Klarna Turns Profitable but Weak Outlook Sends Shares Down 20%

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•  18 Aug 2026
 

$KLAR Klarna Group plc reported second quarter revenue of $1.042 billion and net income of $9 million, while improving transaction margin and credit quality, but the shares fell about 20% in premarket trading after a sharply weaker third quarter outlook. The Swedish fintech beat the market revenue estimate of about $997 million and returned to profitability, yet investors focused on a reduced annual activity forecast and the planned departure of two senior executives, including the chief financial officer. The stock fell to about $16, well below its $40 IPO price from September last year, after already losing about one third of its value since the start of the year. The reaction shows that earnings momentum is improving, but the market is demanding evidence that rapid growth can translate into sustainable profitability.

Transaction volume through Klarna reached $36.6 billion in the second quarter, up 18% from the comparable period, while revenue rose 27% to $1.042 billion. Activity in the United States continued to grow faster, with transaction volume increasing 27%. Transaction margin, one of the key measures Klarna uses to present the economics of its business, increased 42% to $446 million. Adjusted operating income rose to $91 million from $29 million, reported operating income reached $27 million compared with a $46 million loss, and net income was $9 million compared with a $53 million loss a year earlier.

Credit quality also remained stable as provisions for credit losses represented 0.52% of transaction volume compared with 0.56% last year. For a company rapidly expanding its credit activity, the figure is material because Klarna growth depends not only on increasing customers and transactions but also on correctly pricing risk and collecting loans. The company is therefore showing growth and improving profitability without an increase in the credit loss rate. That combination strengthens the underlying transaction economics even as the forward growth profile becomes less favorable.

The pressure on the shares comes from Klarna decision to lower its annual transaction volume forecast to $149 billion to $151 billion from a previous forecast above $155 billion. About $600 million of the difference is attributed to currency movements, but the more significant reason is an expectation for moderate activity in Germany, the company largest market by transaction volume. Annual revenue is now expected at $4.08 billion to $4.16 billion, while the transaction margin forecast was raised to $1.62 billion to $1.65 billion. The positioning implication is clear: activity will be lower than originally planned, but Klarna expects to generate more profit from each dollar moving through the platform, a setup that could support multiple expansion only if the slower volume outlook stabilizes.

The more difficult test is expected in the third quarter, when Klarna forecasts revenue of $940 million to $980 million against a market consensus of about $1.11 billion. Adjusted operating income is expected to fall to $5 million to $15 million as the company increases investment in marketing and launches new partnerships. That gap between current earnings momentum and the next quarter outlook explains why investors are discounting the second quarter improvement. Institutional flows are likely to remain sensitive to whether those investments produce renewed transaction growth without reversing the improvement in margins.

Klarna also announced changes in senior management, with Chief Financial Officer Niclas Neglen expected to leave his position in early 2027 after about six years in the role. Neglen accompanied the company through its IPO and the expansion of its financing operations, and Klarna has already begun searching for a replacement who will be based in New York. Chief Marketing Officer David Sandstrom, who has held the role for nine years, is also expected to leave during the same period. The timing carries additional weight because Klarna has already experienced several senior executive departures this year, and the CFO transition comes only months after the IPO while the company is lowering its outlook.

At the same time, Klarna continues its effort to evolve from a buy now, pay later company into a broader financial network. Active customers reached 120 million, up 8%, while average revenue per customer increased 24%, and the number of merchants connected to the network jumped 54% to more than 1.2 million. Klarna Card reached 6.5 million active users across 16 countries compared with 1.3 million users a year earlier, while the number of paying subscribers increased eightfold to 2 million. The company also connected to the J.P. Morgan payments platform, which processes about $2.6 trillion annually, and is expanding its Apple partnership through a device leasing program in the United States.

About 90% of Klarna funding sources come from consumer deposits, while the company is also expanding transactions in which external investors finance or purchase part of the credit it originates. This structure allows Klarna to continue growing while using capital more efficiently. The report therefore presents a clear tension between improving operating performance and weaker forward expectations. Revenue is growing, transaction margin is expanding, card usage is rising and the company has moved into profit, but a stock that was listed at $40 and now trades around $16 is being valued primarily on what comes next: slower than expected growth, higher investment in the next quarter and a significant change in the management team that led the company into the public market.

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