Klarna Group NYSE: KLAR reported a stronger-than-expected first quarter of 2026, with management pointing to accelerating payment volumes, rapid growth in its financing product and continued expansion of its merchant network as key drivers of the results.
Co-founder and CEO Sebastian Siemiatkowski said the quarter came in “above the high end of every line,” citing revenue of $1.012 billion, up 44% from the prior-year period, transaction margin of $389 million, also up 44%, and adjusted operating profit of $68 million compared with $3 million a year earlier. Klarna also turned net income positive, reporting $1 million for the quarter.
Chief Financial Officer Niclas Neglén said the results showed “operating momentum” across the business. Gross merchandise volume rose 33% year over year to $33.7 billion, while transaction margin dollars, which Klarna describes as its “North Star metric,” increased to $389 million from $270 million a year earlier.
Merchant Network and Payment Strategy Drive Growth
Siemiatkowski said Klarna’s strategy is centered on becoming a default payment option through payment service providers across multiple markets and payment use cases. He said the company now covers 26 markets and offers three payment products: debit for everyday spending, Pay Later for mid-ticket purchases and point-of-sale installments, or Financing, for larger purchases.
“Geography plus product range,” Siemiatkowski said, describing the approach as borrowing from “Amex 2000s parity and ubiquity playbook.”
The company said payment transactions rose 27%, compared with 13% growth a year earlier, while payment volume increased 33%, compared with 6% growth a year ago. Transaction and service revenue grew 29%.
Klarna’s merchant count reached 1.07 million, up 49% year over year. Siemiatkowski said Stripe and Nexi are scaling, while JPMorgan Payments and Worldpay have been signed and are expected to launch later this year.
In response to an analyst question on merchant acceptance, Siemiatkowski said Klarna does not have an exact split between merchants new to buy now, pay later and those already offering competing providers. However, he said Klarna’s breadth of markets and products helps it become a default option through payment service providers. He also said that when Klarna appears side by side with other buy now, pay later providers, the company has “seen over and over again” that it receives a higher share of checkout.
Financing Growth Boosts Revenue, Credit Trends Remain in Focus
Management emphasized that Klarna remains “spend centric, not lend centric,” with Siemiatkowski noting that the company’s book turns more than 10 times per year. He said the company prioritized Pay Later from 2020 through 2024, especially in the U.S., and shifted more focus to Financing in 2025.
Financing volume reached $4.1 billion in the quarter, up 138% year over year, with 225,000 merchants now offering the product, compared with 103,000 a year earlier. Pay Later remained the largest product category, growing 29% and representing 77% of GMV. Pay in full contributed $3.5 billion of volume.
By geography, U.S. GMV rose 39% to $7.1 billion, representing 21% of total GMV. Global ex-U.S. GMV rose 31% to $26.6 billion. U.S. revenue grew 67% to $399 million, outpacing U.S. GMV growth, while global ex-U.S. revenue increased 33% to $630 million.
Neglén said interest income grew 56% to $284 million, driven by new originations and continued revenue recognition from loans originated in prior periods. Gain on sale of receivables totaled $57 million in the quarter.
On credit quality, management said delinquency trends remained healthy. Neglén said Pay Later 30-day-plus delinquency rates were stable, while Financing delinquencies were tracking favorably, with both 30-day-plus and 60-day-plus past-due rates declining quarter over quarter. Siemiatkowski said U.S. Financing 30-day-plus past due improved 36 basis points from the second-quarter 2025 peak.
Responding to questions about credit performance, Neglén said cumulative net charge-offs were in line with Klarna’s expectations. He said model adjustments were needed as the company ramped its card business and three-month loan tenors in the second half of 2025, but added that the third- and fourth-quarter cohorts were performing well as those models normalized.
Klarna Card Tops 5 Million Active Users
Klarna said its card product surpassed 5 million active users globally during the quarter. Siemiatkowski described the card as central to the customer relationship, combining daily app usage, debit transactions and credit options when users want them.
He said the debit side of the card has been stronger than expected, calling it evidence that the product is becoming part of users’ everyday spending behavior.
Neglén said membership fees were up more than 600% year over year in the first quarter. He also said a card user has about three times the frequency of a non-card user, and that average revenue per user is about four times higher after roughly six months of maturity into the card.
Operating Leverage and Funding Base
Klarna reported transaction costs of $623 million, up 45% year over year, while non-transaction operating expenses were $373 million, up 3%. Neglén said transaction margin dollars are growing more than 14 times faster than the company’s cost base, calling the operating leverage “structural.”
Operating income was positive $17 million, compared with a $90 million loss a year ago. Net income improved by $100 million year over year to $1 million. Earnings per share improved from a loss of $0.26 to a loss of $0.01, which Neglén described as effectively break even, noting that part of net income is attributable to capital bond interest payments.
Siemiatkowski also highlighted Klarna’s funding profile, saying consumer deposits represent 91% of deposits with an average duration of 270 days. He said deposits remain “at the core” of the company’s diversified funding base, while forward-flow capabilities are additive and help manage capital more efficiently.
Guidance Reiterated for 2026
Klarna reiterated its full-year 2026 outlook. The company continues to target:
- GMV of more than $155 billion;
- Revenue of more than 2.8% of GMV;
- Transaction margin dollars of more than 1.04% of GMV;
- Adjusted operating income of more than 6.9% of revenue.
For the second quarter, Klarna guided for GMV of $35.5 billion to $36.5 billion, revenue of $960 million to $1 billion, transaction margin dollars of $375 million to $395 million and adjusted operating income of $30 million to $50 million.
Neglén said the second-quarter outlook reflects normal seasonality for Klarna’s retail-driven business and foreign exchange normalization following a sharp U.S. dollar depreciation in the first quarter of the prior year. He said the company remains focused on meeting or beating its full-year guidance.
Asked about longer-term earnings potential, Neglén said it was “slightly early” to provide guidance beyond 2026, but said Klarna is thinking about transaction margin dollars of roughly 50% as the portfolio matures and adjusted operating income of roughly 25% in the medium to long term.
About Klarna Group NYSE: KLAR
Klarna Group is a global payments provider specializing in “buy now, pay later” (BNPL) solutions for online and in-store shoppers. The company partners with merchants to offer flexible payment options, including interest-free installments and deferred payments, aiming to enhance conversion rates and customer loyalty. Klarna’s platform integrates risk assessment, fraud prevention, and a one-click checkout experience to streamline transactions for both retailers and consumers.
Through its digital wallet and mobile app, Klarna enables users to manage purchases, track spending and access exclusive shopping offers from partner merchants.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
Before you consider Klarna Group, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Klarna Group wasn't on the list.
While Klarna Group currently has a Moderate Buy rating among analysts, top-rated analysts believe these five stocks are better buys.
View The Five Stocks Here
Enter your email address and we’ll send you MarketBeat’s list of ten stocks set to soar in Spring 2026, despite the threat of tariffs and what's happening in Iran. These ten stocks are incredibly resilient and are likely to thrive in any economic environment.
Get This Free Report
