Klarna Bank AB said losses more than trebled in the first half of the year, ahead of a cost-cutting drive that’s set to temper its rapid international growth.

The Stockholm-based fintech reported an operating loss before tax of 6.2 billion Swedish kronor ($581 million) for the six months through June, up from 1.8 billion kronor in the same period a year ago. Revenue rose 24%.

“We’ve had a few years now where growth has been really heavily prioritized by investors. Now, understandably, they want to see profitability,” said Chief Executive Officer Sebastian Siemiatkowski in a statement.

Klarna’s sharp increase in losses were driven by administrative expenses — the cost of running the business, including paying salaries — which rose to 10.2 billion kronor, compared to about 6 billion kronor a year before.

The firm said it would cut 10% of its staff earlier in the year as it looked to get a handle on these expenses. “We cannot afford being as forward leaning” while investors are getting more careful about the fintech industry, Siemiatkowski told Bloomberg TV.

The company has reevaluated its investment plans, including some strategies to attract new customers, he added. Klarna is working to restore profitability after an investment round this summer that slashed the company’s valuation to $6.7 billion from about $45.6 billion a year ago.

Cash reserves more than halved to 9.35 billion kronor in the first half of the year. But the pace appears to have slowed, since reserves fell 7.3 billion Swedish kronor in the first quarter of the year alone, in a sign the firm’s cost-cutting is already taking effect.

Klarna’s borrowing costs dropped after the earnings: yields on bonds maturing in February 2024 fell 14 basis points to 4.57% early on Wednesday in a possible sign of relief that the company has stemmed the outflow of cash. That said, yields remain well above the 1.38% seen at the start of the year.

Other Key Insights

• Net credit losses were 2.85 billion kronor, up from 1.85 billion kronor. The firm said the total represented 0.7% of gross merchandise value and was a result of overall loan growth. A year ago, credit losses were 0.56% of gross merchandise value.
• Klarna offers interest-free loans to customers who shop online, allowing them to spread the cost of a product over multiple payments, making money by charging retailers a fee on transactions. That makes it vulnerable rising costs that might force customers to cut spending.
• Klarna said the US continues to be the company’s fastest-growing key market, with volumes up 109% on a year ago and 30 million users. Overall it has 150 million customers across 45 markets.
• The more established business in the UK is “an excellent example of Klarna’s expected market trajectory,” it said, pointing to 70% volume growth along with gross margins of 54%.

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–By Aisha S Gani and Abhinav Ramnarayan (Bloomberg)