Klarna Group plc Goldman Sachs Communacopia + Technology Conference 2026

We are going to get started with the next session. Up next, I am very pleased to have Sebastian Siemiatkowski here, Co-founder and CEO of Klarna. Sebastian, thank you for coming out all the way to the West Coast. I know it's very far from where you live, and we're very pleased to have you.

Thank you for having me. It's great to be here.

We're about at the one-year mark from the IPO. It's been a very eventful year. A number of different moving pieces in the business between the ramp in Fair Financing, the launch of card products around the world, the PSP default rollouts, and a lot of education for the new investor base along the way. As you look back on the first year as a public company, what has played out as you expected? Where has reality been different from the plan, and where are you focused on executing over the next year?

Sure. Well, look, I think first, if we take the bigger perspective, long-term perspective, we have three segments of payments or spending that we offer services towards the consumer. It's everyday spend, low average tickets. It is the mid-ticket segment, which would be fashion, cosmetics, beauty, et cetera. There's been high ticket, which is financing. Just as it's been before the IPO, it has continued to be after the IPO, which was that in every market we enter, the mid-ticket is our entry strategy because it grows frequency, brand awareness, brand preference. We can train our credit underwriting models based on issuing small amounts of $100 on average, which lets us understand the customer and their payments behavior over time before we start extending the big-ticket items, so what we call Fair Financing, which is basically point-of-sale installments.

About two years ago, we started focusing in the U.S. and also in the big ticket segment, where we have been quite small before. We have seen great success in our opinion. We have signed Walmart, we signed Apple, and as a lot of, to your point, have followed, Fair Financing has grown a lot as a share and general in the market. That is very much according to our strategy as we always do, and obviously it comes with more revenue and transaction margin dollars. All of that very much according to plan. We are excited to see that Fair Financing took off so much since it is a competitive market, but we see that the offering is in demand both from the merchant side and the consumer side.

I think in general, also, if I look at the fact that revenue was up in Q2, 27%, transaction margin dollars 42%, ARPU 24% year-on-year, all of that, great. Where we fell short, Germany. In May, we assumed Germany second half would be firm. What we started seeing is, and I think this is important to remember, we do 3.8 million transactions a day. We actually see these things before the statistical office see it. In August 18, we adjusted on what we saw, which was about 3% of volume guide, even though we adjusted up our transaction margin dollars for the year. We got the confirmation on the 1st of September when the official Federal Statistical Office of Germany, Destatis, published that online sales in Germany was down against expectations 5.6% in July.

Again, if you think about it, we built this company for the 10-year ambition, and that is what we still run that way. You rightly hold us to the number we said in May, and a miss against that number costs credibility against that 10-year plan. Going forward, the rule is guide us to what we can see and change the guide when we can see changes at all our quarterly reports.

Got it. When you talk to investors in the days after the print, what do you think is being misunderstood or underappreciated about the quarter or the underlying trajectory of the business or execution along that 10-year plan?

Look, the market is the market. I understand why people anchor to volume, but volume fluctuates. You will have a seasonality effect. There are currency effects. There is also the lapsing of big partnerships that may impact numbers and so forth. I think we still believe that the right focus is the transaction margin SEK and how that develops, and we are very pleased to see that development in the last- In earnings, it is Klarna's largest market.

I think it would be helpful if investors maybe understand the complexion of that business for Klarna. My understanding is that the German volume is relatively low take rate, very high margin. Maybe we could do a little bit of an education on what that market looks like. I assume it is heavily pay now and pay later. What does the volume look like, and then how do transaction costs differ in that market versus other markets?

Yep. I think it comes back to the fact that Germany, just like many other European markets, the primary reason people use Klarna is not for lending. It is for what we call actually the ability to touch and see the package before you pay for it. In e-commerce, that is the big thing. You are using credit as a way to increase your safety when shopping online as opposed to a lending factor. That is a big difference that applies to these European markets. Then what we see is high frequency. The people shop a lot with Klarna. It is a very well-known renowned brand in the German market. What is different also is that if you look at Klarna in general, actually, not everyone, I think, notices this, but the biggest cost of Klarna is actually payment fees are higher than what we provision for credit.

But that is not true in Germany.

Right. Because in Germany, we primarily fund through very cheap ACH-based type of funding mechanism, that allows the gross margins being more in the 50s, 60s on those transactions.

The other thing is, again, that it is very much what we refer to as spend centric, not lend centric. Germany is not the market where financing is at large. There is still potential to grow it. There is more opportunity. Generally speaking, a lot of it is just paying back within the 30, 60 days that allows us to turn the books 10 times a year because you have that velocity of spending, but short duration credit.