Sweden's leading buy-now-pay-later payments specialist, Klarna Holding, has reported a decrease in its net loss for the first half of this year. By implementing cost-cutting measures and seeing lower credit losses, the company has been able to improve its financials.
Financial Results
Klarna recorded a net loss attributable to shareholders of SEK2.06 billion ($190 million) in the six months ending June 30, compared to a loss of SEK6.34 billion in the same period last year. This significant reduction in net loss showcases the company's efforts to enhance its financial performance.
Moreover, the company witnessed a 12% decline in net interest income, which amounted to SEK1.51 billion. On the positive side, credit losses decreased from SEK2.85 billion to SEK1.75 billion. As a percentage of gross merchandise volume, credit losses stood at 0.39%. Klarna also reported a notable 67% drop in credit loss rates in the United States.
Impressive Growth
In terms of sales, Klarna experienced substantial growth during the first half of 2021. The gross merchandise volume for this period reached SEK449 billion, surpassing last year's figure of SEK396 billion. This signifies increased demand for Klarna's services and highlights the company's efforts to expand its market presence.
U.S. Market Highlights
The U.S. market continues to be a primary driver of Klarna's sustainable and profitable growth. In the second quarter, the company achieved its first month of net profit. Klarna's partnership with Airbnb played a crucial role in this success, and the company plans to extend this collaboration to European markets in the near future. CEO Sebastian Siemiatkowski emphasized the significance of this achievement and the potential for further growth.
Focus on Profitability
Klarna's shift in focus from growth to profitability has yielded positive results. By reducing its workforce by 10% and adopting a more stringent approach to credit losses, the company has demonstrated its commitment to improving financial performance. Additionally, Klarna has leveraged artificial intelligence technology to drive down costs in areas such as analytics, marketing, and customer interactions. These initiatives have contributed to substantial improvements in cost performance.
Robust User Base and Partnerships
With over 150 million active users worldwide and more than 500,000 retailer partners, Klarna continues to strengthen its position in the market. The company's broad user base indicates its popularity and widespread adoption among consumers. Furthermore, its extensive network of retail partners illustrates the trust and confidence that businesses place in Klarna's payment solutions.