What's going on?

Buy-now-pay-later (BNPL) firm Klarna is still shedding cash, but it said on Wednesday that it�s getting closer to turning a profit.

What does this mean?

Klarna was the darling of Europe�s tech startup space not long ago, showered with praise and funding alike � but how the mighty have fallen. The global economy�s hit a rut now, and capricious investors have fixed their attention on companies that can actually turn a profit. And Klarna doesn�t, which could be why the firm�s valuation plunged from $46 billion to $7 billion in July. Since then, Klarna�s been proving skeptics right, racking up a $200 million loss last quarter, twice the sum at the same time last year. Now, though, Klarna�s determined to turn things around: the firm bid farewell to 10% of its staff back in May, and it’s tightening up the conditions of the loans it offers. With a little luck, it�s hoping those moves will see it turning a profit again within a year.

Why should I care?

Zooming in: Grand ambitions.
Cutting costs is just one way Klarna�s trying to make up ground. The other is by tapping into revenue streams beyond the BNPL space it sprang from. Case in point: the firm recently rolled out a new price-comparison tool, built on its $1 billion purchase of PriceRunner last year. That�s one step in the firm�s plans to turn Klarna into a one-stop-shop for online bargains, rivaling similar services offered by Google and Amazon.

Zooming out: Inflation steps off the gas.
Inflation has doled out nothing but suffering to most firms, but it�s probably been kind enough to Klarna: after all, quick online loans can be handy for hard-up shoppers waiting on their next paycheck. But now there are signs that inflation�s easing in Europe, falling to a lower-than-expected 10% in November versus the same time last year � the first time the metric�s decreased in a full 17 months.