Klarna isn’t paying a high price — now or later — for high interest rates.

The preeminent buy now, pay later (BNPL) firm, which is planning a US public debut as soon as early 2025, announced stellar first-half results for 2024 on Tuesday. The company swung back to a profit, demonstrating that its success isn’t entirely reliant on ultra-low interest rates in the process.

AI Now Pays Off Later

It’s been a rollicking few years for Klarna, and returns have come in the form of anything but four equal, even installments. The firm — founded in Stockholm way back in 2005 — says it was profitable all the way through 2019. Then came an aggressive US expansion, during which it suffered expected losses. Still, by June 2021, Klarna remained enough of a startup darling to score a monstrous $46 billion valuation in a fundraising round led by SoftBank. Then came inflation. And then came a rapid spike in interest rates — an alpine-size anvil for a de facto loan company — helping to squash its valuation all the way down to just $6.7 billion by its next fundraising round in July 2022.

After four straight years of losses, Klarna last November announced it had eked out a profit of around $12 million in the prior quarter. On Tuesday, it said that its winning streak continued, with an adjusted profit of around $66 million in H1, up $108 million year-on-year. New tech and new strategies helped Klarna hit the mark:

• In June, sources told Bloomberg that Klarna, among other BNPL firms like Affirm and PayPal, began selling debt backed by consumer loans as securities on the private market. By selling the asset-backed securities, Klarna has found a backdoor to cheap funding amid high interest rates. 
• Meanwhile, the company has been on an aggressive cost-cutting, human-replacing mission. CEO Sebastian Siemiatkowski told the Financial Times on Tuesday that the company has reduced its headcount from around 5,000 employees to 3,800 in the past year, with many marketing and customer service employees replaced by AI.

That may just be the start. “Not only can we do more with less, but we can do much more with less,” Siemiatkowski told the FT. “Internally, we speak directionally about 2,000 [employees]. We don’t want to put a specific deadline on that.”

Second Time’s the Charm: The BNPL trend may be coming back in full force. On Tuesday, Australia-based BNPL operator Zip said that it was in talks with Apple to integrate its payments service on iDevices in the US. Of course, Apple launched its own BNPL service, Apple Pay Later, in October last year, only to shutter the service entirely in June.

It makes sense that the Emerald Isle is serious about staying green.

Google’s hopes for a new data center just outside Dublin were dashed this week when South Dublin County Council refused planning permission for the project. The impasse shows the enormous infrastructure problems that Big Tech companies face in their eagerness to ramp up generative AI products.

Over-Energetic AI 

Ireland is American Big Tech companies’ gateway to Europe. Silicon Valley giants including Google, Meta, Microsoft, and Apple have European HQs in the country, partly due to its generous tax incentives. All of those companies are, to some degree, chasing after generative AI products. But to build and run the large language models (LLMs) that underpin them, you need a heck of a lot of compute power — which in turn requires a heck of a lot of energy. Ireland has seen a big expansion of data centers in recent years. According to the country’s central statistics office, data centers’ consumption jumped 20% from 2022 to 2023, and they consumed 21% of the nation’s metered electricity in 2023, up from 5% in 2015.

The council that rejected Google’s plans for a new data center, which was supposed to be built and ready to rumble by 2027, gave two reasons:

• It’s concerned about the strain the center would place on the local grid, saying Google didn’t explain in enough detail how it would impact local energy supply by the time it was built. 
• It also said plans for the center didn’t feature enough on-site renewable energy to comply with the region’s plan for green infrastructure. Big Tech’s clamor to snap up electricity for its AI ambitions is majorly tarnishing its reputation as a large industry that favors green energy.

You’ve Been Served: While local council members in Ireland gum things up for Big Tech’s AI ambitions, another big AI player just got drenched with a bucket of ice water. Hindenburg Research, the investment research firm with a penchant for big, market cap-gutting reports, announced a new target on Tuesday in the form of Super Micro, a data center server that has been buoyed up this year by the AI frenzy. Hindenburg announced it has taken a short position on Super Micro, and accused it of “glaring accounting red flags, evidence of undisclosed related party transactions, sanctions and export control failures, and customer issues.”

As the price of franchises soar, shrinking the pool of would-be acquirers, NFL owners have reconsidered their aversion to private equity. 

Thirty-one of the 32 franchise owners voted at a special meeting Tuesday to allow a select group of PE firms to join their ranks as minority investors. At these prices, who else is going to buy the Cleveland Browns or New York Jets?

Running Back Carried Interest

The NFL’s exclusive group of owners has been more reluctant to let in PE than its league counterparts: The NBA, NHL, and MLB all allow PE firms to buy team stakes up to 30%.

But the increasingly daunting price tag of pro sports teams — now higher than a Dallas Cowboy in the 1990s — has made it nearly impossible to finance purchases without institutional money. “Unless you’re one of the wealthiest 50 people in the world, writing a $5 billion equity check is pretty hard for anyone,” Apollo Global co-founder Josh Harris — who led a group of over 20 in purchasing the Washington Commanders last year for a North American sports franchise record of $6 billion — told CNBC. And even though the NFL is loosening its rules, they will remain the most restrictive among the major North American sports leagues:

• A PE consortium including Blackstone, Carlyle, CVC Capital, and Dynasty Equity — reportedly nicknamed “The Avengers” — is among industry heavyweights that will pledge $12 billion for stakes in NFL teams. Approved funds and consortiums can buy a maximum 10% stake in a team and make deals with no more than six teams, CNBC reported — the NFL also informed teams it will take a cut of private equity profits on sales of ownership stakes.
• The NFL will still require that the controlling owner of an ownership group, which can’t comprise more than 25 people, have at least a 30% stake. Groups can’t borrow more than $1.4 billion, and sovereign wealth funds, which have taken huge stakes in European soccer, will remain blocked from investing.

Brotherly Shove: The value of two of the league’s most famous faces, talking about everything from football to UFOs to sandwiches to one’s love life with Taylor Swift, clocked in at $100 million Tuesday, with Amazon’s Wondery signing up as distributor of brothers Jason and Travis Kelce’s podcast “New Heights.”