Excellent John K. Kumi is a cryptocurrency and fintech enthusiast, operations manager of a fintech platform, writer, researcher, and a huge fan of creative writing. With an Economics background, he finds much interest in the invisible factors that causes price change in anything measured with valuation. He has been in the crypto/blockchain space in the last five (5) years. He mostly watches football highlights and movies in his free time.
Klarna, the Swedish payment firm, has reportedly recorded a massive growth in the U.S. as the country continues to battle the emergence of the COVID-19.
Klarna has become the biggest Fintech Unicorn in Europe after amassing over $650 million in an online equity funding round. This has taken the company’s valuation to $10.6 billion. The Swedish payment firm has reportedly recorded a massive growth in the U.S. as the country continues to battle the emergence of the COVID-19. The global pandemic has had a considerable effect on consumer preference and caused a massive switch to online retail causing the company to add 35,000 more retailers to their network according to reports.
The funding round was reportedly led by the Silver lake partners as well as the GIC, BlackRock, HMI Capital, and Singapore’s sovereign wealth fund. Klarna is currently ranked the 5th on the CNBC disruptor 50 lists in 2020. They have active users worldwide of over 12 million, and 55,000 daily downloads as claimed by the report. Interestingly, this is three times the download of its closest competitor.
The change in Consumers’ taste and preference has resulted in Klarna recording revenue growth of 44% in the first half of 2020. There has been a percentage increase in 36% of revenue reaching $22 billion and $466 million in respective growth of revenue year after year.
Loss in Revenue for Fintech Startup Klarna
Interestingly, there was a drastic rise in the loss as the revenue and volume growth had no Impact on the net profit. Klarna set aside a reserve in order to deal with losses imposed by the pandemic, and the loss came from the funds invested in international expansion. There was a $59.8 million (522 million Swedish Krona) recorded net loss between January and June.
In the same period last year, the net loss was 73 million Swedish Krona which is a seven times increase in a net loss. In addition, there was a 1.2 billion Swedish Krona credit loss in the first half of 2020 though said to be modified for macroeconomic certainty.
Despite the net loss and the credit loss, the overall loss recorded was just 0.6% of the entire sales volume in the first half of 2020. This does not put its balance sheet in a bad light. The company currently competes with the likes of Afterpay in Australia and Max Levchin the co-founder of PayPal. Before its current deal, it was valued at $5.5 billion with Checkout. Some of its regional competitors are Revolut, a British banking app, and Checkout, a payment software maker.
According to Sebastian Siemiatkowski, the CEO and Co-Founder of Klarna, Klarna is the true infraction point of banking and retail. Having admitted that there has been a tangible change in consumer behavior, he asserted that Klarna has been a great deal. He said that the change of consumer behavior has called for people looking for flexibility, convenience, and how to pay in addition to its irreplaceable shopping experience.
Klarna offers an interest-free payment on retail purchases in installment plans. Klarna makes payments to merchants on behalf of consumers and sends invoices to the customers to make payments in installment. Klarna is currently the biggest valued Europe’s private fintech company and among the top 5 highest-valued private fintech in the world.