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Klarna losses triple after aggressive U.S. growth and mass layoffs

Klarna losses triple after aggressive U.S. expansion and mass layoffs

The logo of Swedish payment provider Klarna.

Thomas Trutschel | photo library | Getty Images

Klarna on Wednesday reported a dramatic jump in losses in the first half, adding to a deluge of negative news for the “buy now, pay later” pioneer.

The Swedish payments firm generated revenues of 9.1 billion Swedish krona ($950 million) in the period spanning January to the end of June 2022. That was up 24% from a year ago.

But the company also racked up hefty losses. Klarna’s pre-tax loss soared more than threefold year-on-year to nearly 6.2 billion krona. In the first half of 2021, Klarna lost around 1.8 billion Swedish krona.

The company, which allows users to spread the cost of purchases over interest-free installations, saw a jump in operating expenses and defaults. Operating expenses before credit losses came in at 10.8 billion Swedish krona, up from 6.3 billion krona year-over-year, driven by administrative costs related to its rapid international expansion in countries like the US credit losses, meanwhile, rose more than 50% to 2.9 billion swedish krona.

Klarna had previously been profitable for most of its existence — that is up until 2019, when the firm dipped into the red for the first time after a hike in investments aimed at growing the business globally.

The company’s ballooning losses highlight the price of its rapid expansion after the onset of the Covid-19 pandemic. Klarna has entered 11 new markets since the start of 2020, and took a number of costly gambits to extend its foothold in the US and Britain.

In the US, Klarna has spent heavily on marketing and user acquisition in an effort to chip away at Affirm, its main rival stateside. In the UK, meanwhile, the firm acquired PriceRunner, a price comparison site, in April. It has also engaged in a charm offensive with British politicians and regulators ahead of incoming regulations.

More recently, Klarna has been forced to cut back. In May, the company slashed about 10% of its global workforce in a swift round of job cuts. The company subsequently raised funds at a $6.7 billion valuation — an 85% drop from its previous valuation — in an $800 million investment deal that defined the capitulation from high-growth tech firms as investors grew wary of a possible recession.

The sharp discount reflects grim sentiment among investors in fintech in both the public and private markets, with publicly-listed fintech Affirm having lost about three quarters of its market value since the start of 2022.

“We’ve had to make some tough decisions, ensuring we have the right people, in the right place, focused on business priorities that will accelerate us back to profitability while supporting consumers and retailers through a more difficult economic period,” said Sebastian Siemiatkowski , CEO and co-founder of Klarna.

“We needed to take immediate and pre-emptive action, which I think was misunderstood at the time, but now sadly we have seen many other companies follow suit.”

Klarna said it plans to tighten its approach to lending, particularly with new customers, to factor in the worsening cost-of-living situation. However, Siemiatkowski said, “You won’t see the impact of this on our financials in this report yet.”

“We have a very agile balance sheet, especially in comparison to traditional banks due to the short-term nature of our products, but even for Klarna it takes a little while for the impact of decisions to flow through.”

Fintech companies are cutting expenses and delaying listing plans amid a worsening macroeconomic backdrop. Meanwhile, consumer-oriented services are losing their appeal among investors while so-called “business-to-business” fintechs attract the limelight.

Klarna says it is now used by over 150 million people, while the company counts 450,000 merchants on its network. Klarna mainly generates income from retailers, not users, taking a small slice of each transaction processed through its platform.

“Ultimately they’ve proven there can be a profitable business there but have doubled down on growing in the US market which is expensive,” Simon Taylor, head of strategy at fintech startup Sardine.ai, told CNBC.

“Market share there will be meaningful for long-term revenue. But it takes time and the funding taps aren’t what they used to be.”

But the company faces stiff competition, with titans in the realms of both tech and finance seeking to capitalize on growth in the buy now, pay later industry. Apple is set to launch its own BNPL product, Apple Pay Later, this case, which will allow users to split the cost of their purchases over four equal monthly payments.

Meanwhile, proposals are afoot to bring the BNPL market under regulatory supervision. In the UK, the government has announced plans to enforce tighter affordability checks and a crackdown on misleading advertisements. Stateside, the Consumer Financial Protection Bureau opened a market-monitoring probe into BNPL companies.

