Swedish payments giant Klarna will cut hundreds of jobs in the coming days. Today’s news comes a few days after the Wall Street Journal report that the company will lower its valuation to raise new capital.
The company currently employs about 7,000 employees. Cutting 10% of the company’s workforce means about 700 people will lose their jobs at the fintech company. It is likely to affect all domains and offices worldwide.
“I am no stranger to sharing good and bad news. However, today is the hardest day so far,” wrote Klarna co-founder and CEO Sebastian Siemiatkowski in a message shared with all employees. “As much as we may like it, Klarna doesn’t exist in a bubble.”
In the coming days, some employees in Europe will be asked to leave the company in exchange for severance pay. Some employees outside of Europe will also have to leave the company, but “the process for those affected will vary depending on where you work,” said Siemiatkowski.
The company did not state a single reason for the layoffs. Instead, Siemiatkowski lists various macroeconomic and geopolitical factors that have led to today’s difficult decision.
“When we set our business plan for 2022 last fall, it was a very different world than the world today,” he said. “Since then, we have seen a tragic and unnecessary war in Ukraine unfold, a shift in consumer sentiment, a sharp rise in inflation, a volatile stock market and there is a possibility of a recession”.
“I am sad to say that as a result of this, about 10% of our colleagues and friends across all areas of the company will be affected,” he added later.
Last year, many tech startups raised multiple rounds of funding at sky-high valuations. And more specifically Klarna raised $639 million at $45.6 billion valuation.
Klarna currently works with 400,000 merchants around the world. The company’s flagship product is a checkout feature that lets you buy something now and pay in installments.
Over the years, Klarna has expanded into other markets and launched new products. It offers a shopping app so you can manage your payments, save items for later use, track deliveries and more. In some markets, the company also offers payment cards that you can control from the app.
In Europe, Klarna operates as a regulated bank. Customers can open a bank account with Klarna and use the service to enjoy interest rates with fixed-term savings packages. In this way, the company can raise direct deposits from retail investors.
And yet, if the Wall Street Journal report is correct, Klarna is thinking about reducing its valuation to a “lowest in the $30 billion” post-money valuation so it can raise more money. That process may have impacted the current state of work at Klarna with some employees losing their jobs as a result.
Unfortunately for Klarna employees, the company hasn’t said who will be affected by the job cuts. Calendar invitations will be sent out in the next few days. “For the privacy of those affected by these changes, we’re asking everyone to work from home this week,” Siemiatkowski said.
