Klarna shares climbed roughly 15.78% in early trading after the payments company released first-quarter 2026 results before markets opened, surprising analysts with an earnings print that was effectively near break-even and a billion-dollar revenue quarter that outpaced consensus.
The report showed gross merchandise volume (GMV) of $33.7 billion, a 33% increase year-over-year. Revenue rose 44% to $1.0 billion, and adjusted operating profit increased to $68 million from $3 million in the prior-year quarter. The company reported earnings per share of -$0.01, a marked improvement versus the Street's expectation of a loss in the range of approximately $0.13 to $0.20 per share. That gap represented one of the most significant positive surprises in Klarna's public-market history.
Customer and merchant metrics provided the operational backdrop for the top-line expansion. Active customers grew 21% year-over-year to 119 million, and the merchant count expanded by about 50% to more than 1.07 million. Management highlighted that these gains supported the robust GMV performance.
Operational efficiency appeared to be improving as well. Revenue per employee approached $1.4 million, roughly four times the level recorded in 2022, and revenue growth in Q1 continued to outpace operating expenses. The company reported adjusted operating profit improvement, which market participants interpreted as evidence of developing operating leverage.
Klarna maintained its full-year 2026 guidance and issued Q2 guidance calling for GMV between $35.5 billion and $36.5 billion and revenue in the range of $960 million to $1.0 billion. Some investors viewed the Q2 revenue band as modest relative to Q1's momentum, and that judgment contributed to some intraday volatility, though the net market reaction stayed clearly positive.
Analyst coverage leading into the print had set a relatively low earnings bar. Recent initiations included TD Cowen's Hold rating with a $16 price target on May 11 and BMO Capital's Market Perform initiation at $16 in late April.
Separately, the company announced expanded distribution in the U.S. by bringing its flexible payment options to Google's Gemini app and Google Search through Google Pay ahead of the earnings release. Market commentary noted Klarna as the fastest-growing buy-now-pay-later (BNPL) name in the peer group, with stronger profitability and improving delinquency metrics cited as positives. Rival Affirm was noted as having comparatively weaker revenue growth, reinforcing views of Klarna's leadership position within the sector.
The broader equity market provided a supportive backdrop. The S&P 500 rose 0.54%, the Dow Jones gained 0.57%, and the Nasdaq increased 0.60% during the session, a risk-on tone that helped amplify the stock's earnings-driven momentum. Combined, the sizable earnings beat, the company's first-ever positive net income quarter, accelerating merchant and consumer growth, and a constructive market environment pushed KLAR to its highest level since mid-March. The stock is now up nearly 30% from its 52-week low of $12.06.
Investor takeaway - A very large earnings surprise, improving profitability measures, and continued network expansion drove a strong market reaction, even as Q2 guidance left some investors wanting more given the quarter's strength.