Buy now, pay later firm Klarna cuts losses in first half but falls short of profit

Published

2 years ago

August 31, 2023

admin

Swedish buy now, pay later firm Klarna reduced its losses by roughly 67% in the first half of 2023, as the company dramatically cut costs in a bid toward profitability.

The company reported overall net operating income of 9.2 billion Swedish krona ($843.5 million), up 21% year-over-year. Failing to record a half-year profit, the firm posted a net loss of 2.1 billion Swedish krona for the period, down 67% from 6.4 billion krona between January to June 2022.

Klarna did, however, say that it recorded one month of profitability in the first half of the year, ahead of its internal target to post profit on a monthly basis in the second half.

Klarna CEO and founder Sebastian Siemiatkowski hailed the firm’s profitability milestone, saying that its results “clearly rebut the misconceptions around Klarna’s business model, evidencing that it is incredibly agile and sustainable,” and supporting a “healthy consumer base.”

“Some claimed Klarna would face difficulties in the tough macro-economic climate with high interest rates, but having led the company through the 2008 financial crisis I knew we had a strong and resilient business model to see us through. Despite the volatile environment, we have done exactly what we set out to do,” Siemiatkowski said.

Credit losses, a measure of how much the company sets aside for customer defaults, sank by 39% to 1.8 billion krona from 2.9 billion.

Buy now, pay later, or BNPL, firms allow shoppers to defer payments to a later date or purchase things over installments on interest-free credit.

These firms are able to offer zero-interest loans by charging merchants, rather than customers, a fee on each transaction — but as interest rates have risen, the BNPL funding model has been challenged.

Siemiatkowski previously told CNBC the company was planning to achieve profitability on a monthly basis in the second half of 2023, suggesting that an aggressive cost-cutting strategy in 2022 — which included hundreds of redundancies — had paid off.

Klarna cut 10% of its workforce in May last year.

“To some degree, all of us were lucky that we took that decision in May [2022] because, as we’ve been tracking the people who left Klarna behind, basically almost everyone got a job,” Siemiatkowski said at an interview in Helsinki, Finland, at the Slush technology conference last November.

“If we would have done that today, that probably unfortunately would not have been the case.”

Klarna said that cost optimization was a key factor behind its ability to churn out a monthly profit in the first half of the year.

The company said that operating expenses before credit losses improved by 26% year-on-year, thanks in part to its push into artificial intelligence.

Klarna said a recently-launched customer services feature “made solving merchant disputes for customers more efficient, saving over 60,000 hours annually.”

Like other fintech companies, Klarna has made a big push into AI lately, as it looks to capitalize on the growing boom in the industry’s growth, following the birth of OpenAI’s ChatGPT.

In April, the company revamped its app with a host of new personalized shopping features. It is trying to make the software similar to TikTok, which has a discovery feed for users to find content suited to their preferences.

David Sandstrom, Klarna’s chief marketing officer, told CNBC at the time that the aim was to “offer people products and brands before they knew they wanted them.”

Klarna last year saw 85% erased from its market value in a so-called “down round,” taking the company’s valuation down from $46 billion to $6.7 billion.

Some of the company’s peers, like PayPal, Affirm, and Block, also saw their shares plummet sharply amid a wider sell-off in technology valuations.

Klarna at the time blamed deteriorating macroeconomic conditions, including higher inflation, rising interest rates, and a shift in consumer sentiment.

Technology

Alphabet to report Q1 earnings results after the bell

Published

2 hours ago

April 24, 2025

admin

Alphabet to report Q1 earnings results after the bell

Alphabet, the parent company of Google and YouTube, is set to report first-quarter earnings after the bell Thursday.

Here’s what analysts are expecting.

Revenue: $89.12 billion, according to LSEG
Earnings per share: $2.01, according to LSEG
YouTube advertising revenue: $8.97 billion, according to StreetAccount
Google Cloud revenue: $12.27 billion, according to StreetAccount
Traffic acquisition costs (TAC): $13.66 billion, according to StreetAccount

Google finds itself at the center of an artificial intelligence arms race where its position may be threatened pending mounting regulation and competition from generative AI companies, including OpenAI and Anthropic. The company is also among those bracing for the potential impact from President Donald Trump‘s tariffs, which could result in a pullback in advertiser spending due to tighter budgets.

Alphabet shares have dropped more than 17% in 2025 so far.

Wall Street is expecting Alphabet to report 10% year-over-year revenue growth for the first quarter, which included a slew of AI announcements, its largest-ever acquisition, cost cuts and regulatory hurdles.

In March, Google released Gemini 2.5, its “most capable” artificial intelligence model suite yet, and Gemma 3, the company’s latest open model. The timing of Gemini 2.5 and Gemma 3 comes after DeepSeek in January released its R1 model, which caused a rift in Silicon Valley after the Chinese startup claimed its AI model was trained at a fraction of the cost of other leading models.

Google AI chief Demis Hassabis told employees at an all-hands meeting in February that he was not worried about DeepSeek and that Google has superior AI technology.

“We’re very calm and confident in our strategy, and we have all the ingredients to maintain our leadership into this year,” Hassabis said, calming concerns from investors and employees alike. He added, however, he thinks the Chinese company is still “something to be taken seriously.”

Google this quarter also announced new personalization features for Gemini, allowing the chatbot to reference users’ search histories, and users can also connect Gemini to other Google apps, including Calendar, Notes, Tasks and Photos.

During the quarter, Nvidia CEO Jensen Huang announced it would be partnering with Google’s Gemini products, giving the company high praise.

