Klarna Shares Slump 21% on Gloomy Outlook; Fintech Loses Its CFO
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Swedish fintech Klarna has just rattled investors with a combination of a lowered full-year forecast and a reshuffle at the top of the company. The stock lost around 21 percent in US trading, closing in on 15.41 dollars. That brings the decline since the start of the year to roughly 46 percent. Operationally, though, the company delivered in the quarter just reported: after a loss in the year-earlier period, it is back in the black, if only narrowly.
German business weighs on the forecast
The main trigger for the sell-off was the reduced outlook for gross merchandise volume (GMV), meaning the total value of all purchases completed across the Klarna network. Instead of the previously targeted minimum of 155 billion dollars, the company now expects 149 billion to 151 billion dollars for the year. Analysts polled by FactSet had penciled in around 155.7 billion dollars.
Chief financial officer Niclas Neglén pointed to two factors on a call with analysts: roughly 600 million dollars stem from currency translation effects, the rest from weaker than expected discretionary spending in Germany, Klarna’s largest market by volume. The guidance, he said, simply assumes that German softness persists rather than reverses. US assumptions remain unchanged, according to Neglén, and the country continues to be the group’s fastest growing region.
The outlook for the current quarter was cautious as well: Klarna guided for revenue of 940 million to 980 million dollars, while Wall Street had modeled roughly 1.11 billion dollars.
Two more departures from the management team
At the same time, two long-serving executives are leaving the company. CFO Niclas Neglén, six years with Klarna and the architect of its stock market debut last September, will step down early next year. Chief marketing officer David Sandström, widely credited with driving the brand’s US growth, is departing as well. Both will stay in their roles through the transition. Klarna has started a search for a New York based successor to run its finance function.
CEO and cofounder Sebastian Siemiatkowski praised the two managers as executives who helped shape what the company is today. Klarna also stressed that neither transition resulted from any disagreement over the company’s operations, policies or practices.
The changes fit into a longer reshuffle. COO Camilla Giesecke left in the spring after more than nine years. Before that, Klarna had to recalibrate one of its most visible AI projects. After the group claimed its AI assistant was doing the work of 700 customer service agents, it returned to hiring human support staff because service quality had suffered. Siemiatkowski now considers it critical that a human is always reachable on the customer service side.
Profit, growth and the path to recurring revenue
The financials point in a different direction than the share price. In the second quarter, Klarna posted a profit of 9 million dollars, against a loss of 53 million dollars a year earlier. Earnings came in at one cent per share, where analysts had expected a loss of five cents. Revenue climbed 27 percent to 1.04 billion dollars, beating estimates of 996.5 million dollars. GMV rose 18 percent to 36.65 billion dollars.
The number of active customers grew by about eight percent to roughly 120 million, while the merchant network expanded 54 percent to around 1.21 million partners. Transaction margin dollars, meaning total revenue less total transaction costs, were up 42 percent. For the full year, Klarna slightly raised its guidance for that metric to between 1.62 billion and 1.65 billion dollars, up from at least 1.61 billion dollars previously.
Siemiatkowski credits the classic buy now, pay later business alongside higher engagement products such as longer-term installment loans and the Klarna Card. The company’s subscription strategy is aimed at the same goal: as Trending Topics reported, Klarna is upgrading its subscription bundles to outcompete credit cards and capture a larger share of recurring user revenue.
