Klarna is in focus this morning after announcing a new distribution partnership with Stripe aimed at expanding its footprint in financial services ahead of its upcoming listing in the United States.
The agreement will make the company’s “buy now, pay later” or BNPL services available to merchants using Stripe in 26 countries.
It’s not the first time that Klarna has teamed up with the financial technology startup. It first started extending its BNPL services to Stripe’s merchants in 2021.
Neither Klarna nor Stripe is so far available for the public to trade.
Why did Klarna partner with Stripe?
Klarna has decided to team up with Stripe at a time when it’s warming up to list its shares in the United States.
The fintech confidentially filed for a US initial public offering (IPO) in November.
According to a Bloomberg report, the upcoming IPO could value Klarna at up to $20 billion.
Klarna refrained from sharing the financial details of its new agreement with Stripe on Tuesday. David Skyes – its chief commercial officer, however, dubbed it a “really significant” development for the Swedish firm that’s broadly known for its buy now, pay later loans.
“We added 100,000 new merchants in 2024 and we’re already seeing that growth rate increase with this agreement,” he added in an interview with CNBC today.
Klarna-Stripe deal is a win-win for both companies
Partnering with Stripe could deliver a significant increase in revenue for Klarna which was once valued at about $46 billion.
Buy now, pay later services help businesses benefit from higher average order values and increased conversions.
BNPL-compatible businesses generate as much as 14% more revenue than peers, according to a recent Stripe study.
“We’ve seen BNPL volume grow 172% last year on Stripe, which is much faster than other mainstream payment methods,” the company’s chief business officer, Jeanne Grosser, said in an interview on Tuesday.
The new distribution agreement Stripe signed with Klarna today is a win-win for both companies, she added.
Klarna has achieved gross profitability in the US
Markets have also been watching Stripe as a potential candidate for an initial public offering in the near term.
The fintech itself, however, says it’s not really in a hurry.
Much like Klarna, Stripe’s valuation has also had a significant haircut in recent years. It was valued at $50 billion in 2023 – down sharply from $95 billion in 2021.
But a secondary stock sale last year reportedly pushed its valuation back to about $70 billion.
Meanwhile, for those interested in investing in Klarna IPO that’s expected in the first quarter of 2025, it’s worth mentioning that the fintech has already achieved gross profitability in the US.
In H1 of last year, Klarna’s revenue was up 27% on a year-over-year basis.
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