Q3 2025 Klarna Group PLC Earnings Call

Speaker #1: welcome to Klarna's third quarter 2025 earnings call. My name is Andrea Ferraz, Head of Investor Relations at M&A. And I'm joined today by Sebastian Szymankowski, and Niklas Nygren.

Speaker #1: Our Q3 results were released at around 7:30 a.m. Eastern Time, and they are available on the same link as this webcast. During this call, we will discuss our business outlook and make forward-looking statements.

Speaker #1: These statements are based on our current expectations and assumptions as of today. Actual results may differ materially due to various risks and uncertainties, including those described in our most recent filings with the SEC.

Speaker #1: During this call, we will present both IFRS and non-IFRS financial measures. A reconciliation of non-IFRS to IFRS measures is included in today's earnings press release, which is distributed and available to the public through our investor relations website, as well as filed with the SEC.

Speaker #1: Please note, unless otherwise stated, all comparisons in this call will be against our results for the comparable period of 2024. During the Q&A portion of today's call, please limit yourself to one question.

Speaker #1: We will reopen the queue for more questions if there is time. To join the queue, please press star one on your keypad. Before we move to Q&A, we'll begin with a short presentation.

Speaker #1: Sebastian, please go ahead.

Speaker #2: Hello, everyone, and welcome to Klarna's first earnings report, quarterly earnings as a public company. Very excited. I'm Sebastian Szymankowski, the CEO and founder of Klarna, and with me, I have Niklas Nygren, our CFO.

Speaker #2: Let's get right to it. Most of you are probably familiar with Klarna, 140 million active consumers, 850,000 merchants, and above $100 billion in GMV.

Speaker #2: And we have grown this network quite extensively in the last few years. We are having users across all parts of life. These are female, male, all types of educational backgrounds, living in all areas.

Speaker #2: As you may know, Klarna is today much more than just buy now, pay later. We offer painless, pay later, fair financing. And as you will see, more and more neobank features.

Speaker #2: Our reach is global: North America, Canada, the US, most of Europe, and Australia and New Zealand. But let's look at today's headlines. Today, I'm very proud to focus together with you on three topics: growth acceleration. It's fantastic that we're expecting to see above 30% revenue growth for Q4.

Speaker #2: We also have a record quarter for our fair financing product. It actually grew over 139% year-on-year, and I'll tell you more about why, associated with the number of merchants that we're seeing growing there.

Speaker #2: And then we're celebrating that Klarna has now actually issued over half a trillion dollars, over our 20 years. Thanks to our leading underwriting technology, we have continuously lower losses than industry standards.

Speaker #2: Those half a trillion has actually been issued with less any benchmark, and you will see that's pretty than 70 basis points. Put that against 26 markets.

Speaker #2: Impressive. Over 20 years, and a little bit of time; in 2015, Klarna is about 10 years ago. We're sitting down with most of the current management team, asking ourselves: what is the future of tech?

Speaker #2: What is the future of BIN? We realize this world is about to change. Eventually, we will all have digital financial assistance that helps us save time, save money, and be in control of our lives.

Speaker #2: And we realize this will also have large implications for both the financial industry, retail banking, and technology. You can think about it this way.

Speaker #2: Both of these markets are pretty much malfunctioning. They have the classical fallacies of non-functioning markets, such as the fact that it's hard to search and find the right things.

Speaker #2: But that is going to an end now. AI is going to change, and ignorance will stop being a business model. These lock-ins that people have been able to rely on—forget about them.

Speaker #2: They're going to go from strategy to nostalgia because now AI agents will be able to move all of my so-called proprietary data preferences and all of that between different providers.

Speaker #2: And finally, this means the moats are drained, the gates are open. We're going to see a dramatic increase in competitiveness in both financial services and tech.

Speaker #2: We're very excited about this. What it means is that trust is the new oil. Not data anymore, but trust. The companies that customers actually trust to truly care for their best interests are going to be the ones that gather the most following.

Speaker #2: In addition to that, customer service minimization is going to be something that we can't forget about. Historically, banks have put us on 45-minute holds, and the big tech companies, they don't have customer service at all, just FAQs.

Speaker #2: Forget about that. That's that thing of the past. So the quiet life that we have observed among the big tech and banking companies are over.

Speaker #2: Complacency means the end of business. Marble offices are gone, and the free gourmet cafeteria is no longer culture; it's overhead. This is what we're about to see.

Speaker #2: And we can see that it's already starting to happen. Pre-AI tech, we saw tremendous perks, zero customer service, and product skill without consequence. And now we're starting to see zero efficiency, intense AI product shipping urgency, and the first real competitive threats in 20 years.

Speaker #2: that is quite exciting because if you And look at those two sectors, fin retail banking, that's a 520 billion profitable profit pool that is addressable to Klarna.

Speaker #2: We only cater to 0.6% of that today. Ads and technology companies are another 500. These two combined represent a trillion dollars. Now, remember, this was estimated by McKinsey, but also by Claude.

Speaker #2: And I have to admit that Claude was significantly cheaper than McKinsey in making these estimates. Now, what does this mean? Well, we say in Sweden, "one person's dead and another person's bread."

Speaker #2: This is pretty much it, because this means that Klarna is having a fantastic opportunity to go after these two massive profit pools. And we're going to do that with 100% focus on customer obsession, growth, operational efficiency, and leading the AI innovation.

Speaker #2: And I think that here I want to highlight that those days when tech companies and banks could not wake up every day, like retailers do and restaurants do, focusing on how do I bring in customers through the door?

Speaker #2: How do I give them the best offer, the best service? And how do I make sure I operate very efficiently so I don't go out of business?

Speaker #2: businesses in these industries that are willing to really pursue this and work Those days are gone. And the effortlessly on these topics, they are going to win and they're going to grab a lot of market share in these markets.

Speaker #2: So, let's talk about customer obsession at Klarna. What we are doing is very simple: we give people back time, we give people back money, and we give them back control.

Speaker #2: And this goes far beyond. A lot of you will be familiar with Buy Now, Pay Later, but we do offer a number of other services, like searching for products at the right price, making sure that it's easy to pay your bills and manage your finances.

Speaker #2: To show you where your packages are in real time, so you can go and pick them up, and give you control and insights of your spending habits.

Speaker #2: And in addition to that, we offer you a lot of give back money. I mean, just this number of money that our customers have saved on customer or not paying interest with our paying for interest free is in the billions.

Speaker #2: And in addition to that, we offer cash back and other features as well. So, this is very complicated. I think something I would like to focus on today a little bit is that our form of credit is really the more sustainable solution.

