(News Bulletin 247) – The Swedish specialist in split payments recorded growth of 27% in the first half of 2024 while its adjusted operating profit went into the green. Its IPO, the timing of which has not been set, is highly anticipated.

Klarna has not yet taken its first steps on the stock market. But its name is already well known to investors. Notably because the skills of its artificial intelligence assistant caused the shares of the French specialist in outsourced customer relations, Teleperformance, to plummet in February.

A young company founded in 2005, Klarna is a payment company specializing in “buy now pay later”, or split payment, which allows consumers to defer or spread out their payment. This payment facility has gained popularity over the years. According to a 2023 Kantar study for BNP Paribas, 43% of Europeans used “from time to time” a split payment or a deferred payment. According to Lafferty Research, the global split payment market could reach $3,000 billion by 2030.

As early as 2006, Klarna began its international offensive and in 2012 became a unicorn, i.e. an unlisted company with a valuation of over a billion dollars. Today, Klarna claims 150 million users and 575,000 partner merchants. This is despite the fact that its co-founders, when they “pitched” their idea during a sort of Swedish equivalent of “Who wants to be my partner?”, were told “it will never work” by the jury.

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A valuation far from that of 2021?

The company must now shift into high gear and prepare for an IPO. Sebastian Siemiatkowski, the company’s CEO and co-founder, said earlier this year that the group was ready to go public. The timing has not been specified, but CNBC recalls that the executive had explained that an IPO this year was not “impossible”. The American channel emphasizes that many expect the operation to take place on Wall Street.

Bloomberg, for its part, rather mentions the beginning of 2025 and mentions a valuation that could reach 20 billion dollars. This would however be far from the 45 billion dollars that the company had reached during a fundraising carried out in 2021. At that date, inflation and interest rates had not yet taken off, and investors were not yet expressing the current doubts about household consumption.

Let us recall that the payments universe is a sector of fixed costs, with a huge number of transactions that remunerate companies with small commissions. The higher the volumes, the better the company’s results. The downside is that this sector, which is growing strongly with digitalization and the multiplication of payment practices, is very dependent on the economic situation and consumer trends.

In any case, Klarna continues to show strong growth and improve its results, as evidenced by its accounts delivered on Tuesday.

In the first half of 2024, Klarna reported revenues of SEK 13.27 billion, or around €1.2 billion, up 27% year-on-year. In the US alone, its growth reached 38% year-on-year. Adjusted operating profit turned green with a profit of SEK 673 million, compared to a loss of SEK 456 million a year earlier. The company remains in a net loss, but it has divided it by more than six, to SEK 333 million compared to SEK 2.1 billion in the first half of 2023.

Moreover, Sebastian Siemiatkowski indicated in a press release that the company had achieved a balanced net result in the second quarter alone.

Klarna has been able to rely on generative AI to improve its productivity and costs. Adjusted operating expenses were stable year-over-year, despite the company’s strong growth. Sebastian Siemiatkowski explained that his generative AI tool would have been able to perform the tasks performed by 700 employees.