Klarna Bank AB, often simply known as Klarna, is a Swedish financial technology (fintech) firm that specializes in offering a wide range of online financial services. These services encompass payment solutions for e-commerce platforms, direct payment options, and post-purchase payment alternatives.
Klarna reported its first quarterly profit in four years. The Swedish fintech registered a net profit of US$ 8.5 Million (€8mn) in the third quarter. For comparison, in the same period last year, the company made a loss of US$ 192 million. Klarna has increased its revenue by 30 per cent and more than halved its credit losses. The company says this was “due to continuous improvements in underwriting precision and accuracy ensuring Klarna continues to make the right lending decisions for consumers”. This has led to the first profit report since 2019.
Klarna Planned IPO
Klarna has about 150 million international customers. It is the biggest BNPL provider in the UK and has just set up a legal entity in the country. Observers see the move as a first step in a journey towards an IPO. However, this does not mean the company will float its stocks in the UK market. It is an administrative change by the company which is anticipating regulatory changes in the UK. The Labour Party in the country has said it wants to give BNPL users the same protection as credit card borrowers.
Currently, Klarna is a regulated financial holding company under the direct supervision of the Swedish Financial Services Authority (SFSA). The payment group was forced to slash its valuation by 85 per cent to $6.7bn last year. It plans to go public but says the plans are not immediate. The USA is its biggest market with Germany second and UK third. Also, the location of the listing has yet to be decided.
It is anticipated the market flotation could value the company at $15bn. The time for the IPO is also not set. Klarna says that will happen when the “market conditions are right”.