Aug 18, 2026 earnings call — Transaction margin growth and updated guidance
Management raised full year transaction margin dollars to $1.62 billion to $1.65 billion, up to 1.09% of GMV.
Revenue $1.0B (est $1.0B) · EPS $0.01 (est $-0.05) · Next-quarter revenue outlook $0.9B–$1.0B
Key quotes
"Transaction margin dollars were $446 million, up 42%, well above the $375 million to $395 million we guided in May."
"These are fixed term installments, and it's our fastest-growing product, up 82% year-over-year to $4.7 billion, offered by 256,000 merchants now, up from 151,000 when we first spoke to you in November."
"The remainder is a more measured view of European volumes concentrated in Germany, our largest market by volume, where retail sales grew less than 1% in real terms in the first half."
Analyst Q&A 15
Transaction margin outlook for H2
Q (William Nance · Goldman Sachs): The analyst asked why the guided transaction margin exit rate is lower than the strong first half. He asked about seasonality, prudence in the guide, FX, and how Fair Financing ramp will affect transaction margin over time.
A: Management said second-half TMD growth is lower versus the first half mainly due to lapping Fair Financing growth from 2Q '25 and FX headwinds. They gave a breakdown: interest income was 0.72% in Q2 and will be a little lower in Q3/Q4 with the fair value presentation; gain on sale similar to Q2 as a percent of GMV; processing and servicing costs will grow a bit ahead of GMV; provisions stable to slightly downward. They emphasized continued strong U.S. volume growth and that new default partners should help TMD.
"So if you look at it, we're looking at around about 23% year-over-year growth on TMD in the second half, if you take the midpoint of our guide, that is compared to 42% in the first half of '26, right?" — Niclas Neglen
Germany volume mix and outlook
Q (Robert Wildhack · Autonomous): The analyst asked how much GMV comes from Germany, the mix of Pay Later vs Fair Financing there, and how the expected Germany growth changed since earlier in the year. He also asked why TMD looks softer if Germany is lower-margin.
A: Management said Germany is the largest market by volume and saw a softening in consumer discretionary retail spend at the end of 2Q that continued into early Q3. They said Germany is mainly Pay Later and Pay Now, and the guidance assumes that softness continues without a quick rebound. On TMD softness, they said TMD dollars are still growing 23% and the headline change is more about U.S. growth and earlier comps and FX factors than just Germany mix.
"Germany is our largest share of volume or our largest market from a volume perspective, right?" — Niclas Neglen
CFO search in New York and strategy
Q (Harshita Rawat · Bernstein): The analyst asked why the CFO search is New York based and whether the leadership changes imply any change in funding, capital allocation, brand investment, or U.S. expansion.
A: Management said the transitions are planned for early next year and that current leaders built solid foundations to continue operating the same way. They said the U.S. is the largest market by revenue with over 30 million consumers, so having a stronger New York presence is important and helps stay close to investor relations and the stock market.
"So having a stronger presence in New York is important to us." — Sebastian Siemiatkowski
Loans sold, forward flows, fair value change
Q (James Faucette · Morgan Stanley): The analyst asked how many loans will be sold for Pay Later and Fair Financing, and how gain-on-sale margins change under the fair value presentation.
A: Management said the strategy is to be capital light and focus on Fair Financing forward flows, and that substantially all loans will be eligible to be sold in the second half of the year, prompting the fair value change. They guided to 1.09% TMD and said about 2 basis points are pulled forward in the fair value view, which makes gain on sale slightly flatter but raises TMD; backing out 2 basis points gives 1.07% versus 1.04% prior, adding about $40 million to $50 million more true transaction margin dollars.
"Ultimately, like I said, if you look at it in totality, we are guiding to about 1.09% of transaction margin, TMD." — Niclas Neglen
Germany impact vs large partner ramps
Q (Bryan Keane · Citi): The analyst asked how much Germany is hitting the numbers versus ramps like JPMorgan and other PSP relationships and how Germany is modeled.
A: Management said they are lapping strong Fair Financing growth from last year's second half while the U.S. continues to grow very strongly and has a strong pipeline. They said guidance focuses on trend and that German consumer sentiment softness is expected to continue, so on that baseline they expect very marginal increases in Germany overall.
"So on that baseline, we're expecting very, very marginal increases in Germany overall." — Niclas Neglen
Apple Upgrade program and guidance
Q (Connor Allen · JPMorgan): The analyst asked if the Apple Upgrade program is assumed in second-half guidance and asked for any details about the partnership.
A: Management said they are happy with the Apple Upgrade program and expect it to be multiyear; they expect a positive AOI in 2026 and through the life of the program. They said the program will ramp this year and can be accretive over time, but the current guide reflects what they are including now.
"We see this very much as a multiyear similar to what many of our other partners we have where we start and we start ramping, which we will do this year." — Niclas Neglen
Q4 GMV growth visibility
Q (Jason Kupferberg · Wells Fargo): The analyst asked how realistic the Q4 GMV growth needed to reach the full-year midpoint is, and what visibility supports that pace versus last year's Q4.
