The Swedish “buy now, pay later” pioneer said Tuesday that its new design would help users find the items they want by using more advanced AI recommendation algorithms, while merchants will be able to target customers more effectively.
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Klarna on Wednesday announced a global partnership with Uber to power payments for the ride-hailing giant’s Uber and Uber Eats apps.
The partnership will see the Swedish financial technology firm added as a payment option in the U.S., Germany and Sweden, Klarna said in a statement.
In those countries, Klarna will roll out its “Pay Now” option in the two apps, which lets customers pay off an order instantly in one click. Users will be able to track all their Uber purchases in the Klarna app.
The company will also offer an additional payment option for Uber users in Sweden and Germany, allowing users to bundle purchases into a single, interest-free payment that gets removed from their monthly salary.
Interestingly, the company isn’t rolling out installment-based “buy now, pay later” plans, arguably Uber’s most popular service offering, on its platforms.
Sebastian Siemiatkowski, CEO and co-founder of Klarna, said in a statement Wednesday that the deal represented a “significant milestone” for the company.
“Consumers can Pay Now quickly and securely in full, which already accounts for over one third of Klarna’s global volumes, and more easily manage their finances in one place,” Siemiatkowski said.
Klarna declined to disclose the financial terms of its deal with Uber.
Big pre-IPO merchant win
The Uber deal marks one of the most significant merchant wins for Klarna as of late and comes as the European fintech giant is rumored to be gearing up for a blockbuster initial public offering that could value the firm at just north of $20 billion.
Klarna began having detailed discussions with investment banks to work on an IPO that could happen as early as the third quarter, Bloomberg News reported in February, citing unnamed sources familiar with the matter.
CNBC could not independently verify the accuracy of the report. Klarna has said that it doesn’t comment on market speculation.
Such a market flotation would mark a turnaround for a company that saw $38.9 billion erased from its valuation in 2022 when deteriorating macroeconomic conditions stoked by Russia’s invasion of Ukraine caused a reset of sky-high tech valuations.
Klarna reached an eye-watering $45.6 billion in a 2021 funding round led by SoftBank, before seeing its market value fall to $6.7 billion the following year in a so-called “down round.”
The firm recently launched a monthly subscription plan in the U.S. to lock in “power users” ahead of its anticipated IPO.
The product is called Klarna Plus and costs $7.99 per month. Klarna Plus enables users to get service fees waived, earn double rewards points and access curated discounts from partners, such as Nike and Instacart.
Last year, Klarna reported its first quarterly profit in four years after cutting its credit losses by 56%.
The company posted an operating profit of 130 million Swedish krona (roughly $11.7 million) in the third quarter of 2023, swinging to a profit for a loss of 2 billion Swedish krona (roughly $183.6 million) in the same period a year earlier.
Buy now, pay later boom
Klarna is one of many “buy now, pay later” services that allow users to pay off their purchases over a period of monthly installments.
The payment method has become increasingly popular among consumers who are making online and in-person shopping purchases. It also can be an alternative to credit cards charging interest and high fees.
However, it has also stoked concerns about the affordability of such services, and whether it is in fact encouraging some consumers — particularly younger people — to spend more than they can afford.
In the U.K., the government has proposed draft laws to regulate the “buy now, pay later” industry.
The U.S. Consumer Financial Protection Bureau has previously said that it plans to subject “buy now, pay later” lenders to the same oversight as credit card companies.
Meanwhile, the European Union last year passed a revised version of its Consumer Credit Directive to include “buy now, pay later” services under the scope of the rules.
For its part, Klarna has defended the “buy now, pay later” model, arguing that it offers customers a cheaper way to access credit compared with traditional credit cards and consumer loans.
The company also said it welcomes regulation of “buy now, pay later” products.
Check out the companies making headlines in extended trading. Discover Financial – Shares inched lower by 1%. The financial services company posted third quarter results that surpassed expectations, with earnings of $3.69 per share on $4.45 billion of revenue. Analysts polled by LSEG were calling for earnings of $3.42 per share and revenue of $4.35 billion. CSX – The rail transportation company lost 4% after third quarter results fell short of Wall Street’s forecasts. CSX reported earnings of 46 cents per share on revenue of $3.62 billion, while analysts polled by LSEG anticipated 48 cents per share in earnings and revenue of $3.67 billion. Overall volumes were up 3% from the year-ago period, but revenue per unit was down about 1%. Alcoa – Shares of the aluminum producer jumped nearly 9%. Alcoa posted third quarter adjusted earnings of 57 cents per share, topping analysts’ estimate for 28 cents a share, per LSEG. Revenue missed the mark, coming in at $2.90 billion versus the Street’s call for $2.97 billion. Lucid Group – The electric vehicle maker slid 10% after announcing a public offering of more than 262 million shares. Lucid also said that Ayar Third Investment Company, an affiliate of the Public Investment Fund, indicated it would buy more than 374 million shares. Kinder Morgan — Shares of the energy infrastructure company fell 2.7% on disappointing third-quarter results. Kinder Morgan reported adjusted earnings per share of 25 cents and revenue of $3.70 billion. Meanwhile, analysts had estimated 27 cents earnings per share on $3.98 billion in revenue. Management also announced it expects to fall below budget on adjusted earnings before interest, taxes, depreciation, and amortization and adjusted earnings per share by 2% and 4%, respectively. PPG Industries — Shares slipped less than 1% after the paints manufacturer missed on both top and bottom lines in the third quarter. PPG Industries posted adjusted earnings of $2.13 per share on $4.58 billion in revenue. Analysts