Klarna Group (KLAR) investor relations material

Strategic business developments

• Focus remains on three payment segments: everyday spend, mid-ticket (entry strategy), and high-ticket Fair Financing, with mid-ticket driving frequency and brand preference.

• U.S. expansion in high-ticket segment has seen success, with major partnerships like Walmart and Apple, boosting Fair Financing's share and transaction margins.

• Revenue up 27% in Q2, transaction margin dollars up 42%, and ARPU up 24% year-on-year; Germany underperformed due to weaker online sales.

• Guidance will be updated quarterly based on real-time transaction data to maintain credibility with long-term plans.

• Transaction margin SEK is prioritized over volume due to seasonality and partnership effects.

Market and product insights

• In Germany, Klarna is used mainly for payment safety rather than lending, with high frequency and strong brand presence.

• German transactions benefit from low-cost ACH funding, resulting in gross margins of 50-60%, and are spend-centric with short-duration credit.

• U.S. market now leads in revenue and users, with 30 million users and strong presence in mid-ticket retail segments.

• Fair Financing in the U.S. is growing but remains a smaller share compared to historical highs; balance between spend-centric and financing products is improving.

• Card product has reached 6.5 million active users, driving higher ARPU and enabling more frequent customer engagement.

Distribution and partnerships

• Default placement with major PSPs like Stripe and JP Morgan increases acceptance points and user base, supporting international growth.

• Being default requires broad international presence and a full suite of payment methods for all ticket sizes.

• PSP distribution is cost-effective, reducing sales and marketing expenses.

• Recent partnerships with Apple and Southwest Airlines are expected to drive further growth, with ongoing vertical and merchant expansion in the U.S. and Europe.