Klarna’s half yearly operating loss rises

STOCKHOLM (Reuters) – Swedish payments company Klarna said on Wednesday its half-yearly operating loss more than tripled weighed down by an increase in employee costs, higher credit losses and continued investment in market expansion.

The operating result for the first half of the year was a loss of 6.17 billion Swedish crowns ($578.52 million) compared with 1.76 billion crowns in the year-earlier period.

Total credit losses rose to 2.85 billion crowns from 1.85 billion crowns a year earlier.

Known for its “buy now, pay later” (BNPL) services, Klarna grew fast during the pandemic but since the start of the year rampant inflation and the war in Ukraine had worsened business sentiment.

The Swedish company laid off about 10% of its workforce in May and last month raised $800 million of funds at a valuation of $6.7 billion, down around 85% from the $46 billion price-tag it attracted last year.

“We have had a few years now where growth has been really heavily prioritised by investors,” Chief Executive Sebastian Siemiatkowski said in a statement. “Now, understandably, they want to see profitability.”

Klarna said it has revisited its 2022 plans and will implement a number of prudent and preemptive measures to meet the evolving challenges.

The company’s revenue grew 24% to 9.1 billion crowns and gross merchandise value (GMV) was up 21% to 396 billion.

However, total operating expenses before credit losses also rose to 10.81 billion crowns from 6.26 billion crowns.

Klarna, which has 150 million consumers on its platform across 45 markets, counts Germany, the United States and Sweden among its top markets.

($1 = 10.6651 Swedish crowns)

(Reporting by Supantha Mukherjee in Stockholm, Editing by Louise Heavens)