The once-bright Swedish buy-now-pay-later (BNPL) platform Klarna clocked substantial losses in its interim earnings report published on Tuesday August 30.
Net losses of 6.2mln kronor (£500,000) increased from 1.4mln kronor in the previous year.
Operating income increased 18% year on year (YoY) to 7.5bn kronor, a far sight from 2021’s interim growth rate of 40%.
Klarna has been forced into implementing cost-cutting procedures including a 10% workforce reduction and a tighter hold on credit losses, but that has not stopped ballooning operating expenses approximately 75% up YoY from being noted on the income statement.
However, the vast majority of negative cash flows came off the balance sheet in the first quarter; a positive sign that cost-cutting procedures are making an impact.
“Klarna continued to invest in growth with an increase in fees in line with volume growth and the launch of the Klarna card in the US and UK,” the company said in justification for the opex increase.
Chief executive officer and co-founder Sebastian Siemiatkowski tried to talk up the US$800mln July funding round, though neglected to mention the 85% carving from the company's valuation that came with it.
The US and the UK are the main drivers of volume growth, clocking in a user repayment level of 99%.
But the US segment has yet to turn a profit, a fact that Siemiatkowski conceded investors are staring to turn their attention to.
“We’ve had a few years now where growth has been really heavily prioritised by investors. Now, understandably, they want to see profitability,” said Siemiatkowski.
“We’ve had to make some tough decisions, ensuring we have the right people, in the right place, focused on business priorities that will accelerate us back to profitability while supporting consumers and retailers through a more difficult economic period.”
The interim report made no mention of an IPO.