Klarna IPO | Swedish fintech files for blockbuster IPO, targets $15 billion valuation after 24% revenue surge: 5 Points

Klarna IPO: Swedish fintech Klarna Group Plc filed its paperwork publicly for a US initial public offering (IPO) in November. This could be one of the year’s biggest company listings and a long-awaited stock market debut. The buy now, pay later pioneer reported a 24 per cent surge in 2024 revenue. The Stockholm-founded digital payments firm filed confidentially for the IPO in November.

According to its filing with the US Securities and Exchange Commission (SEC), Klarna had a net income of $21 million on revenue of $2.81 billion for 2024, compared with a net loss of $244 million on revenue of $2.28 billion a year earlier. Klarna, which reshaped online shopping by pioneering the short-term financing model, did not disclose the size of its proposed IPO.

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The company's latest step comes as stock market volatility in the US, driven by renewed recession fears and uncertainty over US President Donald Trump's tariffs, threatens to stall a recovery in the IPO market. Klarna's decision to go public now comes as a key test for fintech IPO appetite, following a period of weak listings and tighter funding for private firms.

Klarna IPO: Top five things to know about the upcoming US IPO

1.IPO size, valuation, other details

According to Bloomberg, Klarna is seeking to raise at least $1 billion in the IPO and is targeting a valuation of more than $15 billion in the listing. The company and some of its shareholders are selling shares in the offering.

Klarna drew investor attention as its valuation soared from $5.5 billion to $46.5 billion in just two years, fueled by three funding rounds between mid-2020 and 2021. In October, analysts pegged the company’s valuation at about $14.6 billion. According to PitchBook data, it has privately raised $4.8 billion in capital.

Klarna has tapped 15 banks for the IPO. The public offering is being led by Goldman Sachs Group Inc., JPMorgan and Morgan Stanley as the lead underwriters and lists 11 other firms working on the deal. Klarna plans to list on the New York Stock Exchange under the symbol KLAR.

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2.Company details

Led by Co-Founder and Chief Executive Officer Sebastian Siemiatkowski, Klarna offers consumers buy now, pay later financing, a type of lending that took off at the start of the decade and further accelerated during the COVID pandemic with the explosion of online shopping. In the filing to the SEC, Klarna reported that it discovered a material weakness within its financial controls in 2022 related to its IT systems for preparing financial statements. 

While the company has developed a remediation plan for the issue, Klarna warned that it still hasn’t been resolved since the end of last year. Klarna told potential investors it is facing an investigation by the Swedish Consumer Agency related to compliance with the country's marketing laws.

3.Customers, industry rivals

As of 2024, Klarna had 93 million active customers on its platform, with more than 675,000 merchants and operations in 26 countries. Its rival, Affirm, currently commands a roughly $15 billion valuation. US fintech rivals Stripe and Chime were last valued at $91.5 billion and $25 billion in a tender offer and private funding round. Both companies are reportedly preparing for IPOs.

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4.Investors

Besides Sequoia, Klarna's major shareholders include its co-founder Victor Jacobsson and Danish fashion magnate Anders Holch Povlsen's Heartland A/S. The company has partnered with major global brands, including cosmetics retailer Sephora, sporting goods giant Nike, and rental booking platform Airbnb.

Klarna’s largest investors, with five per cent or more of the outstanding shares, include entities affiliated with Sequoia Capital, which beneficially owned 78.8 million shares ahead of the offering. Heartland A/S, an investment vehicle for the family behind clothes retailer Bestseller, has 37.1 million shares, and co-founder Victor Jacobsson has 31.4 million shares.

5. Partnerships

The company agreed in June to divest its Checkout payments business for about $520 million and snapped up the assets of New Zealand’s Laybuy in August. Klarna bolstered its relationships with tech stalwarts, announcing in November it would offer buy-now, pay-later credit to US shoppers using Google Pay just a month after sealing a partnership with Apple Inc. 

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“We are in the advanced stages of establishing business relationships with a second bank partner in the US, through which we expect to offer our Fair Financing products in that market, and with a second payment network, on which we plan to issue the Klarna card in select markets,” said Klarna. “As a result of these negotiations, we expect to enter into a binding agreement with the relevant partner in the first quarter and second half of 2025.”

The Swedish firm has struck deals with Adyen NV, Xero, and Worldpay Inc. as it seeks growth through mainstream payment processors. JPMorgan Chase & Co.’s payments processing unit is partnering with Klarna to expand buy-now, pay-later options for its merchants. This partnership will allow about 900,000 businesses to offer Klarna’s fast credit options to their customers.

With inputs from Bloomberg and Reuters