Things continue to look up for European fintech giant Klarna. This time last year, it would have been difficult to say that.
Alex Wilhelm explained the ins and outs of Klarna's first-quarter earnings in May, along with some history of its rather tense 2022, when the company's valuation took a hit and there were layoffs.
The company, best known for its buy now, pay later (BNPL) offerings, has additional good news: It reported a profitable month in the second quarter as gross merchandise volume grew 14% to $238,6 billion. Swedish crowns ($21,8 billion) from 209,2 billion crowns ($19,1 billion) in the same quarter of 2022.
The revenue in the second quarter They grew at an even faster pace, up 17% to 5.500 billion crowns ($502,2 million), up from 4.700 billion crowns ($429.100 billion) in the prior-year period. The company's total operating income increased 21% compared to the prior year period.
Meanwhile, Klarna reported that its credit losses continued to improve after declining 41% compared to the second quarter of 2022, noting that “our responsible lending approach has allowed us to maintain credit losses at continued low levels of 0,39. XNUMX% of GMV in the first semester. of the year, as revenue and GMV continued to grow.”
Mary Ann Azevedo reported in June 2022 on Klarna's (and its competitor Affirm's) efforts to attract American customers. It looks like it's paying off so far for Klarna: The company reported that the second quarter represented its third consecutive quarter of gross profits in the U.S. Further boosted by a new relationship with Airbnb to offer flexible payments to guests. That offering is expected to expand to Europe soon.
CEO Sebastian Siemiatkowski said Klarna has built a “strong, healthy business model” and the company has been thinking about profitable growth, especially as investor sentiment has shifted in that direction over the past year. last year.
"We had to make some painful decisions a year ago," Siemiatkowski said. “Since then we have focused on optimization and that has paid off, especially now that we have three consecutive quarters of growth in the US.”
It also noted that Klarna was affected by the overall flat growth of the e-commerce industry over the past year, particularly in most of its mature markets in Europe, where between 50% and 80% of the market uses Klarna.
Looking ahead, Siemiatkowski said Klarna's long-term strategy was designed with the intention of betting on multiple functions and continuous innovation.
“By having an interest-free buy now, pay later offer at the point of sale, people will still find value, but you can't bet your entire business on it,” he said. “For example, our customers, when they open their purchase history, they see images of the items they purchased and they like that. We have to keep creating features like that.”
