The buy now, pay later company employed about 5,000 people this time last year, but has shrunk its headcount to 3,800.
A spokesperson said that figure is likely to fall to about 2,000 in the coming years, without giving an exact time frame.
In Klarna’s interim results, released on Tuesday, it said the cuts come as AI takes on more and more tasks at the company, allowing it to reduce the number of human workers.
It said: “Our proven scale efficiencies have been enhanced by our investment in AI, which has driven down operating expenses and improved gross profits.”
Klarna said its average revenue per employee has increased 73% versus this time last year.
The company, which is based in Sweden, has two UK offices in London and Manchester, according to its website, as well as dozens of others across Europe, the Americas, Australia and New Zealand.
It declined to comment on how many people it employs in the UK, but said the planned headcount reductions would be even across its sites.
AI has already been put to work extensively in customer service, Klarna said, where it estimates that its chatbot performs the work of 700 human employees.
It has cut the average resolution time of a customer service issue from 11 minutes to two, while “maintaining the same customer satisfaction scores as human agents”.
The company is also using the technology in marketing.
It said: “Our AI assistant now also serves as a powerful shopping assistant that helps consumers discover and choose products tailored to them, further transforming the shopping experience and helping them save time and money.”
None of the reductions have come via redundancies, but instead through natural staff turnover combined with a hiring freeze which the company announced last year.
The interim results showed that Klarna increased its revenue by 27% to 13.3 billion Swedish krona (£990 million), while it swung to an adjusted profit of 673 million krona from a loss of 456 million krona last year.
It comes amid a turnaround effort at the company, which had been profitable until 2019 but started sustaining financial losses in 2020 following a rapid expansion in the US.
Shortly after, it plummeted in estimated value between 2021 and 2022, from 46 billion US dollars (£34.8 billion) to just 6.7 billion dollars.
Klarna could also get a stock market listing as early as next year, according to chief executive Sebastian Siemiatkowski.
He told Reuters that an initial public offering next year “sounds reasonable”, but that it has no definite plans yet.
Mr Siemiatkowski said the company might lean towards listing in the US, but that it had looked at European options.
A more recent valuation estimate, by top Klarna investor Chrysalis Investments in July, said the fintech firm could achieve a valuation of between 15 billion and 20 billion dollars at an IPO.
