Buy-now pay-later giant Klarna said it was on a “solid path to profitability” today after a major cost-cutting push saw it narrow its losses in the second half of the year.
The Swedish headquartered firm, which has slashed its headcount and pared back growth plans in the past 12 months, lost a record SEK 10.4bn (£830m) across the year, up from SEK 7.4bn (£590m) in 2021, but said it had seen a significant push towards profitability in the second half.
Net losses in the final six months came in at 4.1bn SEK, down from a 6.4bn loss in the period to the end of June.
Total spending on its products jumped 22 per cent to 837bn SEK across the year while credit losses – the amount of customers defaulting on their borrowing – slowed to 0.58 per cent.
“Through a challenging macro environment we have once again proven our resilience delivering high profitability across our established markets while launching products and services helping to diversify our revenues and solving problems for consumers,” said founder and chief Sebastian Siemiatkowski.
“With [gross merchandise volume] up 22 per cent year-on-year and credit loss rates decreasing, we have made significant progress on our new strategy and we’re on a solid path towards profitability.”
The firm has been on a profitability push as investors sour on high-growth, loss-making tech firms globally. Klarna was forced to lay off around 10 per cent of its workforce and raise cash at a valuation of $6.7bn in July – down 85 per cent on its previous fundraise.
Siemiatkowski said the moves to cut costs were “showing results” in the second half, with adjusted operating figures improving 21 per cent (SEK 330m) in the final quarter of the year.
Klarna is now targeting expansion in the US after the market became its largest by revenue share in the past quarter.
In a move to stem credit losses, City A.M. revealed last week that the firm would roll out late fees in the UK for the first time next month.