Klarna losses soared to over $1 billion (SEK 10.4 billion) in 2022 – but CEO Sebastian Siemiatkowski said optimistically that “we’re on a solid path towards profitability” as the company reported its annual results.
The Swedish multinational, which provides buy-now-pay-later capabilities to customers, said it continues to grow strongly, hitting 34 million US customers and signing deal with Booking.com, Fossil Group, Groupon, Instacart, Samsung, and Tractor Supply Company in 2022 as the US became its biggest revenue driver.
Klarna now has 150 million global consumers using its services who bought $83 billion of goods in 2022.
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Klarna said it has tightened up its underwriting, trimming credit loss rates 37% in 2022 compared to 2021.
But its net credit losses for the year were an eye-watering $545 million (SEK 5.7 billion), the report shows.
(The company said by Q4 2022 it had trimmed credit losses to an “industry leading” 0.58% of GMV).
Annual Klarna revenues for 2022 were $1.8 billion (SEK 19.3 billion).
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The company says its “current goal is to return to profitability by the summer of 2023.”
The company laid off 10% of its staff last year and said that “following our change in strategy in May to sharpen
our focus on core value drivers, our operating result has improved 44% in the second half of the year compared to H122 on an adjusted basis. H222 GMV grew 22% while credit loss rates reduced by 16%. In the US credit loss rates are down 30% in H222 vs the first half of the year, and down 45% compared to the same period last year.”
New tools it has released include the ability to connect online shoppers directly with merchants’ experts in physical stores or showrooms through live video and messaging, “providing a highly personalized experience.”
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“Beyond payments, we have expanded into commerce solutions and made strategic investments… our new products and services like search and compare, our in-app loyalty card wallet, enhanced CO2 tracker, shoppable video, money management tools and in-app shipping and tracking information makes Klarna a cutting- edge, superior digital shopping assistant for all our consumers’ needs, across platforms” it added.
Klarna built its core software platform called Kred on Erlang, which it now runs on AWS instances, with Apache Kafka pipelines. (Its engineers have written refreshingly openly about how a Kafka node failing took down services for a few hours in 2021 here, which may appeal to those who wrench on this kind of infrastructure).
