Europe’s most valuable fintech startup Klarna reports its biggest loss ever, posts nearly $600M loss in just 6 months

In May, Buy Now, Pay Later (BNPL) pioneer Klarna announced it was laying off 10% of its workforce as the economic downturn hits the buy now, pay later space.

Then in June, Klarna raised a massive $800 million in down round funding at a $6.7 billion valuation in a sign that the BNPL market is cooling off. The raise was an 85% plunge from the $45.6 billion valuation a year ago. Now, it appears Klarna’s problems are not over yet.

Today, Klarna is out with its quarterly report and things are not looking good for Europe’s most valuable fintech startup as the company’s losses triple after aggressive U.S. expansion and mass layoffs.

Klarna reported Wednesday that the company generated revenues of 9.1 billion Swedish krona ($950 million) in the period spanning January to the end of June 2022, a 24% increase from a year ago. That’s where the good news ends. During the same period, the company’s pre-tax loss soared more than threefold year-on-year to nearly 6.2 billion krona $582,930,820. In the first half of 2021, Klarna lost around 1.8 billion Swedish krona.

In a statement, Klarna CEO and co-founder Sebastian Siemiatkowski said: “We’ve had to make some tough decisions, ensuring we have the right people, in the right place, focused on business priorities that will accelerate us back to profitability while supporting consumers and retailers through a more difficult economic period.”

With inflation hovering between 8 to 14 percent in the US and Europe, consumers have cut back on non-essential items like clothing to focus on basic needs such as food, healthcare, and energy. The economic downturn has rippled into the buy now, pay later (BNPL) sector forcing companies to make tough cost-cutting decisions including hiring freezes and layoffs.

Klarna was founded in 2005 in Stockholm, Sweden with the aim of making it easier for people to shop online. In the last 12 years, technology has evolved, excited, and transformed the world around us, yet its mission remains as relevant as ever, to make paying as simple, safe, and above all, smooth as possible.

Klarna’s app has more than 12 million monthly active users worldwide, with 55,000 daily downloads, significantly outpacing its nearest competitor with almost 4x as many downloads over the last year. Klarna, a unicorn startup,  is one of the world’s largest providers of “buy now, pay later” services, which offer shoppers interest-free financing over a period of installments.

Early this year, Klarna also launched a new credit card in the UK to take on banks and credit card firms. Unlike regular credit cards, Klarna said the card will allow for payment on purchases to be delayed for up to 30 days, with no interest charged on the balance or fees levied for late payment when used at high street shops. The new credit card is offered to customers in addition to Klarna’s buy-now-pay-later (BNPL) products for UK customers.