History and Development of the Company Klarna Group plc (“Klarna” or the “Company”) was founded in 2005 in Sweden with the objective of improving trust and efficiency in online commerce. The Company initially focused on providing flexible payment solutions designed to allow consumers to pay for goods after delivery, thereby reducing friction and uncertainty between consumers and merchants in e-commerce transactions. Following its founding, Klarna expanded rapidly across the Nordic region and subsequently into other European markets. By 2010, the Company operated in the Nordics, Germany and the Netherlands, and by 2016 had established operations in nine markets, including Austria, Switzerland and the United Kingdom. During this period, Klarna focused on scaling its payments platform, expanding its merchant network and refining its underwriting capabilities to support real-time transaction decisioning. In 2017, Klarna began operating as a licensed bank within the European Economic Area following approval by the Swedish Financial Supervisory Authority. This milestone enabled Klarna to broaden its range of financial services, including the ability to fund a significant portion of its lending activities through customer deposits, and supported the continued development of its consumer and merchant offerings. Beginning in 2019, Klarna initiated a strategic expansion into additional international markets, with a particular focus on the United States. Over the following years, the Company expanded into multiple new geographies while continuing to invest in product development, technology infrastructure and brand awareness. Over time, Klarna introduced new products and services, including payment options allowing consumers to pay immediately, defer payment, or finance purchases over longer fixed terms, as well as consumer-facing tools designed to help manage purchases and spending. Klarna has also expanded beyond payments into adjacent commerce services. In 2019, the Company began scaling its advertising and merchant marketing solutions, enabling merchants to connect with consumers within a commerce-centric environment. In subsequent years, Klarna introduced additional consumer-facing products, including the Klarna app and the Klarna Card, and continued to develop technology-enabled features intended to streamline the commerce experience. In May 2024, Klarna completed a corporate reorganization pursuant to which the Company redomiciled its parent entity from Sweden to the United Kingdom by way of a share-for-share exchange. As a result of the reorganization, Klarna Group plc became the ultimate holding company of the Klarna group. Following the reorganization, the Company’s ordinary shares were listed on the New York Stock Exchange. Additional information regarding the corporate reorganization and the Company’s share capital is set forth under “Description of Share Capital and Articles of Association.” Throughout its history, Klarna has evolved from a payments-focused provider into a global digital commerce network connecting consumers and merchants across multiple channels and geographies. As of December 31, 2025, the Company served approximately 118 million active consumers and approximately 960,000 merchants across 26 countries. KLARNA GROUP PLC78 Business Overview Our Mission and Vision Our mission is to reimagine how consumers spend and save in their daily lives. We help people save time, money and put them in control of their finances through AI-powered, transparent and flexible financial services. Our vision is a world where Klarna empowers everyone, everywhere, through seamless commerce experiences—as a personalized, trusted AI-enabled assistant making financial empowerment effortless. Our Company We are a global digital bank and flexible payments provider building the next-generation AI-powered commerce network. We have built one of the largest commerce networks in the world, measured by the number of consumers and merchants, serving approximately 118 million active Klarna consumers and approximately 966 thousand merchants in 26 countries as of December 31, 2025, and facilitating $128 billion of GMV in the year ended December 31, 2025. Our flexible and personalized products, trusted consumer brand, global distribution and proprietary scalable infrastructure are the foundations enabling us to become our consumers’ everyday spending and saving partner, available everywhere and for everything. Through our history, we have consistently innovated and challenged the status quo, evolving our network from a consumer-focused payments tool to a global commerce network that enables merchant success. Klarna was built to address the manifold pain points in commerce today, including inefficiency, lack of trust, prevalence of fraud, impersonal relationships between consumers and merchants and high interest and credit-related fees that are harmful to consumers, merchants and society at large. We began by pioneering a new approach to online payments, designed to bridge uncertainty in the transactions between consumers and merchants by providing short-term flexible credit that is predominantly interest-free and accelerating growth for merchants. Our approach leverages differentiated underwriting capabilities, utilizes bank deposits and other low-cost funding sources and is monetized primarily by driving increased GMV for merchants on our network rather than from only charging interest to consumers. For the year ended December 31, 2025, 97% of transactions conducted on our network were interest-free. This results in lower fees, which we believe drives consumers and, in turn, our merchants, to shift more of