Klarna’s Losses Widen but Hot IPO Market Makes It a Good Time to Go Public

Klarna posted a wider second-quarter loss. (Stefani Reynolds/Bloomberg)

Klarna Group appears to be gearing up to make its trading debut amid a revived market for initial public offerings but the fintech’s second-quarter earnings report signals there could be challenges ahead.

The Stockholm-based buy-now, pay-later provider made headlines in May when it revealed that users were defaulting on loans, causing its first-quarter net loss to widen to $99 million. The latest earnings report paints a similarly complicated picture.

Klarna’s net loss swelled to $52 million in its second quarter from $18 million last year. Management attributed the wider loss to higher expenses, including credit loss provisions, funding costs, and a one-time $24 million restructuring charge.

The second-quarter report overall was mixed. Revenue climbed to $823 million from $682 million last year. Credit losses as a percentage of gross merchandise volume rose to 0.56% from 0.41%, while realized losses as a percentage of gross merchandise volume fell to 0.45% from 0.48%.

In a letter to shareholders, CEO Sebastian Siemiatkowski asserted that a record number of transactions were paid early or on time in the quarter, adding that “credit losses remain low at 0.56% of GMV.”

The company has made ground in the U.S. over the past year. In March, Klarna said it would become the exclusive “buy now, pay later” provider at Walmart, replacing Affirm. A month later, Klarna’s flexible payment options were introduced to eBay users in the U.S.

But uncertainty remains. Klarna noted in a filing with the U.S. Securities and Exchange Commission that it has “a recent history of incurring losses and may not be successful in effectively balancing growth and profitability in the future.” While the company’s expansion into the U.S. has contributed to an increase in gross margin value, “it has also led to net losses in recent periods,” Klarna wrote.

The company appears to be gearing up to make its trading debut. In March, Klarna publicly filed registration documents for its initial public offering with the SEC. However, those plans ground to a halt after President Donald Trump unleashed a barrage of tariffs on key U.S. trading partners the following month, sending the market into a spiral.

Klarna filed an amended registration statement with the agency on Friday, raising the possibility of an IPO sometime in the near future.

There has been a rash of attention-grabbing public debuts as of late. Shares of cryptocurrency trading platform Bullish , the owner of CoinDesk, surged more than 80% on Wednesday as they began trading on the New York Stock Exchange. Then, on Thursday, crypto option exchange Miami International Holdings soared 31% in its trading debut.

They aren’t alone: stablecoin issuer Circle Internet Group , software company Figma , and fintech Chime Financial are among the big names to go public this summer. Clearly, the market is hot for IPOs. It remains to be seen just when Klarna will seize on the interest.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com