KLAR

PayPal lost 15% as Stripe and Advent abandoned their $50B bid, while Affirm surged 13% on record profits and a new Shopify Australia deal. Klarna jumped 5% on consolidation relief, but XLF's flat close signals these are name-specific moves, not a financials sector rotation. Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and PayPal didn't make the cut. Grab the names FREE today. Two of the biggest names in digital payments are ripping in opposite directions Friday morning, with the buy-now-pay-later cluster trading on unrelated single-name catalysts rather than a common thread. The broader financials sector is barely moving, which reinforces that this is a name-specific event and not a sector rotation. PayPal Holdings (NASDAQ:PYPL) stock is down 15% to $52.45 in early Friday trading after Bloomberg reported that Stripe and Advent International walked away from an acquisition of PayPal that had been valued at more than $50 billion. Meanwhile, Affirm Holdings (NASDAQ:AFRM) stock is up 13% to $87.56, a mirror-image move as investors reassess a competitive landscape that briefly looked like it might feature a Stripe-owned PayPal. Across the rest of the cluster, Klarna (NYSE:KLAR) stock is up 5% to $14.65 and Sezzle (NASDAQ:SEZL) stock is up 2% to $128.70, while the Financial Select Sector SPDR ETF (NYSEARCA:XLF) sits at $57.90 and is practically unchanged. The dispersion inside the buy-now-pay-later group tells you the cluster isn't trading as a bloc. Bloomberg first reported Stripe's interest in PayPal in February, and The Wall Street Journal reported in August that PayPal had found the initial bid insufficient and that the two sides were negotiating a higher price. Stripe and Advent are both privately held, so the withdrawal removes an obvious buyer without introducing any new public competitor. The takeover overhang that had lifted PayPal stock for months is gone. Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and PayPal didn't make the cut. Grab the names FREE today. PayPal stock had risen more than 40% this quarter on a combination of a second-quarter earnings beat and takeover speculation, and one of those two supports has now disappeared. PayPal stock carries a market cap of roughly $52.59 billion, close to the offer that was just withdrawn, which is what makes today's air pocket feel especially sharp. The underlying business hasn't changed: PayPal's Q2 2026 report showed non-GAAP EPS of $1.38 versus $1.2776 expected, revenue of $8.68 billion, and total payment volume of $486.45 billion, up 10%. Affirm reported fiscal fourth quarter 2026 results after Thursday's close, covering the quarter ended June 30, 2026. CEO Max Levchin described the period as "our most profitable quarter ever, even without the tax allowance release" and stated that "the company is thriving and the core business is firing on all business." Affirm also promoted Michael Linford to president, a signal that management sees the growth runway extending well beyond the current quarter. Additionally, Affirm and Shopify (NASDAQ:SHOP) announced Thursday afternoon the launch of Shop Pay Installments in Australia, powered exclusively by Affirm, marking Affirm's return to the Australian market. Shopify is a payments and commerce heavyweight, and exclusive distribution through Shop Pay is the kind of channel that peer BNPL names would struggle to replicate. The vanishing threat of a Stripe-controlled PayPal only sharpens Affirm's competitive setup heading into the holiday season. Klarna stock and Sezzle stock are both green, but neither is riding the Affirm move dollar-for-dollar. Klarna is drifting higher on relief that the biggest checkout-brand consolidation scenario is off the table for now, while Sezzle is barely participating despite operating in the same lane. Same category, different price action. The Financial Select Sector SPDR ETF sitting essentially unmoved is the tell that this isn't a sector event. Payment fintechs live inside financials for index purposes, but XLF's flat move confirms banks, insurers, and diversified financials aren't reacting. Investors sizing their exposure around today's headlines can treat these moves as idiosyncratic rather than thematic. Traders can watch for whether PayPal stock finds a floor near its pre-speculation level from earlier in the quarter, since that reference frames how much of the recent rally was fundamentals versus takeover premium. Shareholders may want to keep an eye on whether Affirm's Shopify Australia rollout produces early volume disclosures over the next few quarters. Position sizing matters more than usual on days like this. Investors chasing Affirm stock at a 13% higher price should size their exposure to survive a mean-revert session, and anyone bottom-fishing PayPal stock should scale in rather than commit full size into a name that just lost its most obvious near-term catalyst. Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and PayPal didn't make the cut. Grab the names FREE today. Contact [email protected] for any questions or corrections.

Swedish digital payments company Klarna (NYSE: KLAR) published its second-quarter results on Aug. 18, and the report arrived with mixed signals for investors. Revenue rose 27% year over year to reach $1.04 billion and beat the average analyst forecast by roughly $43 million, and the company's net income swung to $9 million following a $53 million loss in last year's quarter -- delivering per-share earnings that beat the average Wall Street forecast for a loss of $0.05 per share. On the other hand, the buy now, pay later company cut its full-year guidance for a key metric and issued an underwhelming sales forecast. Klarna now expects gross merchandise volume (GMV) between $149 billion and $151 billion, down from its previous guidance of $155 billion. Meanwhile, revenue for the year is now projected to be between $4.08 billion and $4.16 billion -- significantly below the average analyst estimate of $4.42 billion. Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » Klarna's stock saw a significant pullback following its Q2 report and is now priced at about $14.30 per share, down 51% year-to-date. Should investors focus more on the significant Q2 beats or the disappointing guidance when evaluating the shares? While Klarna's Q2 beats were impressive, the company's downward revision for full-year GMV and disappointing full-year revenue guidance have greater significance for the stock. Profitability came in significantly stronger than expected in the second quarter, suggesting that the company still has avenues to outperform even with a softer sales outlook, but it's unclear whether the margin drivers that helped power the earnings beat last quarter will carry through to the second half of the year. While Klarna expects its transaction margin to be highest in the year's fourth quarter, the company's take rate declined to 2.84% in the second quarter from 3% in Q1. With GMV now looking significantly weaker for the year, there could be meaningful implications for the company's longer-term growth trajectory. Klarna is seeing a weaker expansion outlook in Germany and across Europe, and consumer hesitancy is translating into significantly softer GMV growth. Adding another complicating factor, the company announced in conjunction with its Q2 report that it was shifting to fair value accounting from the Current Expected Credit Losses (CECL) method it had previously used. While fair value accounting assesses credit assets based on market prices, CECL estimates losses on credit that won't be serviced, and the new system also shifts interest revenue to an up-front event rather than being recognized over the loan's term. The combination of Klarna's weaker GMV outlook and the shift to fair value accounting creates some significant uncertainty for investors. In addition to signs that growth momentum in transaction volumes conducted through its platform is facing meaningful headwinds, the shift in accounting methods means the company's past and future results are no longer neatly comparable -- and Klarna's overall performance trajectory is more difficult to get a read on. So while the company's Q2 report looked strong, the company's guidance and accounting pivot have made the picture significantly more complicated. Before you buy stock in Klarna Group, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Klarna Group wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $439,308!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,286,826!* Now, it’s worth noting Stock Advisor’s total average return is 964% — a market-crushing outperformance compared to 212% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 27, 2026. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Klarna Group. The Motley Fool has a disclosure policy. Klarna Beat on Earnings and Guided Lower at Once. Which Number Should Decide the Stock? was originally published by The Motley Fool

Image source: The Motley Fool. Tuesday, Aug. 18, 2026 at 8:30 a.m. ET Chief Executive Officer and Co-Founder - Sebastian Siemiatkowski Chief Financial Officer - Niclas Neglen Operator: Hello, everyone, and welcome to Klarna's Second Quarter 2026 Earnings Call. During this call, we will discuss our business outlook and make forward-looking statements. These statements are based on our current expectations and assumptions as of today. Actual results may differ materially due to various risks and uncertainties, including those described in our most recent filings with the SEC. During this call, we will present both IFRS and non-IFRS financial measures. A reconciliation of non-IFRS to IFRS measures is included in today's earnings press release, which is distributed and available to the public through our Investor Relations website as well as filed with the SEC. Please note, unless otherwise stated, all comparisons in this call will be against our results for the comparable period in 2025. [Operator Instructions] Before we move to Q&A, we will begin with a brief presentation. Sebastian, please go ahead. Sebastian Siemiatkowski: Good morning, everyone, and thank you for joining. This was a good quarter. We delivered above the high end of our guidance on every line for the second consecutive quarter. Revenue grew faster than volume and transaction margin dollars, which is our most important metric, grew faster than both. Volume was up 18%, revenue up 27%, transaction margin dollars up 42%. Adjusted operating income reached $91 million, up $62 million year-on-year, and net income was positive at $9 million. Our operating costs grew just 16%. We are investing in our business whilst delivering strong operating leverage, which is what we have been building toward. As I said, we measure our progress in transaction margin dollars. That number shapes how we build products, how we price and how we underwrite. And because operating costs grew far slower, growth in transaction margin dollars is what over time turns into earnings per share. On our last call, we told you what to expect for the year, transaction margin dollars compounding