Klarna has reported its fifth annual loss in a row ahead of a possible stock market listing.
The Swedish “buy now, pay later” lender narrowed its net losses for 2023 to SwKr2.5 billion (£191 million) from SwKr10.4 billion in 2022. It reported that revenues had risen by 22 per cent during the financial year as it gets ready for a long-rumoured initial public offering.
Klarna, which was founded in 2005, was profitable until 2019, when it began investing heavily in new markets, including an aggressive expansion in the United States. Once Europe’s most valuable start-up at $45.6 billion in 2021, it was valued at $6.7 billion a year later as high interest rates hit the financial technology sector.
This week it was reported that Klarna is considering seeking a valuation of about $20 billion if, as expected, it floats on the stock markets in New York.
Just over a week ago Sequoia, the American investment group that owns 22 per cent of Klarna, failed in an attempt to remove Sir Michael Moritz, a former partner at Sequoia, as the lender’s chairman. Moritz, 69, is seen as an ally of Sebastian Siemiatkowski, 42, the Klarna founder and chief executive. The clash, believed to be around possible governance changes at the company before the potential flotation, culminated in the departure of Matthew Miller, a Sequoia partner, from Klarna’s board.
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Siemiatkowski said: “While we continue on our journey to long-term profitability, we made a conscious decision to invest in growth in the peak shopping season of the fourth quarter. We will continue to invest wisely for growth and will focus on being cost-effective on our path towards annual profitability.”
Credit losses for the company fell by 32 per cent year-on-year in 2023. Siemiatkowski added that the figure “highlights the strength of our underwriting and how we are getting better and better at lending to people who pay us back and use Klarna again and again”.
While the company continues to expand, it also has cut costs, laying off 10 per cent of its staff in 2022 after the onset of the war in Ukraine.