Speaker #2: And if you were to ask that digital financial provider, the digital financial assistant of the future, what they would argue is the best form of credit, I can tell you it's not going to be credit cards with $6,500 outstanding balance fees and never-ending payback, with tremendous over-revolving.

Speaker #2: That's not going to be the one. It's not going to be point-of-sale financing. Yet again, another way to charge high fees. It starts at 0% financing, but then after a few months, they start to push you into 36%, and it's also not the best one.

Speaker #2: But the best one is going to be the Buy Now, Pay Later with Klarna. Why? It's low average order value, so you're only borrowing about $100.

Speaker #2: Your average outstanding balance with Klarna is $88, compared to these others. The interest rate is zero, and you pay back on fixed installments. This is a healthier form of credit, which is attracting an audience that is very aware and conscious about their spending.

Speaker #2: This is also visible in our credit losses and our charge-off rates. As you can see, a fraction of these competing credit providers already really distinguished itself.

Speaker #2: And just today, I want to focus on one to just highlight it to you. Klarna is the only payments network in the world that collects SKU-level data on basically a majority of all of our transactions, which means that when customers buy with us, when they buy with a credit card, they're used to seeing what you see on the left-hand side.

Speaker #2: recognize it from your banking apps. You barely understood You will all where you spent. It's just some merchant name that you can barely read and some amount.

Speaker #2: With Klarna, we have the full SKU level. We know exactly what you purchased, so we can show you images of the items that you bought.

Speaker #2: As you can see on the right-hand side, the Nike tech here and so forth. You can see the sizes, the colors. You can also then, as a consequence, report returns much more easily.

Speaker #2: Or if you have warranties or other things that you want to follow up on, that is a tremendous value and a differentiation in the richness of information that we carry at Klarna.

Speaker #2: So putting customer obsession is really what we've been focusing on a lot, and even more so in the last year. We have this very strict process where we start with insights.

Speaker #2: So we generate every week. We have we we do over 200 consumer interviews basically inspect visually 5,000 interactions in detail per week. And this drives a lot of what we call actionable insights, which are average actually about 75 currently per week.

Speaker #2: They expected value of delivering on them are estimated at $300 million of lifetime transaction margin. And we're very, very important to us that they are crystal clear on what is broken, how could it be fixed, and that we have these very quick estimates of the financial impact and the efforts to fix them.

Speaker #2: And then we obviously work effortlessly to deliver these improvements to our customers. Currently, we're shipping at a rate of about 20 improvements a week, with an estimated lifetime value of about $15 million in transaction margin.

Speaker #2: In each of these shipped improvements, we verify the impact, quality, and effort. This is the core of our customer obsession process: to effortlessly talk to customers, review these recordings, and understand how we could improve on them.

Speaker #2: The fantastic effects of this are that numbers don't lie. We have 73 in MPS, 54% in global bank trust, and 41 in global brand awareness.

Speaker #2: Remember, as I said, trust is the new oil. More than data. Data will flow freely. Trust doesn't come freely. Trust only comes from hard work like the one I just displayed.

Speaker #2: And this is why we don't just have customers. We actually have fans. These consumers, when you talk to them, they rave about Klarna. They rave about what we're offering them, and we offer them.

Speaker #2: Now, this then brings us to growth. Now, with growth, we have our objective number one, and that is that Klarna should be available everywhere Visa is.

Speaker #2: That we basically do that through what we call our default global distribution parking plan. This means that we go to the biggest P2Ps in the world, the ones that are doing over $1 trillion worth of volume, and then we have worked with them to say, "Klarna shouldn't just be an alternative that you add on as a merchant."

Speaker #2: It should be standard default. When you sign up for these Stripe, Nexi, WorldPay, you should automatically get Visa, Mastercard, and Klarna in the default offering." And that is something that we are have been pushing for years, and are continuously pushing for.

Speaker #2: And you can see now this quarter we add Clover to this club of signed partners, and some of them are already even live, like Stripe and Apple Pay, that are basically ramping up now with this new offer.

Speaker #2: And you can see that that's having a real, real impact on the number of merchants that we're adding. Because if we're ever going to hit the 150 million acceptance points that Visa has, this is only through global distributions that this will happen.

Speaker #2: And you can see that it's starting to pay off the strategy as we went we added a record of 235,000 merchants this quarter. And it's now growing at 38% compared to a year ago at 13.

Speaker #2: Obviously, we are still expanding with the world's best brands as well. Some of the renewed or expanding partnerships you can see on this, and that is obviously still a big important part of our strategy. However, the distribution of our PSPs, acquirers, and technological platforms is the key one that's going to drive the most of the millions of merchants that we want to attract to Klarna to be on par with Amex, Visa, and Mastercard.

Speaker #2: Objective two, and this may be something that you're not familiar with, is that a lot of merchants offer Klarna, as we said about 850,000. However, not all of them have been offering all of our payment methods.

Speaker #2: And this is also an important thing. We want customers to be able to expect that each of the payment methods that they recognize with Klarna, which is the paying for all or pay now, it is the pay later, and it is the fair financing, should be available at every merchant.

Speaker #2: And we have made fantastic progress here, especially on the fair financing side. As you can see, just between last year, we were 80,000. Now, we're 150,000 merchants.

Speaker #2: It means that still only 18% of our merchants actually offer fair financing, but it's a significant improvement. And this is driving a this is what is the explanation for driving that fast growth in the fair financing product.

Speaker #2: We just doubled the number of merchants that offer it. Consequently, you can see more than almost doubling the volume as well. We're also working effortlessly to improve our Pay Later offering.

Speaker #2: This is really you could if you would like to call it the big wallet competitor to some of our big wallets out there, because this allows you to pay the full amount.

Speaker #2: Currently, we have about 43% coverage and it is growing, which is great. We do a lot of things here to make sure that debit is an important payment method available at every checkout out there when people see Klarna.

Speaker #2: Our third objective is to go from now, then we have payments to a full neobank. In order to explain to you how we do that, I will take you quickly through the customer acquisition channel that I think is totally revolutionary and very different.

Speaker #2: Most banks will acquire customers through promotions, through standing in the airports and bug you when you're running to your flight. Well, Klarna does is we're available in all of these millions of checkouts, and people will see fantastic brands, be it a Nike, a us.

Speaker #2: Macy's, and Sephora, and we bug you and say, "Hey, you know what? Why don't you use us to We are associated there with pay this time around rather than your card?" And it turns out it is so simple to start using Klarna.

Speaker #2: It's almost as simple, or even simpler, than using your existing card. This ease of use has allowed us to accumulate 114 million active users, which is fantastic.

