$46 billion fintech Klarna sees losses quadruple amid surging demand for buy now, pay later

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  • Klarna reported a pre-tax loss of 3.1 billion Swedish krona ($344 million) from January to September, more than four times compared to the same period a year ago.
  • Buy now, pay later products like Klarna have seen increasing demand over the past year, thanks in no small part to the coronavirus pandemic.
  • Klarna, whose final value was privately held at $46 billion, has recently been expanding aggressively in the US and UK.

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LONDON — Swedish fintech start-up Klarna saw its losses balloon in the first nine months of 2021 as costs rose sharply amid rising demand to buy now, pay later services.

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The Stockholm-based firm reported a pre-tax loss of 3.1 billion Swedish krona ($344 million) from January to September, a four-fold increase from the 800 million krona it lost in the same period a year earlier.

Klarna, which had a final private value of $46 billion, reported net operating income of 9.8 billion krona, a 40% increase from the previous year.

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The bulk of the loss came from general administrative expenses, which increased from 5.9 billion krona last year to 9.5 billion krona.

The credit deficit has also increased significantly, totaling 2.9 billion krona, higher than the 1.6 billion krona reported for the same period last year.

A Klarna spokesperson told Businesshala that the firm has entered nine new markets since the beginning of 2020 and now has more than 90 million customers worldwide.

“Each market entry follows a consistent financial trajectory; as volumes increase, and more clients use Klarna, market knowledge is improved and credit risk is reduced, making mature markets permanent.” become profitable,” the spokesperson said in an emailed statement.

Klarna is one of the largest players in the rapidly growing Buy Now, Pay Later, or BNPL, market. BNPL products allow buyers to split the cost of their purchase into a series of equated monthly installments, often interest-free.

Klarna and rivals such as Afterpay and Affirm earn most of their revenue from the fees they charge merchants for processing transactions. Some also make money from late payment fees and interest charged on long-term installment loans.

BNPL products have seen a surge in demand over the past year, thanks in no small part to the acceleration of e-commerce adoption triggered by the coronavirus pandemic.

Millions of shoppers use Buy Now, a pay later service to finance their purchases. And the options are more diverse than ever.

Meanwhile, big companies are jumping on the bandwagon, PayPal has launched its own product, Amazon and Apple have partnered with Affirm, and Square has agreed to buy Afterpay in a $29 billion deal.

Klarna has been expanding aggressively in the US and UK recently. According to data provided to Businesshala by research firm Yipitdata, the company controlled approximately 18% of the US BNPL market as of November 17, behind Firm, which had a market share of 36%, and Afterpay, with 21%. .

In the UK, Klarna a . has been on charm offensive, meeting with top political figures ahead of the new rules, which will bring the BNPL sector under regulatory oversight.

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