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15h ago

Klarna Reports Growth but Faces Rising Losses and Regulatory Challenges

The buy-now-pay-later giant's Q1 2025 earnings reveal increased revenue, higher credit defaults, and looming U.K. regulations set for 2026.

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Sebastian Siemiatkowski attends the official launch of the Klarna pop-up on June 4, 2019, in London.
FILE - People shop for shoes in a Nike store on Nov. 25, 2022, in New York. (AP Photo/Julia Nikhinson, File)
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Overview

  • Klarna's Q1 2025 revenues grew 15% to $701 million, but pretax losses doubled year-over-year to $92 million, with credit losses rising 17% to $136 million.
  • The company now serves 100 million active customers globally, with growth driven by U.S. expansion and partnerships such as its recent collaboration with DoorDash.
  • Consumer debt concerns are mounting, as 41% of BNPL users report struggling to repay loans on time, and a quarter now use these services for essentials like groceries.
  • The U.K. Parliament introduced legislation granting the FCA oversight of BNPL products starting in 2026, prompting warnings from experts like Martin Lewis about potential financial risks.
  • Klarna continues to leverage AI to streamline operations, having cut its workforce by 40% since 2022, but is now piloting a gig-based customer service model to complement its AI systems.