“No company is better at every single layer of computing than Google and Google Cloud,” Huang said.

Alphabet also had a number of announcements in autonomous driving.

In March, Waymo began offering robotaxi rides in Austin, Texas, through the Uber app and opened up a waitlist in Atlanta. Those markets are just two of several more expected expansions in the U.S. this year.

Alphabet also made its largest acquisition ever in March when it agreed to buy Wiz for $32 billion in cash, almost $10 billion more than it offered for the startup in 2024, and said it expects the deal to close next year, subject to regulatory approvals. With the acquisition, Google will seek to bolster its cloud division’s security offerings. Google is behind Amazon and Microsoft in cloud market share, which may help the company’s argument to obtain regulatory approval.

Google this quarter also faced a slew of regulatory and legal challenges.

Last week, a federal judge ruled that Google held illegal monopolies in online advertising markets due to its position between ad buyers and sellers. The ruling represents a second major antitrust blow for Google. Last August, a judge determined the company has held a monopoly in its core market of internet search.

In April, the company reached a settlement with its employee union, where it agreed to reverse a policy forbidding employees from discussing antitrust litigation. The settlement, which marked a major victory for Google staffers, came ahead of Google’s remedy trial, which will determine the consequences of the search monopoly ruling over the next few weeks.

Education tech company Chegg in February filed a lawsuit against Google. Chegg claimed that Google’s “AI summaries” feature in search have hurt the online education company’s traffic and revenue. Similarly, Reddit in February claimed that Google’s search algorithm caused some “volatility” with user growth in the fourth quarter, but the company’s search-related traffic has since recovered, CEO Steve Huffman said.

WATCH: DOJ targets Google’s AI ambitions in high-stakes antitrust trial

Technology

ServiceNow shares pop 15% on strong earnings, upbeat guidance

Published

2 hours ago

April 24, 2025

admin

ServiceNow shares pop 15% on strong earnings, upbeat guidance

Bill McDermott, chairman and CEO of ServiceNow, speaks during an interview on the floor at the New York Stock Exchange on Oct. 26, 2023.

Brendan Mcdermid | Reuters

ServiceNow shares surged 15% on stronger-than-expected first-quarter results and an upbeat forecast despite the uncertain macroeconomic environment.

The enterprise technology company posted adjusted earnings of $4.04 per share on $3.09 billion in revenue. That topped a consensus estimate of $3.83 in earnings per share and $3.08 billion in sales, according to LSEG. Revenues grew about 19% from a year ago.

ServiceNow reported net income of $460 million, or $2.20 per share. That is up from $347 million, or $1.67 per share in the year-ago quarter. Current remaining performance obligations reached $10.3 billion, jumping 22% year over year. The company also lifted its full-year forecast.

“While our business remains strong, we are only flowing through part of those benefits into our full‑year outlook” to account for any pending risks from the geopolitical environment, the company said in a release.

Don’t miss these insights from CNBC PRO

ServiceNow shares spike more than 7% on Q1 beat

Technology

South Korea says DeepSeek transferred user data to China and the U.S. without consent

Published

7 hours ago

April 24, 2025

admin

South Korea says DeepSeek transferred user data to China and the U.S. without consent

Jaap Arriens | Nurphoto | Getty Images

South Korea’s data protection authority has concluded that Chinese artificial intelligence startup DeepSeek collected personal information from local users and transferred it overseas without their permission.

The authority, the Personal Information Protection Commission, released its written findings on Thursday in connection with a privacy and security review of DeepSeek.

It follows DeepSeek’s removal of its chatbot application from South Korean app stores in February at the recommendation of PICP. The agency said DeepSeek had committed to cooperate on its concerns.

During DeepSeek’s presence in South Korea, it transferred user data to several firms in China and the U.S. without obtaining the necessary consent from users or disclosing the practice, the PIPC said.

The agency highlighted a particular case in which DeepSeek transferred information from user-written AI prompts, as well as device, network, and app information, to a Chinese cloud service platform named Beijing Volcano Engine Technology Co.

While the PIPC identified Beijing Volcano Engine Technology Co. as “an affiliate” of TikTok-owner ByteDance, the information privacy watchdog noted in a statement that the cloud platform “is a separate legal entity and has no relation to ByteDance,” according to a Google translation.

According to PIPC, DeepSeek said it used Beijing Volcano Engine Technology’s services to improve the security and user experience of its app, but later blocked the transfer of AI prompt information from April 10.

DeepSeek and ByteDance did not immediately respond to inquiries from CNBC.

The Hangzhou-based AI startup took the world by storm in January when it unveiled its R1 reasoning model, rivaling the performance of Western competitors despite the company’s claims that it was trained for relatively low costs and with less advanced hardware.

However, the app’s rising popularity quickly triggered national security and data concerns outside China due to Beijing’s requirement for domestic firms to share data with the PRC. Cybersecurity experts have also flagged data vulnerabilities in the app and voiced concerns about the company’s privacy policy.

PIPC on Thursday said it had issued a corrective recommendation to DeepSeek, which includes requests to immediately destroy AI prompt information transferred to the Chinese company in question and to set up legal protocols for transferring personal information overseas.

When the data protection authority announced the removal of DeepSeek from local app stores, it signaled that the app would become available again once the company implemented the necessary updates to comply with local data protection policy.

That investigation followed reports that some South Korean government agencies had banned employees from using DeepSeek on work devices. Other global government departments, including in Taiwan, Australia, and the U.S., have reportedly instituted similar bans.