Is Klarna Going Out of Business? An In-Depth Look at the Fintech Giant’s Future

What Is Klarna’s Financial Status in 2025?

As of the first quarter of 2025, Klarna’s financial position reveals a company under considerable pressure but not in crisis. The Swedish fintech giant reported a net loss of $99 million for Q1, which is more than double the $47 million it posted during the same period in 2024.

This increase in losses was attributed to several one-time costs, including depreciation, share-based payments, and restructuring expenses.

Despite this concerning figure, Klarna’s revenue rose by 13%, reaching $701 million. These contrasting numbers indicate a company still experiencing top-line growth but struggling with profitability. Klarna also boasts 100 million active users and 724,000 merchant partners worldwide.

These impressive figures highlight the company’s continued relevance in the global payments landscape.

What’s clear from the numbers is this: Klarna is not collapsing, but it is undergoing a critical restructuring phase in order to pivot from high-growth to sustainable profitability.

Klarna’s Q1 2025 Key Financials

Metric	Q1 2025	Q1 2024
Net Loss	$99 million	$47 million
Revenue	$701 million	$620 million
Pre-tax Loss	$92 million	$47 million
Active Users	100 million	90 million
Merchant Partners	724,000	650,000

How Is Klarna Performing in the UK Market?

The United Kingdom continues to be one of Klarna’s most important markets, both in terms of user engagement and regulatory attention. With over 18 million users in the UK alone, Klarna is deeply embedded in British eCommerce.

Its partnerships with leading brands such as ASOS, H&M, Samsung, and eBay have allowed it to maintain a strong footprint in the retail space.

However, the landscape in the UK is not without its challenges. The Financial Conduct Authority (FCA) has made clear its intentions to regulate the Buy Now, Pay Later (BNPL) sector more strictly.

This includes proposed rules that would require providers like Klarna to conduct affordability checks and offer clearer repayment terms.

Despite these regulatory pressures, Klarna has remained adaptive, updating its credit policies and increasing transparency in its user agreements.

While regulatory changes might slow growth in the short term, they are likely to strengthen Klarna’s long-term viability in the UK market.

Has Klarna Announced Any Layoffs or Restructuring Plans?

Yes, Klarna has undergone significant internal restructuring over the past two years. Since 2022, the company has cut its workforce by approximately 40%, a reduction enabled largely through the deployment of artificial intelligence across its operations.

These reductions were not confined to a single geography but spanned offices across Europe, North America, and the UK.

However, Klarna is not simply cutting back. It is restructuring with the purpose of investing heavily in automation, AI, and technology to build a leaner and more efficient business model.

For instance, Klarna’s AI-powered customer service solution has reduced service costs by 40% per transaction, while maintaining high satisfaction scores.

Additionally, 96% of Klarna’s employees now use AI tools daily, reflecting the company’s strong commitment to digital transformation.

Yet, the company has also acknowledged the limitations of a fully automated support model. In 2025, Klarna began rehiring in customer service to ensure that users still have access to human assistance, particularly for complex or sensitive inquiries.

Why Is Klarna Delaying Its Initial Public Offering (IPO)?

Klarna’s much-anticipated US IPO has been delayed indefinitely. Initially slated for 2024 and valued at over $15 billion, the IPO was paused in early 2025 due to rising economic and geopolitical instability.

The primary trigger was the economic disruption caused by new US tariffs announced by President Trump, which affected multiple tech sector valuations and caused market volatility.

This delay reflects a broader trend in fintech, where several high-profile firms, including StubHub and Chime, have postponed their listings.

For Klarna, the costs related to IPO preparations legal fees, restructuring, and compliance also contributed significantly to its rising quarterly losses.

Despite the setback, Klarna remains committed to going public in the future. CEO Sebastian Siemiatkowski has indicated that the company will wait until market conditions stabilise before revisiting its listing plans.

Is Klarna Struggling with Global Expansion?

Klarna’s international operations present a mixed picture. While the company has successfully expanded into several markets, including the US, Australia, and various European countries, the challenges are mounting.

Regulatory uncertainty, local competition, and consumer credit risk vary widely by region.

In the United States, Klarna now commands a 26.2% share of the BNPL market, higher than any of its competitors, including Affirm.

However, Klarna’s US consumer credit losses have risen sharply, with the company reporting a 17% increase year-over-year, reaching $136 million in Q1 2025.

This uptick mirrors broader trends in the BNPL sector. A LendingTree survey found that 41% of BNPL users in the US had paid late in the past year up from 34% previously.

