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Chatting with a customer service rep often feels like you’re face-to-face with a lifeless animatron. And if Klarna’s IPO goes as planned, you probably will be.
The Swedish buy now pay later giant is hoping to reduce its workforce by half with the help of AI as it looks to ramp up profitability ahead of its IPO, the Financial Times reported. The company, which is seeking to go public next year, is an early adopter of generative machine learning in marketing and customer service and says the tech is already doing the work of 700 employees.
“By simply not hiring, which we haven't done since September ... the company is kind of becoming smaller and smaller," CEO Sebastian Siemiatkowski told Reuters.
Siemiatkowski said that Klarna’s workforce has already dropped from 5,000 to 3,800, and that it could see that number shrinking to 2,000 in the next few years due to AI.
The company said that its average revenue per employee grew 73% year over year.
Klarna’s commitment to reducing its labor costs comes as it reported surging profits for the first half of the year. It reported an adjusted operating profit of $66.1 million in the first half of 2024, compared to a $44.8 million loss the same period last year. Revenue also grew 27% year over year, reaching $1.31 billion.
IPO comeback
Klarna, which last raised $800 million at a $6.7 billion valuation in July 2022, is one of a handful of mature tech startups looking to hit the public markets while the good times are rolling. The firm is talking to financial advisors including potentially Morgan Stanley, JPMorgan Chase, and Goldman Sachs, according to the Financial Times.
With rising interest rates and a rocky stock market in 2022 and 2023, the IPO pipeline became more of a slow drip. Now, with the S&P 500 up 19% this year so far, private companies could feel ready to jump in the IPO waters sooner rather than later. Many are looking to go public in the popular Labor Day-to-early November window, but face a conundrum: You either risk rushing to an IPO but catching the bull market, or you could wait until next year when interest rates are lower. —LB