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Klarna Bank released its interim report for the first half of 2020. The report indicated that the company experienced growth in some sectors despite a net loss of $59.8 million.
Leading global payments and shopping provider Klarna Bank AB on Thursday released its interim report for January-June 2020. According to the published results, Klarna saw accelerated growth and demand from retailers and consumers.
This came despite the company taking precautionary measures during the first half of 2020 due to the ongoing crisis, which included adjusting its credit policies globally.
“In the context of Covid-19 and the uncertainties it has unfortunately created for so many, a somewhat precautionary approach was necessary at times, including adjusting our credit policies globally,” Klarna co-founder and CEO Sebastian Siemiatkowski said in a letter to shareholders. “Despite this, we have seen accelerated growth and rapidly increasing demand for our services.”
Since its inception, the company has been providing online financial services that include payments for online storefronts, direct payments, post-purchase payments and many more. Additionally, its core service is to assume stores’ claims for payments and handle customer payments, hence eliminating the financial risks associated with the business for both the seller and buyer.
Details of Klarna H1 2020 Financial Results
According to the report, the company saw strong growth in the first half of the year, whereby it reported an accelerating gross merchandise volume and net operating income growth of 51% and 41% year-on-year respectively.
Notably, the company registered around 35,000 new retail partners, which reciprocated to approximately 200 new per day. The company also recorded 14 million new consumers and 12 million monthly active users during the same period.
Worth noting is that the bank registered approximately 45,000 app installations every day, which was 3x higher compared to the same period last year.
However, on the other side of its balance sheet, the bank reported a net loss of 522 million Swedish krona ($59.8 million) between January and June, which was a sevenfold increase from the net loss of 73 million krona it posted in the same period last year.
“Net credit losses increased 93% to SEK 1.2bn, or 73% to SEK 1.1bn adjusted for the additional reserve held due to macroeconomic uncertainty. This is driven by the rapid expansion in newer markets with a higher share of new consumers,” the company wrote in its report.
What to Expect Further
With the increased competition in its line of business from the likes of PayPal and Afterpay. Klarna isn’t looking forward to improving its mode of operations to give it a vantage point over its competitors.
Additionally, the company is anticipating to go public via an IPO, whereby Siemiatkowski recently suggested that this could happen within the next two years.
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