Klarna. Profit was the exception.
The buy now pay later firm just did something thought impossible: it made a profit. Then it slid back into losses. The dip is the interesting bit.
THE GIST ON KLARNA: "Profit Flip and Slip"
What did Klarna do?
Earlier this year, Klarna posted a small adjusted profit of about $3 million after years of billion dollar losses. Not because it got more users, but because it rewired the company.
It cut thousands of jobs, automated large parts of customer service and operations with AI, cut costs everywhere, and shifted from growth at any price to a disciplined financial company. For one quarter it worked.
Then what happened?
Later this year it slid back into losses. To Huw, it's not the profit but the dip back that makes this interesting. It shows buy now pay later can be profitable, just not consistently. It's incredibly sensitive to default regulation, retail spending and marketing costs.
What is the lesson?
Not much cause for celebration. If anything, a warning. The key to a sustainable fintech isn't who grows fastest but who can run lean enough to survive their own volatility.
Efficiency, automation and discipline can flip the unit economics, but staying profitable is the real test. For buy now pay later, that may be the difference between being a banking giant and a bubble.
Is buy now pay later good for shoppers?
Your take. One tap, then see how everyone else voted.
Quick answers
How much profit did Klarna post?
A small adjusted profit of about $3 million, according to Huw.
How did it get there?
By cutting thousands of jobs, automating customer service and operations with AI, and cutting costs.
What is buy now pay later sensitive to?
Default regulation, retail spending and marketing costs.
See you on the next one.
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