9 votes

Klarna reports first quarterly profit in four years – swing to profit of £9.6m by Swedish firm improves its fortunes in run-up to possible £12bn flotation

Posted by mycketforvirrad
Tags: business, sweden, technology, fintech, payments.mobile, klarna, profits, stock market, regulation, flotation, buy now pay later, united kingdom, author.kalyeena makortoff, source.the guardian
https://www.theguardian.com/business/2023/nov/06/buy-now-pay-later-firm-klarna-reports-first-quarterly-profit-in-four-years

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Title
Buy now, pay later firm Klarna reports first quarterly profit in four years
Authors
Kalyeena Makortoff
Published
Nov 6 2023
Word count
684 words

8 comments

  1. [4]
    Sodliddesu
    Link
    This comes after all those stories of people needing to use split payment apps to buy groceries from earlier this year... So, are more people buying or just more people needing to buy using this?

    This comes after all those stories of people needing to use split payment apps to buy groceries from earlier this year...

    So, are more people buying or just more people needing to buy using this?

    7 votes
    1. [3]
      TheBeardedSingleMalt
      Link Parent
      People are buying but more are missing the payment deadlines. I used klarna to buy a new laptop over a year ago. Just make sure they have the option to pay off early or you strictly stick to the...

      People are buying but more are missing the payment deadlines.

      I used klarna to buy a new laptop over a year ago. Just make sure they have the option to pay off early or you strictly stick to the payment schedule or else you get hit with a LOT of interest...which is how these groups make money.

      5 votes
      1. [2]
        stu2b50
        Link Parent
        People keep saying this but Klarna is a public company, you can see how they make money. They made profit BECAUSE less people missed their payments Klarna packages off its consumer debt and sells...

        People keep saying this but Klarna is a public company, you can see how they make money. They made profit BECAUSE less people missed their payments

        The BNPL lender’s first profits since 2019 were driven by a 30% jump in revenue, as well as an increase in customers meeting their payment deadlines as Klarna became more discerning on who it lent to and how much they were able borrow against their purchases.

        Credit losses, Klarna said, dropped by 56% “due to continuous improvements in underwriting precision and accuracy ensuring Klarna continues to make the right lending decisions for consumers”.

        Klarna packages off its consumer debt and sells it to keep it off the books asap. The more delinquencies the cheaper their bonds have to be sold.

        They make their revenue from merchant fees.

        22 votes
  2. [4]
    fineboi
    Link
    I’ve used Klarna. The app is pretty intuitive and allowed me to find savings on the audio equipment I bought. Not sure how they make money. I don’t purchase anything I can’t pay in full and paid...

    I’ve used Klarna. The app is pretty intuitive and allowed me to find savings on the audio equipment I bought. Not sure how they make money. I don’t purchase anything I can’t pay in full and paid off my purchase early.

    3 votes
    1. stu2b50
      Link Parent
      Merchant fees. The merchant fee for payment options like Klarna is waaaay higher than traditional credit card processing. Often 5% or higher.

      Merchant fees. The merchant fee for payment options like Klarna is waaaay higher than traditional credit card processing. Often 5% or higher.

      6 votes
    2. snoopy
      Link Parent
      You could say the same about traditional credit cards. From you, they're making money from merchant fees. From other people they make money from interest on late payments.

      You could say the same about traditional credit cards. From you, they're making money from merchant fees. From other people they make money from interest on late payments.

      2 votes
    3. infpossibilityspace
      Link Parent
      Modern MBA has a mini-documentary about how buy-now pay-later companies do (or don't) make money. Tldr Merchant fees, late fees, or interest. Out of klarna, afterpay or affirm, none are reasonably...

      Modern MBA has a mini-documentary about how buy-now pay-later companies do (or don't) make money.

      Tldr Merchant fees, late fees, or interest. Out of klarna, afterpay or affirm, none are reasonably profitable relative to their valuation.

      2 votes