Klarna Group plc Q4 FY2025 earnings call

Klarna is accelerating its growth of banking relationships and revenue per customer. Product adoption in Q4 2025 accelerated beyond expectations. Active consumers, merchants, GMV, and revenue all saw growth. Transaction margin had acceleration but didn't meet guidance due to lending growth. Partnership strategy continues with adding merchants and expanding payment options. Product ubiquity is being accelerated. Consumer engagement with banking products is increasing with higher transaction frequency and ARPU. Operating model is efficient with high revenue per employee.

Active consumers reached 118 million, up 28% year-over-year. Merchants grew to 966,000, up 42% year-over-year. GMV came in at $38.7 billion, revenue grew 38% to over $1 billion. Transaction margin dollars before provisions grew 31% to $622 million, after provisions was $372 million. Active card users grew to 4.2 million, up 288% year-over-year. Consumer deposits reached $13 billion, up 37%. Klarna banking customers reached 15.8 million, growing at 101% year-over-year.

2026 is expected to continue expanding revenues faster than operating costs, incorporating growth trajectory and timing effects. The underlying trajectory of revenue compounding, cohort maturing, and lean cost base gives confidence.

Faster lending growth leads to lower upfront transaction margins and operating profit. Credit loss provisions impact transaction margin in the short term. Uncertainties in market dynamics and competitive environment pose risks.

Q: When are you planning to become profitable?

A: Growth in loans has short-term impact on transaction margin but creates future profit streams.

Q: How will you prioritize capital allocation?

A: Focus on growth and revenue generation first, then consider debt reduction and shareholder returns.

Q: Latest delinquency trends?

A: Delinquency is stable, provision credit losses declined in Q4 '25 from Q3.