Speaker #2: But obviously, they only use us; some of them only use us for a single purchase. So what we then start doing is telling them, "Hey, you know what?

Speaker #2: If you download our app, you will unlock a world of additional features—additional things that you can do. For example, you can see your purchase history and understand exactly what you purchased, or make it easier for you to return.

Speaker #2: So, about 49 million monthly active users and 76% of the total have downloaded our app. So, that's the next step. And then we say, "Hey, when in that app, beyond just seeing your purchase history, you can actually use it for shopping." We have our shopping browser.

Speaker #2: We have cashback. We have tons of things. And what you can start seeing happening now is there’s about 10% of the population that uses these features.

Speaker #2: So it's much smaller, but look at what's happening with the average revenue per customer. It's going from $28 to $90 in that segment of the audience.

Speaker #2: And now here comes the card, which we're super excited. I'm going to show you some more amazing metrics on our card. And what's interesting here is only 3% so far has picked it up, but it's starting to pick up rapidly.

Speaker #2: And you can see that when people start using our Klarna card, then the average revenue per customer jumps to $130, which is actually four times as much as the average active user.

Speaker #2: And in addition to that, we're also expanding the bank offer, the store positive balance, to be able to use our savings products and so forth.

Speaker #2: And you can see there as well, the average revenue per customer is very, very different. So each one of those are very early, but we can say the funnel is working.

Speaker #2: This channel is amazing. It brings in customers at a fraction of the cost that our competitors are spending to attract the same users. And we're now seeing that we are able to transform them into a richer relationship that gives consumers more value, but also allows Klarna to generate more revenue per customer.

Speaker #2: So first, what about the card? People ask me about, "Why should I get the card?" Well, first and foremost, the purpose of our card was to bring back the control of debit or credit.

Speaker #2: Some of you may remember when you were kids, at least when I was a kid working at Burger King, you would swipe your card and it would press one for debit, press two for credit.

Speaker #2: But your purchases per month were on a balance, and then you were less likely to revolve, less likely to build up that balance. So banks removed that.

Speaker #2: The problem was that banks didn't love it because you weren't borrowing enough money when you did that. You weren't building up a balance. You weren't putting all of it together. People really love that.

Speaker #2: But we know there's a big segment of customers in the U.S. We call them the self-aware avoiders, which McKinsey has said is about 20% of the audience.

Speaker #2: We think it's even bigger. But the point is that that's an audience who have tried those credit cards, realized that they're a debt trap, and realized that they're a product of the devil, as some of them call them, and that they're all about pushing you into debt.

Speaker #2: So they really enjoy this control of press one for debit, press two for credit. And we're bringing that back, and we see tremendous demand for that.

Speaker #2: But the most

Speaker #1: card ? loyalty What about And you're seeing is that I get here points ? that's what all the my on my now other perks about credit only have , not we launched the card with for debit and two for credit , but in addition to we're now one debit out a card with credit card perks and the demand for this has been through the very excited about roof .

Speaker #1: this We're . It's just about to roll out and get launched . I can give you a funny tweeted about this and example .

Speaker #1: said that I would anyone who these produce memes will funny actually give us , you know , will early have an was And it .

Speaker #1: A thousand people who indicated that they wanted to sign up to get their credit card cut by us, we think personally show that there's a very good promise to this demand for the product.

Speaker #1: we're seeing And me media . There's interest as we tons of present these products to our audience . So objective number three , from this payments to full what is the numbers ?

Speaker #1: What is it looking neobank , the fantastic Well , thing like ? is , thanks to the success of the last quarter , we have now surpassed one of our main competitors in global active card users , 3.2 million , which we're very excited about .

Speaker #1: can see And we us that been a big contributor to obviously has that with going from 0 to 1.4 million active virtually cardholders the market .

Speaker #1: US So in it's starting to really , really work . And we're excited about to continue to accelerate this . And trying to in additional markets , you should be aware here that Europe was a little bit late to the game .

Speaker #1: So US was first and we expect to see we even more success here in great well . And that is also seen in our card volumes .

Speaker #1: As see on a year to year basis , they're now growing you can almost at And 100% rate . also that has contributed .

Speaker #1: So I would say doubling the number of merchants offering growth financing has a product lot. You can see here how we have done what we do through the card.

Speaker #1: this is paying off in an And all of acceleration of our growth . revenue So here again , what you can see now is for US the that we are now this quarter actually reporting 51% growth year on year .

Speaker #1: very We're excited . Which means that we're far outpacing our local competitor in growth . And in addition to that , see that it's picking you can also also markets .

Speaker #1: the And strong the US growth in is board in all contributing a lot to the overall of the company , meaning that we're now almost on up global par .

Speaker #2: Growth is .

Speaker #1: this is And while increasing rates , take which is a sign strong of the preference our interest in So finally , a few words on operational efficiency and .

Speaker #1: It's that we're fantastic. Now we have celebrated that we underwrote $0.5 billion since inception. And we've done that with, you know, south of 70 basis points in credit losses.

Speaker #1: this And is partially due to the fantastic short durations of our credit . That means that through the macroeconomic cycles that we have gone through over those 20 years , issuing all of this in over 26 markets , when macroeconomic happen , we can change our underwriting models and in just a about 60 days , we have or more than half of our balance sheet is underwritten , according to the new model .

Speaker #1: That's a level of agility that none of the large banks can compete with . Most of their credit them with card portfolios and their mortgages and so forth .

Speaker #1: Will sit and try to refresh their balance sheet for years after economical changes have had implications on how you should underwrite . And we have also continued to productivity .

Speaker #1: So you can see here that our revenue as we've been per employee , talking about previously , has continued to increase . We're now at $1.1 million per employee , and we hope to continue to do that .

Speaker #1: Acceleration, and part of that is due to AI and just a focus on operational efficiency, which is not through layoffs but through natural attrition.

Speaker #1: As we haven't hired for a years , has few now led to the number of employees to shrink by about 47% . But we want to highlight here as well is that not all of that comes through on the total staff cost .

Speaker #1: reason for And the that is we have made a commitment to our employees that all of this efficiency gains , and especially the applications of AI should also , to some degree come back in their paychecks so that they are fully aligned and they are incentivized , aligned with the investors to drive these changes through the company .

Speaker #1: And that's your compensation per seeing as the employee has risen from $126 to $232. That gives us a process which is in perfect alignment between our employees and investors in driving the financial goals of Klarna.

Speaker #1: we continue to So see very from demonstratable value AI systems . This has been reported before . the With data . As you can see , it used to do about 700 full time jobs .

