Klarna has cut its revenue target for the current financial year, citing unfavourable currency movements and softer European volumes, particularly in Germany, its largest market by volume. The Swedish fintech said it now expects full-year revenue of between $4.08bn and $4.16bn, down from a previous forecast of over $4.34bn.
The Klarna revenue target cut came alongside a reduction in forecast gross merchandise volume (GMV), the total sales value of everything transacted on its platform before fees or costs are deducted. The company trimmed its GMV outlook to $149bn from $151bn. Previously it had been expecting GMV in excess of $155bn.
‘We have taken a more measured view of European volumes in the second half… and pronounced in certain discretionary retail categories,’ the company said. Around $600m of the GMV reduction was attributed to ‘currency movement’ that had affected ‘European volumes as well as other markets including the UK’.
Germany weighs on the Klarna revenue target cut
Klarna pointed directly to German retail conditions as a driver of its revised outlook. German retail sales have grown by less than one per cent, and the firm said it had forecast the country to remain ‘soft through the second half rather than recovering’. Germany is Klarna’s largest market by volume, making its trajectory unusually consequential for the group’s overall numbers.
The UK, Klarna’s third-largest market globally, was also touched by currency headwinds. The group counts more than 11 million active customers in Britain and works with around 60,000 retailers. Currency shifts affecting European volumes have fed directly into the UK numbers as well, the company noted.
Klarna’s stock fell nearly 19 per cent in early trading to below $16. The shares remain down more than 50 per cent since the group’s IPO last September, underscoring the pressure the company faces to demonstrate a sustainable earnings trajectory after a bruising public debut.
Profits hold, and margins edge higher
Despite the downward revisions to revenue and GMV, Klarna managed to lift its transaction margin dollars target, a measure of the real cash retained from its activity. The forecast was raised from $1.61bn to between $1.62bn and $1.65bn, helped by income streams that carry lower transaction costs.
The company posted a $27m profit in the second quarter, swinging from a $46m loss in the equivalent period in 2025. Revenue surpassed $1bn for the third consecutive quarter, with GMV up 18 per cent year-on-year to $36.6bn. Active consumers reached 120 million, representing annual growth of eight per cent.
Memberships grew eight-fold, bringing the total of paying subscribers to 2 million. Subscription revenue rose 600 per cent, providing a material boost to transaction margins because, unlike lending, subscription income does not carry transaction or credit loss costs. That structural shift in the revenue mix is what allowed the margin target to nudge higher even as topline forecasts fell.
US banking licence application adds a longer-term dimension
In July, Klarna submitted applications to the Utah Department of Financial Institutions and the Federal Deposit Insurance Corporation (FDIC) to establish Klarna Bank USA, proposed as a Utah-chartered industrial bank. The company said the application would help it serve the 30 million US consumers in its network ‘across their everyday spending, saving and payments, with better quality and a lower cost to serve’.
The move draws on a model the firm has operated in Europe for some years. Klarna has held a banking licence in Europe since 2017, giving it a regulatory foundation it now seeks to replicate on the other side of the Atlantic. Since 2019, the company says it has provided Americans with access to over $91.3bn in credit, and claims consumers have saved more than $5.1bn in interest compared with revolving credit card debt.
A US banking licence, if granted, would allow Klarna to take deposits and deepen its relationship with American customers beyond its current offering. Whether regulators approve the application will shape the company’s medium-term growth story at a point when its core European markets are under clear pressure. City AM reported the full quarterly figures alongside the revised targets.
