Klarna

Klarna's CEO told staff in a pre-recorded video message: "What we are seeing now in the world is not temporary or short-lived, and hence we need to act".

The news of layoffs at Klarna, ahead of what the CEO said was "a likely recession", comes amid a difficult economic context in Europe. In a pre-recorded video message to staff, the "buy now, pay later" firm's CEO announced the layoffs ahead of “a likely recession”. "What we are seeing now in the world is not temporary or short-lived, and hence we need to act," he said in his message, which was later posted on the company's website.

It's happening. Klarna, the most valuable fintech unicorn in Europe, told employees yesterday that it was laying off 10%—or around 700—of its employees this ...

Despite rising inflation, the ongoing supply chain crisis, and the second year of the COVID-19 pandemic, the 500 corporations on this year’s list generated a record $16.1 trillion in revenue and $1.8 trillion in profits. The BNPL bank appears to be struggling to raise new capital at the terms it had managed early on in the pandemic. Lassie, a Stockholm-based pet insurance provider, raised €11 million ($11.74 million) in Series A funding led by Felix Capital and was joined by investors including Inventure, Passion Capital, and other angels. Here’s a concerning data point: Consumer debt bumped up $52 billion in March, a historic increase. All is well and dandy—as long as people pay it back. With no major BNPL companies profitable yet, analysts are concerned over how consumer fintech companies will fare if there’s a recession—as delinquencies and defaults may threaten their existing risk management models. Homethrive, a Northbrook, Ill.-based care management and assisted living health care company, raised an additional $20 million in Series B funding led by Human Capital and was joined by investors including 7wireVentures and Pitango HealthTech. “When we set our business plans for 2022 in the autumn of last year, it was a very different world than the one we are in today,” Klarna CEO and co-founder Sebastian Siemiatkowski told employees yesterday in a pre-recorded video whose transcript the company later posted online. When Walmart is, once again, named No. 1 on our annual and historic Fortune 500 list—the 68th edition of which was published yesterday. Just a year ago, Stockholm-based Klarna seemed untouchable. Or Outside, the Boulder-based digital outdoor athletics publication, which said it was letting go of 15% of its staffers earlier this month. U.S.-based competitor Affirm has taken a nosedive in the public markets—down nearly 75% from the beginning of January. That’s not great for Klarna, which had been contemplating an IPO, but last fall decided to wait some of the volatility out on the sidelines.

Swedish bank Klarna has laid off 10% of its staff amid regulation crackdowns and falling consumer confidence.

Consumer confidence in the ballooning buy now, pay later category has taken a hit recently with the UK government considering tougher rules. The company has tapped the likes of Snoop Dogg and A$AP Rocky for campaigns, sponsored events such as Mighty Hoopla festival and created award-winning out-of-home (OOH) campaigns. “When we set our business plans for 2022 in the autumn of last year, it was a very different world than the one we are in today.

Klarna, a "buy now, pay later" fintech, said Monday it will lay off 10% of its employees. CEO Sebastian Siemiatkowski used a pre-recorded video message to break ...

Not only tech startups are affected: Netflix laid off around 150 employees last week and Facebook announced a broad hiring freeze across almost the entire company. In June of last year, it announced a $639 million fundraise led by Softbank's Vision 2 Fund, which secured Klarna's rank as the highest-value private fintech in Europe. Klarna had been planning a public offering for later this year. Klarna joins a rapidly-growing list of tech companies announcing hiring freezes and job cuts as fears of a recession mount.

So what does the future hold for the BNPL industry in an era when consumer wallets are pinched and capital is scarce? At the mercy of interest rates. The first ...

They point to the fixed-term savings account Klarna offers as giving it “significant confidence in the stability of future funding”. That said, the Swedish fintech is reportedly tapping investors for $1bn more cash and will likely see its valuation slashed, as it faces increased scrutiny over its path to profitability. “Interest rate costs were equivalent to just under 6% of Klarna’s total net operating income and around 5% of operating expenses in 2021,” the spokesperson says. In the April prospectus mentioned above, Klarna lists consumer trends as a result of the macroeconomic situation as its number one risk. For the past couple of years this has meant merchant fees and late payment charges brought enough revenue — but their margins begin to narrow when central banks hike rates. Since 2019, investors have poured $3.9bn into Klarna and its European rivals like Scalapay, Zilch, Alma and Zilch — more than half of the total investment into European payments startups in that time.

Klarna's CEO said increased inflation, a volatile stock market and the war in Ukraine have marked the beginning of a 'tumultuous year'.

“I, together with the management team and all senior leaders are deeply saddened by seeing friends and colleagues leave,” Siemiatkowski said. “What we are seeing now in the world is not temporary or short-lived, and hence we need to act.” The news comes days after the Wall Street Journal reported that Klarna is seeking new funds at a lower valuation.

Buy-now-pay-later provider Klarna intends to cut 10% of its workforce as it faces up to challenging trading conditions and the prospect of a recession.

Consumer groups have claimed that BNPL incentivises people to live beyond their means and warned that shoppers are unaware of the risks. According to Cornerstone Advisors, the percentage of Gen-Z (those aged 21-25) who claim to have used BNPL rose from 6% in 2019 to 36% in 2021. Last September, Revolut teased a new feature in which it would allow customers to defer two-thirds of the payment for goods purchased using the Revolut card.