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MarketFlick Insights
Klarna Cuts Revenue Target After Forecasting Weaker European Volumes
At a glance
- Klarna cut revenue guidance to $4.08bn$4.16bn from over $4.34bn, and trimmed GMV guidance to $149bn from $151bn (prior target above $155bn).
- Around $600m of the GMV downgrade was attributed to currency movements impacting Europe and the UK.
- Germanya key market for Klarnais expected to remain weak through H2, with retail growth below 1%.
- Klarna delivered a $27m profit in Q2, reversing a $46m loss year-on-year, and reported three consecutive quarters with revenue above $1bn.
- Active consumers grew to 120m and paid memberships rose to 2m, driving a 600% increase in subscription revenue and supporting improved transaction margins.
- Klarna has applied for a US banking licence to better serve its 30m US customers and broaden services.
Klarna trims outlook as European spending softens
Klarna has lowered its revenue target for the current financial year after citing adverse currency movements and weaker consumer activity across Europe. The Swedish fintech now expects revenue between $4.08bn and $4.16bn, down from a previous forecast of more than $4.34bn (£3.21bn).
The company also reduced its forecast for gross merchandise volume (GMV) the total value of goods sold through its platform before fees and costs to $149bn from $151bn. Earlier guidance had pointed to GMV in excess of $155bn. Klarna said it had taken a "more measured view of European volumes in the second half," with particular softness in discretionary retail categories.
Klarna flagged that roughly $600m of the GMV downgrade was driven by currency movements that affected European volumes and other markets including the UK. Germany, Klarna's largest market by volume, is expected to show less than 1% growth in retail sales and to remain soft through the second half rather than recover, the company said. The UK remains one of Klarna's biggest markets globally, with more than 11m active customers and partnerships with about 60,000 retailers.
Despite the downgrades, Klarna modestly raised its transaction margin dollars target a measure of the actual cash the firm retains from activity to a range of $1.62bn to $1.65bn, up from $1.61bn. The uplift reflects stronger income streams that carry lower transaction costs.
Results and strategic moves
Operationally, Klarna reported a $27m profit in the second quarter, reversing a $46m loss in the same period in 2025 and marking its second quarterly profit since last September's IPO. Revenue topped $1bn for the third straight quarter, while GMV jumped 18% year-on-year to $36.6bn.
Active consumers on Klarnas platform rose to 120m, an annual increase of 8%, and paid memberships surged to 2m an eight-fold rise. Subscription revenue grew by 600%, a material contributor to higher transaction margins because that income stream does not carry transaction or credit-loss costs.
In markets, the company's stock fell nearly 19% in early trading to below $16 following the revised guidance, and remains more than 50% below its IPO price. In July, Klarna filed for a US banking licence, saying the move would help serve the 30m US consumers in its network across spending, saving and payments with improved quality and lower cost to serve.
Klarna said the updated guidance and commentary reflect both macroeconomic effects notably muted European retail demand and currency shifts and the companys more cautious stance on volume recovery in key markets. The fintechs underlying momentum in profitability, subscription growth and margin mix suggests management is balancing near-term headwinds with longer-term product and revenue diversification.
