Klarna Bank AB

Key Company Facts

Founded	2005
Headquarters	Stockholm, Sweden
Sector	Finance
Industry	Fintech/Online Banking
Founders	Sebastian Siemiatkowski, Niklas Adalberth, Victor Jacobsson
Number of employees	5,441 (2022)
IPO Date	2023 (Expected)
Number of investors	6
Total funding	$4.5 billion USD
Number of account holders	147,000,000
Valuation estimate	$6.7 billion USD

Company Overview & History

Klarna Bank AB, also known as Klarna, is a Swedish fintech company that offers online financial services such as payments for online storefronts, direct payments, and post-purchase payments.

Klarna has over 5,000 employees, and its core service is to provide payment processing services for the e-commerce industry. The company is known for its “Buy now, pay later” (BNPL) service, offering customers credit on their purchases during the checkout process​​.

The company was founded by Sebastian Siemiatkowski, Niklas Adalberth, and Victor Jacobsson in 2005. Over the years, Klarna expanded its operations to several countries including Norway, Finland, Denmark, Germany, the Netherlands, and the United States. Klarna raised $460 million in 2019 with plans to expand its payment presence in the US

Financial Performance

In the first quarter of 2023, Klarna reported a net loss of 1.3 billion Swedish krona ($120.7 million), which is down 50% from the same period a year ago.

Klarna’s total net operating income was 5 billion Swedish krona, up 22% year-over-year. Klarna has more than 150 million customers and was given a credit rating of BBB/A-3 with a stable outlook by S&P Global.

Klarna’s financial performance indicates that the company’s cost-cutting measures are starting to pay off, and the company is on track to achieve profitability by the second half of 2023

Revenue

Year	Revenue (USD)
2016	$384 million
2017	$451 million
2018	$588 million
2019	$772 million
2020	$1.07 billion
2021	$1.42 billion
2022	$5.64 billion
2023	$4.69 billion

Business Model

Klarna’s business model is primarily based on its buy now, pay later (BNPL) service. When a customer makes a purchase at a participating online store, they have the option to pay for the purchase upfront or defer the payment via Klarna.

If they choose to defer the payment, Klarna pays the merchant immediately and assumes the credit risk for the transaction. Klarna then collects the payment from the customer in installments. Klarna makes money through fees charged to the merchant for this service, as well as through late fees charged to customers.

The company also offers other financial services, including personal loans and savings accounts, in some markets.

Estimated Valuation

Year	Valuation (USD)
2018	$500 million
2020	$10.6 billion
2021	$45.6 billion
2022	$6.7 billion

Risk Factors

Klarna, like other companies operating in the fintech and BNPL space, faces several risks. One major risk is regulatory, as authorities could impose new rules on BNPL providers to protect consumers from over-indebtedness.

Another risk is credit risk, as Klarna assumes the risk when customers choose to defer their payments. While Klarna has measures in place to mitigate this risk, such as performing credit checks, there is no guarantee that these measures will always be successful.

Additionally, Klarna also faces technology and data security risks, given the digital nature of its services.

Market Opportunity

The BNPL market presents significant opportunities for growth. With the continued shift towards online shopping, demand for flexible and easy-to-use payment methods is expected to increase.

Klarna’s established presence in this market, combined with its broad range of services, positions it well to take advantage of these opportunities. Furthermore, Klarna’s international expansion efforts could also open up new markets and drive further growth.

Competitors

• Afterpay
• Affirm
• Paypal
• Sezzle
• Splitit
• GoCardless
• ViaBill
• FuturePay
• Amazon Pay
• Zilch
• Apple Pay