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Klarna highlights US achievements—but there’s still room for growth

The news: The US overtook Germany as Klarna’s largest revenue market as of December, per a press release.

  • Gross merchandise volume (GMV) in the market grew 71% year over year (YoY) in 2022, and monthly active app users topped 8 million—up from 6 million a year ago.
  • US credit loss rate declined 37% YoY—compared with a 30% YoY decrease in Q3.

How we got here: Two customer features helped fuel growth in the US market, CEO Sebastian Siemiatkowski told TechCrunch.

  • Klarna Card. The card—which launched in the US last June—lets customers split purchases into installments, even at merchants that aren’t partnered with Klarna. It helps Klarna sweep in more volume and attract more customers, which gives the firm more power when negotiating merchant relationships. Klarna earns the bulk of its income through merchant fees.
  • App tools. While buy now, pay later (BNPL) is its mainstay solution, Klarna wants to be more than just a BNPL provider; it’s building out customer tools through the Klarna app. Some of Klarna’s most popular app features include its search engine, money management features, and creator platform, all of which help drive engagement and customer loyalty.

Klarna has also catered to merchants with marketing solutions, which have become its fastest-growing revenue stream, according to Siemiatkowski. As the BNPL segment becomes more saturated, these types of solutions can help Klarna stand out and sustain revenue growth.

Why it’s worth watching: Klarna’s achievements in the US market showcase persistent demand for its offerings despite a difficult few months.

  • The BNPL sector has been buffeted by economic headwinds, leading to widespread layoffs and strategy shifts.
  • Klarna was no exception: It announced two rounds of layoffs, most recently in September.
  • It also struggled to raise capital. Klarna secured $800 million in July but only after lowering its valuation to $6.7 billion, a major drop from $46 billion in 2021.

Klarna seems to be in a better place now, and this stability may be what it needs to hone in on profitability. One way it can do that is by continuing to strengthen its features.

  • Our Klarna spotlight report highlights in-demand features the firm lacks—like earning rewards when customers pay on time or letting customers redeem rewards toward their loan payments
  • Adding these features can help strengthen Klarna’s US business and maintain its leadership position in the BNPL space.

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.