Klarna halved its losses in the first quarter as the Swedish buy now, pay later pioneer said it was on course to return to profit by the end of the year.
Once Europe’s most valuable private tech company, Klarna said on Friday that its net losses narrowed to SKr1.3bn ($120mn) in the quarter while credit losses shrank more than a third. Its revenues rose 13 per cent to SKr4.9bn.
“We are on track to achieve profitability this year,” said chief executive Sebastian Siemiatkowski. The company is expecting to be profitable again by August or September; it last made an annual profit in 2018, a quarterly profit in the second quarter of 2019 and a monthly profit in August 2020.
Klarna became a symbol of the boom and bust in the fintech sector as its valuation was slashed from $46bn to $6.7bn last year, prompting the group to retrench and cut jobs.
Founded in 2005 it pioneered “buy now, pay later”, which allows customers to delay payments or divide them into instalments. The popular form of credit was boosted by the ecommerce boom during the pandemic.
Last week, Klarna announced it was working with Airbnb in the US and Canada, allowing customers to divide accommodation bookings worth more than $500 in four payments over six weeks.
At the same time, the wider BNPL industry is under growing scrutiny, with campaign groups and politicians concerned that some lenders fail to ensure users can afford to buy on credit and are encouraging them to overspend.
In the US, research by the Consumer Financial Protection Bureau published in March found that buy now, pay later users were more likely to be highly indebted, though the regulator said it was unclear whether access to interest-free BNPL credit helped their finances or worsened problems.
This week, Stephen Jones, the Australian assistant treasurer and minister for financial services, said the government would start regulating BNPL as a form of credit, introducing a bill to parliament by the end of the year.
In February, the UK Treasury released draft proposals to enable the Financial Conduct Authority to regulate the sector, with potential penalties including banning companies that fail to conduct adequate credit checks from further lending. The government aims to put legislation before parliament this year.
There is increasing competition in the BNPL market. A number of high-street banks, including NatWest and Santander, have launched buy now, pay later services, while Apple launched its service in March in…
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