Speaker #1: Now it's doing about 853 full time jobs of a saving of 60 million . So we continue to this invest in . And you can see also that focus on the operational efficiency that we said in these AI times will be so important has led us to allow us to do about 108% revenue growth while keeping opex flat , which I think is pretty remarkable .

Speaker #1: And unheard of as a number among businesses. With that said, I'm going to hand over to Nicholas for the financial update.

Speaker #3: Thanks , Sebastian . As you mentioned , Q3 was a landmark quarter for Klarna , a quarter where our investments in growth , especially in the US and fair financing started to compound exactly as we expected .

Speaker #3: And I'll take a few minutes to the walk through financial update . Let's start at the top line . GMV grew to $32.7 billion , and the US 43% year over grew year .

Speaker #3: revenue Consequently , grew to $903 million , and in the US , we saw revenue growth of 51% . The transaction dollars came in at 281 million , reflecting that a planned accounting lag from fair financing that I'll talk more about .

Speaker #3: Importantly, the lag is temporary. We're actually guiding to an increase of over $109 million in transaction margin dollars for Q4, as those revenues start compounding.

Speaker #3: So this slide really captures the story of the quarter faster growth . Now with profitability accelerating right behind it , the foundations for our growth remain the same .

Speaker #3: It's the building blocks you see on the right , growing with our strategic partners , scaling with the large global merchants , ensuring consumers have the Klarna card and building out that full suite of payments at flexible merchants , as we've already said , fair financing is a key contributor to Q3 25 performance in the US .

Speaker #3: It's up 244% . Fair financing is now available at 151,000 merchants , an increase of three x over the last two years . Couple that with the new forward flow agreement that we put in place , enables a very capital efficient way for us to continue to expand this product set overall revenue growth is outpacing the market .

Speaker #3: We continue to see an acceleration based on the foundations of our building blocks, and we're coupling that with an increase in take rate in a very sustainable way.

Speaker #3: page is This central to understanding the impact of our success in accelerating growth through the US fair financing . It creates a short term profitability lag in Q3 25 , on the left hand side , PNL , we show the transaction margin dollars based on realized losses increasing by 25% year over year .

Speaker #3: You can see that correspondingly on the right-hand side chart, where you see going up from $297 million to $371 million, based on those realized losses.

Speaker #3: In fact, the $91 million of upfront provisioning is primarily driven by fair financing and drives the $280 million transaction margin dollars you see in Q3 2025.

Speaker #3: Well , that being the case , we're guiding towards a Q4 25 of 390 million to $400 million of transaction margin dollars , driven by the fact of that revenue from the success of the fair financing compounding over time .

Speaker #3: So let's just recap how accounting for fair financing works . Here's the illustrative example of a consumer who has a six month loan .

Speaker #3: We provision for the potential credit losses upfront , where we actually earn revenue over time as the consumer pays us back as planned .

Speaker #3: Our numbers reflect the growth in fair financing and the associated accounting processes. You can see that in the chart below. The gray parts of the bars show the upfront provisioning from the success of our fair financing product.

Speaker #3: While you can see the realized losses, actually the losses that we have recorded are very stable and coming down by one bit in Q3 2025, based on that continued improved underwriting.

Speaker #3: In fact , when you look at fair financing , you can see delinquencies falling 5% year over year . While GMV has growing at been 139% .

Speaker #3: Similarly , US charge offs remain stable , with an expected ranges . In summary , we strong have top line growth with GMV and revenue driven by an acceleration in the US and in fair financing .

Speaker #3: That's driven a planned profitability lag in Q3 25 , and we're guiding towards an acceleration in transaction margin dollars in Q4 , driven by us being able to continue to compound the revenue that we've seen from the success of our growth .

Speaker #4: Thanks , Nicholas . We'll go to the investor questions first , and I will read three from questions Seecombe . The first question from Salim is how can Klarna stay competitive against traditional credit card companies that offer buy now , pay later options ?

Speaker #1: Yeah , I think Klarna , I've gotten the competitive question 20 years back ever since when it was us versus PayPal in Sweden , and there was us versus PayPal in Germany , and then it was us versus payments companies in the UK US .

Speaker #1: and the I think that , like , I mean , in essence , how do you compete ? You stay customer obsessed . You make sure that you build .

Speaker #1: You listen to your customers and you build the features that they want . You make sure that you are operationally efficient and don't waste money .

Speaker #1: And then you just keep on grinding and grinding . I think that . Obviously you could argue that when Klarna was still a small company , the prerequisite , you know , a small company may be grinding as much as they want .

Speaker #1: It's to scale; still hard to scale into a large company. Klarna is at scale now, with 114 million users globally.

Speaker #1: We are one of the largest banks in the world, with a number of customers, and now we're exploring and looking into how we can add additional value to those customers.

Speaker #1: And we're seeing that that is accelerating in the numbers . So I feel we are very well situated to compete against the traditional companies who most of them , I would say , expose complacency , lack of customer obsession and rely on high barriers of entry and low and high switching costs for their competitiveness .

Speaker #1: Rather than operational excellence . And customer obsession .

Speaker #4: Thanks . The second question is from Benjamin , who asks , Does Klarna have any plans to pay dividends to shareholders ?

Speaker #1: No , we have no such current plans or ambitions , but I mean , hope that Klarna will obviously we continue to improve its profitability and so forth .

Speaker #1: So in a in a future , nobody knows to happen what's going .

Speaker #4: And the third question is how do you intend to profits improve on your current business model ?

Speaker #1: are a There multitude of things . I mean , as you saw here , Nicholas explained . We spent some time on is the profitability lag that is through created the the high growth of financing as a product , fantastic which is a accomplishment and really primarily stems from the fact that we've doubled the number of merchants that offer this product .

Speaker #1: But as you can see , that's still only 20% of the portfolio . And we hope to achieve 100% . So we would expect products to these continue to grow .

Speaker #1: time , in most markets , And Klarna on what has we call transaction margin . Am I using the term ? Yes . right to transaction margin has been somewhere around 5,060% over the longer period of time in these markets .

Speaker #1: that comes back to And a lot of like , you on know , having enough repetitive customers maturing your models for that specific underwriting geography and so forth .

Speaker #1: And we believe that that's very achievable in all of our US markets . The is slight which is difference , worth highlighting . And many times people ask us about credit what we losses , but the US primarily in is payments , right now fees , payments , fees are the same size as actually losses in the US market .

Speaker #1: this is And the settlement costs that because of are and the non-regulated credit credit card markets that we see in So you the US .

Speaker #1: may remember that in Europe . There's a regulation . Credit cards cost 2040 bips in the US . They cost 150 to 200 .

