Klarna shows that BNPL growth is not cheap

The tech world has been a touch busy in the last few days, so you will forgive me for missing that Klarna dropped its 2021 financial results last week. We’re remedying that oversight today.

Klarna is an interesting company. It’s incredibly well-funded, richly valued, and, despite remaining a private company, reports its earnings on a regular basis. This means that we can check in on how it is performing and learn quite a lot about the larger buy now, pay later (BNPL) market that is awash with startup activity and venture dollars.

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The mega-unicorn, in other words, provides us a window into a market replete with smaller companies yearning for both niche and mass-market BNPL adoption.

And what do Klarna’s earnings tell us? Two things: First, that the BNPL market continues to expand, with consumers happy to transact more and more with the spending model. And, second, that growth in BNPL land is not cheap; Klarna’s operating costs are scaling rapidly and the company’s profitability is suffering.

Let’s talk about it!

Inside’s Klarna’s 2021

In 2021, Klarna had revenues (“total net operating income”) of 13.75 billion Swedish Krona, leading to an operating loss of 6.58 billion Krona, and a net loss of 7.09 billion Krona. In U.S. dollars at today’s exchange rate, those figures translate to $1.375 billion in revenue, a $658 million operating loss and a $709 million net loss.

Klarna had posted a 10.0 billion Krona revenue result in 2020 and a net loss of 1.376 billion Krona. So Klarna grew by around 36% last year in revenue terms, but its net losses multiplied by around 5.