Prime Highlights:
- Klarna beat Wall Street expectations in its first earnings report since debuting on the NYSE, posting $903 million in Q3 revenue.
- S. growth fueled the quarter, with gross merchandise volume surging 43% year over year.
Key Facts:
- Total gross merchandise volume rose 25% to $32.7 billion, while the company posted a net loss of $95 million compared to a $12 million profit last year.
- The Klarna Card has surpassed four million users since its July launch, accounting for 15% of October transactions.
Background:
Klarna delivered stronger-than-expected third-quarter results in its first earnings release since listing on the New York Stock Exchange in September, topping Wall Street estimates on the back of rapid U.S. expansion.
The buy now, pay later giant reported revenue of $903 million, above the $882 million expected by LSEG analysts and up 26% from $706 million a year earlier. Despite the solid top-line performance, Klarna posted a net loss of $95 million, compared with net income of $12 million in the same period last year.
A major driver of growth came from the United States, where gross merchandise volume (GMV) surged 43% year over year. Overall GMV rose 25% to $32.7 billion, up from $26.2 billion in 2023. Klarna cited strong adoption of its Klarna Card and “fair financing” options, which offer longer-term installment plans for higher-value purchases. GMV generated through fair financing more than tripled from last year.
Since launching in July, the Klarna Card has surpassed four million customers, accounting for about 15% of transactions by October. CEO Sebastian Siemiatkowski added that fair financing users have doubled over the past year but currently reach only around 20% of merchants, leaving “tons of opportunity” for further expansion.
Klarna’s merchant base climbed 38% to 850,000, up from 616,000 a year ago, although average revenue per active customer declined amid rapid user growth.
Looking ahead to the fourth quarter, Klarna expects GMV to fall between $37.5 billion and $38.5 billion, with revenue projected between $1.065 billion and $1.08 billion. Transaction margin dollars, a key measure of profitability, are forecast at $390 million to $400 million, compared with $281 million in Q3.
The company’s September listing came after a postponed IPO earlier this year, delayed amid market uncertainty tied to former U.S. President Donald Trump’s tariff threats. Since then, market volatility has increased due to concerns over inflated AI valuations and a possible slowdown in consumer spending, pushing Klarna’s stock down more than one-third from its peak.
Siemiatkowski said Klarna has not seen major changes in customer repayments or spending behavior, but is watching how AI-driven shifts in the job market could influence consumer trends.