at roughly 30% ahead of revenue. That is the shape we described in May and is the shape the year is taking. I'd like to review our three business areas, which cover the entire consumer wallet. Everyday spend with the payment option of Pay in Full for purchases under $75 with high frequency. In this business area, we monetize through payment fees, subscriptions and deposit interest. Transactions here are no balance sheet risk. Pay in full contributed $3.6 billion of volume this quarter and subscriptions reached 2 million subscribers. Lifestyle spend or Pay Later is the payment option for purchases between $75 and $500 a purchase. This is our marquee 0 interest short-term fixed installments product. It is the equivalent of and has the economics of charge cards over 30 to 90 days. Spend-centric rather than lend-centric, and the reason why our book turn is 10x a year. Pay Later grew 13% this quarter. And big-ticket spend or Fair Financing, which is designed for purchases between $500 to $10,000. These are fixed term installments, and it's our fastest-growing product, up 82% year-over-year to $4.7 billion, offered by 256,000 merchants now, up from 151,000 when we first spoke to you in November. In the U.S., it more than doubled. We're happy with the balance between these three, making sure we have an attractive offer for every purchase our customers make and with the effect it has on transaction margin dollars. Worth highlighting, Fair Financing is now 13% of our total volume. In the early 2010s, it was roughly 1/5 of Klarna's volume. And in Sweden, our most mature market, it held 16% to 20% for a decade. So Fair Financing today share of volume is still lower than historical averages. And the average Fair Financing balance is $400 on a fixed term with a known payoff date against a $6,700 average American credit card balance, which again reflects the fact that our customers borrow responsibly. We believe every market we operate in follows the same path and has the potential for strong transaction margins. Volume first, then scale, then the margin follows. We have run that sequence enough time to know what it looks like. In total, transaction margin reached 43% of revenue, up 4.5 points in 12 months. The U.S., our fastest-growing large region this quarter, went from 14% to 23% in the year. Global ex-U.S. sits at 54%, up 4 points. And the markets where we have operated longest run at roughly 60%. This quarter, the margin expanded while volume kept growing in the U.S. and everywhere else, both at once. We measure our progress in transaction margin dollars, and we continue to convert more of our volumes into them. Five business updates to highlight this quarter: Klarna membership reached 2 million paying subscribers, 8x a year ago, and subscription revenue grew over 600%. Recurring revenue like this is high margin and worth noting, almost no GMV with it. This decouples our growth over time from GMV. It grows transaction margin dollars directly, part of how transaction margin dollars grow faster than volume. The Klarna Card reached 6.5 million active users across 16 countries, up from 1.3 million a year ago. On our first earnings call in November, that number was 3.2 million. It has more than doubled in 9 months. Last week, we launched new membership plans built on what consumers actually want: cashback and benefits. In May, we told you JPMorgan Payments would launch later this year. It went live on August 6, ahead of peak season. JPMorgan Payments is the largest merchant acquirer in the United States, processing $2.6 trillion of payments a year and every merchant on their platform from boutiques to big box can now offer the full Klarna suite, Pay in Full, Pay Later and fixed-term installments through their existing setup with no new integration. We recently announced that Klarna is the partner for Apple Upgrade, a new device leasing program available from Apple. This is a natural extension of our big ticket strategy. Consumers apply at Apple and then pay and manage with the Klarna app, creating a direct relationship with new U.S. consumers that supports Klarna's ability to grow engagement, ARPAC and profitability. And consumer credit keeps performing better. Delinquencies improved again this quarter and provisions have declined the share of volume every quarter since our first report as a public company. Before I hand over, I'd like to mention two things. First, we have adjusted our annual volume outlook to reflect a softer-than-expected German consumer and changes in FX. Niclas will explain both. Second, in early '27, we will make two leadership transitions. Niclas Neglen, our CFO, after 6 years at Klarna and an extraordinary period of growth and transformation, he told me with plenty of runway, and I respect that. This is an early heads up, not a goodbye. Nothing changes tomorrow. Niclas remains CFO and will continue to lead the finance organization and investor engagement, supporting a transition into next year, including in his capacity as Board member. The search for a New York-based CFO is underway. And David Sandstrom, our CMO for 9 years, will also hand over during next year in the same planned way. In those 9 years, David built one of the most recognized brands in global finance, and he hands it over the same way Niclas hands over the numbers, deliberately and from strength. Both Niclas and David have been great contributors, and we are grateful for all the work. Nothing about them changes what we're building or how we run the company. The best evidence is the quarter we just delivered and the transaction margin dollar outlook we are raising today. Niclas will take you through it. Niclas Neglen: Thanks, Sebastian. It's been an extraordinary 6 years, and I'm deeply proud of what we built together. I'm very pleased we've been able to plan the transition in a way that gives Klarna plenty of continuity. Now to the numbers. Let me take you through the financial highlights of the quarter and then spend some time on our outlook. Starting with the P&L summary for the second quarter. The business executed strongly, and we delivered above our guidance. Total revenue was $1.042 billion, up 27% and ahead of volume growth of 18% as our mix continued to shift towards higher-yielding products. Transaction costs were $596 million, up 17%, well below revenue growth, reflecting improved underwriting and scaling of our offloading programs. Transaction margin dollars were $446 million, up 42%, well above the $375 million to $395 million we guided in May. Our transaction margin dollars was 42.8% of revenue, up approximately 450 basis points from a year ago, with both the U.S. and our global ex business expanding. Non-transaction-related operating expenses were $419 million, up 16% as we invested ahead of peak season and ramped marketing around the World Cup in the U.S. Our operating expenses growth is well below our revenue and TMD growth, and we expect to continue that. So TMD conversion is high. That gap of 42% TMD growth against 16% operating expense growth is operating leverage Sebastian described. Three years ago, our transaction margin did not cover our adjusted operating cost. Today, roughly $0.56 of every additional transaction margin dollar reaches the operating line. That takes us to operating income of $27 million, an improvement of $73 million and an adjusted operating income of $91 million, up $62 million. Net income was $9 million with the basic diluted EPS of $0.01 against a negative $0.14 a year ago. We are delivering real operating leverage with volume, revenue transaction margin and profit each growing faster than the last. Total GMV in the second quarter was $36.6 billion, up 18% year-over-year. This was 15% on a like-for-like basis, reflecting the lapping of the Q2 '25 Fair Financing launch and less of an FX tailwind than the first quarter. GMV growth was broad, and we delivered growth in every geography. The U.S. delivered GMV of $7.9 billion, up 27% year-on-year and was our fastest-growing large region. Global ex-U.S. GMV was $28.8 billion, up 15% or 12% on a like-for-like basis. During the quarter, some markets, most notably Germany, grew at a more measured pace, whilst our performance across our more mature Nordic markets accelerated. I will speak in more detail to the volume outlook in a few pages. U.S. share of GMV rose 2 percentage points year-over-year to 22%, while U.S. transaction margin grew 9 percent points to 23% of revenue, exactly the trajectory we want and a structural reason why TMD growth outpaces revenue growth. By product, our Fair Financing, our point-of-sale installment product, grew 82% year-over-year to $4.7 billion in GMV with continued merchant and market rollout and is now offered by 256,000 merchants. Higher engagement products like Fair Finance and the card generate stronger transaction margin per dollar of GMV as they mature. And as you have seen, are a key reason for our strong profit growth in the quarter. Pay Later, our charge-card equivalent, grew 13% and Pay in Full, our everyday spending product contributed $3.6 billion. Now to revenue in more detail. Transaction and service revenue was $707 million, up 17%, broadly tracking volume with continued strong growth in membership fees with subscription revenue up over 600%. Interest income was $266 million, up 21%, driven by new originations and continued recognition from loans originated in prior periods and the lapping of the launch of Fair Finance in the second quarter of last year. Gain on sale was $69 million, driven by both the U.S. forward flows and the German back-book sales. U.S. revenue grew 37% to $376 million, ahead of U.S. volume growth of 27%. The higher take rate in the U.S. reflects the contribution of interest income and gain on sale of originations from previous quarters, where Fair Financing is most established. Global ex-U.S. revenue grew 22% to $666 million or 18% on a like-for-like basis, ahead of volume growth of 15%, with Fair Financing, the card and membership fees driving this faster growth. Transaction costs were $596 million in the second quarter, up 17%. Within that, processing and servicing was $233 million or 0.64% of GMV, down from 0.79% in the first quarter, which carried the servicing of a higher fourth quarter originations. Provisions for credit losses were $192 million, growing slower than volume. So provisions declined as a share of GMV to 0.52%. That rate reflects continued underwriting improvements, growing forward flow arrangements and the natural maturation of our Fair Financing book. The dollar growth follows the size of the book. Funding cost was $171 million, broadly flat sequentially at 0.47% of GMV. We delivered a strong transaction margin dollar result of $446 million, up 42% or 39% on a like-for-like basis. As a percentage of GMV, that is 1.22% or 1.14% adjusted for the one-off sale. In the U.S., transaction margin dollars was $88 million, up 126% year-over-year, more than 3x the pace of revenue growth, which was 37%. That takes the U.S. margin from 14% of revenue a year ago to 23% in the second