The news: Klarna completed its first billion-dollar revenue quarter, but still managed to run a $26 million net loss for the quarter, per the company’s earnings release.

• Revenues were up 38% YoY to $1.08 billion.
• Gross merchandise volume (GMV) rose 32% YoY to $38.7 billion.
• Active Klarna customers increased 28% YoY to 118 million.
• And participating merchants jumped 42% YoY to 966,000.

Despite the surge in revenues, Klarna’s shares fell 15% in premarket trading. Klarna’s share price has declined since its IPO and is still not profitable, leading to investor unhappiness. Additionally, the fintech’s revenue guidance for Q1 2026 undershot analysts’ expectations at $965.8 million; Klarna anticipates a range from $900 million to $980 million.

Diving into the results: The Klarna Card and Fair Financing, or interest-bearing loans, continued to drive Klarna’s growth:

• Active Klarna cardholders now total 4.2 million.
• Within the US, 25% of card spend happens in-store, signalling Klarna’s increasing capture of everyday spend.
• Klarna Card spend accounts for 15% of total transactions.
• And interest-bearing loans hit 193% YoY growth.

The combination of Klarna’s rising hold on in-store spending and interest-bearing loans suggests the fintech’s growth is maturing. As BNPL user growth slows, Klarna will have to lean on higher-value purchases and more engaged Klarna customers to keep its momentum strong. 

Banking has also emerged as a key product to fuel this shift: Klarna’s banking customers have are its most engaged segments, with these users producing three times the amount of revenues compared to non-banking users, per earnings documents. With its banking base having more than doubled to 15.8 million in just over one year, Klarna may be betting on the stickiness of its banking balances to keep driving more Klarna superusers to its digital wallet at ecommerce and in-store checkouts.

Consumer financial health: Like Affirm’s last earnings, Klarna’s metrics suggest increasing consumer stress.

• Provisions for credit losses hit 0.65%, up from 0.53% Q4 2024.
• 30- and 60-day delinquencies trend lines for 2025 outstripped the previous year’s.

This suggests that as Klarna grows and underwrites larger numbers of loans, more consumers are struggling to fulfill their installment obligations.

Implications for BNPL platforms: As the BNPL industry matures, installment providers will need to capture their most loyal customers’ everyday and nonessential spending to drive growth, as industry-wide BNPL user growth slows YoY, per our forecast. Incentivizing BNPL-enabled card enrollment, loan deposits, and other competitive programs like phone plans, can help create a stickier environment for these customers to keep coming back to the same platform for multiple essential needs.