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After a Strong Wall Street Debut, Klarna's Real Work Begins
Written by Jeffrey Neal Johnson. Published 9/15/2025.
Key Points
- The company's rapid expansion in the crucial U.S. market is driven by major partnerships with the world's largest retailers.
- Klarna's consecutive quarters of adjusted operating profit demonstrate a sound business model and a clear focus on achieving sustainable earnings.
- Through its investments in artificial intelligence, Klarna is successfully growing revenue at a rate that exceeds the increase in its operational costs.
Klarna's (NYSE: KLAR) debut on the New York Stock Exchange ignited strong investor interest during one of the busiest years for initial public offerings. The fintech company priced its shares at $40—above its proposed range—and opened at $52, a 30% premium. This performance ranked among the largest and most successful market entries of the year, underscoring robust demand for established leaders in digital payments and the financial services sector.
While first-day trading captured headlines, a closer look reveals an even more compelling case for long-term investors. Fundamentals—such as accelerating growth in high-value markets and disciplined operational execution—support Klarna's valuation. In other words, this blockbuster IPO may be only the beginning of the company's journey as a public enterprise.
Klarna's Strategy for Market Dominance
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At the heart of Klarna's growth is its rapid U.S. expansion. The company reported a 38% year-over-year revenue increase in the region, reflecting effective execution in the world's largest consumer market. That performance bolstered Klarna's overall financial health, including a 19% rise in Gross Merchandise Volume (GMV) to $31.2 billion in the latest quarter.
This momentum is driven by high-impact partnerships that embed Klarna within major retail operations:
- Walmart (NYSE: WMT): Klarna powers the OnePay Later installment loan service, becoming Walmart's exclusive term-financing option.
- eBay (NASDAQ: EBAY): Expanding a successful European collaboration into the U.S. market.
- Gap Inc. (NYSE: GAP): Integrating Klarna's payment options across Old Navy, Gap, and Banana Republic.
These alliances create a powerful network effect. As more top-tier merchants adopt Klarna, the platform attracts new shoppers. In turn, Klarna's active consumer base—111 million users, up 31% year-over-year—makes it an indispensable partner. Meanwhile, its merchant network has expanded 34% to 790,000 partners, further strengthening a competitive moat that rivals will struggle to breach.
The Smart Path to Profit: How Klarna Drives Efficiency
For many high-growth tech firms, profitability often seems distant. Klarna, however, has charted a disciplined path to sustainable earnings, delivering five consecutive quarters of positive adjusted operating profit, including $29 million in Q2 2025. By excluding non-cash or one-time items, this metric offers a clear view of its core operational health.
While Klarna reported a $53 million net loss for the quarter, that figure reflects strategic investments. It includes a $24 million one-time lease-restructuring charge and $26 million in non-cash, share-based compensation. The rise in credit-loss provisions stems from expanding longer-term Fair Financing products, which require upfront loss recognition even as revenue is deferred over each loan's term.
Efficiency gains are also driven by Klarna's AI-first strategy. Technology investments are paying off: revenue grew 20% in Q2, while like-for-like adjusted operating expenses rose just 3%. This operating leverage—revenue growing faster than costs—underscores the company's path to profitability. Notably, Klarna now generates about $1 million in revenue per employee.
Critically, this growth has not compromised credit quality. The delinquency rate on its core "Pay in 4" product fell to 0.89%, indicating disciplined underwriting that balances expansion with financial stability.
The Path Forward: Why Klarna's Story Is Just Getting Started
Klarna's market debut validated its business model and competitive positioning. Investors should note the company's accelerating U.S. growth, powerful merchant-consumer network, and technology-driven approach to scaling profitably.
Since its IPO, Klarna has evolved from a simple buy-now, pay-later service into a comprehensive fintech ecosystem with multiple growth levers. As its post-IPO quiet period ends on October 20, 2025, underwriters are expected to commence research coverage—potentially providing new catalysts for the stock.
Far from an endpoint, Klarna's public offering marks the start of a new chapter. With strong growth, operational discipline, and expanding market share, the company is well-positioned to shape the future of global digital commerce—and to reward long-term investors along the way.
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