Klarna Shares Rebound After Drop, Weak German Spending Weighs on 2026 Outlook

Klarna Group plc shares edged higher in Wednesday premarket trading, following a 22.81% plunge in the previous session. The stock is attempting to stabilize after the sharp selloff, as investors digest the buy-now-pay-later company's second-quarter results and a below-consensus 2026 sales outlook.

During the earnings call, management pointed to persistently weak consumer spending in Germany, particularly in the discretionary retail sector. The company said softness seen late in the second quarter has continued into the third quarter.

Klarna now expects only marginal growth in Germany, its largest market. The company also assumes the market will remain weak rather than recover within the year.

Klarna Results Snapshot

Klarna reported earnings per share of 1 cent, beating consensus expectations for a loss of 5 cents per share. Revenue rose 27% year-over-year to $1.042 billion, exceeding analyst estimates of $993.39 million.

Transaction volume grew 18% year-over-year. Transaction margin dollars jumped 42% to $446 million, surpassing the company's guidance of $375 million to $395 million.

Gross merchandise volume rose 18% to $36.6 billion, or 15% on a comparable basis. U.S. GMV grew 27% to $7.9 billion, representing 22% of total GMV. GMV outside the U.S. grew 15% to $28.8 billion.

Transaction margin reached 43% of revenue. U.S. margin improved to 23% from 14%, while margin outside the U.S. reached 54%.

Klarna's membership base reached 2 million subscribers, eight times the level from the same period last year. Subscription revenue surged over 600%.

Klarna Card users grew to 6.5 million across 16 countries, more than doubling in nine months.

J.P. Morgan Payments went live on August 6, allowing merchants to offer Klarna products without new integrations. The platform processes approximately $2.6 trillion in payments annually.

Klarna and Apple Inc. also launched the Apple Upgrade device rental program in the U.S. Management expects the partnership to generate positive adjusted operating income in 2026. Executives said it could be "highly accretive over the long term."

Outlook

For the third quarter, Klarna expects transaction volume of $35 billion to $36 billion and revenue of $940 million to $980 million. The revenue forecast is below analyst expectations of $1.108 billion.

The company also expects TMD of $340 million to $360 million and adjusted operating income of $5 million to $15 million.

Klarna expects the third quarter to be its primary investment quarter. The company anticipates higher equity incentive and launch-related expenses, with benefits expected to materialize in the fourth quarter.

The company lowered its 2026 GMV outlook to $149 billion to $151 billion from over $155 billion. Klarna cited a $600 million currency impact and expected weakness in German transaction volume. Its U.S. assumptions remain unchanged.

Klarna expects 2026 revenue of $4.08 billion to $4.16 billion, below analyst expectations of $4.415 billion. The company raised its TMD guidance to $1.62 billion to $1.65 billion and expects adjusted operating income of $280 million to $300 million.

Klarna targets having five payment service providers offer Klarna as a default option by the end of 2026. The company also expects its rental program and a higher-margin product mix to support growth. TMD remains a key performance metric as Klarna seeks to generate more revenue and earnings from every dollar of GMV.

Klarna Stock Performance

KLAR share activity: Klarna stock rose 0.40% to $15.12 in Wednesday premarket trading.