Klarna Group (NYSE:KLAR) Q4 2025 Earnings call February 19, 2026 08:30 AM ET Company ParticipantsDarrin Peller - Managing DirectorFilippa Bolz - Head of CommunicationsHarry Bartlett - VP of Equity ResearchJames Faucette - Managing DirectorNiclas Neglén - CFOSebastian Siemiatkowski - CEOTimothy Chiodo - Managing DirectorWill Nance - VP of Equity ResearchConference Call ParticipantsHarshita Rawat - Senior Research AnalystJason Kupferberg - Senior Equity Research AnalystMihir Bhatia - Director and Senior Equit ...

Klarna Group (NYSE:KLAR) Q4 2025 Earnings call February 19, 2026 08:30 AM ET Speaker1Hello, everyone, and welcome to Klarna's Q4 2025 earnings call. My name is Filippa Bolz, Head of Communications at Klarna, and I'm joined today by Sebastian Siemiatkowski and Niclas Neglén. Our Q4 results were released at around 7:30 A.M. Eastern Time, and they are available on our investor relations website. During this call, we will discuss our business outlook and make forward-looking statements. These statements are bas ...

Group 1 - Klarna reported a 38% year-on-year increase in fourth-quarter sales, reaching $1.08 billion, surpassing analyst expectations of $1.07 billion [1] - The number of users for Klarna's banking services doubled to 15.8 million, indicating successful growth in its banking operations [2] - Klarna's gross merchandise volume (GMV) rose 32% to $38.7 billion in the quarter, with a 43% increase in the U.S. market and a 58% rise in revenue [4] Group 2 - The average employee compensation at Klarna has increased by 60% since 2022, attributed to early adoption of AI which has allowed for workforce reduction while reallocating savings to wages [3] - Klarna is set to release its full fourth-quarter earnings report on February 26, following a net loss of $95 million in the third quarter [5]

Core Insights - Klarna Group's stock has decreased by 56% since its IPO last September, indicating a significant decline in investor confidence [1] - The company is a leading player in the Buy Now, Pay Later (BNPL) sector, partnering with major brands like Walmart and offering various payment options [3] - Despite reporting a 26% year-over-year revenue increase in Q3, Klarna continues to face net losses, which widened from $4 million to $94 million [4][5] Financial Performance - Revenue for Klarna increased by 26% year-over-year in Q3, with gross merchandise volume rising by 23%, including a notable 48% increase in the U.S. market [4] - The company achieved 4 million card signups in the quarter, contributing to 15% of total global transactions in October, and saw a 32% increase in new users, totaling 114 million [4] - Fair Financing, an interest-based product, experienced a 244% year-over-year increase in U.S. gross merchandise volume, while the merchant count grew by 38% to 850,000 [5] Valuation and Market Sentiment - Klarna's current market capitalization stands at $6.8 billion, with a trading price of $18.11, reflecting a price-to-sales ratio of only 2 times trailing-12-month sales, suggesting it may be undervalued [7] - The market perceives Klarna as risky due to ongoing losses and macroeconomic conditions, but there is potential for recovery and value creation for shareholders in the long term [8]

Core Viewpoint - Affirm Holdings, Inc. (NASDAQ:AFRM) is experiencing a decline in share price despite strong fiscal performance, with analysts adjusting price targets and discussing potential growth opportunities in the buy now, pay later (BNPL) market [2][4]. Group 1: Company Performance - Affirm Holdings, Inc. has seen its shares decrease by 23.5% over the past year and 19.4% year-to-date [2]. - The company reported a 30% increase in sales during its latest quarterly earnings, indicating strong fiscal performance [4]. Group 2: Analyst Ratings and Price Targets - Stephens reduced its share price target for Affirm from $75 to $65 while maintaining an Equal Weight rating [2]. - Needham also lowered its price target from $100 to $85 but kept a Buy rating, citing potential benefits from securing a bank charter and the use of AI tools to enhance growth and profit margins [2]. Group 3: Market Commentary - Jim Cramer has frequently discussed Affirm Holdings, suggesting that the company could benefit from its position in the BNPL market, especially in light of recent comments regarding credit card rates [2][4]. - Cramer expressed confidence in Affirm's potential, labeling the stock's decline as "stupid" given its recent earnings performance [4].

NEW YORK (AP) — Rent can eat up an entire paycheck at the start of the month, so a growing number of renters are turning to a financial product that promises relief by letting them split the bill — for a price. So-called “rent now, pay later” services have emerged over the past few years as housing costs climb and paychecks grow less predictable, particularly for lower-income and gig-economy workers. According to the Bureau of Labor Statistics, rents have jumped nearly 28% in past five years. Companies ...

