The good news is Klarna cut credit losses by 67% and generated its first monthly profit in several years. The bad news is its H1 operating loss was still $190.2 million, although it hopes to be profitable by year-end. Affirm saw its Affirm Visa-branded payment card use jump, with 42% of sales paid in full and 51% interest-bearing. Zilch is exploring an IPO and public listing on the London Stock Exchange, NYSE or NASDAQ. Meanwhile, Splitit plans to go private and relocate to the tax haven of the Cayman Islands.
BNPL operators in the Middle East are finding growth in retail stores willing to offer installments as consumers embrace credit cards and e-commerce in the region. New Zealand BNPL defaults are running at 9.4% as consumer credit stress rises. Meanwhile, a UK millennial shopper got headlines for blaming BNPL for her shopping addiction and $4,000 in debt. She has since repaid it and closed her accounts, but perhaps a back-to-school financial basics course would be in order. Such is BNPL.
BNPL firm Klarna cuts losses in first half but fails to post profit
Klarna reported overall net operating income of 9.2 billion Swedish krona ($843.8 million), up 21% year over year from 7.5 billion krona in the same period a year ago. It posted a net loss for the period of 2.1 billion krona, down 67% from 6.4 billion krona between January and June 2022. Klarna recorded a monthly profit in the first half, which the company attributed to cost optimization via cutting expenses and boosting efficiency through AI. CNBC
Klarna narrows losses, reports profitable month
Buy now, pay later giant Klarna has narrowed its first-half losses and reported a profitable month for the first time in three years. The improving financial position comes after a torrid time for the BNPL pioneer, which has cut a tenth of its workforce and seen its valuation savaged amid a tech market recalibration. Revenues in Q2 increased 17%, while credit losses fell 41%. Gross merchandise value continued to outpace e-commerce, growing at 14% YoY in Q2, while global e-commerce remained flat at 0%. Finextra
Klarna reports H1 2023 results: smashes profitability target, continued e-commerce growth
Sebastian Siemiatkowski, Klarna CEO, said, “I’m super proud that we have returned to black numbers, with a profitable month in Q223, well ahead of the target we set for later this year. Today’s results clearly rebut the misconceptions around Klarna’s business model, evidencing that it is incredibly agile and sustainable as we support our healthy consumer base in making sound financial decisions… I knew we had a strong and resilient business model to see us through. Despite the volatile environment, we have done exactly what we set out to do.” Klarna
Affirm’s debit card growth sparks more consumer borrowing
As Affirm matures, it’s widening its focus beyond the online “Pay in 4” installments popularized during the pandemic and is expanding its mix of interest-bearing loans, including those made in-store with its new debit card. While online purchases still drive over 95% of Affirm’s transaction volume, the fintech is pinning its hopes for future profits on the new Visa-branded Affirm Card, which rolled out to more than 200,000 customers. American Banker
Zilch considers London Stock Exchange for IPO
According to CEO Philip Belamant, the BNPL firm has talked with various stock exchanges, including the LSE, the New York Stock Exchange and Nasdaq. The company also revealed it has 3.5 million registered customers who collectively spent over 1.5 billion pounds (about $1.9 billion) through the platform. Additionally, Zilch customers have earned 300 million pounds (about $378 million) in rewards and savings. PYMNTS
Splitit’s CEO on why the BNPL firm wants to go private
Given the myriad storms hitting BNPL lending, Splitit plans to reorganize its financial structure and product strategy to ease the pressure from regulators and investors. Splitit has a capital commitment of $60 million from Motive Partners and other investors. Motive will supply $50 million of the total – and the first $25 million of that commitment is contingent on the Israeli-based Splitit delisting from the Australian Stock Exchange in late Sept and relocating from Israel to the Cayman Islands. American Banker
How are changing market conditions in Mena impacting BNPL?
The momentum realized in the BNPL e-commerce space has carried over to brick-and-mortar sales. The shifting monetization strategies are largely seen as a way to ensure sustainability as cash burn continues to rein in the growth of the retail sector. Only 30% of Saudis have credit cards, so expansion to brick-and-mortar stores is a natural for installment payments and new startups like “enjoy now, pay later” BNPL service Madfu. Wamda
‘Buy now, pay later’ schemes left me thousands of dollars in debt
A UK millennial whines about her shopping addiction and blames BNPL for her lack of self-control and $4,000 debt. “When you’re young and careless with money, it’s so easy to get sucked down the rabbit hole,” Chantal Derrick, a 26-year-old UK traffic management worker, said. She’s since paid off the debt. Maybe it’s time for a back-to-school financial education refresher? New York Post
Debt stress among young people and businesses rising
BNPL is now the most common first debt product among people under 25, with debt stress among this demographic rising, credit bureau Centrix says. Of the estimated 260,000 young New Zealand credit consumers, 57% use BNPL and across all demographic groups, BNPL arrears dropped for the second consecutive month, Centrix says, to 9.4%. They were as high as 10.5% in March. Interest
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BNPL Report: Aug 28 – Affirm beats, Jifiti jumps, Zip up, Mondu B2B, Splitit, NymCard, BNPL grows