Meanwhile, despite job cuts, the BNPL continued to see rising YoY losses in Q3.
Despite mounting losses, buy now, pay later giant Klarna is forecasting to break back into monthly profit in the second half of 2023.
The news came yesterday as Klarna announced Q3 losses of $200m for the period ending 30 September 2022, nearly double the $106m in losses that the lender reported in Q3 2021.
CEO and co-founder Sebastian Siemiatkowski pointed to the quarter-on-quarter reduction in losses that the fintech has managed, with operating losses falling sharply as a result of job cuts impacting more than 10 per cent of staff.
“Klarna has made huge progress on our path to profitability, which we expect to hit on a monthly basis in the second half of 2023, with our operating result improving $169m or 42 per cent on last quarter,” said Siemiatkowski.
“We have achieved this while maintaining credit loss rates at very low levels, actually reducing them to just 0.7 per cent of GMV [gross merchandise volume] and launching a ton of amazing products from search comparison to automated discounts all of which save consumers time and money.”
The CEO also said that Klarna reduced its credit loss rate by 0.1 basis points during the quarter to 0.7 per cent of GMV, however, these losses still equalled some $409m as usage of Klarna continued to rise.
“Klarna continues to outperform the market with global gross merchandise volumes and revenue up 22 per cent YoY,” added Siemiatkowski.
Klarna meanwhile is working hard to diversify its revenue streams, with its Kosma open banking operation and marketing revenue as its fastest growing revenue stream, up 163 per cent year on year as retailers pay to be featured on its shopping app.
UPDATE 01-12-2022 - Klarna was profitable until 2019, an earlier version of this article incorrectly stated that Klarna was expecting its "first" profit next year.