Financial Market

Klarna plans to lay off 10% of workers due to poor market conditions

Buy-now-pay-later giant Klarna is to lay off about one-in-10 of its employees, as the company fights against a worsening economic climate across the globe.

Klarna’s chief executive and co-founder, Sebastian Siemiatkowski said in a blog post on 23 May that the layoffs were a result of worsening market conditions caused in part by Russia’s war on Ukraine and rising inflation.

He said: “We are strongly influenced by the outside world. When we set our goals for 2022 in the autumn, it was a very different world than the one we have today.”

“What we are seeing now in the world is not temporary or short-lived, and hence we need to act… Based on this, the senior leaders of Klarna have made some really tough decisions. Some of the hardest ones we have ever had to make.”

Klarna specialises in buy-now-pay-later services, which lets customers pay for goods and services in instalments without paying interest.

Plans to reduce staff numbers come after it emerged that Klarna was looking to raise new funds that would value it at almost one-third less than the valuation it achieved just under a year ago.

Among those would be a structural rethink of the company which would affect 10% of workers, he said. According to LinkedIn, Klarna has more than 6,800 employees, meaning at least 680 will likely face redundancy.

Siemiatkowski said the “the vast majority of Klarnauts”. However, he added that unfortunately, “some of you will be informed that we cannot offer you a role in the new organisation”

Klarna staffers based in Europe will be given the option to leave with an associated compensation. The process will differ for those based outside of Europe, depending on the location of those employees. “You will obviously receive more information about this very soon,” the chief executive said.

Klarna has 23 offices across Europe, including in London, Berlin and Barcelona, and 33 globally.

What’s next?

Impacted employees will be asked to join a conversation, titled, “Meeting regarding your role at Klarna”.

At the meeting, staff will get information about further steps.

“In consideration of the privacy of the people affected by these changes, we ask everyone to work from home this week. We are fully dedicated to provide clarity and support for all Klarnauts through this challenging time, as fast as humanly possible. This is our priority,” Siemiatkowski said.

READ SoftBank-backed fintech giant Klarna looks for new funds at lower valuation

Klarna became Europe’s most valuable financial-technology startup in June last year when SoftBank Group Corp.’s Vision Fund 2 led an investment in the company that valued it at $45.6bn.

The Sweden-based payments company is aiming to raise up to $1bn from new and existing investors in a deal that could value it in the low $30bn range after the money is injected, The Wall Street Journal reported. That would represent a roughly 30% drop from the previous round.

Klarna was contacted for comment.

To contact the author of this story with feedback or news, email Alexander Daniel

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