Klarna, the Swedish buy now, pay later company, has significantly reduced its workforce by over 1,000 employees in the past year and plans to cut nearly 2,000 more, largely due to the increasing use of artificial intelligence (AI) within the company. Once employing around 5,000 people, Klarna’s headcount has now shrunk to 3,800, with expectations that it will fall to about 2,000 in the coming years. The company has not provided an exact timeline for these reductions.
In its interim results released on Tuesday, Klarna highlighted how the KlarnaAI has played a crucial role in these workforce reductions. The company stated, “Our proven scale efficiencies have been enhanced by our investment in AI, which has driven down operating expenses and improved gross profits.” This integration of AI has increased the company’s average revenue per employee by 73% compared to the previous year.
Klarna, headquartered in Sweden, has offices in London and Manchester in the UK, as well as locations across Europe, the Americas, Australia, and New Zealand. While the company did not specify how many employees it currently has in the UK, it mentioned that the planned reductions would be evenly distributed across its sites. The company emphasized that none of the Klarna layoff have resulted from redundancies but rather through natural staff turnover and a hiring freeze that was implemented last year.
One of the areas where AI has been most impactful is in customer service. Klarna estimates that its chatbot now performs the work of 700 human employees, cutting the average resolution time for customer service issues from 11 minutes to just two, all while maintaining the same level of customer satisfaction as human agents. AI is also being used in marketing, with the company’s AI assistant serving as a powerful shopping tool that helps consumers discover and choose products tailored to their preferences, ultimately saving them time and money.
Klarna’s financial performance has shown significant improvement, with the company increasing its revenue by 27% to 13.3 billion Swedish krona (£990 million) and achieving an adjusted profit of 673 million krona after suffering a loss of 456 million krona the previous year. This turnaround comes as the company continues its efforts to recover from the financial losses it began sustaining in 2020 following a rapid expansion in the US.
Looking ahead, Klarna’s chief executive Sebastian Siemiatkowski indicated that an initial public offering (IPO) could occur as early as next year, potentially valuing the company between 15 billion and 20 billion dollars. While no definite plans have been made, Siemiatkowski suggested that the company might favor a US listing, although European options are also being considered.
