Klarna (KLAR) Q2 2026 Earnings Call Transcript

On Thursday, Klarna reported its Q2 2026 earnings call. CEO Sebastian Siemiatkowski announced that the company achieved above expectations on every metric for the second quarter in a row. Revenue increased by 27%, while transaction margin dollars grew by 42%. Adjusted operating income reached $91 million, marking a $62 million year-on-year increase. Net income was positive at $9 million. Klarna's operating costs grew by just 16%.

The company emphasized its commitment to investing in its business while maintaining strong operating leverage. They measure success through transaction margin dollars, which shape product development, pricing, and underwriting decisions. Over the past year, transaction margin dollars have compounded at roughly 30% faster than revenue growth.

Klarna's three main business areas - Everyday spend (Pay in Full), Lifestyle spend (Pay Later), and Big-ticket spend (Fair Financing) - all contributed to the company's success. Pay in Full, which allows purchases under $75 with no balance sheet risk, contributed $3.6 billion in volume and grew to 2 million subscribers this quarter.

Pay Later, their signature 0 interest short-term fixed installments product, grew by 13%. Fair Financing, designed for purchases between $500 to $10,000, saw an 82% year-over-year increase, reaching $4.7 billion in volume. In the U.S., Fair Financing now accounts for 13% of total volume, up from 1/5 of Klarna's volume a few years ago.

Transaction margin reached 43% of revenue, a 4.5 point increase from the previous year. The U.S. market saw the biggest growth in transaction margin, rising from 14% to 23% in the year. Global ex-U.S. transaction margin expanded by 4 points to 54%. It's worth noting that Klarna's margins have consistently been higher in markets where they've been operating for longer periods.

In terms of business updates, Klarna reported that 2 million paying subscribers joined its membership program, up 8x from a year ago, with subscription revenue growing over 600%. The Klarna Card reached 6.5 million active users across 16 countries, more than doubling in 9 months. Klarna Card membership plans have been launched based on what consumers actually want, including cashback and benefits.

JPMorgan Payments, the largest merchant acquirer in the United States, processed $2.6 trillion of payments in 2026 and now enables Klarna's full suite of products through their existing setup. Finally, Klarna has partnered with Apple to offer an Upgrade program, a new device leasing service available through Apple.