Klarna, the joint largest fintech startup in Europe, has suffered its first ever annual loss, with the “buy now pay later” specialist hit by heavy credit losses.
The company, which lets people pay for online purchases in installments, reported a loss of 1.1bn Swedish krona (£87.5m) on revenues of 7.2bn krona last year, its first fall into the red since it was founded in 2005.
Klarna’s credit losses, revealed today, more than doubled during 2019 to 1.86bn krona. The fintech blamed its entry to new markets, where first-time customers are less likely to repay on time.
Total operating revenue for the year climbed almost a third to 7.2bn krona in 2019, while the volume of goods sold through Klarna increased 32 per cent.
Until now Klarna has enjoyed the rare status of being a consistently profitable fintech, thanks to years of deals with major retailers including Asos and Ikea, as well as interest from late-paying customers.
The loan company, which has been backed by investors including retail giant Hennes & Mauritz, venture capital firm Sequoia Capital and private equity firm Permira, is currently valued at $5.5bn. Its shareholders also include rapper Snoop Dogg and Visa.
Klarna is now tied with Revolut for the position of Europe’s most valuable fintech startup, after the digital bank announced a fresh fundraising round earlier this week.
But the payments firm’s track record of consistent profitability has come to an end as it invests heavily in growing its position in the US and increased investment into establishing an engineering hub in Berlin.
In addition to the US, Australia and New Zealand, Klarna said it plans to expand into a number of unnamed new European markets this year.