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Health

New Remedy for Aggressive Prostate Most cancers Improves Survival

New Therapy for Aggressive Prostate Cancer Improves Survival

An experimental therapy has prolonged life in men with aggressive prostate cancer that has resisted other treatments, offering new hope to patients with advanced illness and opening the door to a promising new form of cancer therapy.

Among men who received the new therapy, there was a nearly 40 percent reduction in deaths over the course of the clinical trial, compared with similar patients who received only standard treatment, researchers reported on Wednesday.

Prostate cancer is the second-leading cause of cancer death among American men, after lung cancer; an estimated 34,130 men will die of prostate cancer this year. One in eight men will be diagnosed with the disease at some point in their lives. The risk increases with age, and the cancer is more common in Black men.

The new treatment relies on a radioactive molecule to target a protein found on the surface of prostate cancer cells. The study, which followed 831 patients with advanced disease in 10 countries for a median period of 20 months, was published in The New England Journal of Medicine.

“This is something new — you’re driving radiation right to the cancer itself,” said Karen Knudsen, president and chief executive of the American Cancer Society. “It’s a much more sophisticated strategy for targeting the tumor.”

“You’re not just destroying the cancer cells — you’re smart-bombing the place that the tumor has found for itself to live.”

There is no definitive cure for metastatic prostate cancer, and there is an urgent need for new therapies, Dr. Knudsen said. Most life-extending treatments rely on suppressing or blocking androgens, the male hormones that fuel prostate cancer.

“This opens the door to precision radiotherapy targeted at other molecules that are on the surface of other cancer cells,” said Dr. Philip Kantoff, chairman of medicine at Memorial Sloan Kettering Cancer Center in New York.

The investigational treatment, called lutetium-177-PSMA-617, combines a compound that targets a protein on the surface of prostate cancer cells, called prostate-specific membrane antigen, or P.S.M.A., with a radioactive particle that attacks the cells.

The P.S.M.A. protein, which can be detected by imaging scans, is almost exclusively on prostate cancer cells, and so the treatment causes less damage to surrounding tissue, said Dr. Oliver Sartor, the trial’s co-principal investigator and medical director of Tulane Cancer Center in New Orleans.

Though the protein is not ubiquitous in prostate tumors, it is found in more than 80 percent of cases. Among patients screened for the trial, 87 percent were P.S.M.A.-positive. Only those men who were positive for the marker were included in the trial.

The study enrolled men with a form of metastatic prostate cancer called castration-resistant prostate cancer. All the patients had disease that progressed despite treatments with chemotherapy and hormonal therapy to suppress and block androgens.

Participants were randomly assigned to receive the experimental treatment, given every six weeks in up to six doses along with standard treatment, or to continue standard care alone, but without chemotherapy or other isotopes.

After a median follow-up period of 20.9 months, patients given the experimental treatment survived for a median of 15.3 months, compared with 11.3 months for those who received only standard care, a reduction of 38 percent.

Their tumors were more likely to shrink, their prostate-specific antigen levels were more likely to fall, and the risk of their cancer progressing was reduced by 60 percent.

Side effects — most commonly fatigue, dry mouth and nausea — were more prevalent among those receiving the compound than among those who did not, but did not appear to significantly affect quality of life, the researchers said.

The study had some limitations. It was a randomized trial, but because of the difficulties of running a double-blinded trial with a radioactive treatment, the trial was open-label: Both patients and physicians knew whether or not they were getting the treatment. That caused some problems early on, as patients who were disappointed by their assignment withdrew from the trial.

The investigational drug worked where other approaches had failed, Dr. Sartor emphasized. “These patients had received essentially all the available therapies,” he said. “This is the first drug targeted to the tumor that actually results in overall survival benefit among incredibly, heavily pretreated patients.”

Dr. Sartor was a co-principal investigator of the trial, along with Dr. Bernd Krause, of Rostock University Medical Center in Germany. The trial was sponsored by Endocyte Inc. and Advanced Accelerator Applications, which are Novartis companies; Dr. Sartor is a paid consultant to the company. The data were analyzed by the sponsor and provided confidentially to the authors.

Officials with Novartis said the company will apply to the Food and Drug Administration for approval of the new treatment later this year.

Categories
Politics

G7 Nations Take Aggressive Local weather Motion however Maintain Again on Coal

G7 Nations Take Aggressive Climate Action but Hold Back on Coal

BRUSSELS – President Biden teamed up with leaders of the world’s richest nations on Sunday to take action to lower global temperatures, but was unable to set a firm end date for burning coal, which is a major contributor to global warming.

