The roundup: Here’s a look at the biggest trends and stories that shaped Klarna’s year.

• It expanded beyond buy now, pay later (BNPL). Klarna introduced a new rewards program to strengthen its app features and bolster loyalty. It also launched a physical card and Klarna Kosma, a business unit dedicated to its open banking platform. Both of these highlight ambitions beyond its core BNPL business amid cost pressures, growing competition, and regulatory heat. And Spotlight, a collection of new and revamped services including a search engine and video content for shopping, demonstrates its ambitions to become a super app.
• It used partnerships to branch out. Klarna expanded its tie-in with Marqeta to bring physical cards to the US and launched BNPL products focused on groceries. A partnership in the UK with Deliveroo, for example, drew some criticism—but it also helped Klarna widen its reach and revenue streams. Partnerships may become crucial to helping Klarna sustain growth as recession fears mount.
• Acquisitions became less frequent. After a raft of takeovers last year, Klarna slowed the pace of buying other companies. One such deal was for Nordic price-comparison firm PriceRunner, which can help Klarna offer more in-app services—like product discovery, price comparison, and product review features.

• No more growth-at-all-costs mentality. Klarna still isn’t generating profits. It suffered a pre-tax loss of about SEK 6.2 billion ($722.2 million) in H1, nearly triple H1 2021’s losses. But Klarna’s struggle to turn a profit isn’t necessarily cause for alarm: It boasts a growing engaged customer base that suggests it has no trouble attracting users. Losses were partly fueled by its aggressive growth. But Klarna knows it needs to get its finances in better shape: It laid off 10% of staff, about 700 people, in May.
• Klarna raised money, but its valuation plummeted. Klarna raised $800 million at a $6.7 billion valuation in July, a sharp drop from the $46 billion high it reached in June 2021. The funding haul highlighted Klarna’s ability to raise cash to fuel growth, but also laid bare the harsher funding picture. Intensifying competition among BNPL firms and incoming regulation in the UK and US also likely contributed to Klarna’s lower valuation.

Dive deeper: Check out our US Buy Now, Pay Later Feature Demand Report 2022 for analysis on the 49 BNPL features that consumers want most.

This article originally appeared in Insider Intelligence's Payments Innovation Briefing—a daily recap of top stories reshaping the payments industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.

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