quarter. Sequentially, it was modestly below the first quarter as we completed a back book receivable sale in Q1 that we did not repeat. Global ex-U.S. transaction margin dollars was $358 million, up 30% at a 54% margin, up 4 percentage points year-on-year and sequentially higher than the first quarter as we executed a back book sale alongside the launch of our German forward flow during the quarter. Ex-U.S. volume grew 15%, revenue 22% and transaction margin 30%. Our most established markets run at approximately 60% transaction margin. The 450 basis point uplift we delivered this quarter closes more of that gap. Consumer delinquency rates remain healthy across both product lines. Here are the U.S. delinquencies. The green dots represents our newest cohorts of origination from 1Q '26. As you can see, they are lower than our 4Q cohorts, representing a sequential improvement. Comparing each vintage at the same point in life, Fair Financing delinquencies 30-plus days past due fell approximately 20 basis points quarter-over-quarter. Pay Later improved approximately 30 basis points on the same measure, in line with the same period last year. Our global ex-U.S. book improved on the same basis with recent cohorts down both quarter-over-quarter and year-over-year, and you can find those metrics in our supplementary data pack. This is a short duration, high-frequency credit with the portfolio turning over 10x a year with an average consumer balance of just $124. We underwrite every transaction individually, starting customers with small balances and scaling exposure only as we build confidence. Where we have taken a more measured view of volume, that is a conscious choice to hold our underwriting standards and stay within our credit box. We would rather protect our risk-adjusted returns than chase margin or volume. Before the outlook, the scoreboard on what we told you in May. We said provisions would keep declining as a share of GMV. They did from 55 basis points to 52, the third consecutive quarterly decline. We said transaction margin dollars will continue to compound faster than revenue, and they are. Now let me take you through our outlook. We are guiding to GMV of $149 billion to $151 billion adjusted from above the $155 billion previously. That is a growth of approximately 17% year-over-year. Of that revision, approximately $600 million is currency movement since our previous guidance. The remainder is a more measured view of European volumes concentrated in Germany, our largest market by volume, where retail sales grew less than 1% in real terms in the first half. This is consistent with what you have heard across German retail this season. Our guidance simply assumes Germany stays softer rather than recovering. We expect GMV growth in the U.S. to be strong in the second half as we scale five significant integrations, JPMorgan; Adyen; Worldline; Worldpay, now part of Global Payments and Fiserv's Clover. And we are excited about the launch of the Apple Upgrade program. U.S. volume assumptions are unchanged, and the U.S. remains our fastest-growing large region. On revenue, we expect $4.08 billion to $4.16 billion against above $4.34 billion previously guided. From the second half of 2026, we expect to manage a larger share of our U.S. and German Fair Financing books with intent to sell. That shifts substantially all new originations for these products and regions from booking provisions upfront to fair value through P&L with fair value recognized in the gain on sale line at origination as required under IFRS 9. The effect is presentational. Reported revenue and transaction costs each reduced by approximately 10 basis points of GMV, which is why the reported take rate is down to 2.74% to 2.75%, while the comparable take rate rises to 2.84% to 2.85%, and because prior periods are not restated, reported revenue in the third and fourth quarters will understate the underlying business. The revenue lines move, the margin line does not. Turning to transaction margin. We are raising our full year outlook $1.62 billion to $1.65 billion or 1.09% of GMV, up from the 1.04% we guided in May. Given the fair value presentation change, more of the economics are recognized earlier. There is a small timing benefit equivalent to expected approximately 2 basis points positive impact to full year 2026 transaction margin as a share of GMV. The rest comes from our better economics. Excluding the presentation change, stronger unit economics are expected to contribute between $40 million and $50 million of TMD for the year on lower volume. This change applies prospectively to new originations from the second half of '26. Prior periods are not restated and loans already on our balance sheet continue to recognize interest income and provisions as previously. A video explaining this concept is available on our Investor Relations website. We are earning more on every dollar we process, driven by Fair Financing volumes, our offloading programs, the card and the growing membership fees. We expect adjusted operating income of $280 million to $300 million at 6.9% to 7.2% of revenue. For context, we delivered $65 million of adjusted operating income in the whole of 2025. We have delivered $159 million in the first half of this year alone, and this guide is more than 4x the 2025 full year. On costs, individual quarters move with the timing of our investments. For the full year, we're guiding to roughly 15% growth in our adjusted operating expenses versus a transaction margin dollar growth of over 30%. We're investing to compound growth over the long term through the second half launches. In dollar terms, adjusted operating income moves with the revenue base. On margin, we are guiding in line to modestly above May. The third quarter is deliberately our investment quarter. It funds the largest set of launches in our history. We're guiding to volume of $35 billion to $36 billion, revenue of $940 million to $980 million, transaction margin dollars of $340 million to $360 million and an adjusted operating income of $5 million to $15 million. The third quarter will be the highest level on the share-based payments in 2026, reflecting our vesting and our grant of our annual compensation review. Fourth quarter is where we expect that investment to show with PSP and marquee merchants live ahead of peak season. We expect it to be a strong transaction margin quarter with strong drop-through to adjusted operating income. We exit this year with a wider network, five PSPs enabling Klarna as a default-on payment option, our leasing program and a structurally higher margin mix. We measure our progress in transaction margin dollars. Every dollar of volume we process is worth more to us today than it was a year ago. With that, Sebastian and I are happy to take your questions. Operator: [Operator Instructions] Your first question comes from Will Nance from Goldman Sachs. William Nance: I wanted to touch on some of the moving pieces in the transaction margin in the back half of the year guidance. Obviously, very strong margin result this quarter and nice to see continued improvements in most of the credit metrics across the board. Can you talk about the expectations for transaction margin in the back half of the year? It seems like that's been quite strong for the first half of the year and then the guidance implies an exit rate kind of considerably lower than the first half of the year. I might have thought with the fair value changes, you might have seen some incremental lift there. So just maybe talk through, help us understand what seasonality? Is there some element of prudence in the guide? And how are you thinking about kind of continued ramp in Fair Financing driving the overall transaction margin over time? Niclas Neglen: Great. Thanks. Will, it's Niclas here. Good question. So if you look at it, we're looking at around about 23% year-over-year growth on TMD in the second half, if you take the midpoint of our guide, that is compared to 42% in the first half of '26, right? This is quite natural for a couple of reasons. Firstly, obviously, we had the lapping of the Fair Financing growth that kicked off at the back end of 2Q '25. We also have the FX, which we should not forget, we had an FX devaluation in the second half of this quarter and such, right? So I think those are the key things that are driving it. But if you look at it -- if you just break it down a little bit, right, what you're going to see here is overarchingly, interest income in the second quarter was around about 72 basis points or 0.72%. In the 3Q and 4Q, given the fair value presentation, we're going to see that coming in a little bit lower. Gain on sale will be obviously running around about the same percentage level as 2Q as a percentage of GMV. Processing and servicing costs will grow a little bit ahead of GMV based on the fact that we're doing card and financing mix shifts. And then we have our provisions, which we expect to see relative stability to slight downward trends in the second half of the year. And so if you look at it -- we are continuing to grow really strongly in the U.S. You can see the TMD rising from 14% to 23% year-over-year. And we expect that particularly to compound with the new pipeline that we have with default options or the default partners that are coming on board as well. So overarchingly, the key thing here is continued strong growth, particularly in the U.S. on the volume side, that's then really turning into strong TMD performance into the second half as well with then a bit of headwinds on the FX from that. Operator: Your next question comes from Rob Wildhack from Autonomous Research. Robert Wildhack: Just to unpack the volume guide, can you give us some more details? It seems like you're attributing the slowdown there to the German market. I know it's about low 20% of revenue. But given the effect that, that region is having on the outlook, can you give us some color on GMV that comes from Germany, the mix between Pay Later and any Fair Financing? And then what kind of growth were you expecting for Germany earlier this year versus what's the revised growth outlook for Germany embedded in your guidance today? Niclas Neglen: Sure. Great. So if you look at it, what we saw towards the back end of 2Q was a softening in basically the consumer discretionary spend in Germany. Germany is our largest share of volume or our largest market from a volume perspective, right? And what you're seeing is primarily there, you have Pay Later and Pay Now being large portions of that business. What we saw in the beginning of the third quarter, which as you see compounds the trend is the fact that we're seeing continuously softness in that German market, particularly in the discretionary spend on the retail side. And that's where we're playing out through the rest of the year, assuming that we're not seeing a recouping of that. So that's really the baseline for it. Robert Wildhack: And if I could follow up on that, if Germany is basically Pay Later and Pay Now, and less Fair Financing, so those are lower margins