Speaker #1: So similar may, in others as we've seen, you have companies. Some have been in payments and fintech for a long time, and will remember how PayPal basically sought to increase the difference between their funding costs and their payment fees.

Speaker #1: And this is exactly the same thing we're going through . tons of We have initiatives to drive down the payments cost , which should US allow the market that is currently running at at positive gross transaction margins , but not as high as in some of the more mature European markets .

Speaker #1: I think that's the biggest , biggest one that's going to have the biggest implication on on the transaction margin , as you can see below , transaction margin , the operating costs , we no plans have whatsoever to increase any spending there currently because of the efficiency gains that we're seeing from AI .

Speaker #1: We don't believe hiring is the that right approach at this point in be small hiring time . here and It could there , but anything that will have implications not on the net .

Speaker #1: Yep .

Speaker #4: Great . Thanks , Sebastian . So look , usually it would be customary for me to open the call to analysts to ask questions themselves .

Speaker #4: Now , there are technical some with our webcast provider , which prevents us from doing that . So I have analysts asked the the questions so I can pass them on to I'll go management . that .

Speaker #4: Now , there are technical some with our webcast provider , which prevents us from doing that . So I have analysts asked the the questions so I can pass them on to I'll go management .

Speaker #4: do So the first question comes from So team at UBS . And it's about Apple Pay in store . Now . They that estimate US Apple Pay could be approaching volume 1 trillion of by 2027 , meaning that even if 1% was via BNPL , Klarna would reasonable share of that have a business .

Speaker #4: Can you talk about how the Klarna team the sizes up potential opportunity associated with the Apple Pay channel ? Even more including broadly , the online traction you've already experience seen ?

Speaker #4: a And as follow , a firm up counts Apple Pay related volumes , which are carded as a firm card . Volumes . Will the recognition be the same here ?

Speaker #4: So we for can use comparability purposes ?

Speaker #1: I'll leave the second one to you , Nicholas , but I think on the the on first one , I can answer that .

Speaker #1: you hopefully I noted the the slide that we were talking about objective one , which is to the same reach amount of acceptance points as the big networks like Visa and Mastercard .

Speaker #1: remember of you will Amex 20 years ago Some was not accepted widely . could maybe use it in a restaurant or an not everywhere .

Speaker #1: And Amex did a fantastic roll it out work to it and make available . Klarna is going through that process right now and that is the objective one that we were to , and we have already a few years referring identified that this is to happen by us not going every merchant ourselves in order for us to reach that scale , need to work more we closely with our distribution partners .

Speaker #1: So that's number Second , one . companies like Apple stripe , like Pay and others who have , you know , acceptance everywhere , who can drive that rollout of Klarna , more making available .

Speaker #1: So with said , that however , we with some of had worked these many years , but we had partners for never worked as we've always been an payment alternative method , something that merchants would have to go in post signing up with a stripe or worldpay etc.

Speaker #1: then and add on that as well and clear to us , was not going to us into , you know , millions and millions of So we points .

Speaker #1: For our holy event that has been to become Grail default, meaning that when you sign up with these partners, we should be default and we should be available.

Speaker #1: And that we're seeing tremendous success already you saw some of with that . The ones in the slide , you can see that it's having a very positive impact on the growth of number of merchants when it comes to Apple Pay , it is slightly different because the acceptance is already there and it's more about customer adoption .

Speaker #1: So we have teams that are focusing internally using that customer obsession methodology that we showcase we are looking and here , where interviewing customers , using that product , looking at customer interactions and then making sure that all the minor glitches and things that can be improved are weeded out and that it works really , really well .

Speaker #1: we see a And scale and lot of growth in that portfolio . But in that , addition to then the second part is just education .

Speaker #1: We , you , marketing and know educating our consumers about the availability . And we have some interesting upcoming things that are going to happen there as to get ahead well .

Speaker #1: of myself , but there's some I want interesting stuff that's going to come there to make it even more attractive . And grow the awareness , as you saw in that becoming a slide , neobank everything with so clients , we have many tons of great features and many of these features .

Speaker #1: Drive additional revenue per customer as well. And a lot of— but we have 140 million users, right? So, there's a lot of it right now.

Speaker #1: The focus is really how do we make sure that all these users actually use us and use all these features ? And so that's where a lot of the effort is .

Speaker #1: And that is for true for Apple Pay as well . When we regarding reporting , I'll handle over to Nicholas on that topic .

Speaker #3: Thanks , Sebastian . So so today we don't actually yeah include Apple Pay our card volumes . in This what you're seeing is today .

Speaker #3: We're announcing things around the card . Apple It doesn't include Pay . Apple pay is growing really strongly . And so is Google Pay .

Speaker #3: you know And I think globally we're seeing really , really strong adoption for Apple Pay as well . And particularly in the UK .

Speaker #4: All right . Thanks . the next So question the next question comes from Sanjay at KBW . And he asks the 4 million card signups in four months .

Speaker #4: Seems really strong. What are you seeing in terms of usage and uplift in GMV from consumers who are signing up for the card?

Speaker #4: the What's from a card customer versus one that doesn't have a card ?

Speaker #1: I will gladly leave that to you, Nicholas.

Speaker #3: Sure . So I think we had some of the some of this on slides . Right . the But what we're seeing from the card pack is around about 130 bucks .

Speaker #3: Now , that's obviously only 3% . Today of active card users . So you can see where that's going in comparison to the $28 that we have on average on our 114 million active users .

Speaker #3: So we'll continue to see , you know , I think strong , strong performance on that overall .

Speaker #4: Great . The next question comes from Jason from Wells Fargo . And he asks the credit data looks good in Q3 . But are you seeing any your signals in data suggesting that you may have to tighten the credit box in any of your major geographies , especially as we head into the holidays and consumers potentially lean in more on BNPL ?

Speaker #1: Look, I think again, the key message that we've been trying to get out and that I feel very strongly about.

Speaker #1: Really myself think a lot about is the fact that the audience using Klarna is what we refer to as the self-aware avoiders . These are users who usually have used credit cards historically found them to be not aligned with their best interests , or even , as I would call it , some customers .

Speaker #1: The product of the devil . And the point is that , like you end up racking up depth of 4 or $5000 , you're interest paying high that , and on you're revolving , you know , for eternity .

Speaker #1: Buy now , pay later . $100 average order value . The fixed installments zero interest . Obviously , our fair financing products are affordable as well , so I would argue that the Klarna customer is a more conscious customer .

Speaker #1: It's more thoughtful one that is a little bit in how to spend on debit, how to spend on credit. And this is partially why we've seen, after underwriting half a trillion dollars over 20 years, these below losses 70 bips time over the.

