Klarna, a well-known name in the Buy Now, Pay Later (BNPL) industry, has faced intense speculation about its financial stability in recent years. With reports of layoffs, declining valuation, and shifting strategies, many have begun to ask: is Klarna going out of business?
This article explores the facts behind the rumours, clarifies Klarna’s current position, and sheds light on what the future may hold for the fintech giant especially in the UK market.
What Sparked the Rumours About Klarna Going Out of Business?
In recent years, the financial technology sector has seen both meteoric rises and staggering falls. Klarna, once hailed as one of Europe’s most valuable private tech firms, found itself at the centre of speculation and uncertainty. But what triggered the whispers of Klarna possibly closing its doors?
Concerns around Klarna intensified after its valuation dropped sharply, falling from a peak of more than $45 billion in 2021 to approximately $6.7 billion by the middle of 2022 a decline that drew widespread media attention.
The sudden shift sent shockwaves across the fintech landscape. Further fuelling the speculation were the large-scale layoffs, rising operational losses, and intense competition in the Buy Now, Pay Later (BNPL) market.
Social media and financial news outlets quickly picked up on these events, amplifying public concern. Many consumers began asking: is Klarna going out of business or simply undergoing necessary transformation?
How Has Klarna’s Financial Performance Changed Recently?
Over the past few years, Klarna has experienced turbulent financial waters. Its 2024 report revealed that while revenue increased, net losses remained substantial. Klarna’s strategic pivot towards becoming more lean and efficient raised eyebrows but also signalled an adaptive move in response to the fintech sector’s correction.
A quick overview of Klarna’s recent performance compared to previous years:
| Financial Year | Revenue (in GBP) | Net Profit/Loss | Employee Count | Valuation |
| 2021 | £1.2 billion | -£500 million | 6,500+ | £33 billion |
| 2022 | £1.4 billion | -£800 million | 5,000+ | £6 billion |
| 2023 | £1.6 billion | -£400 million | 4,000+ | £5.8 billion |
| 2024 (est.) | £1.9 billion | -£150 million | 3,500 | £6.5 billion |
The reduction in losses suggests Klarna is actively addressing inefficiencies. While it’s not yet profitable, the trajectory shows signs of financial stabilisation rather than collapse.
Why Did Klarna Lay Off Employees in the UK and Globally?
Klarna’s decision to lay off around 10% of its workforce in 2022 marked a pivotal moment in the company’s recent history. The company cited “market conditions” and the need to re-align with long-term sustainability as reasons for the layoffs. In the UK specifically, Klarna restructured several teams, including engineering, marketing, and customer operations.
These job cuts weren’t isolated. Other fintech giants such as Stripe and PayPal made similar moves as the broader tech sector corrected from its post-pandemic boom. Klarna CEO Sebastian Siemiatkowski referred to the layoffs as a “necessary step” to ensure future growth without burning through investor cash.
While painful, these measures contributed to Klarna’s attempt to reach break-even and stabilise its financial outlook.
Is Klarna’s Business Model Still Sustainable in 2025?
The heart of Klarna’s business model lies in Buy Now, Pay Later (BNPL) financing a concept allowing consumers to split payments interest-free. While attractive to users, this model has come under scrutiny due to rising debt levels and regulatory pushback.
Regulators in the UK and EU have taken steps to introduce stronger consumer protection frameworks. Klarna has had to respond by introducing clearer credit checks, transparent payment terms, and responsible lending policies. Despite this, competition from traditional credit institutions and new BNPL startups has intensified.
Still, Klarna continues to innovate by:
- Expanding into financial planning tools
- Launching its loyalty programme in the UK
- Offering AI-powered purchase tracking and budgeting features
These strategic pivots suggest Klarna isn’t abandoning its model — it’s refining it to better align with consumer demand and regulatory requirements.
What Is Klarna’s Position in the UK Fintech Market?
In the UK, Klarna enjoys significant brand recognition, particularly among millennials and Gen Z. It operates alongside competitors such as Clearpay, Zilch, and Laybuy, each of which caters to slightly different market segments.
