Klarna cuts revenue target as it forecasts softer European volumes

Klarna, the Swedish fintech unicorn, has lowered its revenue target for the year due to unfavorable currency shifts and reduced activity in Europe. The company now expects to generate between $4.08bn and $4.16bn for the current financial year, down from its previous forecast of over $4.34bn (£3.21bn). Additionally, Klarna has reduced its predicted gross merchandise volume (GMV) to $149bn from a previous estimate of $151bn.

The firm cited a more conservative view on European volumes in the second half and noted weak growth in German retail sales, which is its largest market by volume. The UK remains Klarna's third-largest market, with over 11 million active customers and partnerships with more than 60,000 retailers. Despite the downgrade, Klarna managed to report a profit in the second quarter, marking its second consecutive quarterly profit since its IPO last September.

The company's revenue exceeded $1bn for the third consecutive quarter, with GMV increasing by 18% year-on-year to $36.6bn. Klarna also saw a surge in active users to 120 million, marking an eight percent growth in annual growth, and memberships increased eight-fold, reaching 2 million paying subscribers. This led to a significant boost in subscription revenue, with a 600% increase, which carries no transaction or credit loss costs.

Klarna has also submitted a bid for a US banking license, aiming to serve 30 million US consumers in its network with better quality and lower costs.