versus Fair Financing, which is higher margin. And that's the reason that the volume is slow. I guess why does the transaction margin so much softer in the second half? If your slowing region is lower margin. Does that make sense? Niclas Neglen: Yes. I think -- but I don't think it's so much that. If you look at it, transaction margin dollars is still growing very, very healthily at 23%. Again, I think if you compare it to the first half of the year, part of that is more a performance in the first half of 2025 when we had slower growth and therefore, slower TMD progression. And so the comp was different there, right? In the second half, we're working against both the FX rebound, but also at the same time, we had a stronger growth in the first -- in the second half of the year, particularly around Fair Financing in the U.S. So I think this is really around the U.S. growth more so than the softening of the German volumes with regards to TMD. Ultimately, if you look at... Operator: Next, we'll go to the line of Harshita Rawat from Bernstein. Harshita Rawat: Niclas, we'll miss working with you. Best wishes. Sebastian, I want to follow up on the planned departures after long tenures. You said the CFO search is explicitly New York based. Why is that? And also, should investors infer kind of any change in approach to funding, capital allocation, brand investments, U.S. expansion from this leadership change? Sebastian Siemiatkowski: I'm sorry, can you repeat the second half of that question? I couldn't really hear, sorry. Harshita Rawat: Yes, no worries. So I think the second part of the question was, should investors infer any change in Klarna's approach to funding, capital allocation, investor engagement, U.S. expansion from this leadership change? Sebastian Siemiatkowski: Got it. Well, look, I think that the -- as we highlighted here, this is long-term forward-looking and planning. These transitions are expected to happen at the beginning of next year. Both Niclas and David has been amazing contributors and built solid foundations within the organizations that will continue to operate. We plan to continue operating the way we have. When it comes in regards to New York, in particular, it's obviously the case that Klarna continues to perform extremely well in U.S. It's our largest market by revenue, not yet by volume, as we heard in regards to Germany, but largest by revenue. And it's where we have over 30 million consumers. So having a stronger presence in New York is important to us. At the same time, we think it's also helpful to be close to the Investor Relations community and the stock market and so forth. Operator: Your next question comes from James Faucette from Morgan Stanley. Niclas Neglen: James, I don't think we can hear you. James Faucette: Can you hear me now? Niclas Neglen: Yes. Now we can hear you, James. James Faucette: Apologies about that. I wanted to ask quickly on forward flow and financing. Just wondering how we should think about expectations for loans sold on both Pay Later and Fair Financing? And how we should think about evolution of gain-on-sale margins with the fair value change? Niclas Neglen: Yes. So ultimately, the strategy for us is very clear, right? And that is that we will try to be as capital light as possible and as capital efficient as possible. We have had very good success in building out these programs, and we are very focused, particularly on the Fair Financing forward flows. And I think as we've ramped them up to a certain level now, we've come to the point where basically all -- substantially all of our loans will be eligible to be sold in the second half of this year, and that's where we're making that fair value change, right? Ultimately, like I said, if you look at it in totality, we are guiding to about 1.09% of transaction margin, TMD. And if you think of it from that perspective, about 2 basis points is pulled forward in that fair value view, which means that the gain on sale is basically going to be slightly flatter because you're adding more of it into the second half of the year. But at the same time, you're actually pulling up TMD. So what you fundamentally are doing, excluding the fair value, is improving the TMD for the volume base that we actually have. So as I said earlier on the call, right, we have about 1.09% of TMD in the guide. And what we are -- if you back out the 2 basis points, we have 1.07%, right, in TMD. That's an actual raise versus the 1.04%. And it actually means that we're adding about $40 million to $50 million more of true transaction margin dollars, i.e., we're generating more transaction margin dollars for every dollar of volume that we bring in. James Faucette: Great. And you may have missed it, but Niclas, thank you very much for all your contribution. Good luck. Sebastian Siemiatkowski: He will continue being with us for more earnings calls. So it's friendly of you to say that, but there will be more opportunities. Operator: Your next question comes from Bryan Keane from Citigroup. Bryan Keane: I guess just to go back, making sure I have the numbers, just to quantify the Germany impact, how much is that hitting the numbers versus the ramp of JPMorgan and some of the other PSP relationships? I would have thought that would have offset the weakness in Germany. Just trying to run us through maybe Germany versus some of the onboarding of some of those larger contracts and how they hit the volume in particular would be helpful. Niclas Neglen: Yes. Look, I mean, fundamentally, we're coming from lapping a very strong second half of growth last year with regards to Fair Financing, and we continue to see that growth. If you look to the U.S., we are growing extremely strongly. Fair Finance, for example, grew 114%. And I think to the comments we made earlier, we have a very, very strong pipeline in the U.S. today and a lot of things that we're going to be ramping into the second half of this year. So I think there's a lot of opportunity there. Again, we fundamentally focus on the trend base here when we look at these guidances. And so the German softness in consumer sentiment that we're seeing in the discretionary spending trends are really playing out through that without an assumption that we are going to be overshooting on the -- or overperforming on some of the great pipeline that we have. So our focus is very much on execution in the second half around a lot of the things that Sebastian earlier said. Bryan Keane: Got it. And just in particular, Germany is going to grow negative or at least in the model? How do you model it out, the German business? Niclas Neglen: Yes. So again, as -- versus expectations, Germany is going to be a bit softer. And what we expect is that what we saw in the first half of this quarter is going to kind of continue to trend. So on that baseline, we're expecting very, very marginal increases in Germany overall. And remember that... Operator: Your next question comes from Connor Allen from JPMorgan. Connor Allen: I wanted to ask about Apple, if you don't mind, the Apple Upgrade program. I realize there's only so much you can probably say about a specific partnership, but maybe you could help us understand if there's anything assumed in guidance for the second half around that program? And any other details you might be able to provide about that partnership would be great to hear. Niclas Neglen: Great. Well, we're very happy with the Apple Upgrade program for obvious reasons, right? As we said earlier in some of the statements we made when we did the earnings release or the release of that partnership, we expect a positive AOI in 2026 and through the life of the program, right? We see this very much as a multiyear similar to what many of our other partners we have where we start and we start ramping, which we will do this year. And then we continue to develop that over time, right? So like I said, we are very trend focused here with regards to running a larger portfolio. That Apple partnership is a fantastic partnership, and I think it can be very accretive over time. But we're focused now on the trend and what we have in the guide is where we are. Operator: Your next question comes from Jason Kupferberg from Wells Fargo. Jason Kupferberg: Can you hear me? Sebastian Siemiatkowski: Yes. Jason Kupferberg: So I just want to come back on the full year GMV guide. I guess if we take the midpoint of Q3, it looks like you have to grow GMV about almost 25% quarter-over-quarter in Q4 to get to the midpoint of the new full year outlook. Hoping you can talk about the visibility there. Obviously, you've got the favorable holiday season dynamics, but this would be a faster quarter-over-quarter growth rate than what we saw in last year's Q4 when you also had more tailwind from the initial Walmart ramp. So I know you've got PSP ramps, you've got Apple, but really wanted to hone in on the visibility there as we made the guidance adjustment today. Niclas Neglen: Yes. Great. Thanks. Good question. So if you look at it in the second half, you're right, we're a seasonal business. We're very focused on growth. I think if you think about it from a perspective of where we're seeing a lot of that, the U.S. is continuing to really, really chug along on all engines, right? So we have very strong growth there. As we mentioned, we have a number of pipelines -- a number of things in the pipeline, right? We're investing into not only the Apple Upgrade, but also the default partnerships. I'd also mention the fact that the card, particularly in the U.S., but also particularly in the Nordics, where we've launched Fair Financing and the card, we're seeing mid-teens growth in the Nordics, right? So there's a lot of really good things that are going on, and we haven't even started fully rolling out all of the features from the Nordics into the rest of Europe. So I think there's a lot of things to speak for the fourth quarter that builds up to the guide. Operator: Your next question comes from Andrew Bauch from BMO Capital Markets. Andrew Bauch: I wanted to ask about subscriber monetization opportunities. You had the 2 million subs in the quarter, revenue is growing triple digits again, and we saw the expansion of subscriptions in Europe last week. Longer term, what percentage of revenue or transaction margin dollars do you believe can come from recurring subscriptions? And are there any guideposts investors can monitor to gauge that progress? Sebastian Siemiatkowski: I can start with the commercial aspect of the subscriptionship, which we are very excited about. We, as you highlighted, have seen strong growth in it, 600% growth year-on-year. We've reached 2 million subscribers. We also announced, as you highlighted, about a week ago, some additional updates into the benefits and perks of the membership programs. And this is combined with additional changes to the card that has also grown, and we now have 6.6 million active cardholders -- or 6.5 million, sorry, that -- and those will obviously start merging into the same offering, which becomes the core of our financial partnership