Klarna Posts Narrower Yearly Loss Ahead of Potential IPO

Klarna’s annual report shows the Swedish FinTech’s revenues rising and losses narrowing during 2023.

The report, released Wednesday (Feb. 28), comes as the buy now, pay later (BNPL) company is apparently on the verge of an initial public offering (IPO).

In a message included in the report, CEO Sebastian Siemiatkowski noted that 2023 marked Klarna’s first profitable month and profitable quarter in four years. The year also marked Klarna’s first full year of growth profit in the U.S., the company’s largest market.

Klarna now has 37 million U.S. users, up from 32 million last year. That figure was itself a notable leap, rising 44% from 2022.

“While we continue on our journey to long-term profitability, we made a conscious decision to invest in growth in the peak shopping season of Q4,” he said “We will continue to invest wisely for growth and focus on being cost-effective on our path towards annual profitability.”

According to the report, Klarna’s losses for the year came to 2.5 billion kronor ($241 million), compared to 10 billion kronor (just under $1 billion) in 2022. The company saw revenues climb 22% to 22.5 billion kronor ($217 million).

The company’s release comes one day after a report by Bloomberg News that Klarna, once considered the most valuable startup in Europe, was in discussions with banks about a potential IPO on the U.S. markets valued at $20 billion.

That listing could come as early as the third quarter of this year, the report said, citing unnamed sources. Bloomberg also noted speculation that Klarna could explore listings in its home country or the U.K., where it has recently established a new holding company.

The potential public listing follows a turbulent few years for Klarna, in which its valuation dropped from $45.6 billion in 2021 to $6.7 billion in 2022 over investor concerns about rising interest rates hampering online lending platforms.

Klarna declined to comment when reached by PYMNTS.

PYMNTS Intelligence has found that BNPL users are satisfied with these installment payment options, are favoring them and are making them a part of their financial choices.

According to “Tracking the Digital Payments Takeover: What BNPL Needs to Win Wider Adoption,” a PYMNTS Intelligence and AWS collaboration, 53% of consumers reported upping their use of BNPL plans compared to a year prior.