Klarna came to market at $40 and trades at $13.02, about 1.2x this year's revenue and 3.0x transaction margin dollars. The price says payments processor with a credit problem. The last two quarters say something else: adjusted operating income of $160m in the first half of 2026 against $32m a year earlier, transaction margin back to 1.22% of volume from a 0.86% trough, and costs growing at a fraction of revenue after headcount fell by a third. The view here is that Fair Financing, the interest-bearing instalment product, goes from 9% of volume to 24% by FY2030, taking financing revenue to roughly a third of the total, and the model gets to $20.02 a share on that base case, inside the FY2026 guide in year one. What it needs is US credit to keep seasoning the right way (financing delinquency 3.0% against 3.5% at the peak) and Europe, four-fifths of volume, not to roll over. Management has already cut Germany once.
Traded price
IPO at $40.00, Sep 2025
$13.02
Fair Financing share of GMVSupport
FY2025; 24% by FY2030E in the base case
9%
H1 2026 adj. operating incomeSupport
from $32m in H1 2025
$160m
TMD / GMV, latest quarterSupport
trough 0.86% in Q3 2025
1.22%
US financing 30+ DPDRisk
peak 3.5% in 2025
3.0%
01
Translation and the guided metric
A dollar reporter with most of its volume in euros, sterling and kronor. Beside it, the single number management guides to and the one this page is built around.
Figure 01KLAR · 01
The euro is 3% stronger than two years ago, and four-fifths of volume is earned outside the US
Currency strength versus the US dollar · Indexed to 100 two years ago. Above 100 flatters reported dollar results
Month-end spot rates, inverted and rebased so a rising line means a stronger local currency and flattered dollar results. Management cut FY2026 GMV guidance partly for currency.Source: Yahoo Finance.
Figure 02KLAR · 02
Transaction margin is back to 1.22% of volume from a 0.86% trough, with far more US in the mix
Transaction margin dollars as a share of GMV · Revenue less processing, credit losses and funding. The number the company guides to
Group, Q2'261.22%
Trough0.86%
US, latest1.12%
Company disclosure, Q2 2026 6-K Exhibit 99.5. The US line collapsed through 2025 as Fair Financing vintages were young and unseasoned, then recovered as they matured. Group TMD/GMV back at Q1 2024 levels with far more US in the mix is the bull case in one line.
02
Volume mix and credit
Fair Financing is the growth product and the loss product. It carries interest, it carries a US book that loses four times what Europe does, and it is the reason the US margin line moved the way it did.
Figure 03KLAR · 03
Fair Financing, the interest-bearing product, went from $1.1bn to $4.7bn a quarter in 10 quarters
GMV by product · US$ billions per quarter, stacked
Fair Financing, Q2'26$4.7bn
Share of GMV13%
Share, Q1'245%
Fair Financing GMV went from $1.1bn to $4.7bn a quarter in ten quarters, from 5% to 13% of volume. Pay in Full is shrinking with the exit from Klarna Checkout.Source: company disclosure.
Figure 04KLAR · 04
The US book loses 4 times more per dollar of volume than the rest of the world, and the US line has turned down
Provision for credit losses as a share of GMV · Per cent of GMV, by region, quarterly
US, Q2'261.33%
US peak2.03%
Ex-US0.30%
Company disclosure. US cumulative net charge-offs on financing vintages plateau at 3.5-4.1% versus ~1.3% ex-US. US losses peaked in Q3-Q4 2025 as the Fair Financing ramp seasoned; the Q1 2026 drop is the first sign of underwriting improving with scale.
03
Operating leverage
This is the thesis. Revenue and margin dollars compounding while adjusted costs barely move. The question is whether the gap holds when volume growth slows, which management has just told you it will.
Figure 05KLAR · 05
Revenue is up 62% and margin dollars 61% since Q1 2024 against costs up 35%: the jaws opened in 2026
Operating leverage: growth in revenue, margin dollars and costs · Indexed to Q1 2024 = 100, quarterly
Adjusted opex excludes D&A, share-based payments and restructuring, per the company's definition. Headcount fell from 4,352 to 2,831 over FY2023-FY2025 while GMV grew 38%.
