Klarna Reports Increased Revenue and Prepares for Possible IPO

For the quarter ending in June, Klarna Bank AB reported an adjusted profit of 673 million kronor ($66.2 million), compared to a loss of 456 million kronor ($44.8 million) for the same period last year. In the first half of the year, the fintech company increased revenue by 27%.

Investors are especially interested in Klarna right now as the company works toward an initial public offering in the U.S. likely next year. Should this happen, the Swedish company could be worth as much as $20 billion. Reportedly, Klarna has already discussed the sale of existing stock with interested parties, which would boost its valuation before a public listing.

Klarna’s bottom line was potentially helped through recent investments in artificial intelligence, particularly an AI chatbot powered by ChatGPT. According to CEO Sebastian Siemiatkowski, the chatbot can do the work of 700 customer service agents.

“[The chatbot] handles two-thirds of our customer service chat inquiries,” Siemiatkowski said in an interview with CBS. “It’s on par with humans in terms of satisfaction and it resulted in a 25% reduction in repeat inquiries from customers.”

The potential replacement of service agents does not directly affect Klarna employees as the company outsources customer service responsibilities. Coincidently, the money tech company did lay off 700 people in 2022, but the company stated that it had nothing to do with AI.

While Klarna is on the upswing, new regulations in the U.S. could make doing business a little tougher for buy now, pay later (BNPL) companies. After numerous complaints, the Consumer Financial Protection Bureau (CFPB) announced that the BNPL industry must comply with the same rules as traditional credit card companies. Under the guidelines, BNPL service providers must investigate any disputes initiated by a consumer as well as pause payments while the claim is investigated. Additionally, refunds must be issued for returned products or canceled services and consumers must receive periodic billing statements just like a credit card account.

The BNPL industry has grown by leaps and bounds in recent years. According to the CFPB, the number of loans originated in the U.S. through these companies grew by 970%, from 16.8 million in 2019 to 180 million in 2021. The five biggest companies in the industry, which includes Klarna, generated $24 billion in loans in 2021.