with the most engaged consumers, which is also part of how we drive up the revenue per customer metric that we've seen increased and reported on today. Now where -- how big it can become, that is too early to tell, but we have looked at peers offering similar products where subscription is a significant larger share of their revenue than it is with Klarna. So we believe there's more potential to grow it. For the exact financial targets, Niclas, I'll hand over to you. Niclas Neglen: Yes. We won't be guiding you to a particular long-term view. Let's say, I think it's going to be a significant portion over time. And ultimately, it's going to help us do what we're doing today. Today, in the second quarter, you can see that we are basically earning more TMD for every dollar of volume that comes in. And reality is that these membership programs will allow us to accelerate the TMD continuously without having to add on more and more transactions, right? Because it really means that the consumer will be with us, and we can build a deeper relationship with them as an everyday spending partner with them. So as such, over time, we see this as something that's going to be significant for us and is a key pillar of the strategy from a monetization of giving value back to the consumer. Operator: Your next question comes from Matthew O'Neill from Bank of America. Matthew O'Neill: Congrats again, Niclas. I was hoping I could follow up on the Apple Upgrade program, particularly the accounting. We've had a number of questions around precisely how the devices will sort of impact, I guess, the financial statements. So could you just give us an idea about the -- if the leases will be originated on balance sheet, held at amortized cost? Or will they follow the new forward flow treatment? And then on the back end of the term, who will effectively hold the residual value risk on Apple, et cetera? If you could just help us understand a little bit more about how this should impact things as it grows into the book. Niclas Neglen: Great. Sure. So it in very simple terms is that this is really treated as a financing receivable for us, right? And that is practically what it is. So it's no different to how we treat the Fair Financing point-of-sale installment product that we have today from a perspective of accounting. We will fair value the asset when we bring it on our book. We have the optionality to offload it, and we will look at those things opportunistically based on the economics of it. And that's really the kind of extent of what I can talk about from a commercial agreement. But ultimately, the receivable is a financing receivable. Matthew O'Neill: Okay. Understood. And I guess we'll sort of wait to understand more as it comes, but with respect to the residual value? Niclas Neglen: Yes. Again, as I said, if it's a financing receivable, I carry the receivable of the loan on my book. Operator: Your next question comes from Harry Bartlett from Rothschild & Co Redburn. Harry Bartlett: I just wanted to touch on the competitive environment. And maybe you could just give us some color on what you're seeing in Europe and the U.S. And maybe just in the German market, do you think there's any intensification of competition there that's maybe causing any of the weakness? Or is it just purely macro? Sebastian Siemiatkowski: I think I can take that question. This is partially why we also introduced and presented to you the three business areas because I think in order to answer like general questions on the competitive environment, Klarna has the aspiration and ambition to offer products and services that are relevant for consumers and all of our consumer spend, right, whether it comes from everyday spend, debit type of purchases or it's the short-term buy now, pay later or the big ticket items. What we -- when we established ourselves in the U.S., we were particularly focused on first establishing us within the buy now, pay later lifestyle spend segment -- sorry, area because it gives us a unique opportunity to grow relationship with now over 30 million users, while at the same point in time, issuing very small credit where the average credit is $100. And then as we have established that relationship with those consumers and see their credit history, that's when we have more recently expanded into the big ticket spend. And there, we are -- partly as we've described on earlier earnings calls, it was almost a surprise to us how well received that product was by merchants and the adoption rate and interest for merchants. So we've seen a strong scale in that. And if -- as you know, it's this quarter growing 84%, where U.S. is contributing a lot to that. So I think from a competitor perspective, I would argue that when it comes to lifestyle spend, the traditional buy now, pay later or Pay in 4, mostly known in the U.S., we are clearly dominant and the largest player in that market in the U.S. and seeing healthy growth in that segment. In big ticket spend, we are more -- we have -- we are more newer in that, but have seen a fantastic adoption rate. And we previously announced Walmart, now we're announcing Apple. So we're seeing lots of great progress there. When it comes to the European competitive space, I would argue that Klarna, thanks to its global presence and the fact that we're active in so many markets, is actually creating a significant competitive advantage because any local player or anyone that is in any of those markets, both we have the distribution of our partnerships, or PSPs, as previously like we announced here, JPMorgan Chase or Stripe and others before that. And we have obviously the brand awareness and the consumer awareness with millions and millions of users in those markets. So there's no real change in that regard rather the -- what we have said here about Germany is that it is a -- is that we are seeing a softer-than-expected consumer sentiment in that market. Yes. Operator: Your next question comes from Kyle Peterson from Needham. Kyle Peterson: I just wanted to touch on the guide a little bit. So I appreciate all the color you guys gave on Germany, in particular, and the trends you guys are seeing there. So I guess my question would be, have you guys seen any volume curtailments in any other European or surrounding countries either in the second quarter? And I guess, what does the guidance assume in terms of transaction trends in some of these other European markets that are kind of surrounding Germany? Niclas Neglen: Thank you. So generally speaking, Germany is more pronounced. We have seen some softness here and there in pockets, but we run in 26 markets. And I'd note that it is a varied picture, right? If you take the Nordics as an example, I mentioned before, we're getting double teen growth rates as we've expanded the Fair Financing and the card rollout there. And that's off a back of a market where we've been for a very long time and have a lot of share of wallet already. So I think there's -- generally speaking, there's good growth in Southern Europe. There is a little bit of -- certain countries that might be growing a little bit slower than what we had expected. Ultimately, the larger point is here Germany and why we're calling it out from a consumer sentiment perspective, we're seeing that discretionary spend adjust. But ultimately, very good growth where we're seeing us expanding to more products and features and more partnerships. Operator: Your next question comes from Thomas Nilsson from Nordea. Thomas Nilsson: Q2 showed significant operating leverage with transaction margin dollars growing 42% against much slower cost growth. So looking ahead, if transaction margins kind of grow at 20% plus, when do you see Klarna being able to achieve a double-digit or mid-teens adjusted operating margin, when in time would you say? Niclas Neglen: So if you look at it, you're right, like we're growing really strongly. If you look at it overarchingly for the full year, right, we're growing our adjusted -- our transaction margin dollars at around about 32% and our adjusted OpEx by about 15%. We're seeing very strong growth in the U.S. as we see here, both on the volume side, the revenue side, but that's really translating into an accelerated growth in our transaction margin dollars as well. Transaction margin dollars as a percentage of revenue went from 14% to about 23%, and we're expecting to see growth in that through the quarters as well on a sequential basis. On that basis, we don't guide to a specific date, but I think we have the right traction in transaction margin dollars, the key metric that we're really focused on, both in the U.S., but also in global ex-U.S., right, particularly in Europe, where you're seeing an expansion in that transaction margin dollar over time. So one should really look at a seasonal business that on a whole will fluctuate some quarters to quarters, but the overarching trend is moving in the direction that we have. And we have a long-term target of a 50% transaction margin dollars and 25% adjusted operating income. So we'll continue to move towards that direction, but we won't put a particular quarter to it. Operator: Your next question comes from Moshe Orenbuch from TD Cowen. Moshe Orenbuch: I was hoping to talk just a little bit about Fair Financing. You mentioned the growth in merchants and whether -- I wonder whether, a, that's going to continue? And is there interaction with respect to the card? I assume the card has a higher-than-average kind of mix of Fair Financing. Could you talk about those two and its impact on the Fair Financing share of your total volume over time? Sebastian Siemiatkowski: Sure. I will start and hand over the second part to Niclas. When we -- what we're seeing is that part of our global Klarna default distribution with our partnerships with PSPs is to make sure that every merchant that offers Klarna does not only offer one of our payment products, but all of them. And this has been a major focus of ours, which is partially what has driven the growth of number of merchants accepting. So you can still see that out of the over 1 million merchants that accept Klarna, we are now at about 250,000 offering Fair Financing. So there's still additional potential there to grow to make sure all of them offer all payment products. But obviously, they may -- also some of them be in categories where there will be less spend in the size of $500 and above. So that is basically how it works. Now with the card, we think about the card as like people love using Klarna online. They have, however, not had the opportunity to fully use Klarna offline. And so the card in a way is just a vehicle to bring these debit, the Pay in 4 opportunity as well as the big ticket spend or Fair Financing products into the everyday purchases in the physical world. So basically, the same payment methods are available, but now through the utilization of a card in those stores. And this is the debit flex card that we've launched and seen great growth with, which we're very excited about. The rest, I will hand over to