Stockholm May 26th 2023 - Klarna, the AI powered global payments network and shopping destination, released its first quarter results demonstrating continued growth well ahead of ecommerce, significant progress towards profitability, as well as fast deployment of AI across the business. The results come as Klarna continues to sign new partnerships with iconic brands, making a positive impact on society and helping to drive the global economy forward, most recently launching a global partnership with Airbnb. The full earnings release has been made available on the company’s Investor Relations website.
Continued growth & new global partnerships
In Q123, Klarna’s retailer revenue outpaced GMV, increasing by 17.3% compared to the prior year. Zooming in on the US, retailer revenue has grown 34% YoY as the company attracts new retail partners including Samsung, Uniqlo, Boden, while broadening existing relationships with partners such as Nike, Etsy and Tod’s through new marketing and shopping experiences.
Klarna’s first-of-its-kind partnership with Airbnb will provide their guests worldwide with seamless, sustainable and flexible payment solutions. The partnership goes live as the pandemic is finally over, and Airbnb is expecting an impressive 300 million+ guest arrivals this year. This is a major addition to Klarna’s existing network of 500,000 partners globally as the company expands further into the travel and experiences sector, following partnerships with Expedia and Booking.com.
Progress to profitability
Klarna’s operating loss has more than halved from Q122, and improved 78% on an adjusted basis*, placing Klarna firmly on track to reach profitability on a monthly basis in the second half of the year. The concrete steps the company is taking on its path to profitability, as well as its robust e-commerce position in key markets, is reflected in Klarna being assigned a credit rating of BBB-/A-3 with a stable outlook by S&P Global.
The Q123 performance emphasizes the fantastic agility of Klarna’s business model and ability to quickly adjust to less favorable macroeconomic conditions. Credit loss rates** improved 42% YoY and credit losses by 35% compared to Q122, in line with the trajectory predicted. At the same time global GMV increased 13% YoY compared to Q122, in stark contrast to the global e-commerce market’s -2% contraction***. Total net operating income increased 22% to 4.4bn SEK.
Leveraging AI to save consumers time, money and worry
Klarna’s collaboration with OpenAI, the first integration of its kind by a European tech company, illustrates how Klarna’s agile operating model allows it to deploy generative AI to drive efficiency and better outcomes for consumers much faster than traditional banks and credit card companies. AI is accelerating Klarna's evolution into a digital financial assistant, aiming to save consumers time, money, and worry.
In the Western digital landscape where 80% of purchases originate from search, Klarna is at the forefront of the shift towards a recommendations based approach which consumers are seeking. Klarna carries SKU level data on every transaction and in Q1 that included data from the sales of over 615 million products, with over 300 billion data points that, with consent, is used to provide a superior, personalized experience to consumers. Leveraging this, Klarna uses AI to offer relevant and finely-tailored product recommendations within search and discovery, enhancing consumers' experience and driving significant growth for retailers.
"We're thrilled to team up with Airbnb and bring Klarna’s flexible services to travelers all over the world! By offering flexible payment options, we can support Airbnb's mission of creating a world where anyone can belong anywhere, says Sebastian Siemiatkowski, co-founder and CEO of Klarna. “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 revolutionizing shopping and payments through our AI-powered approach."
Footnotes
*Adjusted operating results are defined as IFRS operating results, excluding restructuring costs, share-based payments, related payroll taxes, depreciation and amortization.
**Credit losses/Gross Merchandise Volume