Swedish fintech Klarna, which has operated a UK office in Manchester since 2019 alongside one in London, aims to extend AI-led cuts to its workforce with plans to axe almost half of its staff, as the buy now, pay later company gears up for a stock market flotation.
Chief executive Sebastian Siemiatkowski lauded the benefits of AI in Klarna’s second-quarter results on Tuesday, which showed a significant narrowing of its net loss from SKr854m (£63.6m) a year earlier to SKr10m (£0.74m).
The Swedish fintech has already cut its workforce from around 7,000 to about 3,800 since 2022, including around 1,200 job cuts in the last year. Staff in Manchester have been affected by previous rounds of cuts
Siemiatkowski has now told the Financial Times that Klarna could employ as few as 2,000 employees in the coming years as it brings in AI for tasks such as customer service and marketing.
“Not only can we do more with less, but we can do much more with less. Internally, we speak directionally about 2,000 [employees]. We don’t want to put a specific deadline on that,” he told the FT.
Klarna has already imposed a hiring freeze on all positions except engineers, with the aim of using natural attrition rather than lay-offs to shrink its workforce.
Siemiatkowski has become an outspoken evangelist for AI, even if it leads to lower employment, arguing that is an issue “for governments to worry about.”
The Stockholm-based group is lining up financial advisers for its long-anticipated initial public offering — possibly as early as the first half of next year — with Morgan Stanley, JPMorgan Chase and Goldman Sachs reportedly in lead positions to secure top roles, although the CEO made no further comment on any IPO plans.
This weeks results also revealed that Klarna had boosted its average annual revenue per employee from about $400,000 a year 12 months ago to $700,000 now, due to cutting its workforce and reducing expenses through AI.
Klarna offers around 150m active users the ability to delay or spread the cost of their purchases. The value of these purchases increased 17 per cent last year, while credit losses fell 32 per cent despite inflationary pressures on consumers.
Klarna was regularly profitable until 2019, when it decided it would accept some credit losses in order to chase US growth. It posted a net loss of 2.5bn kronor (£191m) last year, an improvement from its 10.4bn kronor (£794m) loss in 2022. Revenue for the full year jumped 22 per cent to 23.5bn kronor (£1.8bn).
At the height of its powers in 2021, Klarna was valued at $46bn in 2021, but the company saw its valuation crash to $6.7bn a year later because of rising interest rates and falling stock prices. Bankers and investors in Klarna believe it may be able to achieve a valuation of between $15bn and $20bn when it finally lists.