Speaker #1: And the other thing that we highlighted was the agility of the model . Right ? So because we underwrite in real time , it allows us when we see macroeconomic shifts to adjust those models .

Speaker #1: And in just 40 days , more than 50% of our balance sheet is underwritten , according to the new standards . And that gives you an agility .

Speaker #1: So the question then is , I would say , have we any reason currently to make any adjustments ? And the honest answer is no , we have not seen anything in our data or in our spending that suggests that there should be currently any changes .

Speaker #1: What we have communicated , and I've said on some interviews , is that in the mid-term , I am keeping a close eye on whether we may see what is the inverse of credit underwriting .

Speaker #1: In my 20 years , which would be that , generally speaking , normally in lower in the more worse performing macroeconomic scenarios , you would see implications for low income household blue jobs collar , etc.

Speaker #1: with AI , it might very well be that the implications are the inverse , that it's actually going to affect high income households and white collar jobs to a larger degree .

Speaker #1: And that's what we're keeping an eye on to see if we want to make any adjustments . But so far . Nothing has that .

Speaker #1: I'm keeping a close eye and we're keeping a close eye on the But unemployment numbers and particularly trying to understand in those unemployment jobs or numbers what is how is the split between these professions and what are the implications for that .

Speaker #1: So it's one to keep a close eye on , but nothing that we have acted on so far .

Speaker #4: right . Thank you . And I All understand that they have finally sorted out the issues with the conference line . So operator , please go ahead and open the lines for the analyst .

Speaker #4: Thanks .

Speaker #2: you . Thank Thank you . For question and answer session . If you'd like to ask a question , please press star followed by one on your telephone keypad star , .

Speaker #2: That's followed by one on your telephone keypad . Your first question comes from the line of James Faucette of Morgan Stanley . Your line is now open .

Speaker #5: Thank you very much . I all appreciate all the commentary . I wanted to ask about your partnership with with Walmart and one pay that was highlighted in your prepared remarks and slides .

Speaker #5: But wondering if you can give us any insight on how that's developing so far in terms of adoption , credit quality , even if just directionally .

Speaker #5: Thanks .

Speaker #3: Sure . Sure . I think , I think , I think , I think I think think technical issues . Sorry . Hopefully people can hear me .

Speaker #3: So, yeah, I think so. Yeah, I think, I think.

Speaker #1: Maybe we should continue to .

Speaker #3: Should we continue without? Maybe we continue with the email because it's not working.

Speaker #4: is Operator everything okay ? Can you hear us ?

Speaker #1: Can you just confirm that ?

Speaker #6: We're .

Speaker #1: hear us or They can

Speaker #1: not . Can the

Speaker #4: operator hear us ?

Speaker #2: Yes , we can hear you loud and clear . Can you hear us from our end ?

Speaker #4: We were told that the line went down, but now you can hear us again.

Speaker #1: And are they hearing us?

Speaker #6: Okay .

Speaker #2: We can hear you loud and clear .

Speaker #4: Okay , okay . I believe we are . I believe we're back . Okay , so .

Speaker #1: answer the Should we question then ?

Speaker #3: . Yeah , Yes sure . So to answer your question , the one Walmart relationship is really going well . I think we are firing on all engines .

Speaker #3: And you know , external data . You can see that we have basically taken the taken up the , the vast majority of volume relationship .

Speaker #3: with that so we're And moving forward really nicely . Generally speaking , it's going to plan with regards to type of consumers . We're seeing .

Speaker #3: And I think we're just seeing many , many opportunities . James , for us to continue to develop that relationship with one Pay and Walmart .

Speaker #5: Thanks . Thanks .

Speaker #6: Thank you .

Speaker #2: Our next question comes from the line of Jason Kupferberg of Wells Fargo. Your line is now open.

Speaker #7: Oh hi , guys . Thanks . I know you asked one of mine already , but let me ask you this just on the fair financing side , I think you said you're now at 18% of your merchants .

Speaker #7: And I was wondering what percent of your total GMV those merchants represent . And then just any targets . Where does that 18% penetration rate go to potentially over the next year or two ?

Speaker #7: Because obviously that should ultimately be accretive to the TM line . Thanks .

Speaker #3: Great . Thanks Yeah . I don't for the question . have an figure with regards to the percentage of volume Overarchingly , but I can say is that as we're continuing to work to Sebastian's point with the partnerships , we're going to see this continue to expand , obviously , to the suitable places , but ultimately we're seeing that we're continuing with the partnerships to be in default in places , more allowing us then to have all of our full features or product sets .

Speaker #3: With each of these merchants . Right . So I would expect us to continue to become a very significant number , right . Obviously , you know , with respect to certain verticals , you would have less opportunity for that , right ?

Speaker #3: With the very small ticket , high frequency , but generally would speaking , we expect most of our merchants to be able to have that product set as well .

Speaker #3: And so it's all about just working through the integrations, working through the partnerships that we have, and continuously doing that throughout our 26 markets and beyond.

Speaker #6: Operator thank .

Speaker #2: You . Your next question comes from the line of Darrin Peller of Wolfe Research . Your line is now open .

Speaker #8: All right , guys , thanks . And congrats on your first quarter out of the gate . Being a good quarter . You know , it's nice to see the GMV growth continuing to accelerate during the quarter .

Speaker #8: could just So if you touch on the key drivers here again I know fair financing is one of the main contributors . But anywhere else you're seeing the momentum and and what's the sustainability of that .

Speaker #8: And I'll just ask my two together . Just one more is on PSP default on partnerships . I know that was clearly an exciting terms of opportunity in Tam .

Speaker #8: So how the partnerships ramping in line , are they in line with your expectations ? A update there little .

Speaker #1: I think that the when it comes to the partnerships , as we said , like we . Concluded a few years back that like growing merchant by merchant is just not going to scale .

Speaker #1: You're going to have to work PSPS . You look with at these stripes , the world plays of the world . JP Morgan Chase , all these guys , they have trillions of dollars of volume .

Speaker #1: So Right ? finding out ways to with work finding them , good then partnerships and also not just becoming an alternative that has a one percentage small of the volume , but actually coming default super critical .

Speaker #1: I think one of the things that doesn't actually get enough attention here is the Stripe link partnership, which in itself is, like many of you now using Stripe, will notice that you have this one-click experience.

Speaker #1: Not that dissimilar to what Shopify does . And others . And the benefit now is the client has the main provider of that , which means that everyone getting a stripe link gets the option to use our buy now , pay later , which becomes an faster even way to reach all of the stripe merchants that offer that already .

