An EY audit of Klarna Australia's results reveals a net loss of $56 million, with revenue falling 71% to just $3.1 million in 2021.
Buried in CBA’s 2022 annual report was a $2.3 billion write-down on the value of its investment in Klarna to just A$408 million on June 30 this year. That’s more than half of the $15.1 million in receivables on Klarna Australia’s balance sheet. More broadly, the BNPL sector had a torrid year in 2022. CBA also retains a right to partner with Klarna in Indonesia. In 2020, its debut year, Klarna generated $10.8 million in revenue from sales commissions. CBA’s investment in Klarna, which was valued at A$2.7 billion last year.
EY has revealed the spiralling losses in an audit of Klarna's Australian business, with the audit revealing that the losses "may cast significant doubt on ...
[Klarna ](http://www.altfi.com/companies/klarna)said: “This analysis is inaccurate. 2020 reflects a significant contribution from [Klarna ](http://www.altfi.com/companies/klarna)Group of more than AUD $10m. [Klarna ](http://www.altfi.com/companies/klarna)also vigorously refuted any suggestion it would be exiting the Australian market. We now have over 4m consumers and partner with major brands including most recently The Iconic. [Klarna ](http://www.altfi.com/companies/klarna)is committed and dedicated to Australia as ever before and has never exited a market.” [Klarna’s](http://www.altfi.com/companies/klarna) challenges in Australia are part of broader challenges facing the sector, which is being hit by consumers turning away from the sector and [Klarna ](http://www.altfi.com/companies/klarna)and rivals burning through money. [Klarna ](http://www.altfi.com/companies/klarna)launched in Australia, when losses came in at $14m, according to an official audit of [Klarna’s](http://www.altfi.com/companies/klarna) performance last year, seen by Australian media. [Klarna’s](http://www.altfi.com/companies/klarna) Australia business, which has not been seen by AltFi, was conducted by EY in August and filed with local regulators in [October,](http://www.altfi.com/companies/october) [reports say](https://www.news.com.au/finance/business/banking/buy-now-pay-later-provider-klarna-australia-reports-catastrophic-loses-of-56m-in-2021/news-story/9169d91767e4c8bf5164bc7c09930831). [Klarna,](http://www.altfi.com/companies/klarna) headed up by CEO and co-founder [Sebastian Siemiatkowski,](http://www.altfi.com/people/sebastian-siemiatkowski) said the Swedish fintech projected continued improvement in operating results for future years, according to notes attached to the audit. [Klarna,](http://www.altfi.com/companies/klarna) one of the most well-known fintechs in Europe and last year its highest valued, [which has been hit by job cuts](https://www.altfi.com/article/9863_klarna-cuts-jobs-a-second-time-after-ceo-said-layoffs-were-done) and seen [billions knocked off its valuation](https://www.altfi.com/article/9520_klarna-to-bag-800m-funding-at-58bn-value-as-value-drops-nearly-eight-fold). [Klarna’s](http://www.altfi.com/companies/klarna) parent company has been forced to financially support its Australian division. [Klarna’s](http://www.altfi.com/companies/klarna) Australia business racked up spiralling losses of $56m last year and auditor Ernst & Young has cast doubt on whether it can continue as a going concern, according to media reports.
Klarna's Australian arm racked up losses of $56 million last year, four times bigger than when it launched in the country in 2020, when it reported a $14 ...
We are very pleased with our performance in Australia where revenue more than tripled in 2021, and Gross Merchandise Volume increased 5 times with continued strong progress in 2022." The performance of the Australian unit, which was supported on its launch into the market by a $300 million investment by Commonwealth Bank of Australia, mirrors the jaundiced outlook for the business as a whole, which has had billions of dollars knocked off its valuation and forced a significant retrenchment of its ambitious growth strategy. The company had a net asset deficiency of more than $70 million on 31 December last year and the audit revealed that the Stockholm-based parent company has been forced to prop up the Australian arm.
Buy now, pay later provider Klarna Australia has reportedly haemorrhaged $56m in losses last year, casting doubt over the firms' future.
Net losses, however, were $581m – up from $141m in 2021. The company also laid off 10% of its workforce in an effort to cut costs, with its chief executive Sebastian Siemiatkowski advertising 570 staff members on LinkedIn. Klarna CEO Sebastian Siemiatkowski said in a letter to shareholders at the time that the firm has been ‘operating in a very different environment’ in the first half of this year following the fallout from Russia’s invasion of Ukraine, the economic downturn and a ‘huge shift in investor sentiment’.