- Key insights: The number of consumers using the Klarna Card crossed 5 million in the first quarter, which has increased membership fees and average revenue per consumer compared to non-card-wielding customers.
- What's at stake: Buy now, pay later and point of sale installment lenders rely on their cards to get their financing products in stores where the financiers may not have a relationship with the merchant. Cards also provide important data about consumer spending habits and increase engagement with their customer base.
- Forward look: Klarna left its full-year 2026 guidance – which analysts at Keefe Bruyette and Woods said was conservative – unchanged.
Klarna's customers are continuing to show a penchant for its card product.
Klarna Card topped 5 million users globally in the first quarter ended March 31, according to the neobank.
Cards are a key part of buy now, pay later and point of sale installment lenders' distribution because they provide new avenues for loan origination at brick-and-mortar locations where the financiers may not have a relationship with the merchant. Cards also provide important data about consumer spending habits and increase engagement.
"The everyday spend account is the center of the customer relationship, daily app usage, debit transactions, and the credit option when they want it, additional bank products for the deeply engaged," Klarna CEO Sebastian Siemiatkowski said on the company's earnings call with analysts on Thursday. "Point of sale financing on the card unlocks revenue. The debit side unlocks engagement. Both are important. All of this builds the funding base. Everyday spend feeds the deposits. Deposits fund the originations."
Increased card adoption is also having positive impacts on the lenders' financial performance, Klarna Chief Financial Officer Niclas Neglén said on the call. Membership fees were up more than 600% in the first quarter when compared to the prior year.
Card users also use Klarna's products about three-times more than non-card users and generate an average revenue per user that is about four-times higher after about six months of using the card.
BNPL lenders have been expanding from e-commerce to in-store commerce though multi-use cards, according to TD Cowen analysts.
"E-commerce has been the primary driver of BNPL volume growth. However, the in-store commerce market is four times the size of e-commerce and we believe there is significant white space for BNPL providers to take share," TD Cowen analysts wrote in a research note, noting that BNPL volumes could grow at a 32% 5-year compound annual growth rate from 2025 to 2030.
Increased uptake on the Klarna Card came amid a strong first quarter that put the company back on track following a
"Klarna's solid Q1 was much needed to help rebuild investor confidence in the stock," Keefe Bruyette and Woods analyst Sanjay Sakhrani said in a research note. "While there were some seasonal factors driving part of the beat this quarter, we think the core trends around credit, pricing, GMV growth and expense leverage were strong and could suggest upside to the guide if the macro holds up."
Revenue topped $1 billion, an increase of 44% year over year. U.S. revenue of $399 million was up 67%. Net income was $1 million, compared with a $99 million loss in the same reporting period a year ago. GAAP earnings per share came in one cent per diluted share, ahead of analysts expectations, according to S&P CapitalIQ. Consensus estimates put GAAP EPS at a 16 cent loss.
Total gross merchandise volume hit $33.7 billion, an increase of 56%. U.S. GMV was $7.1 billion, rising 39% and accounting for 21% of total GMV. Global GMV excluding the U.S. rose 31% to $26.6 billion.
By product, Pay Later, which is the company's charge-card equivalent, grew 29% to $26.1 billion, representing 77% of GMV. Fair Financing, Klarna's longer-term point of sale installment loan product, was up 138% to $4.1 billion, driven by an increase in merchant adoption of the product. And Pay in Full, which is Klarna's everyday spending product that functions as a debit transaction, rose 4% to $3.5 billion, accounting for 10% of GMV.
Transaction margin dollars, which measures revenue less the cost of transaction processing and is one of Klarna's key performance metrics, landed at $389 million, up 44% on the year.
Active customers rose 21% to 119 million customers, and active merchants surged 49% year over year to about 1.1 million customers.
Total allowance for credit losses were 4.6%, according to Klarna. By product, Pay Later ACL tallied 3.5%, and Fair Financing ACL hit 6.2%.
Full-year guidance was unchanged, albeit conservative, according to KBW. GMV is expected to be above $155 million. Revenue as a percentage of GMV is expected to be 2.8%, and transaction margin dollars as a percentage of GMV should be 1.04%.
"Management's prudence to hold the full year guide as is makes sense as it is imperative that the company at least meets expectations on transaction margin dollars after a rough first few quarters," Sakharani said.
