Klarna Says Earnings Show ‘Path to Profitability’

Klarna says profitability is closer thanks to continued U.S. demand for installment payments.

The Swedish buy now, pay later (BNPL) company released earnings Tuesday (Feb. 28) that showed revenues increasing 20% in the last quarter of 2022.

Klarna CEO Sebastian Siemiatkowski said in a news release that the results show his company’s “resilience” in a “challenging” macroeconomic environment.

“With GMV up 22% YoY and credit loss rates decreasing, we have made significant progress on our new strategy and we’re on a solid path towards profitability,” Siemiatkowski said.

The company said it began tightening its underwriting in the second half of the year and by the fourth quarter of 2022 had shrunk its credit losses by 18%.

“Klarna continues to grow faster than the market in a challenging macro environment,” the release said.

It notes that while eCommerce remained flat, the value of goods purchased through the company rose by 19%, driving the uptick in revenue. The company said it diversified its revenue, with marketing revenue up 131%, accounting for 10% of worldwide revenue during the quarter.

The earnings come on the heels of last week’s announcement by Klarna that it had seen a 71% increase in gross merchandise value (GMV) in the United States last year, a trend the company attributed to “surging demand” for its app, which has more than 8 million monthly active users and 30 million downloads.

The U.S. has become Klarna’s largest market in terms of revenue, with volumes rising 92% year over year, the company said in January.

Meanwhile, the BNPL world continues to evolve as the world of physical retail recovers, PYMNTS noted Tuesday.

An example of the shift can be found in the recent news that point-of-sale (POS) provider Ingenico and BNPL firm Splitit were working to bring Splitit BNPL to the in-store POS.

Speaking with PYMNTS’ Karen Webster, Splitit CEO Nandan Sheth said the collaboration is the result of merchant demand and an exhaustive search for the right partner.

“Some of the larger merchants that we’re in discussions with, and/or our merchants today using our service in eCommerce, many of them were asking, when are you going to launch an omnichannel solution,” Sheth said. “We see a fairly sizable opportunity at the point of sale.”

Many of the POS providers he spoke with gravitated to QR codes, but he told Webster “we resisted” until landing on Ingenico because of a shared vision for BNPL at the register.

“This experience has no QR code. There’s no registration, there’s no out-of-brand experience,” Sheth said. “You don’t have to use your phone unless you’re using it to tap your card. It’s literally one click, the option that you want [appears], the credit card authorizes, you walk out with your goods, and you pay over six months. That’s the elegance of the solution.”