Klarna, a leading “buy now, pay later” (BNPL) service provider, is gearing up for one of the biggest initial public offerings (IPO) of 2024. The Stockholm-based fintech company has filed confidentially with the U.S. Securities and Exchange Commission (SEC), keeping many details under wraps. Here’s an overview of what we know about Klarna, its growth, and what this IPO could mean for the financial tech world.
Klarna’s IPO Could Be a Big Deal
Klarna’s upcoming IPO is expected to be one of the highest-valued of 2024. The company was recently valued at approximately $14.6 billion, making it a top contender behind Lineage (valued at $18 billion), according to financial analysis tools like Dealogic.
Although Klarna’s valuation has seen ups and downs in recent years—dropping from over $45 billion in 2021 to $6.7 billion in 2022—the company has bounced back, attributing earlier challenges to inflation, recession fears, and other global economic hurdles.
Klarna’s Origin Story: From Burger King to Fintech Giant
Klarna was founded in 2005 in Stockholm by Sebastian Siemiatkowski, Victor Jacobsson, and Niklas Adalberth. The trio met while working at Burger King. Initially named Kreditor, the company later rebranded as Klarna, inspired by the Swedish word for “clear.”
Klarna began by targeting the Nordic market before expanding across Europe, the U.S., and Australia. Today, it operates in 26 countries, collaborates with over 575,000 merchants, and processes around 2.5 million transactions daily.
Klarna’s Impressive Financial Performance
In the first half of 2024, Klarna reported $1.2 billion in revenue, a significant jump fueled by the $47 billion worth of merchandise processed through its platform.
- Merchant Revenue: More than 85% of Klarna’s income comes from fees charged to merchants who use its services.
- Consumer Options: Klarna earns additional revenue from interest on financing plans, though its popular “Pay in 4” feature remains interest-free. This option allows shoppers to split purchases into four payments made every two weeks, with no extra charges.
- Expansion Profitability: Klarna achieved profitability in the U.S. within five years of launching there in 2019, solidifying its position in its fastest-growing market.
Klarna’s Global Growth and IPO Strategy
Klarna is exploring IPO opportunities beyond the U.S. The company has considered listing in markets like London, Stockholm, and Germany. CEO Sebastian Siemiatkowski emphasized the importance of U.S. investors, citing their understanding of fintech and Klarna’s rapid revenue growth in America.
Klarna has also ventured into products beyond BNPL. It now offers financial services like banking alternatives and traditional financing options. These initiatives aim to diversify its revenue streams and compete with major players like Affirm, PayPal, and Block.
Why Klarna’s IPO Matters
Klarna’s public offering marks a significant moment for the BNPL industry and fintech at large. As the BNPL market grows—used by about 9% of Americans according to the Federal Reserve Bank of Boston—Klarna’s move to go public highlights the increasing demand for alternative payment solutions.
With its strong global presence and innovative offerings, Klarna is well-positioned to dominate the sector. However, competition remains fierce, and the IPO will determine how well the company can sustain its growth amid economic fluctuations and evolving consumer behaviors.
