BNPL giant Klarna's losses balloon in first half
Buy now, pay later (BNPL) may be expanding fast but a key name in the process, Sweden’s Klarna, saw its operating losses widening in the first half of the year.
The company lost SEK552 million (£48 million) in H1, a giant negative compared to the SEK84 million deficit it reported a year ago. The fast-expanding company blamed its major growth investment spend as well as increased provisions for bad loans. Its costs increased in the first six months, but its cash flow was strong during the period as net operating income surged 37% to SEK4.6 billion at the privately-owned firm. And total sales grew to SEK215 billion, up 44% year-on-year.
Fifteen-year-old Klarna has been cementing its leadership position in multiple BNPL markets, with its customer numbers having grown sixfold in the US where it now has 7.85 million people using it. It’s even bigger in some European markets with 9.5 million UK customers, for instance.
Its customer growth came as the payment method took off during the global lockdowns when new shoppers moved online and used its services.
“In the context of Covid-19 and the uncertainties it has unfortunately created for so many, a somewhat precautionary approach was necessary at times, including adjusting our credit policies globally,” Klarna Co-Founder and CEO Sebastian Siemiatkowski said. “Despite this, we have seen accelerated growth and rapidly increasing demand for our services.”
The company earns its money from the fees it charges the large merchants that use its services (such as Sephora, Timberland, River Island, Asos and H&M, the latter of which is one of its investors) and from shopper late payment fees.
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