Shulou(Shulou.com)11/24 Report--

According to news in the morning of December 6, Beijing time, the valuation of Swedish "buy-and-pay" giant Klarna has plummeted 85% this year, and its CEO said the company is waiting for profitability and the "sanity" of the market to return before going on the road to an IPO.

Klarna was founded in Sweden in 2005 by CEOs Sebastian Siemiatkowski, Niklas Adalberth and Victor Jacobsson. Klarna allows consumers to share the cost of online shopping by interest-free installments. The company operates in Europe and expands in the US with competitors such as Affirm and Afterpay. The company was once the most highly valued start-up in Europe, with a valuation of $45.6 billion. As the company refinanced in tougher market conditions this year, its IPO tumbled 85 per cent, valuing it at just $6.5 billion.

With the tech boom coming to an end, Klarna hopes to make a profit at a time when growth capital and interest in technology stocks are declining.

The company needs to convince potential investors that "buy and pay later" is a sustainable model even in the face of falling consumer spending, and that it can avoid giving consumers a reputation as heavily indebted as Wonga, the UK short-term lending platform.

Sebastian said IPO could be years away, and he compared it to Google's 2004 IPO.

"for me, Google's IPO is perfect," he told the media at a conference in Helsinki. "it was a market a few years after the dotcom bubble burst. It's a rational market. It's not over-hyped, and Google has a huge opportunity."

"so you're not doing IPO at the end of the growth cycle. I think Klarna is probably pretty close to that point, and I think the market is very close to that point. Maybe we are a little overly depressed now, and then we can come to our senses and hope this is consistent with the period when Klarna is in an advantageous position."

The overall performance of consumer finance technology companies listed in 2021 is poor. Shares of trading app Robinhood, credit card issuer Marqeta and money transfer company Wise have all fallen sharply this year, while shares of Klarna's peer US Affirm have fallen 85 per cent so far this year.

Sebastian is vague about any possible public offering after he said market volatility had made him "nervous".

Klarna expects further losses in 2023 after a tough year, Klarna reported higher revenues and higher losses in the third quarter of 2022. The company experienced two rounds of layoffs in 2022. After the new round of financing, the company's valuation fell 85% to $6.7 billion.

In May, the company laid off 10% of its staff, made a second round of layoffs in September, and about 700 people left the company. According to the company's latest report, the layoffs helped the company reduce its operating loss by 42% between the second and third quarters, but the company still lost 8.3 billion Swedish kronor ($787 million) in the nine months to the end of September.

The company said revenue rose 22 per cent year-on-year to $1.4 billion in the nine months to the end of September. The company currently has 31 million customers in the US, credit losses are down from a year earlier, and total merchandise is up 92 per cent from a year earlier.

Sebastian said that despite rising costs, interest rates and inflation, the company's growth roadmap has not changed much.

"We will stay in all the markets because when you exit a market, no one will forgive you and you can't come back," he said. "

Like other venture-backed growth companies, profitability has been a pressing theme affecting investor sentiment in 2022. Sebastian said positive cash flow was still its goal, adding: "We should make a profit month by month after next summer... that may mean we will still lose money for the whole of next year, but I don't know yet. We'll know then."

He said that at a time when the credit business was facing a severe macroeconomic situation, Klarna adjusted its credit underwriting strategy in January and May, which made some customers unhappy, but this was necessary. This means the business will reduce lending, especially to new customers, because it wants to reduce default rates, according to the company's interim report.

Welcome to subscribe "Shulou Technology Information " to get latest news, interesting things and hot topics in the IT industry, and controls the hottest and latest Internet news, technology news and IT industry trends.