Figure 06KLAR · 06
Adjusted operating income was $159m in the first half of 2026 against $32m a year earlier
Adjusted operating income by quarter · US$ millions; the label is the margin on revenue. Brick bars are losses
Q2'26$91m
Margin on revenue8.7%
H1 2026$159m
Company definition: operating profit before D&A, share-based payments, severance and IPO costs. Q3 2025 was the IPO quarter and the trough of US credit losses.
04
The model: FY2026 to FY2030
Base case is inside the FY2026 guide (TMD $1,630m against $1,620-1,650m guided) and reaches a 16% adjusted margin by FY2030. The thesis driver is Fair Financing share of volume; interest income, the held book, credit losses and funding are all set consistent with it, so the credit business is modelled with its costs, not just its revenue.
Figure 07KLAR · 07
The base case takes revenue from $3.5bn to $7.3bn and operating income from $65m to $1,183m by FY2030
The base case, FY2023 to FY2030 · US$ millions. Solid bars actual, muted bars modelled
FY2026E revenue $4,127m and TMD $1,630m against guidance of $4,080-4,160m and $1,620-1,650m. Adjusted operating income compounds at ~70% a year off a small base.Source: Aadi institutional model.
Figure 08KLAR · 08
The model, FY2023 to FY2030: shaded rows are the four numbers the thesis turns on
Model summary · Actuals from the 20-F and 6-Ks, FY2026E onward from the base-case drivers
Adjusted EPS is adjusted operating income less tax at the driver rate, per share; it strips share-based pay, D&A and restructuring. Reported EPS is what the exit multiple is applied to.
05
Revenue mix and operating leverage
Two views of the same forecast: what the revenue is made of, and how much of it reaches operating income as costs grow slower than the top line.
Figure 09KLAR · 09
Credit income goes from 29% of revenue in FY2025 to 39% by FY2030 as Fair Financing takes share
Revenue mix · Share of total revenue by year. Muted bars are modelled
Fair Financing goes from 9% of GMV in FY2025 to 24% by FY2030 in the base case. Credit income (interest plus gain on sale) follows it: 29% of revenue in FY2025, 39% by FY2030. Receivables, credit losses and funding are set consistent with that mix.
Figure 10KLAR · 10
By FY2030 margin dollars are 1.6 times the cost base on an FY2023 index; the gap is the whole earnings story
Operating leverage, FY2023 to FY2030 · Indexed to FY2023 = 100. Solid is reported, dotted is the model
By FY2030 revenue is 321 and margin dollars 298 against adjusted opex at 181, all on FY2023 = 100. The gap between the top two lines and the bottom one is the whole earnings story; it opened in 2026 and the model assumes it keeps opening.
06
Unit economics and the franchise
What the model tracks underneath the P&L: every line as a share of volume, and the engines that move it. Revenue outgrows GMV because of take rate; margin dollars outgrow revenue because credit and funding costs fall per unit of volume.
Figure 11KLAR · 11
Per $100 of volume, operating income goes from $0.05 in FY2025 to $0.51 by FY2030
Unit economics per $100 of GMV · US$ per $100 of GMV. The P&L as a stack of take rates
Transaction costs are processing, credit losses and funding. Adjusted opex is a percentage of revenue in the model, shown here converted to GMV terms. Every $0.10 on the margin line is worth ~$150m of FY2026 operating income.
Figure 12KLAR · 12
Volume outgrows consumers, revenue outgrows volume, and margin dollars catch up
The franchise, indexed to FY2023 = 100 · Index, FY2023 = 100. Solid is reported, dotted is the model
Consumers 84m to 151m; GMV per consumer and take rate do the rest. Employees 4,352 to 2,300; revenue per employee $1.24m in FY2025 to $3.18m by FY2030.Source: company filings and Aadi model.
07
Capital and productivity
Klarna funds receivables with retail deposits under a Swedish banking licence and is now selling receivables forward. The book grows far slower than volume, which is what lets earnings reach the equity holder rather than the balance sheet. Beside it, the cost side of the thesis in one number.
Figure 13KLAR · 13
Deposits fund the receivables with room to spare, and the book grows far slower than volume
Receivables and the deposits that fund them · US$ billions at year end. Muted bars are modelled
Receivables fall from 8.8% of GMV in FY2025 to 10.5% by FY2030 as forward-flow sales ramp, so the book grows far slower than volume. Tangible book per share $4.36 to $9.83. Deposits at ~115% of receivables throughout.
