Klarna reported a half-yearly loss of 6.17 billion Swedish crowns ($578.52 million) compared with 1.76 billion crowns in the year-earlier period.

Higher employee costs, an increase in credit losses, and investments in growth pushed Klarna to a loss of 6.17 billion Swedish crowns ($578.52 million) in the first half of the year, more than 3X of its loss of 1.76 billion crowns in the corresponding period last year. (SALTWIRE)

The dismal result came on top of an $800 million fund raise last month at a valuation of $6.7 billion, which plunged 85% from the previous valuation of $46 billion last year.

In an effort to rein in expenditure, Klarna laid off 10% of its staff last May. Nevertheless, the fintech suffered credit losses of 2.85 billion crowns in the reporting half year, up from 1.85 billion crowns a year earlier.

Investment in market expansion may be bearing fruit, however: In the US its GMV was up 109%, and the company now boasts of being a market leader in the US, with 30 million users, 60% brand awareness, and 49 of the top 100 US retailers partnering with it.

“Our European business continues to perform strongly, driving $1bn gross profit each year,” said Sebastian Siemiatkowski, CEO and Co-Founder of Klarna (pictured above). “Improvements in underwriting mean credit loss rates are well ahead of our peers with 99% of Klarna consumers paying us back, and 70% of global Pay Later orders actually paid off early.”

However, both Klarna and its investors would like the fintech to become profitable.

“We’ve had a few years now where growth has been really heavily prioritised by investors,” Siemiatkowski said in a statement accompanying the interim results. “Now, understandably, they want to see profitability.”

Related Story: Klarna, Last Valued At $46B, Cuts Workforce By 10%