Dive Brief:
- Swedish buy-now, pay-later provider Klarna aims to keep cutting costs by further reducing its employee headcount, a spokesperson confirmed today.
- Fewer than 100 employees are being offered buyouts, and the move “only impacts the [chief operating officer] domain,” Klarna Spokesperson John Craske said today. Craske wouldn’t provide more details on the number of employees the company seeks to part with or the departments they work in, nor would he provide the company’s current headcount.
- In May, Klarna cut 10% of its workforce, or about 700 of its 7,000 employees. Klarna CEO Sebastian Siemiatkowski pinned those cuts on inflation and shifting consumer sentiment, among other external factors.
Dive Insight:
In acknowledging the pursuit of further downsizing, Craske cited Stockholm-based Klarna’s appointment of executive Camilla Giesecke to COO. Per her Linked In page, she added COO duties to her title in August. Prior to that, she was the company’s chief expansion officer and its chief financial officer.
“It is natural that a new manager makes changes, which is what is happening now,” the company said in a statement. As Klarna’s losses have ballooned, the company has sought to cut costs and may look to tighten lending standards, the Financial Times has reported.
With smaller workforce adjustments, “we sometimes offer severance pay for some employees, generally up to twice the notice period,” the company said in its statement.
Klarna, which had offices in Europe, North America and Australia as of May, is “constantly evaluating and making adjustments to the structure of its organization,” according to the statement. But “adjustments are often small in scale compared to the major change we made this spring.”
Other payments companies such as PayPal and Bolt also cut workers earlier this year. When May cuts were announced, Siemiatkowski said the company was reevaluating its organizational setup “to make sure we can continue to deliver on our ambitious targets.”
Then, in July, Klarna saw its valuation tank: The company raised $800 million at a $6.7 billion valuation, a steep drop from its $45.6 billion valuation in June 2021.
After taking off during the COVID-19 pandemic-fueled e-commerce boom, BNPL now faces more of a test amid current macroeconomic challenges and slowing e-commerce growth. Klarna is one of the biggest BNPL providers, but faces stiff competition from San Francisco-based Affirm, Block’s Afterpay, San Jose-based PayPal and Australian provider Zip.
