In a strategic shift, Klarna, the Swedish fintech giant, is reducing its workforce as AI technology reshapes its operations.
- Klarna has announced significant job cuts, following a notable reduction in employee numbers last year.
- The company attributes these workforce reductions to efficiency improvements driven by AI technology.
- Despite financial setbacks, Klarna cites improved financial performance in recent quarters.
- An anticipated IPO may be on the horizon, with various venues under consideration.
Klarna, the renowned Swedish fintech company, has announced the elimination of 1,000 positions as it adapts to the integration of artificial intelligence (AI) in its business operations. This follows a previous decline in the company’s workforce from 5,000 to 3,800 employees last year. The company acknowledged AI’s role in bringing about ‘proven scale efficiencies’ that have decreased operational costs and enhanced gross profits.
AI has particularly revolutionized Klarna’s customer service sector, where chatbot implementations have replaced tasks equivalent to the work of 700 personnel. This transition exemplifies the increasing impact of AI on workforce dynamics within the company. Klarna assured that the job reductions would be evenly dispersed among its various global locations, including London and Manchester, although it withheld specific numbers for its UK staff.
Despite confronting substantial credit losses amounting to SwKr2.33 billion (£173 million) in the first half of 2024, Klarna reported a commendable enhancement in its financial standing, with a pre-tax loss reduction of 86% to SwKr262 million (£19.4 million) during the same period. The company pointed to its near break-even performance in the second quarter as a testament to this progress.
The specter of a stock market listing looms on Klarna’s horizon, as suggested by Founder and CEO Sebastian Siemiatkowski, though no definitive commitments have been made. London and New York are potential venues for this prospective initial public offering (IPO), with the latter considered a favored choice.
Once at the pinnacle of the fintech valuation hierarchy, Klarna faced a dramatic decrease in valuation from $45.6 billion to $6.7 billion in 2022 following a funding round. Nevertheless, the company remains a major entity in the ‘Buy Now, Pay Later’ (BNPL) market, partnering with 575,000 merchants across 45 countries and serving 31 million monthly users.
Klarna’s adoption of AI marks a pivotal moment as it navigates both technological advancements and financial rejuvenation ahead of a potential IPO.
