Swedish fintech company Klarna has significantly reduced its full-year financial projections, citing challenging conditions in its largest market. According to reports from Reuters, the company now expects full-year gross merchandise volume (GMV) between $149-151 billion, down from its earlier forecast of greater than $155 billion. Additionally, Klarna has revised its revenue guidance to $4.08-4.16 billion, falling short of analyst expectations of $4.42 billion and below its prior expectation of $4.34 billion. The guidance overshadowed the company's surprise second-quarter profit, while analysts had expected a net loss.
The downward revision stems primarily from weakness in Germany, where Klarna operates as its largest market. As reported by Reuters, German retail sales grew less than 1% in real terms during the first half of the year, consistent with broader retail sector conditions. A German survey of 600 retail companies found that 42% rated their current business situation as poor, while nearly two-thirds reported deteriorating conditions compared to the same period in 2025. Klarna's forecast assumes Germany will remain soft through the second half rather than recovering.
Despite the challenging outlook, Klarna delivered a surprising quarterly net profit of $9 million compared to a $53 million loss in the year-earlier period, beating expectations of a $17.4 million loss. According to Reuters, adjusted operating income reached $91 million versus $29 million a year ago. The company's April-June revenue grew 27% to $1.04 billion, surpassing expectations of $993.8 million. GMV rose 18% to $36.6 billion in the quarter, with U.S. GMV specifically growing 27%.
The forecast revision significantly impacted Klarna's stock performance, with shares declining 17% in premarket trading following the announcement. As reported by Reuters, the guidance overshadowed the positive quarterly results, highlighting investor concerns about the company's ability to navigate challenging European market conditions despite strong U.S. growth momentum. The market reaction reflects investor focus on the company's European operations, particularly in Germany, which remain under pressure from weak retail conditions.