you, Niclas. Niclas Neglen: Sure. Thank you. Yes. I think just to add a little bit more color on the numbers there, right? It really depends on the maturity of the market right now, what we're seeing. So in Sweden, where there is deep penetration and usage of Klarna, you're seeing very much more growth in the Pay in Full [ pair ] of the product as people use it for everyday spending, right? What you're seeing in some of the less mature markets but are also -- that is growing is really that they act exactly like with the card as they do online and with the merchant, right? So you're seeing much more of an equal split. So the card is not changing as significantly the types of payments that we're making. But we're seeing that improving, right? So you'll see, for example, the U.S. Pay in Full, albeit on a very low base, is growing significantly faster now, which is proof that the more we engage with consumers with this product, the more they're using more of the types of spending products that we can support them with. Operator: Your next question comes from Giuliano Bologna from Compass Point. Giuliano Anderes-Bologna: Just checking up on the Apple partnership. I realize that you've already answered a handful of questions around that, but it seems like the type of program that has potential to be relatively large over time and you have a little more duration on those assets. When you think about the funding strategy for that, would you -- do you think you would plan on continuing to focus on trying to offload a lot of those off balance sheet just because there's a lot of potential that could create on the balance sheet growth and capital consumption over time? Niclas Neglen: So look, we plan our capital for the long term, right? And we have the optionalities of all the tools in our toolkit. We will offload if we think that the economics make sense with regards to the Apple leasing product, right? But ultimately, we look at this as a portfolio as a whole. And as such, that is -- we don't see it as one or the other, but rather we give ourselves the optionalities and then we see what makes most sense in the market. Giuliano Anderes-Bologna: Got it. That's helpful. And then maybe thinking about just the current balance sheet composition. I noticed there's been a tick down in your deposit funding. I'm curious if that's something that's intentional with the balance sheet composition and pulling down assets? Or is that something -- or is there a different trend or seasonality that's impacting that? Niclas Neglen: So yes, so it's going to be seasonality, right? So our savings deposits are basically what consumers come and bring with us. We will alternate our rates depending on the needs as well. And so you will always see a cycle in the first half where you have a little bit of slowdown in the growth of deposits and then you see it accelerating towards the peak season. That's generally the modus operandi. Operator: And your final question comes from Lemar Clarke from Freedom Capital Markets. Lemar Clarke: On the guidance revision, you pointed to a more measured view of German volumes and flagged softening towards the back end of Q2. I wanted to press on the quarter-to-date picture. Can you characterize what you're seeing in Germany so far in Q3? Has the deceleration you saw exiting June stabilized, continued at that pace or stepped down further in July and into August? Niclas Neglen: Sure. Generally speaking, we're seeing roughly the same kind of trend downward trend, right, which is what we've included in the guide, right? Hence, why we are seeing this. So that's basically where we're at. So the guide really reflects the actuals there. I think the key thing to remember in all of this here, right, is, obviously, if you look at it, transactions and volume is one key driver for Klarna, right? But as we're expanding our feature set and as we are generating various ways to support our customers and both our consumers and partners, we're actually now starting to generate more and more transaction margin dollars on every dollar of volume, right? And I think that's the key takeaway here that depending on fluctuations on transactions is obviously something that we will always live with. But the fact is that we're starting to monetize our consumers on a deeper basis and with a deeper engagement, and that's really what the second quarter shows. Operator: Thank you. That was our final question for today. Thank you all for joining Klarna's Second Quarter 2026 Earnings Call. This concludes today's presentation. You may now log off, and we hope you have a wonderful rest of your day. 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This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends Klarna Group. The Motley Fool has a disclosure policy. Klarna (KLAR) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Klarna Group plc (NYSE:KLAR) reported second-quarter net income of $9 million, reversing a $53 million loss a year earlier and remaining profitable after posting positive net income in the first quarter of 2026. Revenue increased 27% to $1.04 billion, while transaction margin dollars rose 42% to $446 million. Yet the shares closed 22.8% lower as investors focused on weaker expectations for the rest of the year. Klarna Group plc (NYSE:KLAR) reduced its 2026 gross merchandise volume forecast to $149 billion to $151 billion from more than $155 billion and lowered its revenue outlook to $4.08 billion to $4.16 billion from more than $4.34 billion. Management cited weaker expectations for Germany, its largest market by volume. Currency movements accounted for approximately $600 million of the reduction in full-year GMV guidance. The reported quarter showed continued growth and improved profitability, but the revised forecasts suggested that momentum in a core European market is slowing. For Klarna Group plc (NYSE:KLAR), the central question is whether better transaction economics can outweigh weaker growth expectations. U.S. GMV increased 27%, outpacing companywide GMV growth of 18%, while credit loss provisions declined to 0.52% of GMV from 0.56%. Klarna Group plc (NYSE:KLAR) also increased transaction margin dollars to 42.8% of revenue, more than 4.5 percentage points higher than a year earlier. Klarna Group plc (NYSE:KLAR) raised its full-year transaction-margin-dollar forecast to $1.62 billion to $1.65 billion and expects company-defined non-IFRS adjusted operating income of $280 million to $300 million. Transaction margin dollars, another company-defined non-IFRS measure, equal revenue less processing and servicing costs, credit loss provisions, and funding costs. The expansion indicates that higher volume is producing stronger economics after those direct costs. Klarna Group plc (NYSE:KLAR) lowered its GMV and revenue forecasts relative to its previous guidance, although both still imply year-over-year growth. The weaker outlook for Germany matters because improving margins will carry less weight if expansion continues losing momentum in the company’s largest market. Part of the revenue-guidance reduction reflects a prospective presentation change covering new U.S. and German Fair Financing originations during the second half of 2026. Klarna Group plc (NYSE:KLAR) said the change would reduce reported revenue by an amount equal to approximately 10 basis points of GMV. The planned early-2027 departures of Chief Financial Officer Niclas Neglén and Chief Marketing Officer David Sandström add another execution challenge while Klarna Group plc (NYSE:KLAR) works to restore confidence in its growth outlook. Insider Monkey’s hedge fund database shows that 40 hedge funds held positions in Klarna Group plc (NYSE:KLAR) at the end of the first quarter of 2026, compared with 44 funds at the end of the preceding quarter. These holdings were reported before the second-quarter results and revised outlook. Klarna Group plc (NYSE:KLAR) delivered a year-over-year swing to profit and stronger transaction margins, but the 23% decline shows that investors remain focused on growth. The company must stabilize Germany while sustaining U.S. momentum before its improving profitability is likely to receive greater credit from the market. While we acknowledge the potential of KLAR as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: ConocoPhillips (COP): Wall Street Sees More Upside Despite Leadership Shakeup and Here is Why Chevron (CVX) is a Favorite Among Hedge Funds Disclosure: None. This article is originally published at Insider Monkey.

Klarna Group plc KLAR used its second-quarter earnings call to emphasize improving transaction economics as management cut its 2026 volume outlook on softer German consumer spending and currency effects. The quarter cleared expectations: revenues of $1.042 billion topped the Zacks Consensus Estimate of $992.6 million, while EPS of $0.01 exceeded the consensus estimate for a loss of $0.07. Klarna Group plc price-consensus-eps-surprise-chart | Klarna Group plc Quote CEO and Director Sebastian Siemiatkowski said that transaction margin dollars remain Klarna’s central operating measure. Second-quarter transaction margin dollars rose 42% year over year to $446 million, outpacing 27% revenue growth and 18% GMV growth. CFO and Director Niclas Neglen said that improved underwriting, offloading programs and a richer product mix helped widen transaction margin to 42.8% of revenues. Adjusted operating income reached $91 million. For 2026, KLAR lowered GMV guidance to $149-$151 billion from more than $155 billion and revenue guidance to $4.08-$4.16 billion. Transaction margin dollar guidance rose to $1.62-$1.65 billion, while adjusted operating income is projected at $280-$300 million. Neglen said that Germany, Klarna’s largest market by volume, weakened late in the second quarter as discretionary retail spending softened. The revised outlook assumes that trend continues rather than rebounds. During Q&A, an Autonomous Research analyst pressed management on Germany’s role in the lower volume outlook. Neglen said that Pay Later and Pay in Full make up large portions of the German business, while Fair Financing is less prominent. A Prime Executions analyst asked about quarter-to-date conditions. Neglen said that the downward trend had remained roughly consistent into Q3 and was already reflected in guidance. Siemiatkowski described the United States as Klarna’s fastest-growing large region. U.S. GMV rose 27% to $7.9 billion, while U.S. transaction margin dollars increased 126% to $88 million. Fair Financing grew 82% globally to $4.7 billion of GMV and reached 256,000 merchants. Management tied the product to stronger transaction economics. Neglen said that U.S. assumptions were unchanged despite the lower companywide GMV guide. He cited JPMorgan Payments, Adyen, Worldline, Worldpay, Fiserv’s Clover and the Apple Upgrade program as second-half growth drivers. Siemiatkowski said that Klarna Memberships reached 2 million paying subscribers, eight times the year-earlier level, while subscription revenue rose more than 600%. He framed memberships as a way to