Boss of Swedish buy now, pay later firm Klarna expects to return to profit despite growing pressure on the industry
The boss of Swedish buy now, pay later (BNPL) firm Klarna expects to return to profit despite growing pressure on the industry.
Sebastian Siemiatkowski, 41, who co-founded the company in 2005, said it was ‘on track to achieve profitability this year’ following a difficult 2022, when its valuation fell to £5.4billion from £37.2billion as the fintech sector was hit by a downturn after a pandemic boom.
That forced it to scale back its business by axing 700 staff.
Klarna last made an annual profit in 2018 and has not made a quarterly profit since 2019 or a monthly profit since August 2020.
Last year, it made a record loss of £830m, even as Siemiatkowski’s pay for 2022 jumped 35 per cent to £1.05m. Figures yesterday showed losses narrowed to £98m in the first quarter from £196m last year.
Struggle: Klarna last made an annual profit in 2018 and has not made a quarterly profit since 2019 or a monthly profit since August 2020
But there were credit losses of £60.2m, down from £90.3m in 2022. Predictions of a return to profitability came after it sealed a partnership with holiday home rental app Airbnb in the US and Canada to allow users to spread payments over six weeks.
BNPL allows customers to split the cost of purchases into instalments and has exploded in popularity with firms such as Klarna signing partnerships with brands such as Nike and Ikea.
NatWest and Santander banks, as well as Apple, have launched their own versions. But there are fears shoppers are encouraged to overspend, building up debt.
The Treasury has unveiled plans to regulate the sector and legislation to oversee the industry is due before Parliament this year.