Takeaways by Saasverse AI
- $903M Revenue (+26%) | $95M Net Loss | $32.7B GMV (+23%)
- AI and U.S. Growth: U.S. revenue surged 51%, with Fair Financing GMV in the region skyrocketing 244%. Klarna’s AI-driven model continues to scale effectively.
- Strategic Moves: Announced $6.5B fixed-term loan portfolio sale with Elliott Investment to fuel BNPL expansion in the U.S.
Klarna, the fintech giant specializing in "Buy Now, Pay Later" (BNPL) services, delivered a record-breaking Q3 earnings report, marking its first quarterly statement since going public. Revenue for the quarter reached $903 million, reflecting a 26% year-over-year increase and surpassing analysts' consensus estimate of $885 million. The company also set ambitious expectations for Q4, projecting revenue to exceed $1 billion—a milestone largely attributed to Klarna's rapid growth in the U.S. market.
Sebastian Siemiatkowski, Klarna’s CEO, framed the results as a validation of the company’s AI-driven operational model. "This quarter’s record-breaking performance underscores the scalability of our AI-enabled approach. U.S. revenue grew by 51%, while GMV rose by 43%. Klarna's payment card alone has attracted 4 million registered users in just four months, and our Fair Financing initiative is rapidly gaining market share," he stated. Klarna now boasts 114 million active users globally and partners with over 850,000 merchants, including major brands like Uber, H&M, Sephora, and Macy’s.
The company reported a total Gross Merchandise Volume (GMV) of $32.7 billion for Q3, a 23% year-over-year rise driven by a 43% GMV surge in the U.S. market. Klarna Payment Card, launched in July, already accounts for 15% of the company’s global transaction volume, with 4 million sign-ups to date. The Fair Financing long-term loan program has been a standout, especially in the U.S., where its GMV has grown a staggering 244%. Klarna also expanded its reach by adding 27 million new users and 235,000 new merchant partnerships during the quarter.
Despite its stellar revenue growth, Klarna recorded a net loss of $95 million for Q3. The loss was attributed to increased provisioning for potential loan defaults, with the loan loss reserve ratio rising to 0.72% of GMV compared to 0.44% a year ago. This reflects Klarna’s cautious approach to managing credit risk amid its rapid expansion.
In a strategic move to bolster its U.S. BNPL operations, Klarna announced a $6.5 billion fixed-term loan portfolio sale agreement with Elliott Investment Management. Under this agreement, Klarna will offload a portion of its Fair Financing loan portfolio over the next two years while maintaining full ownership of consumer-facing operations, including credit assessment and servicing. The deal also includes $1 billion in financing, ensuring a continuous pipeline of new loans as the underlying assets amortize. This partnership is expected to provide Klarna with the liquidity needed to scale its BNPL business further in the competitive U.S. market.
Saasverse Insights
The market has responded positively to Klarna’s aggressive expansion and record-setting revenue, despite the ongoing net losses. By leveraging AI to optimize its operations and forming strategic partnerships like the one with Elliott Investment Management, Klarna is positioning itself as a dominant force in both the fintech and BNPL sectors. Saasverse anticipates that Klarna’s focus on AI-driven scalability, coupled with its expanding footprint in the U.S., will continue to fuel its growth trajectory while presenting challenges in balancing profitability with rapid market expansion.