How Klarna's IPO Bid Marks Shift From Private Funding

Buy-now-pay-later (BNPL) provider Klarna has submitted confidential paperwork to the US Securities and Exchange Commission for an initial public offering, marking a strategic shift for European financial technology firms seeking public market access.

The Stockholm-based payment services firm, which enables consumers to split retail purchases into interest-free instalments, has not disclosed the number of shares or price range for the proposed listing. 

Market observers note the firm's valuation has experienced substantial fluctuation, dropping from US$46bn in 2021 to US$6.7bn in 2022 amid technology sector declines.

Deutsche Bank analysts calculate a current implied valuation of US$14.6bn, based on shareholder Chrysalis Investments' recent stake value adjustment to £120.6m (US$153.6m). 

Earlier reports suggested Klarna was targeting a US$20bn valuation and considering Goldman Sachs as the lead bank for the offering. The valuation reset reflects broader market adjustments in the financial technology sector.

BNPL sector evolution

The BNPL market has transformed retail finance since 2019, offering consumers interest-free credit at the point of purchase. 

The sector gained prominence during pandemic lockdowns as online shopping surged. BNPL services typically split payments into instalments over periods ranging from 30 days to 36 months, with providers earning revenue through merchant fees rather than consumer interest.

Global BNPL transaction value reached US$157bn in 2022, according to data from Research and Markets. The sector's growth has attracted scrutiny from financial regulators, leading to new oversight frameworks in markets including the UK and Australia.

Financial transformation

The company has demonstrated improving financial metrics in 2024, reporting H1 revenue of 13.3bn Swedish crowns (US1.46bn), representing 27% growth. US market performance showed 38% revenue expansion in the same period, indicating market share gains in North America.

The firm recorded an adjusted profit of 673m Swedish crowns (US$61.56m) in the first half, contrasting with a 456m crown (US$41.7m) loss in the previous year.

The return to profitability follows workforce reduction from 7,000 to 3,800 staff and implementation of artificial intelligence in customer service operations. Klarna has not recorded an annual profit since 2018 when it began US market expansion efforts.

Corporate restructuring and governance

The IPO announcement follows internal management changes and operational restructuring. 

Shareholders voted to remove board member Mikael Walther following disagreements with Chairman Mike Moritz and CEO Sebastian Siemiatkowski. 

The dispute highlighted tensions in the boardroom ahead of the public offering process.

Klarna maintains relationships with 575,000 merchants across 26 countries, serving 85 million active consumers. 

The listing timeline remains subject to SEC review processes and market conditions. The company expects to complete the offering after regulatory requirements are met, though specific timing details remain undisclosed.

“A listing in 2025 sounds reasonable,” says Sebastian Siemiatkowski, speaking in August about the potential timing of an IPO. Now, Klarna is one step closer to that reality with its US listing bid.

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