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Investing.com -- Klarna Group plc (NYSE: KLAR) shares have fallen more than 18% at the open on Tuesday following the company’s second-quarter earnings report, as updated full-year revenue guidance came in below analyst expectations despite beating estimates for the current quarter.
The fintech company reported second-quarter revenue of $1.04 billion, up 27% YoY and above the analyst consensus of $992.82 million. Adjusted earnings per share of $0.01 beat the analyst estimate of -$0.05.
However, Klarna lowered its full-year 2026 revenue guidance to $4.08 billion to $4.16 billion, with the midpoint of $4.12 billion falling well short of the analyst consensus of $4.42 billion. The company cited approximately $600 million in currency translation headwinds and a more measured view of German volumes, its largest market by volume.
Transaction margin dollars, a key metric the company optimizes against, grew 42% YoY to $446 million, reaching 42.8% of revenue. Klarna raised its full-year transaction margin dollar guidance to $1.62 billion to $1.65 billion, representing approximately 1.09% of GMV compared to its previous outlook of greater than 1.04%. Adjusted operating income guidance of $280 million to $300 million remained largely in line with prior expectations.
"Over 120 million consumers now use Klarna, and each is using it for more of their everyday spend — revenue per active consumer grew 24%," said Sebastian Siemiatkowski, CEO and Co-Founder. "That deepening engagement is why transaction margin dollars grew 42%, well ahead of revenue and volume."
The company’s gross merchandise volume reached $36.6 billion, up 18% YoY, while the number of merchants on its platform surged 54% YoY to more than 1.2 million. For the third quarter, Klarna expects revenue of $940 million to $980 million and adjusted operating income of $5 million to $15 million.
Klarna also announced planned leadership transitions for its Chief Financial Officer and Chief Marketing Officer, both set to take effect in early 2027.
Niclas Neglén, who has served as CFO for six years, and David Sandström, who has been CMO for nine years, will each remain in their current roles and lead their respective organizations through the transition period. The company stated that the search for a New York-based CFO is underway.
"Niclas and David have helped shape what Klarna is," said Sebastian Siemiatkowski, Co-Founder and Chief Executive Officer of Klarna. "Niclas has built the finance organization that took us public and has been a trusted partner to me and the Board through six years of growth and change. David has given Klarna a voice; he took a Nordic payments company and has built one of the most recognized brands in global finance."
Reacting to the earnings release, Goldman Sachs said they expect the "2H volume reset to weigh on shares."
"The TMD margin is likely to raise some concerns, with implied TMD margin in the 1-1.1% in 2H, despite materially outperforming in 1H and coming in at 1.22% (and also despite some accounting noise from fair value accounting, which the company called out)," wrote analyst Will Nance.
"So, putting it altogether, we think the volume guide was partially expected, but combined with a disappointing TMD margin guide in the back half, it is likely to raise questions about the exit run-rate into next year, and thus we expect the stock to be down on the back of results."
