Q2 2026 Klarna Group PLC Earnings Call Transcript
Key Points
- Klarna Group PLC (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 (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.
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. During the question-and-answer portion of today's call, please limit yourself to one question. To join the queue, participants should dial pound key five on their telephone keypad. Before we move to Q&A, we will begin with a brief presentation.
Sebastian, please go ahead.
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