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Klarna is expanding its artificial intelligence-based job cuts, planning to put off nearly half of its workforce because the loss-making Swedish buy-now-pay-later company prepares for an IPO.
Chief Executive Officer Sebastian Siemiatkowski praised the advantages of AI in Klarna's second-quarter results on Tuesday, which showed a pointy reduction in net loss to 10 million krone from 854 million krone ($84 million) a yr earlier.
The Swedish fintech company has already reduced its workforce from 5,000 to three,800 employees last yr. Siemiatkowski told the Financial Times that Klarna could reduce its workforce to as few as 2,000 in the approaching years as the corporate uses AI in areas similar to customer support and marketing.
“We cannot only do more with less, but rather more with less. Internally we’re talking about 2,000 (employees). We don’t want to set a selected deadline for this,” he added.
Klarna has imposed a hiring freeze on all employees (except engineers) and is using natural attrition as a substitute of layoffs to cut back its workforce. Siemiatkowski is one of the vital vocal European tech bosses to advocate the advantages of AI, even when it results in less employment, arguing that this can be a problem that governments should be concerned about.
The Stockholm-based group is currently searching for financial advisers for its long-awaited IPO, which is predicted to happen as early as the primary half of next yr, with Morgan Stanley, JPMorgan Chase and Goldman Sachs all said to be within the running to secure top positions, people aware of the matter previously told the FT.
Siemiatkowski declined to comment on plans for an IPO or reports of a possible imminent sale of shares by existing investors. “We haven’t made any decisions yet. That will occur sooner or later,” he added.
He said Klarna was in a position to increase its average annual revenue per worker from about $400,000 12 months ago to $700,000 now by reducing headcount and cutting expenses through AI.
The advantages of AI are prone to be a key selling point for any Klarna IPO. The Swedish company was once the darling of the European tech scene and valued at $46 billion in 2021, but a yr later its valuation plummeted to $6.7 billion on account of rising rates of interest and falling share prices.
Klarna bankers and investors imagine the corporate could achieve a valuation of between $15 and $20 billion when it goes public.
Klarna's loan losses rose 22 percent year-on-year to 1.1 billion krone within the second quarter, but revenues increased 25 percent to six.9 billion krone.
Klarna was consistently profitable from its founding in 2005 until 2019, when its rapid expansion within the US led to major losses.
Last yr, the corporate posted a quarterly net profit for the primary time in over 4 years, and Siemiatkowski said the corporate wouldn’t return to losses as gross margins were boosted by artificial intelligence.
“If I can get higher revenue per worker that permits us to pay top-tier wages to the most effective talent, the people who find themselves currently diving deeper into AI and learning it… The clear message to our employees is lower total labor costs, higher costs per worker. I'm very joyful to see that repay,” Siemiatkowski said.