Mr Biden and six other leaders of the Group of 7 Nations pledged to cut collective emissions in half by 2030 and try to curb the rapid extinction of animals and plants, calling this an “equally important existential threat”. They agreed that by next year they would cut international funding for any coal project that lacked technology to capture and store carbon emissions, and pledged to achieve an “overwhelmingly decarbonized” power sector by the end of the decade.

It was the first time that the major industrialized countries, most responsible for the pollution that is warming the planet, agreed to collectively reduce their emissions by 2030, despite several nations individually setting the same goals, including the United States and the United States Kingdom.

However, energy experts said the failure of the G7 countries, which collectively cause about a quarter of the world’s climate pollution, to agree on a specific end date for using coal has weakened their ability to rely on China to create its own, Use to stem the coal that is still growing. It could also be more difficult convincing 200 nations to sign a bold climate deal at a United Nations summit in Scotland later this year.

G7 leaders also declined to pledge significant new funds to help developing countries both cope with climate change and move away from burning oil, gas and coal.

“It’s very disappointing,” said Jennifer Morgan, executive director of Greenpeace International. “This was a moment when the G7 could have shown historic leadership and instead left a massive void.”

Scientists have warned that the world must urgently reduce emissions if it has a chance to keep global average temperatures above 1.5 degrees Celsius compared to pre-industrial levels. This is the threshold at which experts say the planet will suffer catastrophic, irreversible damage. The temperature change isn’t even around the globe; some regions have already reached an increase of 2 degrees Celsius.

Mr Biden opened his first overseas tour as President last week by stating that “America is back” on issues such as climate. After four years of President Donald J. Trump mocking the established science of climate change, discouraging clean energy development, favoring fossil fuels and refusing to work with allies on environmental issues, Mr Biden was once again part of a unanimous consensus that the world must take drastic measures to prevent a global catastrophe.

“President Biden is committed to addressing the climate crisis at home and abroad, gathering the rest of the world at the Summit of Heads of State or Government, G7, and beyond to achieve bold goals within the next decade,” said Daleep Singh, Deputy National Security Advisor. “While the previous government ignored science and the consequences of climate change, our government has taken unprecedented steps to prioritize this on the global stage.”

In addition to re-entering the 2015 Paris Agreement, which Trump abandoned, Mr Biden has pledged to cut U.S. greenhouse gas emissions by 50 to 52 percent below 2005 levels by 2030, and to eliminate fossil fuel emissions from the American electricity sector by 2035.

But it was the UK, along with a few other European countries, that during the summit that year had aggressively urged to stop burning coal by a certain date in the 2030s. Burning coal is the largest source of carbon dioxide emissions, and after pulling back in pandemic year, coal demand is expected to grow 4.5 percent this year, according to the International Energy Agency.

Instead, the final language of the heads of state and government’s “communiqué” is a vague request to “rapidly expand” technologies and policies that further accelerate the transition from coal without carbon capture technology.

The debate at the summit about how soon to give up coal came at a particularly sensitive time for Mr Biden, whose push for a major infrastructure package in a tightly-divided Congress could potentially depend on the vote of a Democratic senator: Joe Manchin of the Coal dependent West Virginia.

In a statement to the New York Times, Mr. Manchin noted “projections that show fossil fuels, including coal, will be part of the global energy mix in the coming decades,” praising the Biden administration for recognizing the need for clean energy technologies develop . However, advocates of faster action said concerns about appeasing Mr Manchin appeared to have prevented more aggressive moves.

Updated

June 11, 2021 at 1:24 p.m. ET

“Once again, Joe Manchin casts a heavy shadow,” says Alden Meyer, Senior Associate at E3G, a European think tank for environmental issues.

In this decade, the United States in particular has the chance to use strong words to lead countries to turn away from fossil fuels, said Morgan of Greenpeace. But “it doesn’t look like they were the ambitions for this G7.”

Other leading climate change advocates and diplomats called the entire climate package a mixed bag.

Mr Biden and the other leaders said they would allocate $ 2 billion to help nations move away from fossil fuels. And they agreed to increase their contributions and meet the overdue pledge to mobilize $ 100 billion annually to help poorer countries cut emissions and cope with the effects of climate change, even though fixed dollar numbers were not on the table.