grow transaction margin without equivalent GMV growth. The Klarna Card reached 6.5 million active users across 16 countries, up from 1.3 million a year earlier. Management sees the card as a vehicle to extend Klarna’s payment products into offline spending. JPMorgan Payments went live on Aug. 6, letting merchants on its platform offer Klarna’s payment suite through existing setups. Management expects broader distribution to support U.S. volume into peak season. Neglen said that substantially all new U.S. and German Fair Financing originations are expected to move to fair-value accounting in the second half. The change lowers reported revenue and transaction costs while leaving transaction margin economics intact. Excluding an estimated 2-basis-point timing benefit from the presentation change, management expects stronger unit economics to add $40-$50 million of transaction margin dollars for 2026 despite lower volume. In Q&A, Morgan Stanley and Compass Point analysts focused on forward flows and funding. Neglen reiterated a capital-light approach while preserving flexibility to retain or offload receivables when economics support either choice. Management characterized the third quarter as an investment quarter, with marketing and major platform launches arriving ahead of expected volume. Third-quarter adjusted operating income is projected at $5-$15 million. Siemiatkowski and Neglen consistently returned to deeper consumer engagement, higher-value products and transaction margin growth as operating priorities. The revised outlook pairs lower volume expectations with a higher margin-dollar target. KLAR currently carries a Zacks Rank #3 (Hold). Its Momentum Score of A is favorable, but a Value Score of F, a Growth Score of F and a VGM Score of F indicate weaker readings across those style dimensions. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The Style Score complements the Zacks Rank, with A and B grades viewed more favorably. The current mix is uneven rather than uniformly strong, and the Zacks Rank can change as analysts revise estimates after the just-reported results. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Klarna Group plc (KLAR) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

This article first appeared on GuruFocus. Revenue: Total revenue was $1.042 billion, up 27% year over year. Volume (GMV): Total GMV reached $36.6 billion, up 18% year over year. Transaction Margin Dollars: Reached $446 million, up 42% year over year, above the guided range of $375-$395 million. Transaction Margin as % of Revenue: Expanded to 42.8%, up approximately 450 basis points from a year ago. Adjusted Operating Income: Reached $91 million, up $62 million year over year. Net Income: Positive at $9 million, with basic diluted EPS of $0.01 against a negative $0.14 a year ago. Operating Expenses: Non-transaction-related operating expenses were $490 million, up 16% year over year. US GMV: Delivered $7.9 billion, up 27% year over year, with US transaction margin growing to 23% of revenue from 14% a year ago. Fair Financing GMV: Grew 82% year over year to $4.7 billion, offered by 256,000 merchants. Pay Later GMV: Grew 13% year over year. Pay in Full Volume: Contributed $3.6 billion in volume during the quarter. Subscription Revenue: Grew over 600% year over year, with Klarna membership reaching 2 million paying subscribers. Klarna Card: Reached 6.5 million active users across 16 countries, up from 1.3 million a year ago. Provisions for Credit Losses: Were $192 million, declining as a share of GMV to 0.52%. Warning! GuruFocus has detected 3 Warning Signs with KLAR. Is KLAR fairly valued? Test your thesis with our free DCF calculator. Release Date: August 18, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Klarna Group PLC (NYSE:KLAR) delivered above the high end of guidance for the second consecutive quarter, with revenue up 27%, transaction margin dollars up 42%, and adjusted operating income reaching $91 million. Transaction margin as a percentage of revenue expanded by 450 basis points year-over-year to 42.8%, driven by strong growth in the US (from 14% to 23%) and continued improvement in global ex-US markets. The company's fair financing product grew 82% year-over-year to $4.7 billion in GMV, with merchant adoption expanding to 256,000, and US fair financing more than doubled. Klarna's membership program reached 2 million paying subscribers, with subscription revenue growing over 600% year-over-year, providing a high-margin, recurring revenue stream that decouples growth from GMV. Consumer credit performance improved, with delinquencies declining and provisions as a share of GMV falling to 0.52%, reflecting better underwriting and the scaling of forward flow arrangements. Klarna Group PLC (NYSE:KLAR) lowered its full-year GMV guidance to $149-$151 billion from above $155 billion, citing softer-than-expected German consumer spending and FX headwinds. The company expects a more measured pace of growth in Germany, its largest market by volume, with retail sales growing less than 1% in real terms in the first half of 2026. The shift to fair value accounting for new US and German fair financing originations will reduce reported revenue and transaction costs by approximately 10 basis points of GMV, potentially understating underlying business performance in Q3 and Q4. Third-quarter guidance indicates a deliberate investment quarter with adjusted operating income expected to be only $5-$15 million, as the company funds its largest set of launches in history. The company announced leadership transitions, with CFO Niclas Neglen and CMO David Sandstrom set to step down in early 2027, which could create uncertainty during the transition period. Q: Can you talk about the expectations for transaction margin in the back half of the year? The guidance implies an exit rate considerably lower than the first half. Is there seasonality or prudence in the guide?A: Niclas Neglen (CFO): We're looking at around 23% year-over-year growth on TMD in the second half, compared to 42% in the first half. This is natural due to the lapping of the Fair Financing launch in 2Q25 and FX devaluation. Interest income will come in a bit lower due to the fair value presentation change, while gain on sale will run at similar levels. We expect provisions to remain stable with a slight downward trend. The US TMD is rising from 14% to 23% year-over-year, and we expect that to compound with new default partner pipelines. Q: Can you unpack the volume guide? What is the revised growth outlook for Germany embedded in your guidance today?A: Niclas Neglen (CFO): We saw a softening in consumer discretionary spend in Germany towards the back end of Q2. Germany is our largest market by volume, primarily driven by Pay Later and Pay in Now. We saw continued softness in early Q3, particularly in discretionary retail spend, and we are assuming that trend continues without a recouping through the rest of the year. Q: On the planned departures, why is the CFO search explicitly New York-based, and should investors expect any change in approach to funding, capital allocation, or US expansion?A: Sebastian Siemiatkowski (CEO): These transitions are long-term planned and expected at the beginning of next year. We plan to continue operating the way we have. The New York focus reflects that the US is our largest market by revenue and where we have over 30 million consumers. Having a stronger presence in New York is important to be close to the investor relations community and the stock market. Q: How should we think about expectations for loans sold on both Pay Later and Fair Financing, and the evolution of gain on sale margins with the fair value change?A: Niclas Neglen (CFO): Our strategy is to be as capital light and efficient as possible. We have ramped up forward flows, particularly for Fair Financing, to the point where substantially all new loans will be eligible for sale in the second half. The fair value change pulls forward about two basis points of TMD. Excluding that, we are adding $40-50 million more in transaction margin dollars, meaning we are generating more TMD for every dollar of volume. Q: Can you quantify the Germany impact versus the ramp of JP Morgan and other PSP relationships? Is Germany going to grow negative?A: Niclas Neglen (CFO): We are lapping a very strong second half of growth last year for Fair Financing. The US is growing extremely strongly, with Fair Finance up 114%. We have a strong pipeline in the US ramping into the second half. The guidance reflects the German softness without assuming we will overshoot on the great pipeline we have. We expect very marginal increases in Germany overall on that baseline. Q: Regarding the Apple Upgrade program, is anything assumed in guidance for the second half, and can you provide details on the partnership?A: Niclas Neglen (CFO): We expect a positive AOI in 2026 and through the life of the program. We see this as a multi-year partnership where we start ramping this year and continue to develop over time. We are trend-focused in our guidance, and the Apple partnership is not a significant factor in the current guide but can be very accretive over time. Q: For the full year GMV guide, it implies almost 25% quarter-over-quarter growth in Q4. Can you talk about the visibility there?A: Niclas Neglen (CFO): We are a seasonal business. The US is continuing to grow strongly on all engines. We have a number of pipelines including Apple Upgrade and default partnerships. The card is growing well in the US and Nordics, where we see mid-teens growth. We haven't fully rolled out all Nordic features to the rest of Europe. There are many factors supporting the Q4 build-up to the guide. Q: What percentage of revenue or transaction margin dollars can come from recurring subscriptions long-term?A: Sebastian Siemiatkowski (CEO) & Niclas Neglen (CFO): We have seen 600% growth year-on-year to 2 million subscribers. We have looked at peers where subscription is a significantly larger share of revenue, so we believe there's more potential. We won't guide to a specific long-term view, but it will be a significant portion over time. These programs will allow us to accelerate TMD without adding more transactions, as they build a deeper relationship with consumers as an everyday spending partner. Q: On the Apple Upgrade program accounting, will the leases be originated on balance sheet, and who holds the residual value risk?A: Niclas Neglen (CFO): This is treated as a financing receivable for us, no different from our Fair Financing point-of-sale installment product. We will fair value the asset when it comes on our book. We have the optionality to offload it and will look at that opportunistically based on economics. We carry the receivable of the loan on our book. Q: Can you provide color on the competitive environment in Europe and the US, and is competition causing weakness in Germany?A: Sebastian Siemiatkowski (CEO): In the US, we are clearly dominant in lifestyle spend (BNPL) and seeing healthy growth. In big ticket spend, we are newer but seeing fantastic adoption with Walmart and Apple. In Europe, our global presence creates a significant competitive advantage through PSP partnerships and brand awareness. The German weakness is purely about softer than expected consumer sentiment, not intensifying competition. Q: Have you seen volume curtailments in other European countries, and what does guidance assume for surrounding markets?A: Niclas Neglen (CFO): Germany is more pronounced, but we have seen some softness in pockets. We run in 26 markets with a varied picture. The Nordics are getting double-digit growth rates from Fair Financing and card rollouts. Southern Europe has good growth. Germany is the larger point we're calling out from a consumer sentiment perspective, but we're seeing good growth where we expand products and partnerships. Q: When do you see Klarna achieving a double-digit or mid-teens adjusted operating margin For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Klarna (KLAR) dropped 7% ahead of Q2 earnings, where analysts expect a $0.06 per-share loss on $995 million in revenue. Sezzle (SEZL) slid 5% while PayPal (PYPL) dipped just 2%, confirming Monday's selloff is Klarna-specific positioning rather than a broad BNPL sector move. Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Klarna Group plc didn't make the cut. Grab the names FREE today. Klarna Group (NYSE:KLAR) stock is sliding midday Monday, with shares down 7% to $19.38 ahead of the buy now, pay later (BNPL) firm's second-quarter report. The pullback unwinds part of a three-week rally right before a binary event. Klarna stock had climbed 4% for the week and 6% for the month through Friday's close, and shares are down 33% year to date (YTD). The company went public on the New York Stock Exchange in September 2025, and Tuesday's report before the market open is its most anticipated print since that listing. There's no fresh company-specific Klarna news driving Monday's drop. The move looks like straightforward profit-taking and risk reduction into an earnings event, with traders trimming exposure after a run that lifted the stock heading in. Positioning ahead of a binary earnings event often outweighs fundamentals in the final hours before a release. The Street is looking for a Klarna loss of $0.06 per share on revenue of $995 million, per Fiscal.ai. Morgan Stanley raised its price target on Klarna stock to $21 from $18 while keeping an Equal Weight rating, and the 12-month average target sits at $24.55 per Koyfin. Of 22 analysts covering the stock, 13 have a Buy or higher rating and 9 have a Hold. Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Klarna Group plc didn't make the cut. Grab the names FREE today. Retail sentiment on Stocktwits was neutral even as message volume surged 300% over 24 hours. One analyst noted expectations for a Q2 2026 beat on the back of robust e-commerce results, while flagging that Klarna's discount to its larger BNPL competitor "likely only compresses with sustained execution on credit," per TheFly. Klarna's own guidance sets the bar. For Q2 2026, management guided to GMV of $35.5 billion to $36.5 billion, revenue of $960 million to $1 billion, transaction margin dollars of $375 million to $395 million, and adjusted operating profit of $30 million to $50 million. The $995 million consensus revenue figure sits inside that range, shifting the focus to margins and credit. Last quarter, Klarna posted a loss of $0.01 per share against a $0.13 consensus, on revenue of $1.012 billion, up 51.3% year over year (YoY). Fair Financing GMV grew 138% YoY to $4.1 billion, reaching 12% of total GMV, and interest income rose 56% to $284 million. Management has told investors that credit-loss provisions are expected to rise across Q2, Q3, and Q4 on seasonality, Fair Financing growth will moderate as comparables normalize, and the foreign exchange tailwind from a weaker dollar will diminish through the year. Sezzle (NASDAQ:SEZL) stock is down 5% to $122.89 midday Monday. The smaller BNPL platform's shares are still up 103% YTD, though Sezzle stock is down 32% for the month after a sharp reset from July highs, and up 9% for the week through Friday. That mixed pattern reflects investors still digesting Sezzle's most recent print rather than reacting to anything new today. PayPal (NASDAQ:PYPL) stock is down 2% to $60.35 in the large-cap payments corner. PayPal shares are up 11% for the month and up 6% YTD, holding steadier than either Klarna or Sezzle heading into the Klarna earnings report. The scale of PayPal's payments platform makes it less sensitive to any single BNPL data point. Affirm (NASDAQ:AFRM) stock is down 4.17% to $75.08 Monday, giving back a chunk of last week's advance after the shares closed Friday at $78.35. Affirm had gained 4.12% for the week through Friday's close, though it remains down 4.11% over the past month, and it's still up 5.27% year to date on that same basis. As the larger U.S.-listed buy-now-pay-later platform, Affirm serves as the natural valuation anchor for Klarna, and the fact that it's falling alongside Klarna on a day with no sector news suggests investors are trimming BNPL exposure broadly ahead of Tuesday's print rather than singling out one name. The split across the three names supports the read that Monday's action is Klarna-specific positioning rather than a category event. When Sezzle, PayPal, Affirm, and Klarna splinter on the day before an earnings report, it usually points to single-name flows and hedging, not a macro repricing of BNPL. Investors can watch for whether Klarna's revenue lands inside the guided $960 million to $1 billion range, whether transaction margin dollars hit the guided $375 million to $395 million, and whether adjusted operating profit stays positive within the $30 million to $50 million guide. Provision growth and full-year commentary are the two swing factors that could dictate the reaction into Wednesday. The other tells for Klarna include how much provisions climb, and whether management reaffirms the full-year framework of GMV above $155 billion and adjusted operating profit above 6.9% of revenue. Tuesday's release before the open could set the tone for BNPL sentiment into the back half of the year. Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Klarna Group plc didn't make the cut. Grab the names FREE today. Contact [email protected] for any questions or corrections.

The analyst said that it expects the company to post a beat in Q2 on the back of robust e-commerce results. According to data from Fiscal.ai, analysts expect the BNPL firm to post a loss per share of $0.06 on revenue of $995 million. On Stocktwits, retail sentiment around KLAR stock was ‘neutral’ at the time of writing even as message volumes surged 300% over 24 hours. Shares of Buy Now, Pay Later firm Klarna Group plc (KLAR) are on a three-week winning streak as investors have piled into the stock ahead of its second-quarter earnings results. The firm is expected to post its Q2 print on Tuesday before the bell. Meanwhile, Morgan Stanley has raised the price target on Klarna to $21 from $18 and keeps an ‘Equal Weight’ rating on the shares, implying an upside of about 1% from its last close. See what 10M+ investors are talking about. Get the Stocktwits Daily Rip for what retail is watching right now, free to your inbox The analyst said it expects the company to post a beat in Q2 on the back of robust e-commerce results, but added that it thinks the discount to Affirm (AFRM) "likely only compresses with sustained execution on credit," per TheFly. The 12-month average price target is $24.55, according to data from Koyfin. This implies an upside of more than 18% from its last close. Of the 22 analysts covering the stock, 13 have a ‘Buy’ or higher rating, while nine have a ‘Hold’ rating on the company. According to data from Fiscal.ai, analysts expect the BNPL firm to post a loss per share of $0.06 on revenue of $995 million. The company, which debuted on the New York Stock Exchange in Sept. 2025, posted a loss per share of $0.01 on revenue of $1.01 billion in the previous quarter. On Stocktwits, retail sentiment around KLAR stock was ‘neutral’ at the time of writing even as message volumes surged 300% over 24 hours. One user said on Friday, “$KLAR great day. Knowing the usual issue of keeping gains and today's success in that regard, I'm ready for a +15% within next week.” However, another user said, “$KLAR Earnings are this week. Who knows what the stock will do.” KLAR stock is down more than 27% so far in 2026. For updates and corrections, email newsroom[at]stocktwits[dot]com. Aashika Suresh has no position in any of the stocks mentioned in this article. StockTwits' news team content is for informational purposes only and is not intended as investment advice. For more, see our editorial policy. This article was originally published on StockTwits. Related: Duos Technologies Reports Second Quarter 2026 Results Duos Technologies Signs Five-Year, 55 MW Hosting Agreements with Axe Compute Valued at Over $500 Million FTK Clocks Worst Day In Over 6 Years After Wolfpack Research Flags Canceled Deal, Shorts Stock

DLocal (DLO) came out with quarterly earnings of $0.18 per share, missing the Zacks Consensus Estimate of $0.2 per share. This compares to earnings of $0.14 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -10.00%. A quarter ago, it was expected that this online payment company would post earnings of $0.16 per share when it actually produced earnings of $0.17, delivering a surprise of +6.25%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. DLocal, which belongs to the Zacks Financial Transaction Services industry, posted revenues of $399.66 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 11.07%. This compares to year-ago revenues of $256.46 million. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. DLocal shares have added about 1% since the beginning of the year versus the S&P 500's gain of 13.2%. While DLocal has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for DLocal was favorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #2 (Buy) for the stock. So, the shares are expected to outperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.22 on $385.49 million in revenues for the coming quarter and $0.82 on $1.51 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Financial Transaction Services is currently in the top 43% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Klarna (KLAR), another stock in the same industry, has yet to report results for the quarter ended June 2026. The results are expected to be released on August 18. This Swedish buy now, pay later company is expected to post quarterly loss of $0.07 per share in its upcoming report, which represents a year-over-year change of +50%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Klarna's revenues are expected to be $987.94 million, up 20% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report DLocal Limited (DLO) : Free Stock Analysis Report Klarna Group plc (KLAR) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research