- Key insights: Klarna beat analysts expectations on revenue but missed on loss estimates.
- What's at stake: Third quarter earnings marks Klarna's first earnings report since going public on the New York Stock Exchange.
- Forward look: Klarna's growth plans include an expanded distribution network, increasing its long-term installment loan penetration with merchants and becoming a full-fledged neobank
Klarna in its first quarterly report to investors since becoming a
Revenue hit a record $903 million, up 28% year over year and ahead of analysts' estimated $885.5 million, according to S&P CapitalIQ. The neobank posted a net loss of $95 million, or 25 cents per diluted share. Wall Street analysts expected a net loss of $89.9 million or 24 cents per share. Operating expenses increased 24.5% to $295 million, according to Klarna.
Gross merchandise value tallied $32.7 billion, an increase of 23% from the same reporting period last year. The U.S. market led gross merchandize value growth at 43% year over year, while U.S. revenue grew 51%.
In the fourth quarter of 2025, Klarna expects GMV to be between $37.5 billion and $38.5 billion. Revenue outlook landed at $1.065 billion to $1.08 billion. Keefe Bruyette and Woods analyst Sanjay Sakhrani said in a research note that the outlook was "conservative, setting up the company to beat expectations.
"Klarna delivered a solid first print out of the gate with revenue growth accelerating sequentially, and revenue and transaction margin dollar (TMD) growth coming ahead of our expectations," he said.
Shares were down nearly 6% as on 1:10 p.m in New York. Wedbush analyst Scott Devitt said the decline was likely due to "heightened investor caution surrounding the company's exposure to a weaker consumer credit environment and rising loss provisions."
Provisions for credit losses increased 18 basis points sequentially to 0.28% of GMV, up from 0.1% of GMV in the second quarter of 2025, according to Klarna.
"Performance was consistent with management's prior commentary on expected transaction margin pressure in the near-term as Fair Financing volume growth outpaces other areas of the business," Devitt said. "Although fair financing loans require a greater provisioning up-front, the benefit of these loans compound as interest revenues are recognized over the life of the loan."
KBW also brushed off rising provision costs. "We believe the company is a compelling long-term story, and investors need to look past the near-term noise related to provision expenses, as KLAR continues to have a number of upside levers that should materialize over the intermediate term," Sahkrani said.
Distribution through payment service providers
Co-founder and chief executive Sebastian Siemiatkowski said that the company's first objective in its growth was expanding its distribution network to make sure that Klarna was "available everywhere Visa is."
Klarna has been working with the
"When [a merchant] signs up for Stripe, Nexi or WorldPay, you should automatically get Visa, MasterCard and Klarna in the default offering," Siemiatkowski said. "That is something that we have been pushing for years and are continuing to push for."
Those partnerships are lending themselves to more merchant reach. New merchants on the platform hit 235,000, bringing the total merchant count to 850,000 merchants, thanks to distribution deals with Stripe serving as a "key contributor" to that growth, Chief Financial Officer Niclas Neglén said in a letter to shareholders.
"We concluded a few years back that growing merchant by merchant is just not going to scale. You're going to have to work with [payment service providers]," Neglén said on Tuesday's earnings call.
"One of the things that actually doesn't get enough attention here is the Stripe Link partnership," he said. "The benefit now is that Klarna is the main provider of that, which means that everyone getting a Stripe Link gets the option to use our buy now, pay later, which becomes an even faster way to reach all of the Stripe merchants that offer that already."
Klarna also said it expanded its
Expanding longer-term installments with merchants
Klarna's second objective is to increase its penetration of Fair Financing, its longer term installment product. About 18% of Klarna's merchants offer Fair Financing. In the same period last year, only 10% of merchants offered Fair Financing
."We want customers to be able to expect that each of the payment methods that they recognize with Klarna, which is Pay Now, Pay Later and Fair Financing.
GMV from fair financing, Klarna's longer-term installment product, increased 244% year over year in the U.S. and 139% globally and was an important driver of growth during the quarter, Neglén said.
Klarna extended its capital runway to continue to scale fair financing growth in the state with a new forward flow agreement with Elliot Investment Management that will support $6.5 billion in originations over the next two years.
Klarna as a neobank
All roads lead to becoming a neobank, though.
Siemiatkowski said that Klarna's primary customer acquisition channel was at checkout and with blue chip brands that consumers love and trust, giving the company a leg up over banks that used promotions and traditional marketing to acquire customers. From there, it's a matter of getting those consumers to download the app and start using Klarna's other services, such as its marketplace, savings product and the Klarna Card.
"It brings in customers at a fraction of the cost that our competitors are spending to attract the same users, and we're now seeing that we are able to transform them into a richer relationship that gives consumers more value, but also allows Klarna to generate more revenue per customer," Siemiatkowski said.
The Klarna Card has taken off since launching in July, with 4 million sign ups, accounting for 15% of global transactions in October. Klarna Card GMV jumped 92% from the same prior-year period.
Active customers rose 14% from the same period last year to 114 million. Siemiatkowski said that 0% financing was a "fantastic opportunity" to bring in more customers and was something that Klarna had previously underinvested in.
"We are now really ramping up and making sure that we're offering it," he said. "A lot of merchants and a lot of brands want to offer affordability without lowering their prices. And also, what we see is that 0% financing is driving a fantastic audience to Klarna because it attracts a more broad specter of FICO scores."