Laurence Tubiana, CEO of the European Climate Foundation, who served as France’s main climate ambassador during the 2015 Paris negotiations, said she was delighted that nations would stop funding new coal projects without technology to capture and store emissions. This will put an end to virtually all new coal funding as carbon capture technology is still emerging and not widely used.

“This means that China can now decide whether it wants to continue to be the supporters of coal worldwide because they will be the only ones,” she said. However, the financing package is missing for developing countries, which are particularly vulnerable to floods, droughts and other effects of a climate crisis caused by the industrialized nations.

The G7 countries this week also backed Mr Biden’s comprehensive infrastructure plan to counter China’s multi-trillion-dollar belt and road initiative. As part of this, countries have pledged to help developing countries rebuild from the Covid-19 pandemic while taking climate change into account.

In 2009, wealthy nations agreed to mobilize $ 100 billion in public and private funds by 2020 to help poorer countries transition to clean energy and adapt to the worst effects of climate change. However, they only delivered about $ 80 billion on that pledge, according to the Organization for Economic Co-operation and Development. And most of that money is in the form of loans rather than grants, making it difficult for poor countries to use, experts said.

“The G7’s announcement on climate finance is really peanuts in the face of an existential catastrophe,” said Pakistani Climate Minister Malik Amin Aslam. He called it a “big disappointment” for his country and others who had to spend more to cope with extreme weather conditions, displacement and other effects of global warming.

“At least the countries that are responsible for this inevitable crisis must meet their declared obligations, otherwise the climate negotiations could end in vain,” he warned.

A recent report from the International Energy Agency concluded that major economies must immediately stop approving new coal-fired power plants and oil and gas fields if the world is to stave off the most devastating effects of global warming.

At the summit, the seven countries addressed the loss of biodiversity and described it as a crisis on the same scale as climate change.

They said they would campaign for a global push to conserve at least 30 percent of the planet’s land and water area by 2030 and would put such protections in place in their own countries. Scientists say and the G7 are repeating these measures to help curb extinction, ensure water and food security, store carbon, and reduce the risk of future pandemics.

Today, according to the United Nations, around 17 percent of the earth’s land area and 8 percent of the oceans are protected.

Environmental associations welcomed the acceptance of the 30 percent commitment, but emphasized the need for action, which requires adequate funding. That is the difficult part to be worked out at a separate United Nations biodiversity conference in Kunming, China, in October.

Since the remaining intact ecosystems and biodiversity hotspots of the world are unevenly distributed, scientists emphasize that it is not enough for each country to filter out its own 30 percent. Rather, countries should work together to maximize the protection of the areas that achieve the best results in reversing interdependent biodiversity and climate crises. Researchers have mapped proposals.

The rights of local communities, including indigenous peoples who have done better to promote biodiversity, must be valued, proponents said. Conservation does not mean throwing people out, but making sure that wild areas are used sustainably.

Robert Watson, former chairman of two leading intergovernmental bodies on climate change and biodiversity, praised the agreement to link the two crises. But he said it had to address the factors that drive species loss, including agriculture, logging, and mining.

“I don’t see what action is being taken to stop the causes,” said Dr. Watson.

Categories
Politics

Prosecutors Are Stated to Have Sought Aggressive Method to Capitol Riot Inquiry

Prosecutors Are Said to Have Sought Aggressive Approach to Capitol Riot Inquiry

WASHINGTON – In the weeks following the deadly January 6 riot at the Capitol, federal prosecutors in Washington drew up a comprehensive plan to eradicate possible conspirators against the attackers and investigate them for links to the attack.

Prosecutors suggested that these lists could help organizers of the rally where President Donald J. Trump spoke just before the attack, anyone who helped pay the rioters to travel to Washington, and any member of the far-right groups that in the US include crowd that day.

Two of the prosecutors – trial lawyers who led the riot investigation – presented the plan to the FBI in late February, along with a roughly 25-page document setting out the strategy for uncovering possible conspiracies between the attackers and other people behind on condition of anonymity spoke to discuss an active investigation.

The aggressive plan was in line with the Justice Department’s public vow to indict those involved in the Capitol attack. But FBI officials flinched, citing concerns that the plan appeared to suggest investigating people with no evidence to suggest they committed crimes, and that doing so would be against the bureau’s policies and protection of the first amendment. It is not illegal to join any organization, including extremist groups, or to participate in protests or to fund travel to a rally.

