Klarna is making “significant strides” toward profitability on a monthly basis by the second half of 2023, the firm said.

Swedish fintech company Klarna achieved a significant improvement in its financial performance during the first quarter, as it halved its net loss compared to the same period last year. The company reported a net loss of 1.3 billion Swedish krona ($120.7 million), down 50% from the previous year’s loss of 2.6 billion krona.

Klarna’s total net operating income rose by 22% year-over-year, reaching 5 billion Swedish krona. The CEO of Klarna, Sebastian Siemiatkowski, expressed satisfaction with the company’s ability to grow its gross merchandise volume and revenue while simultaneously cutting costs and credit losses. He also highlighted Klarna’s ambitious investments in AI-driven products as part of its strategy to revolutionize shopping and payments. (CNBC)

Klarna also attributed the reduction in losses to improved underwriting, leading to a decline in customer defaults, and the diversification of revenue sources, including marketing initiatives. The company’s efforts to achieve profitability were evident in its monthly performance, according to Klarna. The firm, which boasts over 150 million customers, received a stable credit rating from S&P Global in April, reflecting its strong e-commerce position, profitability rebuilding efforts, and capital buffer.

To enhance its services, the company has been focusing on artificial intelligence (AI). It introduced an advanced AI recommendation algorithm in its app to help merchants effectively target customers. Additionally, Klarna integrated OpenAI’s ChatGPT, a popular AI chatbot, into its service to provide shopping inspiration and improve customer chat through real-time translations.

The company also expanded its offerings by partnering with Airbnb to facilitate short-term holiday rentals and allow customers to pay for their bookings in installments.

The firm faced challenges due to souring investor sentiment toward technology and the macroeconomic environment, leading to a reduction in its market value and a subsequent workforce downsizing in response to investor pressure.

However, the company’s cost-cutting measures and focus on AI-driven solutions are showing promising results, positioning Klarna on track to achieve profitability in the coming months.

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