You're right, I forgot to mention commissions from the merchant side as part of their revenue stream. Klarna reports about 2.76% average commission, so the rest is only consumer loan repayments.

As to how do they make money? The short answer is they don't, because they don't have to. Revenue or profit don't matter to investors and the people trading the stock; they are interested in user growth, with the hope of one day jacking up the interests and commissions once they have become indispensable and have enryone hooked on cheap, easy credit.

The slightly longer answer: I've been looking at Klarna's financial reports for a while, and they are bleeding money.

• They posted losses before taxes of 14 million USD at the end of Q3 2024, and now those losses are 224 million USD for the same quarter of this year.
• Their quarterly revenue grew by like 20% year to year, while their expected losses on delinquency for the same period practically doubled, effectively making just about every extra dollar they made this year vs last year, go to cover the money lost by people defaulting on their Chipotle delivery from 3 months ago.
• the sum total of their consumer receivables (the money people owe Klarna) grew by 2 billion USD in the first 9 months of 2025. You can only expect it to grow more. This is technically an asset, so it looks good to investors, who essentially take debt as money in the bank, just that you're gonna get later.
• how do they cover all of their other expenses and growth, then? By using all the revenue new users and new loans give them, as well as the ones people pay on time. It's not a ponzi scheme if you keep finding suckers. Plus, they raised 192MUSD on stock issuances this year, giving them much needed runway.
• on top of that, they have released notes (read: packaged consumer debt as financial instruments) for 840 million dollars in 2025 alone (until September). Selling those notes in debt markets gives them a nice source of money to count on. For scale, their consumer and commission revenue for all of 2025 is 1.75 billion. Just about 50% of operating income issued as bonds. The bonds sell well, and are considered good debt because when you look at the big picture, the percentage of money lost on delinquent loans is still pretty small (about 0.75% in Q32025, grown from 0.3% in Q32024; for scale, consumer banks usually hsve a 0.05 or 0.1% rate, and that's when debt is cheap and risks are low).

The problems will come if/when anything disrupts the hype cycle: either making delinquency rates much higher because of a financial crash, bond sales/ratings lower, stock prices drop, or a combination of the three makes everyone realize an average loan of 28 bucks for 6 months is a terrible business model, and the whole house of cards comes crashing down, bringing who knows what with it. I don't think it'll go down like in 2008, because some Obama-era regulations to prevent that are still in place, but it'll be a big shock to consumer debt markets for sure, and will more than likely mean that you'll only be able to buy a car for dodge charger sold outside of an army base kind of rates, or a house with a generation-spanning repayment plan.

Disclaimer: I only know the barest bones of finance and bookkeeping, so I might be out of my depth here. But if it looks bad to a dumbass like me, imagine how bad it can actually be.