More Klarna users are buying now, not paying later

Buy now, pay later (BNPL) giant Klarna’s users are increasingly passing on the second part.

The fintech company, which allows users to pay for hamburgers and other items in installments, reported this week that its consumer credit losses in Q1 widened to $136 million, a 17% jump from Q1 2024.

It comes as the BNPL industry is showing signs of both stress and growth:

• In a survey conducted by credit platform LendingTree last month, 41% of users said they paid late within the last year, up from 34% the previous year. At least a quarter of BNPL users took out loans to pay for groceries, up from 14%.
• Klarna’s comparable revenue in Q1 rose by 15% to reach $701 million, while its customer base swelled to 100+ million people.

The company says it isn’t sweating the rise in unpaid balances, since its loan volume widened and these losses only represent a tiny portion of what’s been lent out (0.54% globally).

Though it still made the decision to get paid later…While Klarna recently inked partnerships with DoorDash and Walmart, it postponed a $15+ billion IPO planned for earlier this year amid trade wars and the resulting economic uncertainty.

…and to keep embracing AI (🫂🤖): An AI avatar of CEO Sebastian Siemiatkowski presented the company’s quarterly earnings on Monday, following a push in which the company released ~40% of its staff largely due to investments in artificial intelligence (though this plan is being slightly scaled back).