Fintech/News/

Klarna to make second round of job cuts

The Swedish buy now, pay later giant recently suffered a valuation drop of 85%

By Amy O'Brien and Mimi Billing

Camilla Giesecke, Klarna's COO, made the announcement to staff on Monday

Klarna is planning a second round of layoffs, four months after it cut 10% of its global workforce.

In a live video message sent to employees on Monday afternoon, and reported by Swedish news site SvD, the company’s chief operating officer, Camilla Giesecke, announced that the organisation needed to make further cuts to some of its departments “to reflect the more focused nature of today’s Klarna”. 

The message was sent to around 500 Klarna employees, across three departments including IT and recruiting, according to SvD. Klarna’s revised budget now has capacity for 6,000 employees, sources told the publication.  

Klarna confirmed the new round of job cuts to Sifted and said fewer than 100 employees would be affected globally. 

It comes three weeks after CEO Sebastian Siemiatkowski told Bloomberg that all layoffs were done and that the company was “moving on”.

But a Klarna spokesperson told Sifted: “During the summer, we appointed a new COO, and it is natural that a new manager makes changes, which is what is happening now.” 

A union representative for employees at Klarna told SvD that staff had not been told how many people would need to leave, but that some had already been offered severance pay by the company.

A spokesperson for Klarna also told Sifted that the company is “constantly evaluating and making adjustments to the structure of its organisation”.

“However, the adjustments are often small in scale compared to the major change we made this spring, which was prompted by the turbulent environment.”

Klarna said that with these new “smaller adjustments”, the company would “sometimes” offer severance pay for employees — which would represent pay worth up to double their notice period.

“We are pleased to note that our employees remain highly sought after in the labour market,” the spokesperson continued. “Our assessment is that at least 70% of those who left Klarna with severance pay at the beginning of the summer are already in new jobs.”

It comes after a rocky nine months for the fintech, which previously held the crown as Europe’s most valuable startup. 

Last month, Klarna’s interim results revealed that losses had more than tripled to SEK6.2bn ($580m) in the six months to July, up from SEK1.8bn ($168m) in the same period in 2021. 

This worsening burn rate came as little surprise after the startup saw its valuation slashed by 85% from $46bn to $6.7bn a month earlier, as it tapped investors for $800m fresh funding. 

BNPL startups like Klarna thrive in a low-interest rate environment where it doesn’t cost much to offer credit to consumers.

For the past couple of years this has meant merchant fees and late payment charges brought in enough revenue — but their margins begin to narrow when central banks hike rates, as they have done in recent months.

*Updated September 22 13:50: The original version stated Klarna would not comment on the number of employees affected by the layoffs, and that it was estimated at around 300. Klarna have now come back to Sifted saying this round of layoffs will affect fewer than 100 employees. 

Amy O’Brien is Sifted’s fintech reporter. She tweets from @Amy_EOBrien and writes our fintech newsletter — you can sign up here.  Mimi Billing is Sifted’s Nordic correspondent and tweets from @MimiBilling

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