Sweden's Klarna discloses 24% revenue surge in much-awaited U.S. IPO filing

(Reuters) -Swedish fintech company Klarna on Friday reported a 24% surge in 2024 revenue, as the buy now, pay later pioneer made public its paperwork for a long-awaited stock market debut in the U.S.

Fintech listings soared in 2021 but lost momentum due to rising interest rates and steep valuations. But with risk appetite in equity markets slowly picking up, several companies that had shelved their listing plan are eyeing a comeback.

Klarna, which reshaped online shopping by pioneering the short-term financing model, did not disclose the size of its proposed offering.

Media reports suggest it could aim to raise more than $1 billion at a valuation exceeding $15 billion.

The BNPL market is projected to surpass $160 billion by 2032, with retailers such as Walmart, Target and Amazon joining fintech firms such as Klarna, Affirm and Block to attract younger, credit-averse shoppers.

Klarna's revenue grew to $2.81 billion in the year ended Dec. 31 compared with $2.28 billion a year ago. It earned $21 million, compared with a loss of $244 million, a year ago.

The company's latest step comes as stock market volatility, driven by renewed recession fears and uncertainty over President Donald Trump's tariffs, threatens to stall a recovery in the IPO market.

"The latest spike in volatility has dimmed the IPO prospects for a number of companies, but that has not completely shut down the market for new listings," said Matt Kennedy, senior strategist at Renaissance Capital, a provider of IPO-focused research and ETFs.

Klarna had 93 million active customers on its platform and operations in 26 countries as of 2024 end, according to the IPO filing. It's rival Affirm currently commands a valuation of roughly $15 billion.

U.S. fintech rivals Stripe and Chime were last valued at $91.5 billion and $25 billion, respectively, in a tender offer and private funding round. Both companies are reportedly preparing for IPOs.

Klarna said in its IPO filing it was working to fix a material weakness in its systems that are used to prepare their financial statements. It also said the Swedish Consumer Agency is investigating the company's compliance with marketing laws.

END TO IPO WAIT

For years, Klarna's likely stock market debut has been the subject of intense speculation, with previous plans fizzling out amid volatile market conditions and shifting investor sentiment.

Its decision to go public now comes as a key test for fintech IPO appetite, following a period of weak listings and tighter funding for private firms.

A successful offering could signal renewed investor confidence in high-growth financial technology companies, while a lukewarm reception may underscore concerns over lofty valuations and regulation in the sector, analysts have said.

Klarna drew investor attention as its valuation soared from $5.5 billion to $46.5 billion in just two years, fueled by three funding rounds between mid-2020 and 2021.

CEO Sebastian Siemiatkowski had considered a direct listing - a route that avoids selling new shares and the costs of a traditional IPO - in 2021.

But, the Sequoia Capital-backed company shelved the plan and instead raised funds at a sharply reduced $6.7 billion valuation.

Besides Sequoia, Klarna's major shareholders include its co-founder Victor Jacobsson and Danish fashion magnate Anders Holch Povlsen's Heartland A/S.

The company has partnered with major global brands, including cosmetics retailer Sephora, sporting goods giant Nike, and rental booking platform Airbnb.

Klarna, which has tapped 15 banks for the IPO, expects to trade on the New York Stock Exchange under the symbol "KLAR."

Goldman Sachs, J.P. Morgan and Morgan Stanley are the lead underwriters.

(Reporting by Arasu Kannagi Basil and Manya Saini in Bengaluru; Editing by Sriraj Kalluvila and Arun Koyyur)