By Oliver Smith on Thursday 27 August 2020
The buy-now-pay-later provider is bolstering its credit loss reserves by $14.5m.
The result was a 44 per cent leap in Klarna’s gross merchandise volume to a record $22bn in the first half of 2020, with a resulting net operating income up 36 per cent to $517m.
However, this growth was weighed by a large rise in the company’s expenses of 45 per cent year-on-year, with new markets and now over 3,020 employees, plus an increase in Klarna’s expected credit loss reserves of $14.5m.
The H1 results said this additional move was "related to uncertainties in how worsening macro-economic factors (e.g. unemployement) and future government support programs in the US and UK markets may impract credit losses..."
All of the above left the lender with net losses that grew to $63.1m, up from $9.6m in H1 2019.
In the context of Covid-19 and the uncertainties it has unfortunately created for so many, a somewhat precautionary approach was necessary at times, including adjusting our credit policies globally,” CEO and co-founder Sebastian Siemiatkowski wrote in his letter to shareholders.
“Despite this, we have seen accelerated growth and rapidly increasing demand for our services. Klarna has in fact never been more relevant, both by design but also because we are in a fortunate position as global innovators in e-commerce and retail.”
Of the highlights during the first half of 2020, Klarna says it has added more than 35,000 new retailers to its base of now over 200,000, along with 14m new consumers having used its service.
All that has helped Klarna to reach an average of 1m transactions a day being processed through its platform.