Core Insights - Afterpay positions its services as an alternative to credit cards, highlighting the growing credit card debt in the U.S., which surpassed $1.2 trillion in 2024, with an average balance of $5,300 per credit cardholder [3][4] Group 1: Afterpay's Positioning and Customer Behavior - Afterpay emphasizes its safeguards to prevent customers from falling into debt spirals associated with traditional credit card usage [4] - The company reported that 96% of U.S. customers who used its BNPL services for Black Friday and Cyber Monday purchases repaid their financing early or on time [7] - Additionally, 98% of customers had not incurred late fees through the third quarter of the previous year, indicating responsible spending behavior [7] Group 2: Market Trends and Consumer Data - The average annual dollar value of a BNPL loan increased from $745 to $848 between 2022 and 2023 [5] - BNPL spending rose by 9% year-over-year to $10.1 billion during the holiday season from November 1 to December 1, according to Adobe analysis [6] - Klarna Group reported a 45% increase in spending across its lending services during the same holiday period [6] Group 3: Consumer Credit Profiles - Nearly two-thirds of U.S. consumers using BNPL transactions borrow from multiple providers simultaneously, with 61% having subprime credit scores [5]

Core Viewpoint - Klarna's CEO supports President Trump's proposal to cap US credit card interest rates at 10% for one year, arguing it is a sensible measure to protect consumers [1]. Group 1: Klarna's Position on Credit Cards - Traditional credit cards encourage consumers to accumulate high balances at high interest rates, which disproportionately affects lower-income borrowers [2]. - Klarna's model focuses on smaller purchases with fixed, interest-free payments, aiming to reduce the risk of overspending [3]. - Klarna assesses purchases in real time based on current spending behavior, which helps customers borrow less and miss payments less frequently [4]. Group 2: Critique of Credit Card Systems - Credit card rewards programs primarily benefit wealthier consumers, while lower-income borrowers bear the costs, leading to an unfair economic dynamic [4]. - Merchants increase prices to cover credit card fees, impacting even those who do not use credit cards, effectively redistributing income from lower to higher-income consumers [5]. Group 3: Market Reactions and Analyst Opinions - Trump's proposal to cap interest rates led to a sell-off in major financial stocks, including Capital One, Synchrony Financial, JPMorgan, and Citigroup [5]. - Analysts from UBS and Goldman Sachs caution that a 10% cap could reduce credit availability, making borrowing more difficult for some consumers [6]. - SoFi's CEO suggests that the proposal might shift consumer preference from credit cards to personal loans [6].

Core Insights - Visa Inc. is enhancing its role in digital commerce by collaborating with Akamai to improve transaction security for AI-driven shopping agents, addressing the growing need for trust in autonomous transactions [2][4] - The integration of Visa's Agent Protocol with Akamai's behavioral intelligence allows merchants to authenticate AI agents and validate consumer intent, which is essential as automated shopping experiences evolve [3][9] - This initiative not only focuses on secure payments but also aims to reshape accountability and verification in AI-led commerce, potentially influencing competitive dynamics in the industry [5] Competitive Landscape - Competitors such as Mastercard and Affirm are also advancing their AI commerce strategies, with Mastercard's Agent Pay focusing on secure interactions between AI agents and merchants [6] - Affirm is collaborating with Google to support AI-driven payment solutions, enhancing the integration of buy now, pay later services with AI agents [7] Financial Performance - Visa's stock has increased by 11.2% over the past year, outperforming the industry, which has seen a decline of 7.3% [8] - The forward price-to-earnings ratio for Visa is 26.14, higher than the industry average of 20.79, indicating a premium valuation [11] - The Zacks Consensus Estimate for Visa's fiscal 2026 earnings suggests an 11.7% increase compared to the previous year, with earnings per share estimates showing significant year-over-year growth [13][14]

Core Insights - SoFi and Affirm are both high-growth fintech companies aiming to disrupt traditional financial institutions, with SoFi offering a wide range of financial services and Affirm focusing on "buy now, pay later" solutions [1][2] SoFi Overview - SoFi has expanded its services from student loans to include mortgages, auto loans, personal loans, credit cards, insurance, estate planning, stock trading, and banking, positioning itself as a comprehensive digital financial platform [1][4] - The company targets younger, digitally native users and has grown significantly, quadrupling its member base from 2.5 million in 2021 to 10.1 million in 2024, with projections to reach 12.6 million by Q3 2025 [7][8] - SoFi's revenue and adjusted EBITDA are expected to grow at a CAGR of 27% and 44% respectively from 2024 to 2027, driven by its loan platform business, increased deposits, and new features [9] Affirm Overview - Affirm's BNPL platform caters to younger and lower-income consumers, offering microloans without compound interest or hidden fees, and has seen significant growth, with active consumers increasing from 7.1 million in fiscal 2021 to 23 million in fiscal 2025 [10][11] - The company has secured partnerships with major merchants like Amazon and Walmart, contributing to its gross merchandise volume (GMV) growth from $8.3 billion to $36.7 billion during the same period [11] - Analysts expect Affirm's revenue to grow at a CAGR of 25% from fiscal 2025 to 2028, with adjusted EBITDA projected to increase at a CAGR of 131% through 2028, supported by the growing usage of its Affirm Card and international expansion [14] Valuation Comparison - SoFi has an enterprise value of $32.5 billion, trading at 31 times this year's adjusted EBITDA, while Affirm has an enterprise value of $27.2 billion, trading at 24 times this year's adjusted EBITDA [15] - Despite both companies being strong growth stocks, Affirm is considered more attractive due to its narrower focus, superior growth rates, and lower valuations [15]