Klarna's cash burn shows signs of slowing
Swedish BNPL company Klarna burned through more than half of its cash balance and posted ballooning losses for the first half of the year.
Why it matters: Investors are looking for early signs that Klarna can tamp down on its costs after the company woke up from its lockdown-era spending spree.
- It laid off 10% of its global workforce and took an 85% cut to its valuation in return for capital earlier this year.
Of note: We say early signs because Klarna's layoffs came in May, meaning the full impact of that reduction may not be seen until the next earnings report.
- Klarna also closed on its $800 million financing round in July.
Driving the news: One thing is clear — the company has pulled back on its cash burn but still has more work to do. Klarna started the year with about $1.8 billion in cash, which dwindled to about $1.1 billion as it acquired PriceRunner in the U.K. in the first quarter.
- That burn slowed by the second quarter of the year, with Klarna closing out June with about $879 million in cash and cash equivalents.
- Net operating income grew 18%, to $705 million, from January through June, showing a slowdown from the 41% growth it enjoyed in the same period a year earlier.
The bottom line: The strength of Klarna's business will also determine the ammo it has to go up against Affirm amid the Swedish company's U.S. expansion effort.