AI to reduce costs,” he added.
Klarna is one of the forerunners in the business world when it comes to touting the benefits of using AI to increase productivity and reduce operating costs.
On Tuesday, the company said average revenue per employee over the past 12 months rose 73% year-on-year to SEK 7 million.
It comes as Klarna tries to establish itself as a primary banking provider for customers as it approaches a long-awaited initial public offering.
The company launched its own checking account-like product earlier this month, called Klarna Balance, in an effort to convince consumers to move more of their financial lives to the app.
The move highlighted how Klarna aims to diversify beyond its core ‘buy now, pay later’ product for which it is best known.
Klarna has not yet set a firm timeline for the stock exchange listing, which is expected to take place in the US
However, in an interview with CNBC’s “Closing Bell” in February, Siemiatkowski said an IPO this year was “not impossible.”
“We still have a few more steps and work to do,” he said. “But we would like to become a publicly traded company.”
Separately Klarna earlier this year has divested its own cash register technology activitieswhich allows merchants to offer online payments, to a consortium of investors led by Kamjar Hajabdolahi, CEO and founder of Swedish venture capital firm BLQ Invest.
The move, which Klarna called a “strategic” move, ended competition from rival online payment services including Stripe, Adyen, Block and Checkout.com.