FBI officials voiced their concern to officials at the Chief Justice Department in Washington, who eventually overturned the plan.

However, the decision by senior FBI and Justice Department officials to override the task force prosecutors came at a crucial time for the high-profile, far-reaching investigation, as the public and officials of the Biden government are accountable for the insurrection and called for a push to combat domestic extremism.

Justice Department and FBI spokesmen declined to comment.

The proposal also demonstrates the balancing act that newly sustained Justice Department leaders face as they attempt to counter domestic extremism and prevent terrorism without violating American civil liberties. The FBI was previously criticized for its response to the September 11, 2001 terrorist attacks, the aspects of which were condemned as an attack on civil liberties, and for its Cointelpro campaign in the 1950s and 1960s to spy on civil rights leaders and others.

Attorney General Merrick B. Garland said last week that even as he led the investigation into the 1995 Oklahoma City bombing during a previous stint at the Justice Department, investigators knew they needed to see to it that Americans’ civil liberties were protected.

“We promised to find the perpetrators, bring them to justice and do so in a way that respects the constitution,” Garland said.

FBI officials have emphasized the bureau’s efforts to stay within its boundaries when investigating protected activity. While preventing terrorism is a priority in the United States, “an investigation cannot be initiated solely on the basis of activities protected by the first amendment,” said Michael McGarrity, then head of the FBI’s counter-terrorism division, in the year 2019 in a statement from the house.

The office relies in large part on its large network of informants who provide tips and information on how to start an investigation, said current and former members of the FBI’s Joint Terrorism Task Force. But agents cannot investigate people simply because they are members of groups that advocate violent, racist, or anti-government ideologies.

Washington prosecutors encountered this restriction while trying to identify and track down individuals who participated in the January 6 attack. They also investigated whether the attack was more than a spontaneous riot that broke out after an emotionally charged rally, limited by Mr Trump’s admonitions to his supporters to contest Congressional certification that afternoon of the election.

In February, some prosecutors expressed frustration at being obstructed by senior Justice Department officials overseeing the investigation in the weeks leading up to the swearing-in of Mr. Garland and other Biden officials.

Prosecutors wanted to know more about who had spoken to Stewart Rhodes, leader of the Oath Keepers, a militia whose members had played a prominent role in conspiracy cases charged by the government in connection with the attack.

In a message posted on the Oath Keepers website, Mr Rhodes had urged members to come to Washington and stand up for Mr Trump. He was also part of an operation to provide security to Mr. Trump’s close associates, including Roger J. Stone Jr., who spoke at the rally that day.

Prosecutors wanted a search warrant for Mr. Rhodes. Militias like the Oath Keepers and right-wing nationalist groups like the Proud Boys had for years managed to largely evade FBI control as their protests and other public activities remained within the law.

But with members of such groups in the Capitol on January 6, some prosecutors expressed the hope that they now had reason to investigate their staff and leaders.

However, the law does not prohibit pressuring people to take part in a protest or support a politician, even if the statements are provocative. and investigators found no evidence that Mr Rhodes had helped arrange anything more than bodyguards for the speakers.

Justice Department officials, including Michael R. Sherwin, an officer who was overseeing the January 6 investigation at the time, denied prosecutors’ request for a search warrant on Mr. Rhodes, according to two people who were briefed on the deliberations . They concluded that the prosecutors lacked a likely cause for doing so without violating his civil liberties and rights.

Following the dispute, two of the lead task force prosecutors contacted the FBI’s Terrorism Operations Department to inform investigators of their proposed strategy to review the insurgency. They suggested that investigators look at rally organizers and organizations such as militia groups.

Among the FBI officers who opposed the approach, according to those informed about the plan, was Deputy Director Paul M. Abbate. After office officials discussed the presentation with Justice Department officials, the assistant attorney general’s chiefs – including Matthew S. Axelrod, then the second-largest officer in the office – briefed Channing D. Phillips, the acting U.S. attorney in Washington, on the Prosecutors would not take such an approach to the investigation.

The investigation, which continues to be led by federal attorneys and FBI agents in Washington, has led to the arrest of over 400 defendants in at least 45 states. About 30 were charged with more serious crimes, including conspiracy, according to the Justice Department.