Klarna shares drop sharply on fourth quarter earnings miss Proactive uses images sourced from Shutterstock
Klarna Group PLC (Unlisted (US):KLAR) saw its shares drop almost 25% following the release of its fourth-quarter results after the company reported a wider-than-expected net loss, despite recording its first $1 billion quarter.
For Q4, the Stockholm-based buy-now, pay-later provider reported a net loss of $26 million, or $0.19 per share, compared with Wall Street expectations of a $0.02 loss. This marked a significant turnaround from the $40 million profit the company reported in the same quarter a year earlier.
Revenue, however, grew 38% year-over-year to $1.082 billion, slightly above analysts’ estimate of $1.07 billion. Growth was broad-based, with transaction and service revenue up 24%, and US revenue increasing 58% year-over-year, driven by continued adoption of the company’s Fair Financing offerings.
Klarna also highlighted growth in its consumer and merchant base. Active Klarna consumers rose 28% to 118 million, while the number of merchants using the platform grew 42% to 966,000. Gross merchandise volume (GMV) increased 32% to $38.7 billion.
Adjusted operating profit for the quarter was $47 million, and the company reported early progress in subscription offerings, with 3.5 million subscriptions currently in trial periods expected to contribute to future monetization.
“We’re building a global digital bank that saves consumers time and money and puts them in control of their finances. Our results show consumers are hungry for it,” Klarna CEO Sebastian Siemiatkowski said in a letter to shareholders. “In Q4 we delivered our first billion-dollar revenue quarter—$1.08 billion, up 38% year-over-year and above guidance, the US grew 58%. GMV hit $38.7 billion.”
Despite the revenue gains, investors focused on the earnings miss and net loss, leading to the sharp drop in Klarna’s share price since the report.
