Swedish payment giant Klarna is going to cut hundreds of jobs in the coming days. Today’s news comes a few days after the Wall Street Journal reported that the company was going to cut its valuation in order to raise fresh capital.
The company currently employs around 7,000 people. Cutting 10% of the company’s workforce means that around 700 people will lose their job at the fintech company. It will potentially affect all domains and offices around the world.
“I am no stranger to sharing good and bad news. However, today is the hardest one to date,” Klarna co-founder and CEO Sebastian Siemiatkowski wrote in a message shared with all employees. “As much as we may like it to be the case, Klarna does not exist in a bubble.”
Over 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 impacted employees will look different depending on where you work,” Siemiatkowski said.
The company doesn’t name a single reason for the layoffs. Instead, Siemiatkowski lists different macro and geopolitical factors that have led to today’s difficult decision.
“When we set our business plans for 2022 in the autumn of last year, it was a very different world than the one we are in today,” he said. “Since then, we have seen a tragic and unnecessary war in Ukraine unfold, a shift in consumer sentiment, a steep increase in inflation, a highly volatile stock market and a likely recession.”
“It saddens me to say that as a result of this, approximately 10% of our colleagues and friends across all domains in the company will be impacted,” he added later.
Last year, many tech startups raised mega rounds of fundings at sky-high valuations. And Klarna more specifically raised $639 million at a $45.6 billion valuation.
Klarna currently works with 400,000 merchants around the world. The company’s flagship product is a payment feature that lets you buy something now and pay it later in multiple installments.
Over the years, Klarna has expanded to other markets and launched new products. It offers a shopping app so that you can manage your payments, save items for later, track deliveries and more. In some markets, the company also offers a payment card 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 earn interest with fixed-term savings plans. This way, the company can raise deposits from retail investors directly.
And yet, if the Wall Street Journal report is correct, Klarna is thinking about cutting its valuation to a “low $30-billion-range” post-money valuation so that it can raise more money. That process may have had an impact on the current state of affairs at Klarna with some employees losing their job as a result.
Unfortunately for Klarna employees, the company hasn’t said who will be affected by the job cuts. Calendar invites will be sent over the next few days. “In consideration of the privacy of the people affected by these changes, we ask everyone to work from home this week,” Siemiatkowski said.