Klarna, a Swedish FinTech that allows customers to pay for items through installments, has posted its first annual loss after years of being profitable, according to a report by CNBC.
The company reported a loss of $113 million (1.1 billion Swedish krona) on revenues of $740 million (7.2 billion krona) in 2019. This is the first time the company has had a loss since it was founded 15 years ago. A lot of Klarna’s success was due to its partnership with big-name retailers, but the company said it wants to continue to expand and bring its business to customers around the world.
In 2018, Klarna reported profits of 161 million krona, which was a decrease from 346 million krona in 2017. A Klarna spokesperson said that despite the loss, the business was “very healthy” and “seeing growth” in terms of transactions volumes, merchant growth and revenue.
Last year, the company reported a 31 percent uptick in revenue and added 75,000 new merchants.
The loss was credited to expenses involved with the building of an engineering hub in Berlin, as well as expansion efforts. The company said it will enter “a number of new markets this year.”
Klarna has pulled in more than $1.4 billion in external financing and was valued at $5.5 billion in 2019, after a $460 million funding round.
It is neck and neck with Revolut as the most valuable startup in Europe, and it counts celebrity rapper Snoop Dogg and retail group H&M as investors.
The company acts as an alternative to a credit card, offering customers interest-free financing paid off in monthly installments. It gets money from fees to its clients in retail, as well as late fees from consumers. There was a lot of talk recently about a potential initial public offering (IPO), and last year Klarna CEO Sebastian Siemiatkowski said that the company was getting close to one.
However, in 2019, there were not many successful tech IPOs in Europe, despite ultra successful Adyen and Spotify in 2018.