Updated Aug 13 at 4:04pm ET.
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Klarna has updated its membership tiers across Europe, removing certain service fees and increasing the cash-back rewards users earn when they shop. These changes are part of the company's push to move beyond being just a payment button at checkout to becoming a daily shopping assistant.
By making the membership more rewarding, Klarna aims to keep shoppers inside its own app rather than starting their searches on Google or Amazon. This is a key part of its strategy to earn more from advertising and lead generation, which are more profitable than the small fees it gets from processing payments.
Apple has launched a new program called Apple Upgrade that lets U.S. customers lease iPhones, Macs, and iPads for a monthly fee rather than buying them upfront. Klarna is providing the underlying financing for the service, with plans starting at about $18 per month for an iPhone.
This is a major win because it embeds Klarna into the sales process of one of the world's most valuable brands. For Klarna, this moves the business beyond simple checkout buttons and into long-term hardware financing, which can provide a steady stream of predictable revenue from high-quality borrowers.
Source: Reuters
Klarna completed a deal to transfer about $518 million of credit risk to other investors. This process, known as a significant risk transfer, allows the company to move potential loan losses off its books so it doesn't have to hold as much cash in reserve against them.
This is a smart move for a growing lender because it makes the business more capital-efficient. By offloading this risk, Klarna can support about $12 billion in additional lending without needing to raise more money from shareholders, helping it grow faster while keeping its own balance sheet lean.
Source: Business Wire
The company has scheduled its second quarter earnings release for August 18. Management will host a webcast that morning to discuss the results and the company's progress.
Source: Business Wire
Klarna has set up its first major financing agreement in Germany, a 900 million euro facility. This arrangement allows the company to fund about 5 billion euros in consumer loans in one of its largest European markets.
This matters because it shows Klarna is successfully finding ways to fund its growth using outside capital rather than its own cash. Germany is a key market for the company, and having this dedicated funding in place ensures it can meet rising demand for its payment products there.
Source: Business Wire
Analysts have recently updated their outlooks following the company's new partnership with Apple to power device leasing. Nine of 12 analysts rate the stock a buy, and the average target price suggests a 9% gain from current levels.
The company has a habit of clearing the bars set by analysts, beating expectations in three of the last four quarters. This suggests management is conservative with its forecasts and execution remains steady.
| Expectation | |
|---|---|
| EPS | $-0.04 |
| Revenue | $996M |
