Operating loss before tax at Klarna, a Swedish buy now, pay later (BNPL) provider, has increased more than three-fold to $581m (SEK6.2bn) in the first half of this year from SEK1.8bn in the same period of 2021.

This was attributed to rapid global expansion in various countries including the US, rising credit losses and staff costs, among other factors.

Total credit losses increased to SEK2.85bn in the first six months of 2022, compared with SEK1.85bn in the prior year.

Operating expenses before credit losses increased to SEK10.81bn from SEK6.26bn, mainly due to administrative costs tied to the firm’s international expansion after the Covid-19 pandemic.

Consequently, Klarna’s market valuation too suffered. 

In July this year, the firm secured $800m investment at a $6.7bn valuation, which represents a 85% decrease from its earlier valuation of $46bn.

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However, its revenues in H1 2022 stood at SEK9.1bn, a 24% surge from the corresponding period last year. Gross merchandise value (GMV) soared 21% to SEK396bn.

The firm noted that the US continues to be its fastest-growing market, with 109% year-on-year GMV growth.

Klarna also said that Russia’s invasion of Ukraine, turbulent market conditions, and the soaring inflation have dampened investor sentiment.

In May this year, the firm axed nearly 10% of its workforce across the globe.

Klarna CEO and co-founder Sebastian Siemiatkowski said: “Klarna’s stellar growth in the US continues at pace with sales volumes doubling, outperforming both US peers and e-commerce growth as consumers recognise the value Klarna provides compared to interest-laden credit cards.

“Our European business continues to perform strongly, driving $1bn gross profit each year. 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.

“Together with the significant investments we have made in entering 11 new markets since 2020, and investing in growing our platform and services for the benefit of consumers and retailers, the foundation for a global leader has been set.”