Swedish buy now, pay later giant Klarna Group plc has reported its maiden quarterly profit since debuting on the New York Stock Exchange, with first-quarter revenue topping $1 billion. However, management's cautious second-quarter outlook prevented a full-throated celebration on Wall Street, suggesting the post-IPO adjustment period is not yet complete.
Gross merchandise volume (GMV) climbed 33% to $33.7 billion, underscoring robust consumer spending through the company's installment payment platform. The Stockholm-based firm continues to scale rapidly, with active consumers rising 21% to 119 million and its merchant base expanding 49% to surpass 1 million.
Financial Highlights
For the first quarter, Klarna posted revenue of $1.0 billion, a 44% increase year-over-year and slightly above the $945 million consensus estimate compiled by LSEG. Adjusted operating profit—the company's preferred metric excluding certain expenses—soared to $68 million from just $3 million a year ago. Operating income flipped to positive $17 million, reversing a $90 million loss in the prior year. Net income reached $1 million, compared with a $99 million loss in the same period last year.
Despite the profit milestone, Klarna's second-quarter revenue guidance of $960 million to $1 billion fell short of the $1.07 billion analysts had predicted. The company also forecast adjusted operating profit of $30 million to $50 million, below the first quarter's level.
Market Reaction
Klarna shares surged 12.6% in premarket trading to $15.37, as quoted by MarketBeat, though regular NYSE hours had not yet commenced at the time of the Stockholm market update. Several analysts have adopted a cautious stance: TD Cowen's Moshe Orenbuch initiated coverage with a Hold rating and $16 price target, while BMO Capital's Andrew Bauch set the same target with a Market Perform call. JPMorgan, UBS, and Wells Fargo all lowered their price targets in February but maintained bullish ratings.
Strategic Expansion
CEO Sebastian Siemiatkowski emphasized that Klarna is evolving beyond its core checkout lending business. "Klarna addresses the entire consumer wallet," he stated, highlighting products such as Pay Now, Pay Later, and installment loans for larger transactions. The company's Klarna Card now counts 5 million active users across 16 countries, while its Fair Financing longer-term installment loan product delivered 138% year-over-year GMV growth.
On May 12, Klarna announced that U.S. consumers will soon see its payment options integrated into Google's Gemini app and Google Search via Google Pay. Chief Commercial Officer David Sykes described flexible payments as "essential infrastructure" as commerce shifts toward conversational and AI-driven experiences.
U.S. Market and Risks
The United States remains a critical battleground. Klarna's partnership with OnePay to provide installment loans for Walmart customers effectively displaced Affirm from a major retail alliance. However, risks persist: provisions for credit losses stood at 0.55% of GMV, virtually unchanged from 0.54% a year ago. The mix shift toward longer-term Fair Financing products could intensify scrutiny of underwriting and funding costs.
Analysts are watching closely to determine whether this quarter's profit marks a sustainable turning point or a temporary bright spot in a company still grappling with the challenge of balancing rapid growth, credit discipline, and public-market expectations.