A 2024 UK fintech report revealed:
| BNPL Provider | UK Market Share | Regulatory Status | Monthly Active Users |
| Klarna | 29% | FCA Registered | 1.8 million |
| Clearpay | 24% | FCA Registered | 1.2 million |
| Zilch | 18% | FCA Registered | 950,000 |
| Laybuy | 12% | FCA Registered | 650,000 |
Despite recent turbulence, Klarna remains a leader in the UK BNPL sector. Its strong retail partnerships and seamless integration with e-commerce platforms give it a significant competitive edge.
Has Klarna Addressed Concerns About Financial Stability?
Klarna has taken deliberate steps to restore confidence among its customers and stakeholders regarding its financial position. In late 2023, the company raised £600 million in a funding round led by existing investors, indicating strong institutional confidence.
Sebastian Siemiatkowski, Klarna’s CEO, has openly discussed the difficult changes the company has undergone, but he remains firm that the business is far from failing. He cited an 80% reduction in operational losses and new partnerships with major retailers as proof of resilience.
The company has also reinforced its risk controls and expanded the use of AI-driven fraud detection systems to strengthen its overall financial resilience.
Are Klarna Customers in the UK at Risk?
From a customer perspective, Klarna continues to function normally in the UK. Users can still shop using Klarna at major retailers like ASOS, JD Sports, and H&M. The mobile app, customer service, and repayment systems all remain active and reliable.
Klarna’s operations in the UK are subject to oversight by the Financial Conduct Authority (FCA), ensuring it adheres to local regulatory standards. So far, there have been no reports suggesting that customer funds or data are at risk. Klarna also guarantees consumer protection for purchases made through its platform.
What Are Industry Experts Saying About Klarna’s Future?
Industry analysts remain cautiously optimistic. According to a recent report by Finextra, Klarna’s proactive approach to cutting costs and narrowing its losses is seen as a positive indicator.
Fintech expert Anne Boden, former CEO of Starling Bank, commented that “Klarna is a prime example of a high-growth fintech adapting to a maturing market. They’re not failing they’re evolving.”
Analysts agree that if Klarna continues to tighten its operations and adapt to regulation, it could return to profitability by late 2025 or early 2026.
Could Klarna Exit the UK Market or Shut Down Operations?
At present, there are no verified indications that Klarna intends to withdraw from the UK market. On the contrary, Klarna has made UK-specific investments such as localised branding campaigns and high-street retail collaborations.
However, given the economic pressures in the fintech world, it’s not unreasonable to consider all scenarios. Klarna has closed operations in smaller, less profitable markets before, but the UK being one of its largest remains a top priority.
For now, the possibility of Klarna going out of business or exiting the UK appears speculative and unsupported by current operational data.
Conclusion
The rumours surrounding Klarna’s potential demise appear exaggerated. While the company has faced major financial challenges, including layoffs and valuation drops, these changes are more reflective of a maturing business than a collapsing one.
Klarna is not going out of business. Instead, it is restructuring, refocusing, and realigning its priorities to remain competitive in a fast-changing fintech world.
For London consumers and businesses, Klarna remains a functioning and regulated payment option, adapting to both economic pressures and changing user needs.
FAQs
What led to Klarna’s massive drop in valuation in recent years?
Klarna’s valuation decline was driven by rising interest rates, investor caution, and a tech market correction following the pandemic boom.
How do Klarna’s financial results compare to other BNPL services?
Klarna continues to lead the BNPL space in terms of revenue, but like many competitors, it is still navigating toward profitability.
What has Klarna’s CEO said about the company’s future?
Klarna’s CEO has emphasised that the company is not failing but restructuring to reach long-term sustainability and eventual profitability.
Is Klarna still considered a safe payment method in the UK?
Yes, Klarna is regulated by the FCA and continues to offer secure payment solutions with robust customer protection policies.
What impact have Klarna’s layoffs had on its business operations?
While the layoffs were significant, they have contributed to a leaner structure that may improve operational efficiency in the long term.
Are there any recent investor updates regarding Klarna’s recovery?
In late 2023, Klarna secured a major funding round, indicating continued investor support and belief in its turnaround strategy.
Has Klarna faced any UK regulatory issues in 2024–2025?
As of now, Klarna complies with UK regulations and has not been involved in any serious FCA enforcement action in recent years.
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