The news: Klarna’s revenues grew 44% YoY to $1 billion, per the company’s Q1 2026 earnings, up from 13% a year ago.

Gross merchandise volume (GMV) jumped 33% to $33.7 billion, backed by strength in the US, where GMV hit $7.1 billion. In comparison, rival Affirm notched $11.6 billion in GMV in the same quarter.

Transaction margin dollars, a key metric of profitability, clocked in at $289 million, up 44% YoY.

Diving deeper into the results: The Klarna Card generated 77% of GMV for the quarter, equivalent to $26.1 billion in sales. Card volume grew 29% YoY. 

However, Klarna’s interest-bearing Fair Financing loans were the fastest-growing product in its lineup, surging 138% YoY—a promising sign for the buy now, pay later (BNPL) provider as it angles for more big-ticket sales to boost volume. 

Why this matters: Klarna’s US strategy is maturing. CEO Sebastian Siamiatkowski noted that his company is pulling from “Amex’s 2000s parity and ubiquity playbook,” expanding its geography and merchant range to reach consumers wherever they shop, per the earnings call. 

And as shoppers get familiar with Pay Later products, Siamiatkowski sees growing trust from the repeat Klarna users with proven repayment histories to try interest bearing Fair Financing loans for larger tickets. These loans now represent 12% of all POS installments for the quarter.

Implications for retailers: Consumers are becoming more comfortable taking out interest-bearing installment loans. Working with BNPL providers to fund POS loan deals tied to higher minimum ticket value could help retailers attract more volume as consumers pull back on discretionary purchases.