Swedish buy-now-pay-later (BNPL) giant Klarna has reignited its long-dormant initial public offering (IPO) ambitions, with plans to list its shares and raise approximately $1.27 billion in fresh capital, according to sources familiar with the company’s strategy and a recent regulatory filing previewed to select investors. The move marks a significant pivot for Klarna, which shelved its IPO plans in 2022 amid volatile market conditions and a broader downturn in tech valuations—but now sees a window of opportunity as investor confidence in fintech rebounds and its own financial performance stabilizes.

The IPO, which is expected to take place on the Nasdaq Stockholm exchange as early as the fourth quarter of 2025, would value Klarna at an estimated $25 billion to $28 billion, the sources noted. This valuation is a notable recovery from the $6.7 billion valuation the company fetched in a 2022 private funding round (a steep drop from its 2021 peak of $45.6 billion) but reflects renewed optimism in the BNPL sector, driven by steady growth in consumer adoption and Klarna’s recent efforts to streamline operations and expand into new markets.

Klarna’s decision to revisit the IPO comes on the heels of several quarters of improved financial results. The company reported its first profitable quarter in three years in Q2 2025, with net income of $89 million, up from a $120 million loss in the same period a year prior. Revenue also rose 18% year-over-year to $1.3 billion, fueled by a 22% increase in active users (now totaling 150 million globally) and expanded partnerships with retailers like H&M, Sephora, and Walmart. The company has also trimmed costs by 30% since 2022, including layoffs and reduced marketing spending, which has helped strengthen its balance sheet ahead of the public listing.

In a statement outlining the IPO plans, Klarna CEO Sebastian Siemiatkowski emphasized the company’s focus on long-term growth and diversification beyond BNPL. “We’ve transformed Klarna over the past three years—from a fast-growing but unprofitable startup to a scalable, profitable fintech platform that’s expanding into areas like banking, shopping analytics, and loyalty programs,” Siemiatkowski said. “An IPO will give us the capital to accelerate this expansion, enter new markets in Asia and Latin America, and invest in AI-driven tools to enhance the shopping experience for both consumers and retailers.”

The $1.27 billion Klarna aims to raise through the IPO will be allocated to three key areas, according to the regulatory filing:

1. Geographic expansion: Approximately $400 million will fund market entry in countries like Japan, Brazil, and Mexico, where BNPL adoption is rising but remains underpenetrated.
2. Product innovation: Around $350 million will go toward developing new financial products, including a debit card linked to BNPL accounts and a personalized shopping app that integrates price comparisons and loyalty rewards.
3. Strategic acquisitions: The remaining $520 million will be earmarked for buying smaller fintech startups focused on AI, fraud detection, or cross-border payments—areas where Klarna aims to strengthen its competitive edge.

While the BNPL sector has faced regulatory scrutiny in recent years (with governments in the EU, U.S., and Australia introducing rules to protect consumers from overspending), Klarna has positioned itself as a compliant leader. The company now offers enhanced credit checks for users, transparent fee structures, and financial literacy tools—measures that have helped it avoid the stricter restrictions imposed on some rivals. This regulatory goodwill, combined with its improved profitability, has made Klarna an attractive prospect for institutional investors, who have shown strong interest in the IPO during preliminary roadshows.

Klarna’s IPO could also set a precedent for other BNPL firms that have delayed public listings, such as Australia’s Afterpay (acquired by Block in 2021) and U.S.-based Affirm, which has seen its stock price rise 45% in 2025 amid improved market sentiment. However, risks remain: a potential economic downturn could reduce consumer spending on non-essential items (a key driver of BNPL usage), and increased competition from traditional banks (which are launching their own BNPL products) could pressure Klarna’s market share.

As of now, Klarna has not set a formal IPO date but plans to file its full prospectus with Swedish regulators by mid-September. The company has tapped Goldman Sachs, Morgan Stanley, and SEB as lead underwriters for the offering. For investors, the IPO represents a chance to gain exposure to a dominant player in the $200 billion global BNPL market—one that has weathered industry headwinds and positioned itself for long-term growth in the broader fintech ecosystem.