HELSINKI, Finland — Klarna will become profitable again by next year after making deep cuts to its workforce, CEO Sebastian Siemiatkowski told CNBC.
Klarna lost more than $580 million in the first six months of 2022 as the buy now, pay later giant burned through cash to accelerate its expansion in key growth markets like the U.S. and Britain.
Under pressure from investors to slim down its operations, the company reduced headcount by about 10% in May. Klarna had hired hundreds of new employees over the course of 2020 and 2021 to capitalize on growth fueled by the effects of Covid-19.
"We're going to return to profitability" by the summer of next year, Siemiatkowski told CNBC in an interview on the sidelines of the Slush technology conference last week. "We should be back to profitability on a month-by-month basis, not necessarily on an annual basis."
The Stockholm-based startup saw 85% erased from its market value in a so-called "down round" earlier this year, taking the company's valuation down from $46 billion to $6.7 billion, as investor sentiment surrounding tech shifted over fears of a higher interest rate environment.
Buy now, pay later firms, which allow shoppers to defer payments to a later date or pay over installments, have been particularly impacted by souring investor sentiment.
Siemiatkowski said the firm's depressed valuation reflected a broader "correction" in fintech. In the public markets, PayPal has seen its shares slump more than 70% since reaching an all-time high in July 2021.