Swedish BNPL (buy now pay later) giant Klarna has filed for an initial public offering (IPO) in the US. This puts an end to months of speculation that the payments company was preparing for a stock market listing.
Klarna confidentially submitted a draft registration statement to the Securities and Exchange Commission (SEC) for its IPO, said the company statement. The number of shares to be offered and the price range of the shares are yet to be disclosed. Furthermore, the company remains tight-lipped about the valuation it plans to achieve.
In the statement, Klarna said that its public debut is expected to take place after the SEC completes its review process, subject to market and other conditions.
High valuation swings
Although the company did not reveal financial details, analysts recently estimated Klarna’s valuation could reach around $14.6 billion after Chrysalis Investments Ltd raised its stake in the company to $154 million. This marks an improvement from its $6.7 billion valuation in an $800 million funding downround in 2022.
However, it remains much lower than its peak valuation of $45.6 billion in 2021 when it was considered one of the most valuable companies in the world. The downround was fueled by the Ukraine war and rising interest rates.
Amidst this IPO filing, here are some facts about Klarna.
#1. Born after rejection
In 2005, founders Sebastian Siemiatkowski, Niklas Adalberth, and Victor Jacobsson had a vision to make online payments easy and safe for consumers. They pitched the BNPL idea at a Shark Tank-style competition in Stockholm. However, the judges dismissed the idea saying it would never work and if it would work, the banks would just do it themselves.
While most would have given up, these three visionaries took it forward and disrupted the fintech market with their offering.
#2. Global reach on the rise
During the pandemic, Klarna launched in 11 new markets, including France, Italy, Spain, Canada and Australia, making it the number one choice for global brands across the world, covering over 30 countries. Globally, it has over 150 million users using the platform for 2 million transactions each day and app downloads have surpassed 60 million.
The company has established partnerships with over 500,000 retailers, including big names like H&M, IKEA, and Sephora.
#3. Licences for other services
Klarna became a licensed bank in Sweden in 2017, expanding its services beyond BNPL, which lets customers split the purchases into interest-free instalments of up to 30 days.
In addition to BNPL, Klarna offers a range of other services, such as a personal finance app with budgeting tools, a price-drop tracker, and virtual “try-on” tools, helping shoppers make informed purchasing decisions.
Klarna’s services are available for booking flights, hotels, and vacation packages, gift cards, pre-orders and custom-made or personalised items.
#4. Embraces AI
Klarna integrates AI across its platform to enhance personalisation, security, and customer experience. Key AI features include:
- Personalised shopping recommendations: Klarna uses AI to analyse shopping habits and preferences, delivering tailored product recommendations and offers directly in the app.
- Fraud Detection: Its AI-powered security systems analyse transaction patterns to detect and prevent fraud in real-time, providing safer transactions for both users and merchants.
- Price drop notifications: Klarna’s AI alerts users to potential price drops and upcoming sales, enabling more informed purchasing decisions and better deals.
- AI-powered customer support: Klarna employs AI chatbots and virtual assistants to address common customer queries and manage disputes quickly, reducing response times and enhancing user support.
- Budgeting and spending insights: AI helps users track their spending patterns and offers insights to promote better financial wellness, a recent focus as Klarna emphasises responsible spending.
Prime importance to US market
The payments company expanded its presence in the US in many ways. It partnered with companies like Uber, Airbnb, and Expedia to expand its presence in the US. It also rolled out bank accounts in the US, though they offer more limited services than US bank accounts. The money in Klarna accounts isn’t protected by the Federal Deposit Insurance Corp. Klarna’s US expansion has been successful, with revenue growing by 38% year-over-year in the first half of 2024.
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