Klarna Group PLC (KLAR) posted better-than-expected third-quarter results Tuesday morning, but the market wasn't exactly throwing a party. In fact, shares of the buy-now-pay-later platform fell nearly 10% despite beating on both the top and bottom lines.

The Swedish fintech reported a quarterly loss of 25 cents per share, narrower than the 33-cent loss analysts were bracing for. Revenue came in at $903 million, comfortably ahead of the $881.9 million estimate. For the fourth quarter, Klarna guided to revenue between $1.065 billion and $1.08 billion, topping the Street's $1.058 billion forecast.

So what gives? CEO Sebastian Siemiatkowski offered some clarity. "Q3 was our strongest quarter ever — proof that our AI-driven model is working at scale, with U.S. revenue up 51% and GMV up 43%," he said. "While accounting timing creates a short-term profitability lag, we expect transaction margin dollars to increase by over $100 million in Q4 as revenue compounds."

That accounting timing quirk seems to be weighing on investor sentiment. By Wednesday, Klarna shares had fallen 3.2% to trade at $30.62.

Following the earnings report, Wall Street analysts moved quickly to recalibrate their expectations. Morgan Stanley analyst James Faucette maintained an Equal-Weight rating but trimmed his price target from $43 down to $39. JP Morgan analyst Tien-Tsin Huang kept his Overweight rating while cutting his target from $50 to $45. Wolfe Research analyst Paul Obrecht also maintained an Outperform rating but reduced his price target from $50 to $45.

The pattern is telling: analysts still like the story and believe in the business model, but they're adjusting near-term valuations to reflect whatever bumps might come from that accounting timing issue. It's worth noting that despite the price target cuts, two of the three analysts maintained bullish ratings on the stock.

The strong U.S. performance is particularly noteworthy. A 51% revenue jump in America suggests Klarna is gaining serious traction in a market where competition for buy-now-pay-later dominance is fierce. The 43% growth in gross merchandise volume shows consumers are increasingly comfortable using the platform for their purchases.