Klarna’s losses worsen as provisions jump ahead of IPO
Buy now, pay later giant Klarna reported a surge in losses for the second quarter as provisions for possible bad loans climbed higher.
The Swedish fintech unicorn posted a 64 per cent jump in provisions to $174m (£128m), up from $106m for the same period in 2024.
This helped offset revenue growth of 20 per cent to $824m taking losses for the three months ending June to $53m. This was up from an $18m post-tax loss for the second quarter of 2024 and follows net losses reaching $99m in the first quarter of the year.
But Klarna said credit losses for the period fell 0.56 per cent of gross merchandise volume (GMV) – which refers total sales value of everything sold on a platform before any fees or costs are taken out. GMV jumped 19 per cent to $31.2bn.
“It’s important to clarify that a rise in provision for credit losses in absolute terms does not mean more people are unable to pay us back.
“In fact, the opposite is true – Klarna’s delinquency rates continue to fall,” co-founder and chief executive Sebastian Siemiatkowski said.
The fintech chief pointed to loans in the ‘Fair Financing’ arm – which gives customers longer to pay off heftier priced items – for the surge in provisions.
Siemiatkowski said Klarna “immediately” sets aside a “small amount of money (so called provision for credit losses” once loans are issued “for the unlikely event that the consumer does not pay us back.
Volumes in the division jumped 108 per cent whilst late payments edged down to 2.23 per cent, from 2.34 per cent the year prior.
Klarna bulks up on banking
The firm is set to revive its IPO attempt in the second half of this year after President Donald Trump’s tariff onslaught derailed plans earlier in the year.
The fintech is eyeing a listing in New York as early as September, Sky News reported.
Klarna’s GMV in the US accelerated 37 per cent in the quarter thanks to landmark partnerships with Apple Pay, Google Pay and DoorDash.
It comes as the business makes big swings to move beyond its buy now, pay later legacy into becoming a digital bank.
The fintech received approval from the UK’s financial watchdog to be authorised as an Electronic Money Institution (EMI) last month.
The fresh licence allows the firm to offer its 11m UK customers savings accounts and also pave the way for a debit card launch.
Klarna begun piloting “Klarna Card” earlier this year, which uses tech from Visa to allow users to make immediate purchases or over time through interest-free instalments.
In the second quarter, the firm topped 111m active consumers globally and added over 200,000 retail partners.
Siemiatkowski said: “The Klarna Card is becoming a preferred payment method across our most mature European markets, and we’re now rolling out an enhanced version in the U.S. Strategic integrations with leading PSPs and our partnerships with some of the world’s largest merchants are expanding Klarna’s reach and accelerating our growth.
“At the same time, our growing consumer base remains healthy, with more customers paying on time than ever before.”