Klarna has reportedly suffered its biggest annual loss totalling $1bn, but its company is certain it is on track to return to profitability.
Despite the net loss, which was a 47% increase from 2021, the company raised the chief executive’s pay by over a third, according to the Financial Times.
It stated that the net losses narrowed in the fourth quarter to SEK 1.9bn (182m) compared to SEK 4.6bn ($442m) a year prior. It also stated that credit losses were SEK 1.4bn ($134m) in the three months, which was an improvement of 18% during the same period in 2021.
Klarna chief executive Sebastian Siemiatkowski told the Financial Times that Klarna is looking to return to profit by the third quarter of 2023. However, he warned the company could record an annual loss for the year.
The Financial Times stated that Klarna had regularly recorded profits until 2019 when it began its aggressive expansion in the US.
The company last made an annual profit in 2018, a quarterly profit in Q2 of 2019 and a monthly profit in August 2020.
While the BNPL firm has struggled in the US, the tides seem to be turning. It recently announced it had recorded 71% year-over-year growth in GMV and improved credit loss rates by 37%.
Earlier this week, Klarna announced UK customers will now be charged late fees for missing payments. The company will charge a £5 fee to customers that miss a payment, starting on March 16.
These fees will be capped at 25% of the order value and no more than two fees will be made per order.
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