Rising buy now, pay later (BNPL) use among Americans helped give Klarna a profitable quarter.
The Swedish payments company announced earnings Monday (Nov. 3) showing it had recorded an operating profit of $12 million for its most recent quarter, with revenues of $542 million. Klarna hadn’t logged a quarterly profit since 2019.
“With a profitable quarter and continuous double-digit growth, we have achieved exactly what we set out to do,” Sebastian Siemiatkowski, Klarna’s CEO, said in a news release.
“This fantastic success sets us up for the busiest shopping period where our AI [artificial intelligence] powered products will help consumers make their money go further, find the best deals, and get inspired.”
In a separate announcement Monday, the company said it had recorded a number of accomplishments in the U.S. market for the quarter, where it saw its fourth quarter in a row of gross profits.
In addition, Klarna saw a 46% increase in gross merchandise value, a 28% improvement in credit loss rates and 32% increase in its customer base, with the platform now reaching 37 million consumers in the U.S.
The company’s news comes on the heels of the announcement that it had averted a strike by union workers in Sweden, and that it is setting the groundwork for an initial public offering.
It’s also happening on the eve of a holiday season in which installment plans like BNPL are expected to be a popular financial management tool.
As PYMNTS wrote last week, you can see this trend at work in Great Britain, where financial regulator Financial Conduct Authority recently noted a 10% rise in the use of BNPL amid an ongoing cost-of-living crisis.
And of course, this phenomenon doesn’t just stop in the U.K. BNPL has become a necessity for many American consumers, especially younger shoppers dealing with credit card debt and high interest rates.
PYMNTS Intelligence research has shown that 28% of millennial and Generation Z consumers would abandon a purchase if the merchant didn’t offer BNPL at the checkout. This change in consumer behavior is transforming the retail payments landscape, with BNPL becoming a must-have among shoppers.
“This trend is expected to continue into the holiday season, a period which two-thirds of consumers cite the most as a period of financial stress,” PYMNTS wrote. “It’s no surprise then that installment plans have become increasingly popular among consumers, with 41% of shoppers expecting to rely more heavily on these plans for their holiday purchases.”