Buy now, pay later (BNPL) provider Klarna Australia has reportedly haemorrhaged $56m in losses last year.
According to a report from news.com.au, the firm has had billions knocked off its global valuation this year. The company also laid off 10% of its workforce in an effort to cut costs, with its chief executive Sebastian Siemiatkowski advertising 570 staff members on LinkedIn.
Reports emerged in September of the firm seeing its net losses almost quadruple.
Klarna CEO Sebastian Siemiatkowski said in a letter to shareholders at the time that the firm has been ‘operating in a very different environment’ in the first half of this year following the fallout from Russia’s invasion of Ukraine, the economic downturn and a ‘huge shift in investor sentiment’.
The company’s first half revenue was $852m, up 24% on the first half of last year – driven largely by US growth. Net losses, however, were $581m – up from $141m in 2021.
Klarna said the losses were caused by rising credit losses and the cost of integrating recently acquired price comparison site PriceRunner.
What’s more, an audit of the 2021 financial account for the Australian arm of Klarna conducted by Ernst & Young has revealed concerns that Klarna Australia may not survive.
The accounts revealed that Klarna Australia had posted a 12-month net loss of $56m, which was four times bigger than when it launched in the country in 2020, when it reported a $14m loss.
Ernst and Young partner Michael Byrne reportedly said in the audit that operating losses and the net asset deficiency caused material uncertainty “that may cast significant doubt on the group’s ability to continue as a going concern”.
Klarna’s board however, which includes Mr Siemiatkowski, that oversees the Australian arm of the business, said the company is projecting a continued improvement in operating results for future years, according to notes attached to the audit.
A Klarna spokesperson also said it was “committed and dedicated to Australia as ever before and has never exited a market”.
Earlier this year, Klarna launched a new feature for UK consumers that will let them see their full online purchase history, regardless of whether they are purchased using Klarna.
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