Klarna Group Plc (Klarna (KLAR)) shares jumped more than 14% on Thursday after the buy now, pay later pioneer reported first-quarter results that showed it can actually make money — and lots of it. The company posted revenue of $1 billion, up 44% from a year ago and comfortably above the $945.1 million analysts were looking for. More importantly, Klarna swung to a net profit of $1 million, compared with a loss of $99 million in the same quarter last year. That's not a huge profit in absolute terms, but it's a massive swing and a sign that the business model is finally clicking.
The numbers were driven by strong growth across the board. Gross merchandise value (GMV) — the total value of transactions processed through Klarna's network — rose 33% to $33.7 billion, with the U.S. growing 39% and international markets up 31%. Transaction margin dollars, a key profitability metric, jumped 44% to $389 million, and the transaction margin hit 38.4%, showing that Klarna is getting better at making money on each transaction.
"Klarna addresses the entire consumer wallet: Pay Now for everyday spending and saving, Pay Later our charge card equivalent at 0% interest for mid-size ticket spending, and POS installments (Fair Financing) for big-ticket purchases. In Q1 we executed well across all the business, driving every line of our P&L and compounding growth across our global network. Growing network. Same three products. Deeper consumer engagement," said Sebastian Siemiatkowski, CEO and co-founder of Klarna.
The company's network effects are becoming more apparent. Klarna ended the quarter with 119 million active consumers, up 21% year over year, and more than 1 million merchants, representing 49% annual growth. That's a lot of people and businesses using Klarna's payment options, which creates a virtuous cycle: more merchants attract more consumers, and more consumers attract more merchants.
Klarna also reaffirmed its full-year 2026 outlook, projecting GMV above $155 billion. But the second-quarter guidance was a bit more cautious. The company forecast revenue between $960 million and $1 billion, below the analyst consensus of $1.065 billion. It also guided for Q2 GMV of $35.5 billion to $36.5 billion, transaction margin dollars of $375 million to $395 million, and adjusted operating profit between $30 million and $50 million. That's still solid growth, but the revenue miss relative to expectations might give some investors pause.
Still, the market focused on the good news Thursday. Klarna shares were up 14.61% at $15.68 at the time of publication. The stock has been on a rollercoaster since its IPO, but this quarter shows that the company is on a path to sustainable profitability. For a company that was once seen as a loss-making disruptor, turning a profit — even a small one — is a big deal.
