QS Research · Michael Burry's Scion Capital analyst template · 2006
Klarna Group plc (KLAR)
As of 2026-11-09 · 11/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction low · base case +6% · downside -20% · upside +20%
Section 13 anchored on FY2025 equity ($2.51B, N15), but the newest balance sheet is 30 June 2026 equity of $2.666B (S27), so all three cases use that single base. At $13.60 (N1) the market cap is $5.13B (N5); applying the 2.05x P/B from N18 to that Q2 2026 equity gives 2.05 x $2.666B / 377.51M = $14.48, +6.5%, while downside at $2.0B equity is $10.86 (-20.1%) and upside at $3.0B is $16.29 (+19.8%). Q2 2026 shows real improvement—revenue +27%, TMD +42% and adjusted operating income $91m (S28)—but reported net income was only $9m, helped by a $69m receivables gain (S27/S28), and FY2025 still had a -$273m net loss (N9). The 2026-08-18 revenue/GMV guidance cut, CFO/CMO departures and $5-15m Q3 2026 adjusted operating income guide (S5/S10) leave earnings power unproven at a multiple that is no deep-value discount for a lender with -10.9% FY2025 ROE (N16). I would watch, not buy, until net income is positive without one-offs or the P/B offers a real margin of safety.
Key numbers
- Share price: $13.60
- Market cap: $5.13B
- Latest financial period: FY Dec 2025 to Dec 31, 2025
- Revenue (FY Dec 2025): $3.51B
- Price / book: 2.05x
The 15 boxes
- ✓ 1. Long-form business notes
Klarna is a licensed EEA bank running a two-sided commerce network: about 118 million active consumers and 966 thousand merchants in 26 countries at 31 December 2025, $128 billion of FY2025 GMV and $3,509 million of FY2025 revenue (+25% year-over-year), with 97% of FY2025 transactions interest-free and monetisation coming mainly from merchant fees plus consumer fees and a $190 million FY2025 advertising line. It funds 95% of its lending with $13 billion of consumer deposits at 31 December 2025, lends very short (about 39-day weighted average life) and booked credit losses of 0.63% of GMV in FY2025. Growth has not converted into reported profit: FY2025 operating income was -$230.0 million and net income -$273.0 million (S23), worse than FY2024's -$121.0 million operating loss, while the 20-F reports FY2025 adjusted operating profit of $65 million. Structure changed materially since 2022 — US scale-up from 2019, UK redomicile and NYSE listing in May 2024, Klarna Card US rollout completed in 2025 — but every figure in these sources stops at 31 December 2025, so nothing here is a newer quarterly or TTM number.
- ✓ 2. Competitive advantage
The sources show a network-effect and licensing story, not a demonstrated durable margin: FY2023-FY2025 revenue grew from $2.28B to $3.51B, but operating income stayed negative (-$323M, -$121M, -$230M) and net income was -$244M, +$21M, -$273M, with the FY2024 profit not coming from operations. Klarna says merchant breadth drives consumer frequency and that banking/payment Authorizations are required across markets, while it lists card issuers, PayPal, Affirm, Block, neobanks, AfterPay, Shopify, Amazon and Walmart as competitors and expects competition to intensify. International loan yields were 21.30% in FY2025 vs 19.90% in FY2024 and 17.91% in FY2023, but the filing warns transaction margin may fall as U.S. growth outpaces mature markets.
- ✓ 3. 10-Q takeaways
The newest report is the Q2 2026 interim report (6-K filed 2026-08-18; three and six months ended June 30, 2026) — there are no Q3 2026 results in these sources. Q2 2026 revenue was $1,042m (+27% YoY) and the swing to operating profit of $27m and net profit of $9m was helped by a $69m gain on sale of consumer receivables that had no counterpart in Q2 2025; transaction margin dollars rose 42% to $446m and adjusted operating income to $91m. Liquidity fell (cash $2,672m at June 30, 2026 vs $3,803m at Dec 31, 2025) as consumer deposits shrank and assets moved into debt securities and forward-flow sales. On 2026-08-18 management cut FY2026 GMV guidance to $149–151bn and revenue to $4.08–4.16bn while raising TMD to $1.62–1.65bn and adjusted operating income to $280–300m, and guided Q3 2026 adjusted operating income to only $5–15m.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ○ 9. Insider trading interpretation
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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