Klarna’s first-quarter loss halved as the Swedish buy-now, pay-later pioneer said it was on track to return to profitability by the end of the year.
Klarna, once Europe’s most valuable private technology company, said on Friday its quarterly net loss narrowed to 1.3 billion Swedish kronor ($120 million), while credit losses fell by more than a third. Its revenue rose 13 percent to SEK 4.9 billion.
“We’re on track to be profitable this year,” Chief Executive Sebastian Siemiatkowski said. The company expects to be profitable again in August or September; it last posted an annual profit in 2018, a quarterly profit in the second quarter of 2019, and a monthly profit in August 2020.
Klarna’s valuation fell from $46 billion to $6.7 billion last year, prompting layoffs and layoffs at the group that has become a symbol of fintech boom and bust.
Founded in 2005, it is a pioneer in “buy now, pay later,” allowing customers to defer payments or pay in installments. A boom in e-commerce during the pandemic has boosted the popular form of credit.
Last week, Klarna announced a partnership with Airbnb in the U.S. and Canada that will allow customers to book accommodations worth more than $500 in four payments over a six-week period.
Meanwhile, the broader BNPL industry has come under increasing scrutiny, with campaign groups and politicians concerned that some lenders are failing to ensure users can afford to buy on credit and encouraging them to overspend.
In the US, research released in March by the Consumer Financial Protection Bureau found that buy now, pay later users were more likely to be in debt, although the watchdog said it was unclear whether access to interest-free BNPL credit would help their finances or worsen the problem. .
This week, Australia’s assistant treasurer and financial services minister, Stephen Jones, said the government would start regulating BNPL as a form of credit and introduce a bill to parliament by the end of the year.
In February, the U.K. Treasury published draft proposals that would enable the Financial Conduct Authority to regulate the industry, with possible penalties including a ban on further lending by companies that fail to carry out adequate credit checks. The government aims to bring the legislation to parliament this year.
The BNPL market is increasingly competitive. A number of commercial banks, including NatWest and Santander, have launched buy now, pay later services, while Apple launched the service in the US in March.