Merchant participation also expanded. The number of active merchants using Klarna’s services climbed 38 percent year over year to 850,000, providing the company with a broader distribution network. In the United States, Klarna remains the sole buy-now-pay-later (BNPL) provider for Walmart, bolstering transaction volume at one of the world’s largest retailers.
Diversifying payment options
Klarna built its brand on the Pay in 4 installment product, which splits a purchase into four interest-free payments. Over time, the company added extended financing plans that carry interest, targeting higher-ticket transactions. The strategy aims to serve a range of spending categories while responding to consumer demand for flexible payment choices.
Among Klarna’s newer offerings, Fair Financing—its interest-based installment product—generated a 244 percent year-over-year increase in U.S. GMV during the third quarter. The company has indicated plans to branch into additional financial services, though it has not provided a detailed timeline. As regulators heighten scrutiny of BNPL products, publicly available data from the Consumer Financial Protection Bureau illustrates the broader policy environment confronting the sector.
Profitability remains elusive
Growth has not yet translated into positive net income. Klarna’s third-quarter net loss widened to $94 million from $4 million in the comparable period a year earlier. Management attributed a significant portion of that increase to costs associated with the September IPO. Executives said revenue is expanding faster than operating expenses and reiterated a path toward profitability, although no precise timetable was provided.
With earnings still negative, traditional valuation ratios based on profit offer limited insight. Analysts instead focus on Klarna’s price-to-sales ratio, currently about 2 times trailing-12-month revenue. That multiple is lower than many technology-driven financial services peers, suggesting the market is discounting ongoing losses and macroeconomic uncertainty.
Market considerations before the update
The Feb. 19 release will cover Klarna’s fourth-quarter performance, including holiday-season spending trends, loan-loss experience and progress on expense containment. If the company shows narrower losses or faster revenue growth, sentiment could improve; weaker-than-expected figures may reinforce concerns about sustained cash burn.
Imagem: Internet
Investors evaluating Klarna ahead of the report face several variables: a rapidly expanding user base, accelerating U.S. traction and a merchant network that now approaches one million global partners, against the backdrop of regulatory attention and macroeconomic headwinds. The stock’s sharp decline since the IPO reflects these mixed signals.
Whether February’s update reverses the downward trend remains uncertain. The company’s strategic position as a major BNPL provider with exclusive relationships—such as the Walmart arrangement—underscores potential scale advantages. Conversely, industry competition from banks, card networks and emerging fintech platforms adds pressure to execute efficiently and reach profitability.
Key data points to watch
- Revenue growth: Sustainment of the 20-plus-percent pace may indicate resilience despite a softer consumer-spending environment.
- Net loss trajectory: Any material narrowing could validate management’s cost-control assertions.
- U.S. expansion: Further GMV gains in the United States would highlight the payoff from high-profile partnerships.
- Credit performance: Delinquency and charge-off metrics will shed light on credit-risk management under rising interest rates.
- Merchant growth: An acceleration beyond the current 38 percent pace would signal continued adoption among retailers.
Valuation sits at historic lows
Klarna’s price-to-sales ratio near 2 is well below levels observed among certain publicly traded payments firms at comparable stages of development. The discount reflects investor caution toward unprofitable companies amid higher financing costs. A decisive improvement on Feb. 19 could prompt a rerating, but absent clear evidence of an earnings inflection, the market may remain skeptical.
Near-term risk balanced by long-term potential
In the short term, Klarna’s share price is likely to react sharply to the upcoming earnings release. Positive surprises could narrow losses in recent trading sessions, while disappointing figures might extend the post-IPO slide. Longer term, the company’s large user base, increasing merchant count and diversified payment products outline a framework for eventual earnings leverage, provided operational discipline is maintained.
Market observers continue to monitor Klarna’s progress on technology development, regulatory compliance and international expansion as indicators of future performance. For now, investors considering an entry ahead of Feb. 19 must balance the appeal of a historically low valuation against the uncertainty surrounding the company’s timeline to profitability.
Crédito da imagem: Getty Images
