Understanding the implications of Klarna's IPO on the fintech sector
Klarna Announces US IPO Amid Improved Market Conditions
Swedish fintech Klarna, known for its popular "Buy Now, Pay Later" (BNPL) service, is set to go public on a US stock exchange as early as September 2025. This decision comes despite initial hesitation due to tariff and recession fears, as the US IPO market has recently improved, and fintech stocks have surged.
Klarna's revenue increased by a quarter year-over-year to $2.81 billion in 2024, and it reported a profit of $21 million for the first time. The company, which recently announced an exclusive deal with Walmart, making it the sole provider of BNPL for the world's largest retailer, is poised to debut under the ticker "KLAR" and bring in over $1 billion for the company, with a valuation of $15 billion.
BNPL has become increasingly important for Klarna, accounting for almost 80% of its revenue in 2024, up from 70% in 2022. The US market is becoming increasingly significant for Klarna, with fees charged to retailers for its services generally higher there, and the costs of regulation and bureaucracy lower.
Strong partnerships with US companies like DoorDash, Walmart, Stripe, Uber, Macy's, Disney, and JPMorgan Chase are expected to support Klarna’s growth post-IPO. The potential for BNPL services to be perceived as affordable financing amid tariff-driven price increases could further enhance Klarna’s market position.
CEO Sebastian Siemiatkowski had floated the idea of an IPO in 2021 when the company was valued at over $40 billion. To prepare for the IPO, Siemiatkowski cut costs by reducing the workforce from 5,000 in 2022 to 3,400 by the end of 2024, cutting the marketing budget by 30%, and gradually replacing customer service tasks with AI.
Maximilian Wienke, an analyst at online broker eToro, believes Klarna has a good chance of achieving its targeted valuation in the IPO. Klarna aims to become a data company, integrating into digital wallets like Apple and Google Pay, and expanding into new markets. The company sells insights from its customers' purchase data to retailers, enabling them to run personalized ads.
Lukas Homrich, a freelance journalist and member of the dreimaldrei journalists' bureau, writes about economic and financial topics. According to Homrich, Klarna remains profitable with a large customer base (close to 100 million active consumers) and a healthy delinquency rate on its BNPL loans, decreasing from 1.08% to 0.88% over a year, which may reassure investors of its credit risk management.
Despite the potential for profits, Klarna does not expect to pay dividends in the foreseeable future and plans to reinvest possible profits into its business. Klarna's decision to move forward with a US IPO despite earlier market reservations is driven by improved market conditions, its profitable growth model, and strategic positioning in the growing BNPL fintech space.
[1] The Verge
[2] Bloomberg
[3] CNBC
[4] Reuters
[5] TechCrunch
- Klarna's business strategy, centered around its profitable Buy Now, Pay Later service, has attracted interest from several financial sectors, as it prepares for its US IPO and aims to expand into Digital Wallets for earnings diversification.
- As Klarna debuts on a US stock exchange, investors will be keeping a close eye on the company's growth potential in the finance industry, particularly in the region with higher service fees and lower regulatory costs, such as the US market.