A: Management said the business is seasonal and the U.S. is growing strongly with several items in the pipeline, including Apple, default partnerships, and PSP ramps. They also noted mid-teens growth in the Nordics from Fair Financing and the card, and that not all features from the Nordics have been rolled out elsewhere yet, all of which support Q4.
"the U.S. is continuing to really, really chug along on all engines, right?" — Niclas Neglen
Subscriber monetization potential
Q (Andrew Bauch · BMO): The analyst asked what share of revenue or transaction margin could come from subscriptions long term and what guideposts investors can watch.
A: Management said subscriptions grew 600% year-on-year and they have reached 2 million subscribers with recent membership updates and card integration; they view membership as core to a deeper financial partnership with engaged consumers. Management declined to give a specific long-term percentage but said "it's going to be a significant portion over time" and that memberships help increase TMD per dollar without adding more transactions.
"Let's say, I think it's going to be a significant portion over time." — Niclas Neglen
Apple accounting and residual risk
Q (Matthew O'Neill · BofA): The analyst asked whether Apple device leases will be on balance sheet at amortized cost or follow forward flow treatment, and who holds residual value risk.
A: Management said the Apple program is treated as a financing receivable and is accounted the same as the Fair Financing point-of-sale installment product. They will fair value the asset when on their book and have optionality to offload it opportunistically; if it's a financing receivable, they carry the receivable on their book.
"So it in very simple terms is that this is really treated as a financing receivable for us, right?" — Niclas Neglen
Competition in Europe, U.S., Germany
Q (Harry Bartlett · Rothschild & Co Redburn): The analyst asked about the competitive environment in Europe and the U.S., and whether competition in Germany is causing the weakness or if it is macro-driven.
A: Management said Klarna aims to offer relevant products across everyday spend, BNPL, and big-ticket items and that in the U.S. they established leadership in lifestyle BNPL with small average credits. They said global presence and partnerships give Klarna a competitive advantage over local players, and that the Germany weakness is due to softer-than-expected consumer sentiment rather than a noted change in competition.
"I would argue that Klarna, thanks to its global presence and the fact that we're active in so many markets, is actually creating a significant competitive advantage" — Sebastian Siemiatkowski
Volume trends around Germany
Q (Kyle Peterson · Needham): The analyst asked if there were volume curtailments in other European countries in Q2 and what the guidance assumes for transaction trends in markets surrounding Germany.
A: Management said Germany is the most pronounced case but there is a varied picture across 26 markets with some pockets of softness. They highlighted double-teen growth in the Nordics from Fair Financing and the card rollout, good growth in Southern Europe, and that the guidance calls out Germany's discretionary spend adjustment.
"If you take the Nordics as an example, I mentioned before, we're getting double teen growth rates as we've expanded the Fair Financing and the card rollout there." — Niclas Neglen
When margins reach double-digit OpEx margin
Q (Thomas Nilsson · Nordea): The analyst asked when Klarna could achieve double-digit or mid-teens adjusted operating margin given transaction margin growth and slower cost growth.
A: Management said full-year they expect transaction margin dollars to grow about 32% and adjusted OpEx about 15%, and that transaction margin dollars as a percent of revenue rose from 14% to about 23% with further sequential growth expected. They would not give a specific timing but said they have a long-term target of 50% transaction margin dollars and 25% adjusted operating income.
"And we have a long-term target of a 50% transaction margin dollars and 25% adjusted operating income." — Niclas Neglen
Fair Financing merchant growth and card impact
Q (Moshe Orenbuch · TD Cowen): The analyst asked if merchant adoption of Fair Financing will continue, and how the card affects Fair Financing mix and share of total volume over time.
A: Management said they encourage merchants to offer all Klarna products and that out of over 1 million merchants, about 250,000 now offer Fair Financing, so there is room to grow. They said the card brings Klarna products into physical stores but does not fundamentally change payment types; market maturity matters and in some markets Pay in Full grows faster as users adopt the product.
"So you can still see that out of the over 1 million merchants that accept Klarna, we are now at about 250,000 offering Fair Financing." — Sebastian Siemiatkowski
Funding strategy for Apple and deposit trend
Q (Giuliano Anderes-Bologna · Compass Point): The analyst asked whether Klarna will continue to offload assets like the Apple program off balance sheet and about the recent tick down in deposit funding.
A: Management said they plan capital for the long term and keep optionality across tools, and they will offload Apple leasing assets if the economics make sense while viewing the balance sheet as a portfolio. On deposits, they said the recent decline is seasonal: consumer savings deposits fluctuate and they change rates as needed, with a typical cycle of slower first-half growth and acceleration toward peak season.
"We will offload if we think that the economics make sense with regards to the Apple leasing product, right?" — Niclas Neglen
Q3 Germany quarter-to-date trend
Q (Lemar Clarke · Freedom): The analyst asked whether the Germany deceleration seen exiting June has stabilized, continued at the same pace, or worsened in July and August.
A: Management said they are seeing roughly the same downward trend in Germany in Q3 and that this is reflected in the guide. They reiterated that while volume fluctuates, they are generating more transaction margin dollars per dollar of volume as they expand features and deepen consumer monetization.
"Generally speaking, we're seeing roughly the same kind of trend downward trend, right, which is what we've included in the guide, right?" — Niclas Neglen