Profitable Klarna files for a potentially blockbuster IPO

Swedish fintech Klarna took the next step in its highly anticipated U.S. IPO on Friday when it made its F-1 prospectus public. We are sifting through the document now.

Klarna hopes to raise at least $1 billion at a $15 billion valuation with this IPO, Bloomberg reported last week. The public documents don’t yet reveal how many shares it plans to sell or the price range, so we won’t know if this IPO will meet its fundraising aspirations or not until it prices shares. That’s typically around a month, sometimes more, after the prospectus documents are made public for everyone to chew on.

However, this IPO has been anticipated for years now so perhaps its bankers have some indication that investors will bite at that level.

One reason could be that Klarna’s previous private valuation recently rebounded to $14.6 billion, according to reports, after one investor increased its stake.

Another could be that Klarna is reporting a profit. Specifically, Klarna reported revenue of $2.8 billion for 2024, up from around $2.3 billion in 2023. It also reported a net profit of $21 million in 2024, a big swing from a loss in 2023 of -$244 million.

Founded in 2005 by its current CEO Sebastian Siemiatkowski, Klarna is one of several players that offer buy now, pay later financing to customers for purchases. After launching in the U.S. in 2015, Klarna hit a hefty valuation of more than $45 billion by 2021, a figure that swiftly plummeted by 85% to $6.5 billion when the 2021 venture capital valuation bubble burst.

Klarna has recently been making news for developing its own in-house AI system based on OpenAI’s ChatGPT and saying that it dropped its contract for Salesforce CRM to use its internal systems instead.

Siemiatkowski said its homegrown ChatGPT-powered customer service bot led to replacing 700 full-time contract employees and a savings of approximately $40 million annually. He even went so far as to say that Klarna stopped hiring aggressively because of its use of AI, letting its workforce dwindle from 5,000 in 2023 to about 3,500 by the end of 2024.

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