Klarna's Upcoming IPO in 2025: From Sequoia to Wall Street

In 2005, three students from the Stockholm School of Economics: Sebastian Siemiatkowski, Niklas Adalberth, and Victor Jacobsson, joined forces in the school’s annual entrepreneurship contest with a vision to simplify online shopping payments. This marked the inception of what we today, almost 20 years later, know as the fintech giant – Klarna. Since its inception, Klarna has catapulted into becoming a key player in the “buy now, pay later” (BNPL) space, and the company have just filed the F-1 for an IPO in 2025. Let’s explore the company in more detail.

• Rapid expansion: Klarna, originally named Kreditor, quickly grew from being a Swedish startup to a major player in the global BNPL market.

• Innovative business model: Klarna's "smooth shopping" philosophy offers flexible payment options, including direct payments, pay after delivery, and installment plans like Pay In 4, across its app and through partnerships with global retailers.

• IPO ambitions: With its recent financial turnaround, marking its first quarterly profit since 2019, Klarna is gearing up for an IPO in 2025, particularly eyeing a listing on the New York Stock Exchange.

• Valuation recovery: Despite a significant devaluation in 2022, Klarna's valuation rebounded to $7.85 billion in December 2023, following a profitable third quarter. Reports suggests its IPO could price it at a valuation of over $15 billion.

Klarna was founded in 2005 by Sebastian Siemiatkowski (also founder of Swedish investment company Flat Capital), Niklas Adalberth, and Victor Jacobsson. Initially named Kreditor, the company’s early years were marked by the founders’ relentless work on simplifying the complex maze of online transactions.

By 2007, its 1000th vendor sign-up was celebrated, and growth was continuously rapid; by 2008, the company was venturing into Denmark, Finland, and Norway, and by 2009, it rebranded to Klarna. This period also saw the launch of innovative services like installment payment solutions and Klarna Checkout, and it kept on significantly gaining market share.

In 2013, Klarna acquired SOFORT, further solidifying its foothold in the European payment solutions market. As of market share the company had already by 2014 captured a remarkable 10% share in Northern Europe, and processed 30% of all online sales in Sweden.

Klarna’s mantra is “smooth shopping,” a philosophy that permeates every facet of its business model, from online to in-store experiences. This approach isn’t just a catchy tagline; it’s a comprehensive strategy aimed at redefining the shopping experiences by offering flexible payment options that cater to the diverse needs of consumers worldwide. Some of its biggest competitors in this space are Block, Affirm, and PayPal.

Whether through their app or in partnership with retailers across the globe, Klarna ensures that customers can pay their way, enjoying the liberty to choose from direct payments, pay after delivery options, or installment plans like the flagship Pay In 4 program. This flexibility is complemented by a seamless, one-click purchase experience, epitomizing convenience and efficiency.

Further reading: The Payments Value Chain: A Complex System

The global footprint of Klarna is significant, with 150 million active customers globally, including 34 million in the U.S., and over 500,000 merchants using its services. The company processes an impressive two million transactions per day, illustrating the scale and reach of its operations across 45 countries. With a workforce of 5,000 employees, Klarna’s continued growth is supported by notable investors such as Visa, Sequoia, Permira, Bestseller, and Atomico.

An illustration of how a pay later transaction at Klarna works.

An illustration of how a pay later transaction at Klarna works.

By recently turning a corner financially, reporting its first quarterly profit since 2019, Klarna’s journey towards an IPO is gaining momentum. For 2024, the company increased its revenue to $2.81 billion, up from $2.28 billion in 2023. Klarna also rebounded to profitability in 2024, after reporting a net loss of $244 million in 2023.

The company’s valuation has been a point of debate, especially after a significant devaluation in 2022, but the recent shift in the trend is a sight of promise for the company's prospects.

In December 2023, Swedish investment company Creades increased its stake in Klarna to $11.3 million at a $7.85 billion valuation. As the company now files for an IPO, reports suggests it could aim to raise more than $1 billion at a valuation of over $15 billion. This would make it one of the largest IPO’s in recent years.

The volatility and uncertainty in the market of early 2025, has forced many companies to think twice considering their plans to go public. However, signs now that activity is slowly shifting might suggest that the IPO market might improve. Besides Klarna, AI cloud provider, CoreWeave, recently filed for an IPO at an expected valuation at more than $35 billion.

With an IPO now back on the table, Klarna has applied to list its shares on the New York Stock Exchange. The U.S. market, being Klarna’s largest in terms of revenue, is seen as a natural choice for the company’s stock market listing.

Additionally, CEO Siemiatkowski, has earlier hinted that a listing in the U.S. might be more reasonable from a visibility and regulatory standpoint. Also, the U.S. markets are in general more familiar with fintech and tech companies, potentially contributing to a more successful IPO.

On the 14:th of March, 2025, Klarna filed their F-1 with the SEC, setting the wheels in motion for a long awaited IPO. Although uncertainties remain surrounding the specific IPO date, expectations are that it might occur in Q2 of 2025.

The company has not disclosed information related to number of shares in the offering or an expected price range. Given that Klarna fulfills its IPO plans, the company has applied to trade under the symbol "KLAR".

Klarna's network growth since inception, now surpassing $100 in gross merchandise volume (GMV).

Klarna's network growth since inception, now surpassing $100 in gross merchandise volume (GMV).

The upcoming IPO represents a pivotal moment for Klarna, as it seeks to capitalize on its strong market position and recent turn to profitability. While the exact timing of the IPO remains uncertain, Klarna’s strategic focus on the U.S. market underscores its ambition to further solidify its standing as a leading player in the global fintech landscape.