their commerce activity onto our network, aligning the financial success of our consumers and merchants with our long-term ambition of durable growth. We have also built a unique advertising solution, connecting engaged consumers to advertisers in a personalized, commerce-centric environment. Consumers come to Klarna to pay flexibly and securely, to find goods, services and experiences that are relevant to them, and to manage their purchases and savings, all in a trusted environment. We designed our network to provide consumers with more control and flexibility over their payments, to save them time and money and to help them worry less about their finances. This allows us to become an important growth partner for merchants of all sizes, enabling them to grow their businesses and acquire new customers, convert more transactions with higher Average Order Values (“AOVs”) and retain customers with increased loyalty, all while establishing and fostering personal relationships with their customers. Just as card networks revolutionized the way merchants and consumers received and made payments decades ago, we have created a new type of network built upon fairness, sustainability and innovation, while removing intermediaries, complexity and fees along the way. We accelerate commerce by connecting consumers and merchants with comprehensive AI-powered payment and performance-based advertising solutions, both online and offline. Our payment options provide consumers with the choice to pay however they prefer: Pay in Full for immediate settlement, Pay Later allows consumers to complete a purchase today while deferring payment to a later date or into KLARNA GROUP PLC79 installments and Fair Financing allows consumers to settle payments over longer, fixed-term schedules with transparent pricing. We offer the benefits of both open and closed networks. We open our network to a broad consumer and merchant ecosystem, similar to Visa, MasterCard and Amex, but also benefit from our proprietary closed-loop network where we issue, fund, process and settle the entire payment, while retaining a direct relationship with our consumers. Payment options are facilitated across numerous channels, including directly at our merchants’ online or in-store checkouts, in the Klarna app, with the debit-first Klarna card or using Apple Pay or Google Pay. We have achieved global consumer and merchant scale. Our 118 million active Klarna consumers are diverse—from a wide range of income levels and educational backgrounds—and representative of the broader population. In Sweden, our most mature market, approximately 85% of adults were active Klarna consumers as of December 31, 2025, according to our estimates. Our consumers are financially responsible, too—in the year ended December 31, 2025, Provision for credit losses were less than 1% of originated Gross Merchandise Volume. Merchants view Klarna as an important growth partner because of our consumer scale and global reach. Our approximately 966 thousand merchants include some of the largest global brands—on average, 48% of the top 100 merchants in each of the major markets we serve, which include the United States, the U.K., the Nordics, Germany, Austria, Belgium, Spain, France, Italy, the Netherlands and Switzerland (based on data from eCommDB and Digital Commerce 360) used Klarna in the last twelve months ended July 31, 2025 to facilitate payments, while an even greater percentage (66%) advertised on our network during the same period. Our broad adoption across merchants contributes to our GMV diversification, with no single merchant representing more than 10% of our GMV in any of our major markets in the year ended December 31, 2025. Through both our payment and advertising solutions, we help our merchants attract new customers, drive higher AOV with higher purchase frequency and offer frictionless commerce and higher conversion rates. We do all of this while allowing merchants to seamlessly integrate Klarna into their existing operations and infrastructure, retaining full control over their brands. Klarna sits at the center of a global ecosystem. We connect an array of different financial services and commerce organizations, from PSPs, traditional banks, card networks and open banking providers, to commerce enablers, technology partners, in-store payments providers and shipping and return logistics providers, to improve the commerce experience for our consumers and merchants through a unique AI- powered global network. We continue to grow our network across verticals and geographies to better serve consumers and merchants. We believe that our credit underwriting capabilities, enabled by our proprietary data from approximately 3.4 million transactions made on average per day on our network from 118 million active Klarna consumers in the year ended December 31, 2025, differentiate us from other networks. We are able to make underwriting decisions in seconds with our fully automated processes and underwrite every transaction in real time. We also provide a small spending capacity that gradually increases as consumers responsibly spend more with Klarna, and clear and transparent repayment terms that encourage borrowers to repay on time. All of this distinguishes our financing solutions from market alternatives. In the year ended December 31, 2025, our average balance per active Klarna consumer was $124 (Pay in Full: $0; Pay Later: $120 Fair Financing: $393) (compared to an average balance per credit card of approximately $6,961 in the United States in 2025, according to Experian). Based on contractual repayment schedules, our weighted average life (WAL) was approximately 39 