After a rocky 2022, payments firm Klarna hopes to right the ship next year.
“This isn’t a boat, it’s a container ship,” CEO Sebastian Siemiatkowski said in an interview with the Financial Times (FT) on Wednesday (Nov. 30). You don’t turn it around in the quarter, it takes some time.”
Siemiatkowski told FT his goal is for the buy now, pay later (BNPL) company to reach monthly profitability by August or September next year, although he cautioned the company could still see a full-year loss in 2023. Its monthly profit was in August 2020.
Klarna experienced one of the most high-profile devaluations of the year in July after the firm raised $800 million in financing at a $6.7 billion post-money valuation. That came after a massive $639 million funding round in June of 2021, which valued the company at $45.6 billion.
The company’s turnaround involves tightening lending and cutting staff, according to the report. The company cut 700 jobs in May, followed by a second wave of layoffs a few months later.
It’s part of a broader wave of BNPL layoffs that has continued up to this week, with U.K. company Zilch letting go of 10% of its workers.
Speaking at a conference earlier this month, Siemiatkowski said Klarna needs to focus on engaging its existing customers rather than acquiring new ones. He added that the United States remains a “top priority” for the firm even though expanding in the market has hurt Klarna’s profitability in the past.
Research by PYMNTS showed that BNPL remains popular, with 13.5% of consumers using it within the prior year, and another 44.7% saying they are aware it is an option. Nearly two out of every three consumers said they are more likely to patronize stores offering BNPL, and roughly the same figure said that BNPL allows them to make purchases more frequently.
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