Speaker #1: all of So this is just like different ways of distribution of Klarna . Another one in Europe , which is actually important is these this this Vipps might announcement , which sound small , but it means it's opening up for third party partnerships with local schemas , with local payment schemas and so forth .

Speaker #1: So all of these things are going to but the difference kind of growth is with these obviously it's not like you launch and then go live and everything .

Speaker #1: These are like long term strategic relationships . You need to sign the contracts . You need to find the reasons for them to do it .

Speaker #1: You up the need to set technical integrations . And as you will be familiar with some of these companies , are mbna's . So they will have , you know , different tech platforms for different subset of the volumes .

Speaker #1: So, you need to integrate on all these platforms. But what we're happy about is that we like setting a foundation for the long-term growth of the company.

Speaker #1: I can see, think it's that clearly. Now, the ones that are already live, like the Stripe on the slide or the Apple Pay and so forth, that is actually starting to really be visible in the growth of both the number of merchants and volume.

Speaker #1: So we think this is nice because it sets the foundation . It will continue . And there's really why why we no reason this would stop or anything .

Speaker #1: We're on a good trajectory here . And this is going to continue . I think that's important for been very the US . The other one is making sure that we actually then offer all payment methods .

Speaker #1: It's not just one , as you saw . And then the third one , which we're super excited about is that card growth that has already out competed , you know , globally on a global level .

Speaker #1: One of our competitors there, but also even on the U.S. level, we think fairly soon we'll be able to catch up.

Speaker #1: So I think that the there's good belief to to be optimistic about the opportunities in the US in the short and mid-term . Right .

Speaker #3: I would just add there , if you don't mind , like basically if you think of it , there's $7 trillion worth of volume flow through these PSPS that we've signed , right ?

Speaker #3: we're We're going to start ramping . We've started ramping up with with stripe and a few others . That's mentioned . And over the coming quarters , we'll continue to do so .

Speaker #3: But , you know , when we talk about something being live , yes , it's live , but there's still , you know , multi-year worth of growth here to Sebastian's point , right .

Speaker #3: Which is really , I think , important to point out . And highlight . And with regards to your other question , just around verticals , I was looking through kind of we're actually seeing a very broad based growth across all of our types of verticals , which just shows how we're , you know , more and more becoming an everyday spending

Speaker #1: think it's

Speaker #1: worth highlighting as well , is that partner . I in Europe , we are used to being in the UK . As an example , not 20% share of checkout uncommon for to be 20% share checkout on par with PayPal in other markets , we could see 40 , 50 , even 60% share of checkouts in the US is predominantly still 5 to 10 .

Speaker #1: This is entirely natural. This is exactly the same as what we've seen over the years in the market. We come in, we grab about five, and we start growing to ten, fifteen, and so forth.

Speaker #1: So also like as a share of checkout , there's tremendous opportunity to grow in that regards . believe and We then people will have augmentations like is the same going to the US happen in and Europe etc.

Speaker #1: etc. . But from our point of perspective , there's no reason to believe that we could not achieve that . And we're going to definitely work hard to make it happen .

Speaker #6: Okay .

Speaker #8: Very helpful . Thanks again . Sebastian . Nicholas . Congrats .

Speaker #6: Thanks . .

Speaker #2: Your next question comes from the line of Mihir Bhatia of Bank of America . Your line is now open .

Speaker #5: Hi .

Speaker #9: morning . Good Thank you for taking my question . I wanted to just maybe talk a little bit about the provision line item , and I the detail .

Speaker #9: appreciate You guys went into in the prepared remarks . But maybe just to put a little finer point the provisions for on it , losses credit are they're up 17 Bips quarter on quarter .

Speaker #9: And I was just wondering if you could talk about the drivers of that. How much of that was new loans versus changes for the loans on the balance sheet?

Speaker #9: Because just given the credit performance, it seems like a pretty big jump. Any color on how we should think about that forward-going?

Speaker #3: Yeah . So I mean , obviously we are scaling the book quite quickly , right ? And given that the vast majority is really so on is really with the new cohorts of growth that we're seeing , right ?

Speaker #3: expect that to kind I would of move over over time , start normalizing . Right . But I think given the speed and the size and the opportunity and the fact that we can continue to compound with so many new merchants through the partnerships that we have , I think it will take , you know , a multi-quarter view for us to fully kind of get into a more normalized makes mix , if that sense .

Speaker #1: Well , we think it's it's very good . It's very healthy . It's like a subscription business . You should take the marketing cost up front .

Speaker #1: you and you have And revenue over the lifetime of the of the customer . And that's the same thing we're doing here . I mean , the dominant impact on that line is because we're taking the cost upfront while the revenue is coming in over time .

Speaker #1: And so that makes a lot of sense . Obviously , some of our competitors , when they sell more of what they generate , they book both cost and the income the immediately .

Speaker #1: we also But know many of you and you , will be aware that that is also less affordable . It is actually more profitable to do what we're doing and putting it on our balance sheet .

Speaker #1: So it's a trade off much we between how sell off . And so forth . But from an accounting perspective , this makes a lot of This is sense .

Speaker #1: diligence . This smart and is thoughtful to do it this way . And for us been may have been with us for 20 years as an investor shareholder , I've seen us go through these cycles and as you start growing fast because of the number of merchants that we've added on , financing has doubled , then you're going to see these short term profitability lags , implications on on the PNL .

Speaker #6: But .

Speaker #9: Understood . If I could ask a just on Southern Europe , pretty strong growth there anything in particular , anything to call out there on what's driving that growth ?

Speaker #9: Thank you .

Speaker #1: Yeah , I think that the you for thank that highlighting we we actually , you know , we spent , I would say 2022 and 23 had a commercial , spent a lot of time on really setting the foundation in Italy , in Spain , in France in this and large markets that at that point of time , we hadn't really been as successful in .

Speaker #1: And we hadn't yet out the competitors that local existed . And it's really nice to see that pay off . I think one thing that's underappreciated about Klarna is global coverage and the point is , if you're talking to retailers across the world , if you're talking to Sephora , that's operating obviously in all these markets , it just has such a tremendous to be able to value work with one provider .

Speaker #1: Klarna across all these markets . I remember clearly being in a meeting with Ikea and told me , they once like ago , you many years moved from the local payment method to the regional one .

Speaker #1: And I was like , yeah , but here's global PayPal . How do I with get into that quadrant ? And now we are right .

Speaker #1: And what's helpful about that ? Obviously , we also have salespeople on the ground across the world . Right ? So we have people in Barcelona with people in , in in Tokyo , we have people in , in , you know , Portland next to Nike .