Figure 14KLAR · 14
Revenue per employee went from $0.52m to $1.24m in two years as headcount fell by a third
Revenue per employee · US$ millions per full-time employee. Muted bars are modelled
Employees 4,352 (FY2023) to 2,831 (FY2025), modelled to 2,300 by FY2030. The company said it would keep falling. If this line flattens while revenue keeps growing, the operating-leverage thesis is intact; if headcount turns up, it is not.
08
Valuation
The FCFE DCF lands below the price, the other routes above it; the bear case lands below it. Value is a FCFE DCF with exit P/E and TMD-multiple cross-checks, rolled to the pricing date.
Figure 15KLAR · 15
5 of 25 cells in the exit-multiple grid sit below the $13.02 traded price
Value per share: exit multiple against cost of equity · US$. Exit P/E on FY2030E earnings; warm cells sit below the price, cool above
FCFE for FY2026E-FY2030E plus a terminal on FY2030E net income, discounted and rolled to the pricing date. 5 of 25 cells sit below the traded price, at the low-multiple, high-cost-of-equity corner.
Figure 16KLAR · 16
Probability-weighted value of $22.24 against $13.02 traded
Value per share by method and scenario · US$ per share. Brick bars sit below the traded price, ink above; the rule is the price
Bear 30%, base 45%, bull 25%. Skew on twelve-month targets 3.2x. The bear is floored at tangible book: a network with 120 million consumers and a bank licence gets bought or restructured, not zeroed.
09
Returns
What the position earns to FY2028 and FY2030 across exit multiples, on reported and on adjusted earnings, and what earnings look like if the drivers are wrong in either direction.
Figure 17KLAR · 17
On adjusted earnings the three-year return clears the hurdle at 18x; on reported earnings it does not
IRR by exit multiple, base case · Per cent a year. Exit at FY2028E (3-year) or FY2030E (5-year) earnings times the multiple, from today's price
Reported EPS carries share-based pay and an abnormal tax rate through FY2028; adjusted EPS is what the market is likely to capitalise while those normalise. At 18x, the two differ by roughly fifteen points of IRR.Source: Aadi model, Returns sheet.
Figure 18KLAR · 18
The bear loses money through FY2030 and the bull earns three times the base: the spread is the risk, not a haircut
Earnings per share by scenario · US$ per share. Bear, base and bull are separate driver sets, snapshotted from the model
FY2026E TMD: bear $1,230m, base $1,630m, bull $1,923m. Weights 30% / 45% / 25%. The bear loses money through FY2030: European volume at 5%, credit at 0.6% of GMV, no operating leverage. That is the FY2023-FY2025 company again, priced accordingly.
10
What would change the view
The things worth watching, in the order they would move the estimate.
01
Fair Financing keeps taking share of volume, at a stable loss rate on the bookRisk
Fair Financing was 9% of GMV in FY2025 and 13% in Q2 2026; the base case needs 24% by FY2030 with credit losses staying near 7% of the average book. Watch the FF share in the quarterly GMV table and the US financing charge-off vintages together; one without the other is the wrong outcome.
02
Transaction margin holds above the FY2026 guide of 1.09% of GMVRisk
Latest quarter 1.22%. The model has this rising to 1.39% by FY2030. If it stalls at the guide, FY2030 adjusted operating income is roughly a quarter lower. This is the whole argument.
03
US financing delinquency keeps falling as vintages seasonRisk
30+ DPD at 3.0%, down from 3.5%. US GMV is growing 30%+ and is now over a fifth of the group. Cumulative net charge-offs on US financing plateau at 3.5-4.1%; that number has to come down, not just stabilise.
04
European volume does not roll overWatch
Management cut H2 2026 European volume, citing Germany, its largest market. Roughly 80% of GMV is ex-US. The US cannot carry the group if Europe is flat; the Bear case is Europe at 5% growth.
05
Adjusted costs keep growing at half the rate of revenueSupport
Headcount 2,831 at year-end 2025 from 4,352 two years earlier. Management says it keeps falling. If the AI-productivity story is real, FY2030 adjusted margin near 18% is conservative; if it is done, the jaws close.
06
The asset-light shift does not hollow out revenueWatch
Gain on sale of receivables was $69m last quarter, up from nothing a year earlier, while interest income flattened at $266m. Selling receivables releases capital and lowers funding cost but swaps a recurring interest stream for an upfront gain. Take rate guidance now comes with and without it; watch the without.