Klarna reports annual loss ahead of possible listing

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Klarna has reported a fifth straight annual loss as the Swedish fintech that was once Europe’s most valuable private tech group stuck to an expansion plan ahead of a possible initial public offering this year.

The buy now, pay later pioneer on Wednesday reported a net loss of SKr2.5bn ($241mn) for 2023, narrower than its SKr10.4bn loss in 2022. Revenues rose 22 per cent to SKr23.5bn.

Founded in 2005, Klarna was regularly profitable until 2019 when it started aggressively expanding in the US and racked up credit losses.

Chief executive Sebastian Siemiatkowski said the company had “made a conscious decision to invest in growth in the peak shopping season” at the end of the year and that it would continue to “invest wisely for growth and focus on being cost-effective on our path towards annual profitability”.

The disclosure of the loss follows a boardroom dispute this month that exposed tensions at Sequoia Capital, Klarna’s largest shareholder, and raised questions over the governance of the Swedish fintech.

The clash, which centred on a change in Klarna’s corporate structure ahead of a possible IPO, culminated in the departure of Sequoia partner Matthew Miller from Klarna’s board after a failed attempt to oust former Sequoia head Michael Moritz as chair of the fintech.

While Klarna continues to expand, the company has also been cutting some costs. It slashed its workforce to 4,201 at the end of 2023, from 5,441 a year earlier. The group said on Wednesday that its credit losses fell by 32 per cent to SKr3.8bn in 2023.

Klarna became a posterchild of the fintech boom as its buy now, pay later model, which allows customers to delay payments or divide them into instalments, flourished during the growth of online shopping during the pandemic.

But higher interest rates have since hammered the fintech sector, triggering a collapse in Klarna’s valuation from $46bn in June 2021 to $6.7bn just over 12 months later.

Siemiatkowski’s total remuneration was SKr13.2mn last year, the group said, the same amount he received last year when his total pay package had jumped 35 per cent.

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