Speaker #1: We have them across the world , over 40 locations . They sit close and work retailers . with these You know , these are long term relationships .

Speaker #1: And we make sure that we're live with these merchants across all markets, so we're getting a lot of value from that in these markets.

Speaker #1: Like France and Spain , Italy , because they they just roll us out . And that allows us to be very competitive on local level as well .

Speaker #1: And I think that's being seen. But we actually think there's more potential there. There's more work to be done on improving the quality of the product and so forth.

Speaker #1: So we think there's a good continue potential to growing these markets as well . But very helpful to have this global distribution partnership with people like stripe and others with an automatically turn us on in all these local markets .

Speaker #6: Thank you .

Speaker #2: Next question comes from the line of Nate Svensson of Deutsche Bank. Your line is now open.

Speaker #10: Hey guys . Congrats on on getting out there with the first quarter . I wanted to ask on the Elliott partnership that we saw the news come across this morning .

Speaker #10: Maybe you could talk a little bit more about the process to bring them on board, what they saw in Klarna to get them comfortable, and why you decided they were the right fit.

Speaker #10: partner And then I guess we saw that $6.5 billion number there . Does that give you enough runway to meet your ambitions for us ?

Speaker #10: Fair financing , or do you think you're going to have to add additional partners and then . Sorry for making it a three parter , but just on the revenue recognition there , sounds like you will be selling some of the back book over .

Speaker #10: Should we assume the entirety of the front book will be sold to Elliott ? Sebastian , I think you had mentioned making this decision between how much to keep on how much to sell .

Speaker #10: So just more details on the revenue recognition from that partnership would be helpful .

Speaker #3: Sure . yeah , so Great . So is a great I mean , Elliott partner and we work with them on a number transactions as well .

Speaker #3: Sure . yeah , so Great . So is a great I mean , Elliott partner and we work with them on a number transactions as of other I think generally speaking , you know , always going to be a balance for it's in between profitability , ensuring that we can continue to grow and ensuring that we don't dilute our shareholders in that growth through the capital .

Speaker #3: Given that we're a bank . Right . So those are really the three vectors that we think about . And I think this is a great partnership .

Speaker #3: Elliott's a strong partner . They understand us . They know us well . We've done other transactions with them in the past . And you know , from our perspective one is a really , this this really good partnership .

Speaker #3: I do believe the runway that we have with our growth potential, that we've just spoken about, will give us an opportunity to continue to do more of these things over time.

Speaker #3: Right . And again , thinking about those three balances of profitability and , you know , ensuring that we minimize dilution to shareholders , grow , grow the best return on tangible equity while also growing the business in the size and ensuring that we can do that .

Speaker #3: So I think that's really the economics around it.

Speaker #4: Thanks , Nicholas . I'm going to take it again , since some of the analysts sort of just ended up sending us the email .

Speaker #4: So, Will from Goldman Sachs is asking, could you talk about your engagement with merchants around advertising into the holidays? Where are you now, and where do you aspire to be in terms of merchants?

Speaker #4: Using Klarna as a way to drive sales and engagement with consumers?

Speaker #1: Yeah . So I think that this actually one of the things I'm very proud and happy about , and I think has made a big difference , is in this , we about this were talking customer obsession work .

Speaker #1: You saw me presenting a little bit on how we do it those . You saw customer interviews that we do and we review all the experiences and so forth , and a big part of that is obviously feeding actionable insights , not only for us , but also for our partners .

Speaker #1: So, what we do out of that process is we come and we recognize how we could help Sephora grow their business.

Speaker #1: How could we Etsy help grow their business ? How can we help eBay grow their business ? And this generates like very , very concrete advice and suggestions of changes of improvements , marketing campaigns to your so forth .

Speaker #1: point and that's what our sales teams are . interacting with . And Then we've seen a fantastic uptick in trust and people wanting to listen , because I think maybe more like every other traditional company , we used to come and say , hey , we have this idea and this could have this impact , and it could be like something more complex .

Speaker #1: But now we're coming with like super concrete , real well explained , very , very high impact changes that can be fixed . And we're seeing that having a very dramatic effect .

Speaker #1: So and marketing activities is obviously a big part of that . There's tons of things we can do in like how we position the payment method , how we show it on the website , and obviously 0% financing .

Speaker #1: Fantastic opportunity. One of the things that I think has been underinvested in, and we are now really ramping up and making sure that we're offering, I think, such a fantastic opportunity.

Speaker #1: A lot of merchants and a lot of brands want to offer affordability without lowering their prices . And also what we see is that 0% financing is driving a fantastic audience to Klarna because it attracts a more broad spectrum of of Fico scores .

Speaker #1: So it is fantastic in many , many ways . And that's going to be a continuous focus with our partners . You can see us do a lot of things in 0% financing .

Speaker #4: Fantastic . And I think we have time for just one more . It comes from Rob Wildhack at Autonomous , and the question is , wondering if you could talk about the transaction margin by product , what kind of transaction margins are you seeing on the US fair financing volume , and how should we expect then to the mix in the mix to impact the overall transaction margin as you grow that product , where does that transaction margin settle out at steady state ?

Speaker #3: Yeah . Good question . I mean , look , there's there's a lot of different products that we're that we're launching . Right .

Speaker #3: that we're And building that are working and new . And whether it be through the card and otherwise . But let's talk about fair finance because you mentioned that one .

Speaker #3: So , you know , generally we target between 3 and 4% transaction margin dollars . And I think that's a fair approach . You know , and as we continue to ramp that , obviously we'll be accretive to the overall portfolio .

Speaker #3: And but again , at the same time , we're also , you know , to Sebastian's point , building out the painful elements and such .

Speaker #3: Right. So we are going to have various variations of that. I think the key thing for us is really, can we serve as much of the customer share of wallet as possible?

Speaker #3: And are we relevant every single time that they want to make a payment as an everyday spending partner? That's what we really need to focus on.

Speaker #3: Then , know , as you you know , we've spoken about this before . It's all about having a very trend based , focused model and where we look at how we're developing over time .

Speaker #3: the fact that we are growing in 26 markets across , with 114 million users or consumers , and with so many merchants . Right .

Speaker #3: And so across so many vectors . So we're going to continue to kind of do that . And as we guide , we'll guide , you know , toward towards that transaction margin , dollar growth basis on a volume view , rather than trying to just nail down a particular unit economics on one or another .

Speaker #4: Thank you so much . All right . And with this , conclude the we call . We thank everyone for joining , for putting up with our technical issues .

Speaker #4: And with this, we conclude the call. Thank you.

Speaker #1: Thank you so .