Klarna (KLAR) saw its stock decline by 22% on the heels of its Q4 earnings report, despite achieving record revenue figures. The company announced a revenue of $1.08 billion for the fourth quarter, surpassing analysts” expectations of $1.07 billion. This marked a significant milestone as it was Klarna”s first quarter to exceed the billion-dollar mark.
The company”s Gross Merchandise Volume (GMV) reached $38.7 billion, outpacing the anticipated $38.1 billion, and active users grew to 118 million, exceeding the Wall Street forecast of 117 million. However, the positive headlines were overshadowed by disappointing metrics in margins and guidance.
Klarna”s transaction margin dollars amounted to $372 million, falling short of the $395 million forecast for the second consecutive quarter. The adjusted operating margin was reported at 4.4%, significantly below the expected 6.4%. Klarna attributed this shortfall to the rapid growth in its Fair Financing installment product, while analysts from J.P. Morgan pointed to increased processing and funding costs as the main culprits.
In terms of future projections, Klarna provided guidance for Q1 2026 with revenue expectations between $900 million and $980 million, which is below the analyst consensus of $965.1 million. The company”s GMV guidance of $32 to $33 billion also fell short of the $33.4 billion estimate, and the full-year 2026 GMV guidance was above $155 billion, yet still below the consensus of $159 billion. Klarna anticipates a revenue growth of over 24% for the year, which is less than the previously projected 29% to 31% growth.
Despite these challenges, Klarna did report positive developments in its banking segment, with the number of banking consumers doubling to 15.8 million. This segment generated more than three times the revenue compared to average users. The company also added a record 115,000 merchants in the quarter, bringing the total to 966,000, marking a 42% increase year-over-year. Credit loss provisions decreased to 0.65% of GMV from the 0.72% reported in the third quarter.
Before the earnings report, Klarna”s stock had already been under pressure, having fallen more than 34% since the start of 2026. The stock initially debuted at $40 per share on the NYSE in September and enjoyed a 15% increase on its first day of trading but quickly lost momentum.
The broader fintech landscape, concerns regarding potential AI disruptions, and a proposed cap on credit-card interest rates have contributed to the stock”s decline.
Klarna is set to release its full annual financial statements on February 26, which may provide further insights into the company”s performance and future strategy.
