Should Klarna Go Public, Despite Significant Consumer Credit Losses?

Buy now, pay later (BNPL) giant Klarna has recently made headlines for two major reasons: its decision to delay a planned April IPO and a Q1 2025 earnings report highlighting a sharp rise in consumer credit losses that are beginning to impact its bottom line.

In an early-April report, CNBC noted that Klarna (as well as StubHub) had both pulled back from plans to execute IPOs, with market turbulence related to President Donald Trump's trade policies and continuing macroeconomic turbulence cited as the motivating factor. Goldman Sachs, tasked with leading the Klarna IPO, declined comment at that time.

But as a more recent report from NBC News reporter J.J. McCorvey pointed out, there are other headwinds working against Klarna's intention to roll out its ideal IPO. McCorvey pointed to U.S. consumer debt hitting a record high of $18.2 trillion during the first quarter of 2025, a surging number of student loan delinquencies due to a Trump administration crackdown on borrowers, and a LendingTree survey indicating that more than two-fifths (41%) of BNPL borrowers had paid late over the course of the past year — in addition to the most pertinent findings from Klarna's own first-quarter earnings report.

In that report, Klarna chalked up a whopping $430 million in transaction costs, of which $136 million was derived from consumer credit losses alone. That figure is 17% higher than year-ago figures, with Q1 2024 consumer credit losses totaling $117 million. And while Q1 2024 saw Klarna's PNL statement exhibiting a $30 million net loss, Q1 2025 saw the company register a total net loss of $99 million.

Klarna Spokesperson: Consumer Credit Loss Increases Don't Tell the Whole Story

Although some metrics attached to Klarna's recent operations appear ominous, the company did successfully push Affirm out of the picture to take on the role of retail giant Walmart's one-and-only BNPL provider — and also teamed up with DoorDash to deliver the same buy now, pay later functionality, opening the door to small-dollar transactions in which it could be centrally involved.

McCorvey quoted a spokesperson representing Klarna as speaking out on the touchy subject of the 17% hike in consumer credit losses: The spokesperson was quick to indicate that these losses "[don't] tell you much about the U.S. consumer," particularly when understood in the greater context of the credit losses as a share of the sum it had loaned out in total — its "gross merchandise value."

When this is accounted for, said losses rose only marginally, from 0.51% to 0.54%. "A very slight increase, but still very low," the Klarna rep added.

Klarna Delivers Q1 2025 Results via AI Avatar, Leans on AI Capabilities

Those Q1 2025 results were delivered May 19 by an AI-generated avatar of its CEO, Sebastian Siemiatkowski, in a bit of pageantry emphasizing the company's commitment to its AI tools. Despite the AI version of Siemiatkowski being a little less than perfect, the point was made.

As TechCrunch noted, Klarna delievered an adjusted operating profit (of $3 million, according to the press release), despite a shaky PNL sheet — and it did so by leveraging AI capabilities to reach 100 million users.

The company also "streamlined its workforce by ~40%," according to a Klarna blog post, with AI placed in the spotlight to drive profitability for the company in its future endeavors.

"The momentum is undeniable — and this is just Q1! Klarna has reached 100 million consumers and secured exclusive partnerships with major retailers like Walmart through OnePay, teamed up with DoorDash, and expanded our partnership with eBay to the U.S. after multiple successful European launches," Siemiatkowski said.

"Our AI-first strategy is driving exceptional returns, we’re outpacing competitors, our merchant network is scaling rapidly, and our next-gen products are reshaping money management for millions,” he added.