surveyed by LSEG had forecasted $2.15 earnings per share and revenue of $4.65 billion. A challenging global industrial production backdrop pressured the company’s results. SL Green – The office building-focused company tumbled around 3% after posting a revenue miss in the third quarter. SL Green reported $139.6 million in quarterly revenue, based on a rental income basis, while analysts polled by LSEG had expected $142.5 million. Meanwhile, losses came in at 21 cents per share versus the Street’s forecast of a 50-cent per share loss. Equifax — The consumer credit reporting company dropped nearly 5% after issuing weak guidance. In the fourth quarter, Equifax anticipates adjusted earnings of $2.08 to $2.18 per share, while analysts polled by LSEG sought $2.20 per share. The revenue outlook for the quarter also fell short of expectations. Steel Dynamics — The steel producer added 3%. Third quarter earnings came in at $2.05 per share, beating the $1.97 per share anticipated by analysts, per LSEG. Revenue also trounced expectations, with Steel Dynamics reporting $4.34 billion, versus the $4.18 billion estimated by the Street. — CNBC’s Darla Mercado contributed reporting
Check out the companies making headlines in midday trading. Novavax – Shares plunged more than 17% after the biotech company said the Food and Drug Administration put a clinical hold on its application for a Covid and influenza combination shot as well as a standalone flu vaccine. United Airlines – The stock soared 11% after the airline posted an earnings and revenue beat for the third quarter and guided for a strong fourth quarter. In addition, United said it is starting a $1.5 billion share buyback, its first since before the Covid pandemic. Morgan Stanley – Shares popped 7% after the bank reported quarterly results that beat Wall Street’s forecasts , boosted by higher profits from its wealth management, trading and investment banking divisions. The firm posted earnings of $1.88 per share, higher than the $1.58 expected by a LSEG analyst poll. Revenue was $15.38 billion versus the $14.41 billion consensus estimate. Cisco Systems – The technology networking stock advanced 3.3% to a 52-week high on the back of a Citi upgrade to buy from neutral. Citi said artificial intelligence can become a larger part of the business over time. Novocure – The stock rose 2.1% on the heels of the Food and Drug Administration’s approval of the company’s wearable treatment for metastatic non-small cell lung cancer, known as Optune Lua. ASML – Shares of the semiconductor equipment maker slumped 5.8%, building on a 16% loss from Tuesday after the Dutch company mistakenly released its third-quarter earnings earlier than expected . ASML Holding cut its sales outlook for 2025, citing a slower-than-expected recovery in segments beyond AI. J.B Hunt Transport Services – Shares added 3.4% after the company posted a top and bottom line beat. J.B. Hunt posted $1.49 earnings per share on $3.07 billion of revenue in the third quarter. Analysts polled by LSEG had forecast $1.41 in earnings per share on $3.02 billion of revenue. The company said demand for its intermodal service rose throughout the quarter. Aspen Aerogels – Shares gained 11% after the company announced that it received a conditional commitment for a proposed Department of Energy loan of up to $670.6 million. Aspen Aerogels also released preliminary results for the third quarter. For the period, the company is expecting revenue of around $117 million and adjusted EBITDA of around $25 million, above the $95.1 million in revenue and $14.1 million in adjusted EBITDA that analysts polled by FactSet were expecting. Prologis – The warehouse giant rose more than 4% after posting better-than-expected quarterly results . For the third quarter, Prologis reported core funds from operations of $1.43 per diluted share, above the $1.37 estimate from FactSet. In a statement, CEO Hamid Moghadam said: “Looking ahead, the supply picture is improving, and the long-term demand drivers for our business remain strong.” U.S. Bancorp – The stock moved more than 4% higher after U.S. Bancorp’s third-quarter earnings beat estimates, posting $1.03 per share versus the 99 cents per share that analysts were expecting, per LSEG. Revenue, however, missed estimates, coming in at $6.86 billion compared to the consensus estimate of $6.9 billion. General Motors – Shares increased more than 2% on the heels of the automaker’s agreement with Lithium Americas Corp. to establish a joint venture. The deal includes General Motors giving $625 million in cash and credit to the Canadian mining business. — CNBC’s Alex Harring, Hakyung Kim, Samantha Subin, Pia Singh and Michelle Fox contributed reporting.
Check out the companies making headlines before the bell. Cisco Systems — The networking technology stock added nearly 2% on the heels of a Citi upgrade to buy from neutral. Citi said artificial intelligence can become a bigger part of the business over time. Novocure — Shares soared roughly 22% after the U.S. Food and Drug Administration approved Novocure’s Optune Lua wearable treatment for metastatic non-small cell lung cancer. Morgan Stanley — Shares gained more than 3% after the bank reported quarterly results before the bell that beat Wall Street’s forecasts, helped by higher-than-expected revenue from its wealth management, trading and investment banking operations. The firm’s earnings came in at $1.88 per share, versus the $1.58 expected by a LSEG analyst poll. Revenue was $15.38 billion versus the $14.41 billion consensus estimate. United Airlines — Shares rose about 1% after the airline beat earnings and revenue expectations for the third quarter. United also announced a $1.5 billion share buyback, its first since before the pandemic. ASML — Shares of the Dutch chip equipment firm slid 4% before the bell, adding to Tuesday’s losses after it accidently released its third-quarter results a day early . The report was disappointing as ASML cut its 2025 sales forecast, suggesting weakness in markets other than those that serve AI applications. J.B Hunt Transport Services — Shares jumped more than 7% after the company’s third-quarter results topped expectations. J.B. Hunt posted $1.49 earnings per share on $3.07 billion of revenue. Analysts polled by LSEG had forecast earnings of $1.41 per share on $3.02 billion of revenue. The company said demand for its intermodal service rose throughout the quarter. — CNBC’s Sean Conlon, Alex Harring, Sarah Min, Michelle Fox and Hakyung Kim contributed reporting.