days (27 days for Pay Later and 109 days for Fair Financing) (compared to a typical loan duration of more than five years at a typical Nordic bank in 2024, according to publicly available information, and an average of 2.5 years of a typical U.S. personal bank loan in Q1 2025, according to TransUnion). This allows us to quickly react to market changes and efficiently manage credit risk. Our underwriting process results in credit losses that are generally lower than the industry average: for example, our provision for credit losses represented 0.63% of GMV in the year ended December 31, 2025, while the charge-off rate on consumer loans, issued by all commercial banks reached 2.89% in Q3 2025, according to the Federal Reserve Bank of St. Louis. In addition to lower credit losses, we believe that our underwriting process provides more value to consumers and merchants than alternative payment methods, which helps drive our financial performance. KLARNA GROUP PLC80 We have been a constant pioneer in our industry. In 2005, when online shopping was still nascent and marked by distrust, we launched Pay Later products to guarantee consumers would pay only after they had received goods, while also pioneering a new approach to credit. In 2010, we launched our Pay in Full product to give consumers more choice and control over how they pay. In 2017, we started building a disruptive brand to help people streamline their financial lives. As we learned that consumers wanted to use Klarna everywhere, we launched the Klarna card in 2018. That same year, we launched the Klarna app, which enables our consumers to track all their purchases in one place, track their shipments, assist with errands and much more. While we began with payments innovation, in 2019, we started to meaningfully scale our advertising solutions, which personalize the commerce experience for our consumers by using our vast proprietary data set, including data they entrust to us. In 2023, we developed an AI assistant powered by OpenAI, which meaningfully streamlines the commerce experience, and in 2024, introduced Klarna balance, which makes commerce even more effortless by allowing consumers to Pay in Full or Pay Later without connecting to a bank account or card. In 2025, we continued to expand and introduce more digital finance products to help our consumers save time and money and effortlessly put them in control of their finances. For example, we enhanced the Klarna Card to deepen its role in everyday financial management and completed its rollout in the United States. The debit-first card integrates our Pay in Full and Pay Later options within a single product and was upgraded with real-time transfer and deposit capabilities to support smarter wallet functionality. The Klarna Card continues to scale rapidly, with more than 4.2 million active consumers globally, reflecting strong consumer demand for simple, flexible and transparent payment tools. At the same time, we continued reshaping access to credit through the expansion of our Fair Financing offering—a transparent, non-revolving alternative to traditional credit—now available at a broader merchant network, including major partners like Walmart. These innovations are all built on our AI-enabled, cloud-native and global technology platform to which merchants can connect via a single API. Every product we bring to market can be launched globally, allowing merchants to reach millions of consumers worldwide almost instantly once connected to our network. We began operations in Sweden in 2005, and rapidly expanded through the rest of the Nordics. By 2010, we operated in the Nordics, Germany and the Netherlands. By 2016, we were established in nine markets, including Austria (2012), Switzerland (2014) and the U.K. (2014). Since inception, we have strived to maintain a deliberate balance of growth and profitability. We remained profitable for the first 14 years as we scaled our operations in Europe. In 2019, we strategically decided to expand our successful operating model into additional geographies, with a particular focus on the United States, and in the following three years expanded into 12 additional markets. While our expansion in the United States has contributed to an increase in our GMV, it has also led to net losses in recent periods. In 2023, our operating loss started to decline and we began generating positive transaction margin dollars in the United States, while continuing to grow our GMV and the number of active Klarna consumers and merchants worldwide. KLARNA GROUP PLC81 Our Network’s Growth For over two decades, Klarna has been transforming the commerce landscape. Our growth strategy is an extension of our ability to innovate and cater to our customers’ needs: •Klarna at Every Checkout. We have a proven track record of bringing leading global merchants to our network, which have been key in amplifying our brand’s reach. We also have a unique go-to-market strategy: by partnering with several of the world’s largest PSPs, including Worldpay, Stripe, Nexi, J.P.Morgan Payments and Adyen, we can connect with consumers through hundreds of thousands of merchant checkouts. By integrating Klarna with Apple Pay and Google Pay, our consumers can use Klarna’s payment solutions wherever Apple Pay or Google Pay is available online in the United States as well as, in the case of Apple Pay, in the U.K., without having the Klarna card. Increasing the availability of our payment methods is imperative to further growth of our network, as a higher penetration of merchants directly translates to a higher share of checkout. •Klarna Card in Every Wallet. We envision Klarna becoming the default