Klarna returns to profitability as more shoppers borrow

Klarna reported its first quarterly operating profit in four years as it attracted more consumers to buy now, pay later loans, giving the firm a boost as it lays the groundwork for an initial public offering.

The Stockholm-based fintech reported an operating profit of 130 million Swedish kronor ($18.5 million) for the three months through September, while revenue rose by about 30 per cent to 6 billion kronor. It is the firm’s first profitable result since the second quarter of 2019.

“Our growth has accelerated in Q3 and we will build on this momentum in Q4 with further investments to drive value to our consumers and merchants alike,” Sebastian Siemiatkowski, chief executive officer, said in a statement.

Klarna, once Europe’s most valuable start-up, offers credit to about 150 million shoppers globally looking to spread the cost of online purchases. The value of goods sold using Klarna rose 22 per cent year-on-year in the third quarter, with the US growing nearly 50 per cent. The firm said it has now been profitable in the US for four consecutive quarters.

Despite the inflation strain on customers in many markets, the rate of credit losses improved to 0.33 per cent of gross merchandise value, compared to 0.74 per cent a year ago.