Klarna Shares Plunge 22% Despite Record Q4 Revenue as Profitability Concerns Mount

Key Takeaways

Table of Contents

Klarna (KLAR) delivered Q4 revenue of $1.08 billion, surpassing the $1.07 billion projection and achieving its first-ever billion-dollar quarter.
Gross merchandise volume reached $38.7 billion while active users climbed to 118 million, both exceeding analyst predictions.
Transaction margin dollars disappointed at $372 million against expectations of $395 million — the second consecutive quarterly shortfall.
First-quarter 2026 revenue outlook and full-year GMV projections landed below Wall Street consensus figures.
The stock plummeted 22% to $14.68, compounding a 34% year-to-date loss prior to the earnings report.

Klarna’s fourth-quarter 2025 performance delivered impressive top-line numbers. The company posted revenue of $1.08 billion, exceeding analyst expectations and crossing the billion-dollar threshold for the first time in its history. Gross merchandise volume of $38.7 billion surpassed the $38.1 billion projection. The platform’s active user base reached 118 million, beating the 117 million Wall Street anticipated.

KLARNA $KLAR Q4’25 EARNINGS HIGHLIGHTS
🔹 Revenue: $1.082B (Est. $1.07B) 🟢; +38% YoY (+58% U.S.)
🔹 GMV: $38.7B; +32% YoY (+43% U.S.)
🔹 Banking Consumers: 15.8M; +101% YoY
🔹 Klarna Card Users: 4.2M active (+1.9M QoQ)
🔹 Credit Loss Provisions: 0.65% of GMV (vs. 0.72% in Q3)… pic.twitter.com/OCChIcyVjO
— Wall St Engine (@wallstengine) February 19, 2026

Despite these achievements, the stock declined over 22% to $14.68 during Thursday trading. The underlying metrics painted a more complicated picture than the headline figures suggested.

Klarna Group plc, KLAR

Year-over-year revenue expansion reached 38%, with U.S. revenue climbing 58%. American GMV increased 43%. While these growth rates appear robust, investors zeroed in on profitability metrics instead.

Profitability Metrics Fall Short of Expectations

Transaction margin dollars totaled $372 million, missing the anticipated $395 million. This marked the second straight quarter where this critical metric underperformed analyst forecasts. The adjusted operating margin registered 4.4%, significantly trailing the 6.4% projection.

Klarna explained the transaction margin shortfall as a consequence of accelerated expansion in its Fair Financing installment offering. Analysts at J.P. Morgan identified processing and funding expenses as the main culprits, highlighting the variance from their proprietary models.

J.P. Morgan characterized the annual outlook as having “missed Street estimates across most all key metrics.”

Forward Guidance Underwhelms Investors

For the first quarter of 2026, Klarna projected revenue between $900 million and $980 million. The range’s midpoint sits beneath the $965.1 million analyst consensus. The company’s Q1 GMV forecast of $32–$33 billion similarly lagged the $33.4 billion estimate.

Full-year 2026 GMV guidance of above $155 billion fell short of the $159 billion consensus target. The company anticipates annual revenue growth exceeding 24% — below the 29–31% range analysts had modeled.

The company’s banking expansion demonstrated notable traction. Banking customers doubled to 15.8 million, producing more than triple the revenue of typical users. Fair Financing GMV surged 165% during Q4, accelerating from 139% growth in the prior quarter. The platform onboarded a record 115,000 merchants in the quarter, pushing the total to 966,000 — a 42% annual increase.

Credit loss provisions improved to 0.65% of GMV from 0.72% in the third quarter. Revenue per employee hit $1.24 million. From Q4 2022 through the latest quarter, revenue expanded 104% while operating costs decreased 8%.

Pre-Earnings Selloff Extended by Results

Klarna completed its NYSE listing in September with a $40 share price. The stock gained 15% on its first trading day but failed to sustain upward momentum. Before the Q4 earnings release, shares had already declined more than 34% year-to-date in 2026.

Multiple headwinds contributed to the selling pressure — widespread fintech sector weakness, anxiety surrounding artificial intelligence disruption, and proposed legislation introduced in January to cap credit-card interest rates at 10%.

Klarna plans to publish its complete annual financial statements on February 26.