One of the most powerful things that can happen in a startup is improving customer cohorts (a cohort normally is a group of customers from a specific time period.) An example of an improving cohort would be that the group of new customers from January 2023 have spent more after two months than the group of new customers from January 2022 had after two months.

Another powerful improving cohort type, both from revenue/profitability and fundraising perspectives, is “the customer cohort in New geography is trending towards having the performance of the customer cohort in Mature geography“.

In Stockholm this New/Mature geography customer cohort is playing out with Klarna and credit loss rates. In Q4’22 Klarna had a credit loss rate of 0.58 % globally. But looking at older annual reports, the Swedish and German credit loss rates were reported to be in the 0.25-0.30 % range. If those numbers are still relevant, and US credit loss rates can come down to that level, it would lower credit losses with about 700 MSEK per quarter. Not enough to make Klarna profitable until the summer of 2023 by itself, for that to come true revenue growth would have to accelerate and/or operating expenses would have to come down.