Klarna delivers $1bn quarter but shareholder returns take beating
Klarna delivered a record quarter at the end of 2025, with revenue rocketing, but the firm reported a major slump in shareholder returns after its stock price took a bruising following its public debut.
The Swedish fintech unicorn notched just north of $1bn (£743m) in revenue, marking a 38 per cent jump year-on-year as active customers swelled by a quarter to 118 million.
Gross merchandise volume (GMV), which measures the total sales value of everything sold on a platform before any fees or costs are taken out, climbed 32 per cent to $38.7bn, hitting the top end of guidance.
The titan of the buy now, pay later industry has set its sights on becoming a bank in the last year, with customers in the segment up over 100 per cent in the last 12 months to 15.8m.
But the firm’s ambitions have led to a hefty expenses bill and led to losses of $26m in the final quarter and $273m for the full-year.
Klarna blames delayed value creation for margin pressures
Klarna blamed the losses on its growing fair financing product, which saw GMV increase by 165 per cent, as it requires cash set aside for credit losses on day one of issuing a new banking loan. The interest revenue from those loans is also only earned over several months or years.
Elsewhere, costs of processing and servicing loans jumped 56 per cent to $250m in the fourth quarter, whilst the cost of capital rose 43 per cent to $210m, driven partly by seasonal volume and interest rate environments.
The full-year loss was also impacted by one-off hits associated with its 2025 public listing.
Klarna’s value has been slashed in half since its IPO in September, with the firm’s stock down by over 55 per cent.
For the full year ending December 31, 2025, Klarna reported a net loss per share of $0.79 – a sharp turn from inching into profitability at $0.01 last year and surpassing the previous loss of $0.69 in 2023.
In his letter to shareholders, co-founder and chief executive Sebastian Siemiatkowski doubled down on pressures from loan provisions.
He said: “When growth outpaces expectations, those day-one provisions temporarily weigh on margins, even when credit quality remains strong and lifetime economics are attractive.”
“This is value creation that is deferred,” Siemiatkowski added.
Klarna booked $250m in provisions for credit losses in the fourth quarter, whilst provisions as a percentage of GMV inched down to 0.65 per cent from 0.72 per cent. But this remained elevated from the $156m recorded at the end of 2024 at 0.53 per cent of GMV following growth in customers.