Many users are now relying on BNPL for essential purchases like groceries, a shift from its origins as a flexible payment tool for discretionary spending.

How Does Klarna’s Business Model Affect Its Stability?

Klarna’s model centres on offering interest-free instalments while earning revenue from merchant fees and, in some cases, late payment charges.

While this model drove rapid adoption, especially among younger users, it has proven sensitive to economic downturns.

One of the core issues with the BNPL model is its reliance on consumer solvency. When household finances are tight, the risk of non-payment rises significantly.

Klarna has responded by tightening lending standards and employing AI tools to assess creditworthiness more accurately.

The company now measures credit losses as a percentage of total Gross Merchandise Value (GMV), which has only risen modestly from 0.51% to 0.54%, according to Klarna.

This suggests that while absolute losses have increased, they are still within a manageable range relative to Klarna’s overall lending volume.

What Are Analysts and Investors Saying About Klarna?

Industry analysts largely agree that Klarna is in a transitional phase rather than on the brink of collapse. While some early investors have pulled back, others remain optimistic about the company’s long-term prospects.

CEO Sebastian Siemiatkowski continues to be a vocal advocate of Klarna’s strategy, describing the company as “AI-first and future-focused.”

He highlights the firm’s expanding merchant network, rising revenue per employee, and product innovation as signs that Klarna is not just surviving, but evolving.

Still, concerns remain. The repeated IPO delays, growing losses, and rising consumer defaults are valid issues that Klarna must address convincingly to regain investor confidence.

What Does the Future Look Like for Klarna?

Klarna’s roadmap for the future includes a strong focus on technology-driven growth, product diversification, and regulatory compliance.

The firm is working on expanding its service offerings to include budgeting tools, financial analytics, and savings products.

These initiatives are designed to transition Klarna from a transaction-based business to a full-scale financial services platform.

The company has also increased its investment in tech talent. As of Q1 2025, 52% of Klarna’s workforce is in tech roles, up from 36% in 2022. This shift demonstrates Klarna’s commitment to building a sustainable, agile, and data-driven organisation.

While Klarna is not without its challenges, its size, user base, and innovation engine position it favourably in a fintech market that is entering a more mature and regulated phase.

How Does Klarna Compare to Its UK Competitors?

The BNPL sector in the UK is becoming increasingly competitive. Klarna remains the market leader, but other platforms are rapidly gaining ground, each offering unique features and regulatory advantages.

Provider	Est. UK Users	Business Model	Regulation Status	Key Differentiator
Klarna	18 million+	Merchant fees, BNPL	FCA regulation pending	AI-first platform, 724K+ merchants
Clearpay	12 million+	Pay-in-4, no interest	FCA registered	Simple model, integrated with retailers
Laybuy	5 million+	6-instalment plan, interest fee	FCA registered	More traditional credit model
Zilch	3 million+	BNPL + cashback	FCA authorised	Combines rewards with instalments

Could Klarna Be Evolving Instead of Going Out of Business?

All signs point to evolution, not extinction. Klarna is navigating a difficult, highly regulated environment while making strategic adjustments to ensure long-term viability.

Its commitment to AI, diversified product development, and operational efficiency signals a company preparing for its next phase, not closing shop.

The growing pains are real, marked by layoffs, rising losses, and delayed IPO plans but Klarna’s foundational strengths remain intact. As one of the most recognisable names in global fintech, Klarna is betting that transformation is the key to survival.

Frequently Asked Questions

Why Did Klarna’s Valuation Drop Recently?

Klarna’s valuation dropped from $45 billion to under $7 billion due to investor recalibration, repeated losses, and the postponement of its IPO.

Has Klarna Laid Off UK Employees in 2025?

Yes. Klarna has conducted layoffs across its global offices, including the UK, as part of a broader restructuring and cost-saving strategy.

What Sets Klarna Apart from Other BNPL Platforms?

Klarna distinguishes itself through AI integration, global merchant partnerships, and a growing range of fintech products.

How Are UK Regulations Impacting Klarna?

The FCA is increasing regulation of BNPL providers. Klarna is updating its credit checks and disclosures to meet these stricter standards.

Is Klarna Still Safe for UK Customers?

Yes. Klarna continues to operate in the UK and remains compliant with evolving regulatory standards, making it a safe option for most consumers.

What Do Klarna’s Financial Reports Reveal?

Recent reports show a company with rising revenue but also increased operational costs and credit losses, indicating a shift towards long-term stability.

Is Klarna Planning to Move Beyond Buy Now Pay Later?

Yes. Klarna is developing additional financial tools, including savings features and AI-powered money management apps.