Five Things to Know about BNPL Provider Klarna Ahead of Its IPO

Klarna, which helped popularize buy now, pay later plans, filed a prospectus to hold an initial public offering earlier this month, offering details about its growth over the past two decades.

The company’s buy now, pay later plans caught on with Swedish consumers, who could take home their purchases, while paying a portion of their bill and agreeing to have further installments deducted from their account in the coming weeks.

Klarna has since expanded to 25 other countries, partnered with 675,000 merchants and taken payments from 93 million consumers. The company said it handled an average of 2.9 million transactions daily in 2024, with underwriting decisions on short-term loans made in seconds using a “fully automated process.”

The filing didn’t include details about how many shares Klarna intends to sell, or at what price. Here’s a look at what the company did have to say.

US Growth Has Squeezed Profits Lately

Klarna made money for its first 14 years, but said its profits came under pressure when it launched in the US in 2019.

It calls 2023 an inflection point because that’s when it achieved the scale needed in America to generate positive margins. Klarna reported a $21 million profit in 2024 after two years of losses. Klarna’s revenue has grown nearly 48% over the past three years, from $1.9 billion in 2022 to $2.8 billion in 2024.

Klarna Has Several Revenue Streams

Nearly 64% of revenue last year came from merchants. Klarna charges retailers transaction fees when their consumers pay using the service, and several big names offer Klarna at checkout, including Uber (UBER), Apple (AAPL), Macy’s (M) and Wayfair (W). (Klarna recently signed on Walmart (WMT) and DoorDash (DASH) the company said.)

Merchants also pay to advertise on Klarna’s website and app, and to have their products prominently displayed in users’ search results.

Another 12% of revenue last year involved consumer payments, such as “reminder” fees for late payments, the company said. Consumer payments also includes money from Klarna Plus, a roughly $8-a-month subscription plan that comes with deals and waived service fees, the company said.

The remaining 24% related to interest—both interest paid by borrowers and interest Klarna earned on investments.

Basic Payment Processing Is Playing a Smaller Role at Klarna

Klarna handles three types of transactions, including basic payment processing, where funds are immediately transferred.

About 26% of gross merchandise value—or the total cost of items sold via Klarna—in 2022 were paid for outright, but that fell to 16% in 2024, the company said. During that period, Klarna’s “Pay Later” product, where consumers delay or divide a payment into installments, went from 70% of GMV in 2022 to 79% in 2024, Klarna said.

The share of GMV paid for with short-term loans, which can carry interest, ticked up slightly during these three years.

Swedes Use Klarna for a Range of Purchases

In its filing, the company compared the scope of its operations in Sweden and the U.S., showing the role it can play in a mature market.

About 82% of adults in Sweden used Klarna last year, and they had an average of 32 transactions each, the company said. Their spending was fairly evenly distributed across categories including apparel and accessories, health and beauty, home and electronics, food and beverage and leisure.

In the US, nearly 10% of adults paid with Klarna in 2024—about five years after the company launched in the States. Americans had an average of more than five purchases that year, and 69% of their spending was concentrated in apparel and accessories, the company said.

Klarna Says it Has Room to Grow

Klarna envisions growing by working with more merchants, operating in new regions and drawing in additional consumers.

The company wants to build up two revenue streams. Klarna, which has a banking license from Sweden, wants to boost its retail banking business, which held $9.5 billion in deposits for consumers at the end of 2024.

Klarna also wants to scale its advertising business, which brought in $180 million, or more than 6% of all revenue last year.