Things continue to look up for European fintech giant Klarna. Around this time last year, it would have been hard to say that.
Today the company, best known for its buy now, pay later offerings, has additional good news: It reported a profitable month in the second quarter as gross merchandise volume grew 14% to 238.6 billion Swedish Krona ($21.8 billion) from 209.2 billion ($19.1 billion) Krona in the same quarter in 2022.
Revenue in the second quarter grew at an even faster pace, up 17% to 5.5 billion Krona ($502.2 million), up from 4.7 billion Krona ($429.1 billion) in the year-prior period. The company’s total operating income increased 21% compared to the period a year ago.
Meanwhile, Klarna reported that its credit losses continued to improve after decreasing by 41% compared to the second quarter in 2022, noting “our responsible lending approach has enabled us to maintain credit losses at continued low levels of 0.39% of GMV in the first half of the year, as revenue and GMV continued to grow.”
Mary Ann Azevedo reported in June 2022 about Klarna’s — and its competitor Affirm’s — efforts to attract U.S. customers, here and here. Those seem to still be paying off for Klarna so far: The company reported that the second quarter represented its third consecutive quarter of gross profit in the U.S. Even more so buoyed by a new relationship with Airbnb to offer flexible payments for guests. That offering is now expected to expand into Europe soon.
CEO Sebastian Siemiatkowski told TechCrunch in an interview that Klarna has built a “healthy, robust business model,” and that the company has been thinking about profitable growth, especially amid investor sentiment shifting in that direction over the past year.
“We had to make some painful decisions a year ago,” Siemiatkowski said. “We have since focused on optimization, and that has paid off, especially now that we have three consecutive quarters of growth in the U.S.”
He also noted that Klarna was affected by the overall flat growth of the e-commerce industry in the past year, particularly in more of its mature markets in Europe where 50% to 80% of the market is using Klarna.
Looking forward, Siemiatkowski said that Klarna’s long-term strategy was designed with the intention of betting on multiple features and continued innovation.
“By having a buy now, pay later offering with zero interest at the point of sale, people will continue to find value, but you can’t bet the whole business on it,” he said. “For example, our customers, when they open up their purchase history, see images of the items they bought, and they like that. We have to keep coming up with features like that.”