Swedish buy now, pay later (BNPL) FinTech Klarna will lay off about 10% of its staff due to the effects of inflation and the Russia-Ukraine war, Klarna CEO and Co-Founder Sebastian Siemiatkowski said in a Monday (May 23) announcement.
That comes out to roughly 700 people, Reuters reported Monday, citing an article in Swedish business newspaper Dagens Industri. The news follows the company’s $689 million loss in 2021.
“I am no stranger to sharing good and bad news,” Siemiatkowski said in the announcement. “However, today is the hardest one to date. As much as we may like it to be the case, Klarna does not exist in a bubble.”
Klarna rolled out a new business plan last fall, a time Siemiatkowski called “a very different world than the one we are in today.”
“Since then, we have seen a tragic and unnecessary war in Ukraine unfold, a shift in consumer sentiment, a steep increase in inflation, a highly volatile stock market and a likely recession,” he said in the announcement.
Klarna management re-evaluated the company’s organizational setup, he added.
“It saddens me to say that as a result of this, approximately 10% of our colleagues and friends across all domains in the company will be impacted,” Siemiatkowski said.
Stockholm-based Klarna was founded in 2005 with the goal of making online shopping easier, according to the About page on its website. The company stated that its clients include more than 400,000 merchants regularly handing an average of 2 million purchases per day from bases of 147 million active customers.
Earlier this month, Klarna was seeking to raise capital — as much as $1 billion — at a reduced valuation of about $30 billion. The valuation would represent a $16 billion drop in one year.
The installment billing space is facing increasing competition from newcomers from PayPal and Barclays. Klarna rival Affirm is down 75% on the Nasdaq this year.
Regulatory scrutiny is another aspect facing the sector. Last year, the U.K. government moved to start regulating BNPL products in an attempt to better protect consumers.