Klarna’s path to profitability: Stellar Q1 results and a new partnership with Airbnb

Klarna's path to profitability: Stellar Q1 results and a new partnership with Airbnb

Klarna, the AI-enhanced global payments network and shopping service, recently unveiled its first-quarter results, showcasing impressive growth surpassing ecommerce trends.

This remarkable development is due in part to the firm’s swift adoption of AI throughout its operations. The latest Klarna update comes on the heels of several notable partnerships with globally renowned brands, such as Airbnb. These alliances continue to fuel Klarna’s positive societal impact and drive economic growth. The complete financial report can be found on Klarna’s Investor Relations website.

In the first quarter of 2023, Klarna has seen substantial growth in retailer revenue, which has grown 17.3% year-on-year, outperforming Gross Merchandise Value (GMV). Focusing on the US market, retailer revenue has seen a 34% YoY surge, thanks to new partnerships with retail powerhouses like Samsung, Uniqlo, Boden, and more. Furthermore, Klarna has successfully strengthened existing collaborations with brands like Nike, Etsy, and Tod’s, thereby enhancing shopping and marketing experiences.

Klarna’s pioneering partnership with Airbnb promises global guests seamless, flexible, and sustainable payment solutions. This collaboration is timed perfectly as the pandemic comes to a close, and Airbnb anticipates over 300 million guest arrivals this year. This significant expansion of Klarna’s partner network of 500,000 partners worldwide marks a critical foray into the travel and experiences sector, adding to previous alliances with Expedia and Booking.com.

Klarna’s Q1 2023 demonstrates marked progress towards profitability, with operating losses more than halving from Q1 2022, representing a 78% improvement on an adjusted basis. This favourable trend is expected to continue, putting Klarna on a clear path to reach monthly profitability in the second half of the year. Klarna’s business model’s agility and resilience, along with its robust e-commerce position in key markets, is evidenced by the BBB-/A-3 credit rating with a stable outlook awarded by S&P Global.

Klarna’s partnership with OpenAI, a first-of-its-kind for a European tech company, highlights its agile operational model, enabling quick deployment of generative AI for greater efficiency and improved consumer outcomes. AI accelerates Klarna’s transformation into a digital financial assistant, aiming to offer consumers time, money, and worry savings. Klarna’s application of AI for finely-tailored product recommendations within search and discovery significantly enhances customer experience and drives substantial growth for retailers.

Klarna co-founder and CEO, Sebastian Siemiatkowski, shared his excitement about the new partnership with Airbnb and the potential to bring flexible payment services to travellers worldwide. He stated, “This quarter we’ve impressively managed to grow GMV and revenue, at the same time as we cut costs and credit losses, and also investing ambitiously in AI driven products. We are on track to achieve profitability this year all while revolutionising shopping and payments through our AI-powered approach.”

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