Klarna swings to adjusted profit in first half of 2024 ahead of planned listing

Klarna swung to an adjusted profit in the first half of 2024 as the fintech giant moved toward an IPO.

The Swedish firm—the UK’s largest buy-now-pay-later provider—reported adjusted operating income of 673m kroner (£49.9m) for the six months, compared to a 456m kroner (£33.8m) loss during the same period last year.

Revenue jumped 27 per cent to 13.3bn kroner (£984m).

Klarna’s operating loss was 285m (£21.1m) kroner, an 85 per cent improvement from a 1.89bn (£139.7m) kroner loss in the first half of 2023.

“Klarna’s massive global network continues to expand rapidly, with millions of new consumers joining and 68,000 new merchant partners,” said Sebastian Siemiatkowski, Klarna’s co-founder and chief executive.

He said the firm’s adjusted profit came as a result of Klarna “focusing on sustainable, profitable growth and leveraging AI to lower costs… as we build the commerce network of the next generation”.

Its operating expenses before credit losses ticked down three per cent compared to a year ago, to 9bn kroner (£666.6m).

Klarna has been an early adopter of AI technology like ChatGPT. It expects its AI assistant alone to drive $40m (£30.3m) in profit improvement this year.

The firm reported credit losses of 2.4bn kroner (£178m) in the half-year, up 37 per cent from 1.8bn kroner (£134m) in the first six months of 2023, while its gross merchandise volume grew 16 per cent to 523bn kroner (£38.8bn).

The second quarter of 2024 marked Klarna’s seventh straight quarter of profitability in the US, now its biggest market. Its gross profit in the geography jumped 93 per cent year-on-year on the first half of 2024, while revenue rose 38 per cent.

The fintech has reported spoken to a number of Wall Street banks about a possible New York IPO that could come as soon as the first half of next year.

Klarna was once one of Europe’s most valuable tech groups, but its valuation has plummeted in recent years amid higher interest rates and economic instability. At its most recent valuation in July 2022, Klarna was valued at $6.7bn, down from a peak of $46bn in June 2021.

It is unclear what valuation Klarna would seek in a listing, and the company has yet to commit to a location publicly. In May, Siemiatkowski said the firm was “definitely ready” to list.