Despite the growth, there was a loss on the bottom line for Klarna's third quarter.
But this is explained by Klarna's rapid growth in longer installment payments on larger amounts, which require provisions to be made today to cover potential credit losses for the full amount, according to Siemiatkowski.
Then the income comes over the life cycle of the loan, which could be one year or two years, he says.
"These are provisions that are made. The actual credit losses have fallen," he adds.
“Tougher competition”
Siemiatkowski believes that the unexpectedly rapid growth during the quarter made the listing on the New York Stock Exchange on September 10th well-timed.
"We have the building blocks in place. Now we can just focus on delivering and getting in quarter by quarter," he adds.
Klarna's shares have fallen 13 percent since their listing on September 10. The market capitalization is now down to $13.2 billion (approximately SEK 125 billion). However, major competitors such as American Affirm Holdings have fallen even more, down 20 percent during the same period.
Siemiatkowski does not interpret this as the newly listed Klarna being part of a stock market bubble. However, he believes that some high valuations for large “oligopoly companies” in both finance and technology will be corrected, as AI developments lead to new alternatives and it becomes easier to compare services.
We are facing much tougher competition, he says.
Taking market share
Klarna's role in this is to be a customer-focused challenger that drives the transformation, according to the Klarna CEO.
You can question values in the industry and ask yourself whether these profits that have been generated by the banks or in the tech world can be challenged. I think the answer is yes, he says and continues:
I see it as an opportunity.
And Klarna is currently taking market share from its major competitors in the US in the important American market, according to Siemiatkowski.
"Now our growth in the US is 51 percent and theirs is 34 percent. So now we are growing much faster there," he says.
Globally, too, they are starting to catch up, with a growth rate of 28 percent. However, it is more difficult there because Klarna already has such a strong position in many large European countries, according to Siemiatkowski.
Klarna's revenue rose 26 percent year-on-year to $903 million in the third quarter, up from $706 million in the same quarter last year. The average analyst forecast was $885 million, according to Bloomberg.
Total transaction volume increased almost as much, up 25 percent year-on-year to $32.7 billion.
The goal is now to climb over the billion-dollar barrier in terms of revenue in the fourth quarter, according to Klarna – up to $1.06-1.08 billion. The forecast for total transaction volume is $37.5-38.5 billion.
The number of active users in the third quarter rose 32 percent year-on-year to 114 million, while the number of merchants using Klarna services increased by 38 percent to 850,000.
Klarna's adjusted operating profit was a loss of $14 million in the third quarter, compared to a profit of $79 million a year earlier.
