Klarna is now Europe’s largest fintech unicorn with a value of over $ 10 billion
The logo of Swedish payment provider Klarna is displayed on a smartphone screen on April 22, 2020 in Berlin, Germany.
Thomas Trutschel | Photo library | Getty Images
Klarna is now officially Europe’s most popular private fintech company.
The Swedish online payments company said it raised $ 650 million in a fundraiser, valuing the company at $ 10.6 billion. The round was led by Silver Lake Partners, alongside GIC, Singapore’s sovereign wealth fund, as well as Black rock and HMI Capital.
“Klarna is one of the world’s most disruptive and promising fintech companies, redefining the e-commerce experience for millions of global consumers and retailers, just as e-commerce growth accelerates in the world. world and is moving quickly to mobile, ”said Jonathan Durham, Managing Director of Silver. Lake Partners, in a press release announcing the deal.
A regulated bank, Klarna is best known for its “buy now, pay later” model, which provides buyers with interest-free financing on retail purchases over an installment period. Klarna pays a merchant once a customer purchases something using their platform, while users are then billed in installments. Its regional competitors include UK banking app Revolut and payment software maker Checkout.com.
Revolut, Klarna and Checkout were all valued at $ 5.5 billion, according to CB Insights Unicorn Tracker, before the transaction.
The company also competes with U.S.-based Affirm, run by Pay Pal co-founder Max Levchin, and the Australian After payment. Last month Afterpay noted he had agreed to buy the Spanish company Pagantis as part of an agreement allowing it to expand in Europe, thus challenging Klarna.
To date, the Klarna app has over 12 million monthly active users globally, with 55,000 daily downloads, which the company says is nearly three times as many downloads as its closest competitor. over the past year.
“We are at a real inflection point in retail and finance,” Klarna co-founder and CEO Sebastian Siemiatkowski said in the deal announcement. “The shift to online retail is now really supercharged and there is a very tangible change in the behavior of consumers who are now actively seeking services that offer convenience, flexibility and control in the way they pay and a shopping experience. overall superior. “
Klarna is growing rapidly in the United States as the country continues to feel the effects of Covid-19 pandemic. Due to the accelerated shift to online retail and changing consumer preferences, the company added more than 35,000 new retailers in the first half of 2020 to its network of more than 200,000 retail partners. , including Sephora, Groupon and Ralph lauren.
A recent McKinsey & Company A consumer survey found that more than 75% of consumers have tried new brands, new places to shop, or new shopping methods throughout the pandemic. Additionally, 82% of those who have tried a new digital shopping method intend to continue using it even after returning to some semblance of normalcy. For Klarna, this translated into volume and revenue growth of 44% in the first half of 2020 and 36% year-over-year to over $ 22 billion and $ 466 million respectively.
But the growth in volumes and revenues did not translate into net profits. Klarna saw losses increase considerably in the first half of the year as it invested in international expansion and built up reserves to deal with credit losses in the midst of the pandemic. Klarna’s interim report in the first half showed a net loss of SEK 522 million ($ 59.8 million) between January and June, seven times the net loss of SEK 73 million recorded in the same year. period last year.
Credit losses – incurred when a customer does not repay a loan – nearly doubled to around 1.2 billion crowns, a figure which the group said has been adjusted for “macroeconomic uncertainty.”
However, Klarna said the company’s balance sheet was “strong” and overall losses were only 0.6% of total sales volume at the time.
The latest investor fundraising makes it not only the most valued private fintech company in Europe, but also the fourth most valued private fintech company in the world.