Things continue to go from bad to worse for Klarna, the struggling BNPL giant. Whereas 2021 was a terrible year for profit, 2022 has shapen up to be much worse. Losses have quadrupled in H1 2022 and show no sign of reversing.
Klarna Gets Battered
It has been a wild ride for all BNPL providers globally. Klarna, one of the industry darlings, has fallen from grace in recent months and continues to get battered across the line. With losses quadrupling in H21 2022, the company – which recently secured more funding at a far lower valuation – continues to tread water.
The company cites higher credit defaults, increased employee costs, and its market expansion investment as contributing factors. Moreover, the overarching financial environment has changed drastically since COVID-19, and the Ukraine-Russia war isn’t helping either. Moreover, investors are far more bearish on any risky asset, and investing in BNPL firms is not the plan these days.
Although Klarna notes $950 million in H1 2022 revenue, its net losses were $581 million. The firm’s growth in the US is a beacon of hope, but when losses rise from $141 million to nearly $600 million, something needs to change. Klarna’s recent acquisition of PriceRunner – and its subsequent integration into Klarna – is another contributing factor.
Rising employee costs are par for the course, although the firm has cut 10% of its staff since May 2022. Unfortunately, those cuts have not translated into cutting down on overall costs, but that should become more apparent in H2 2022. That is, assuming the BNPL industry can thrive again, as all service providers appear to struggle these days.