Swedish fintech provider Klarna reported a net loss of $26 million for the fourth quarter, a significant shift from a profit of $40 million in the same period last year. This downturn, driven by rapidly increasing costs associated with its fast growth, sent the company's U.S.-listed shares plummeting 23%.
CEO Sebastian Siemiatkowski acknowledged that the company's aggressive expansion strategy has led to upfront cost recognition, with revenue and profit expected to materialize later. Despite the loss, Klarna's quarterly revenue surpassed the billion-dollar mark for the first time, reaching $1.08 billion, a 38% year-on-year increase and exceeding analyst expectations.
JPMorgan analysts noted that the transition from scaling to engagement and lending growth is impacting key performance indicators. Higher processing and funding costs were cited as primary drivers for the weaker-than-expected results. The company's guidance for 2026 also fell short of market expectations.
Klarna's share price dropped to a record low of $14.53. The company has previously highlighted the early adoption of AI as a tool to manage workforce growth and has invested savings into employee compensation, which has risen 60% since 2022. Siemiatkowski emphasized that even in an AI-driven future, human relationships with merchants and consumers will remain central to Klarna's operations.