payment method for our millions of active Klarna consumers and future consumers. The Klarna Card is a debit-first product that integrates all of Klarna’s flexible payment methods within a single physical and digital card experience. It supports real-time transfers and deposits, provides spending controls, and connects directly to the Klarna app for transaction tracking, budgeting tools and repayment management. In 2025, we completed the U.S. rollout of the Klarna Card, which now has more than 4.2 million active users globally. •Next-Generation Digital Financial Services. As a digital-first neobank, Klarna’s services are automated, insight-driven and designed to be transparent, fair and intuitive. We partner with PSPs, traditional banks, card networks, commerce enablers, technology partners, merchants and shipping and return logistics providers to improve the commerce experience for our consumers. This breadth of our ecosystem, coupled with our extensive portfolio of licenses and regulatory authorizations, allows us to KLARNA GROUP PLC82 provide consumer services that others cannot, such as instant refunds, cashback, real-time debit or order and return tracking. These features save consumers time and money and effortlessly put them in control of their finances. •Klarna’s Personal Shopping and Money Assistant. Through a true understanding of our consumers’ needs, we are uniquely positioned to offer them curated shopping assistance and related products that are truly valuable and relevant to them. Consumers gain access to premium features through subscription services, enhancing their lifestyle while enjoying convenience and savings. Within the Klarna app, they can spend, save and shop smarter with the power of an AI assistant designed to understand personal needs and preferences. From product recommendations to managing expenses, this smart companion is here to guide the consumer throughout the entire commerce journey. This, we believe, will redefine how consumers interact and engage with Klarna, creating a deep and sticky customer relationship. •AI-Powered Efficiency. AI allows us to drive scale efficiencies greater than what was previously thought possible, allowing our deep talent pool to focus on innovation and growth. Our Competitive Advantages We enjoy several key competitive advantages that have enabled our continued success since our founding in 2005. Compounding Network Effects Klarna enjoys powerful network effects. Our personalized, highly engaging consumer experiences drive consumers to our network. As more consumers engage at scale, more merchants join our network and grow their businesses. As more merchants join the network, consumers benefit from increased selection across verticals, channels and geographies, and can purchase more frequently using, and demonstrate preference for, our network. Klarna has established a high-utility, high-frequency model, enabling the purchase of everyday goods and services that benefits both our consumers and merchants. Trusted Brand, Global Distribution We have built a brand that is distinctly global, universally recognized and well-loved by consumers and merchants, an accomplishment that we believe is rare among businesses that provide payments and financial services. Our global NPS in September 2024 was 73, according to our estimates, which is significantly higher than an average NPS of 44 for the finance industry in our top eight markets as of March 2023, according to CustomerGauge. As of December 2024, we also had a higher global brand awareness (40%) than the average of our main competitors (28%), according to our estimates. The strength of our brand contributes to our global scale. Our approximately 118 million active Klarna consumers and 966 thousand merchants as of December 31, 2025 operated in 26 countries around the world. Our merchants include global leaders across verticals, such as Walmart, Airbnb, H&M, Nike, Uber and eBay. The ability to provide merchants with global access to consumers almost instantly once connected to our network is a critical competitive advantage. Industry-Leading AI Adoption and Implementation Klarna has been an early and leading adopter of AI. Our unique data set includes SKU-level data points, including 2.6 billion data points collected in the year ended December 31, 2025, and the learnings of more than 6.4 billion transactions conducted on our network to date. We also utilize ML in our business, in particular to increase the speed and accuracy of our proprietary underwriting model. Consumers and merchants entrust us with their data because we use that data for their benefit by improving their experience with Klarna, as more fully explained below: •AI Improves Conversion and Accelerates Our Revenue. We present consumers with AI-powered personalized shopping feeds, leading to more transactions on our network. KLARNA GROUP PLC83 •AI Streamlines the Consumer Experience and Reduces Our Costs. In February 2024, we launched our AI assistant in partnership with OpenAI. Our AI assistant has handled 80% of customer service chats in the year ended December 31, 2025 (according to our service chat log data), with no drop in consumer satisfaction levels since its introduction (according to internal consumer satisfaction surveys). •ML Supplements Our Credit Underwriting. ML enhances our high-frequency, large-scale and real- time underwriting. •AI Transforms Our Productivity and Drives Increasing Efficiency. AI adoption—including the related reduction in the use of third-party suppliers and vendors and the adoption of the AI copilot to create and review code—has led to internal efficiencies. Our average annual revenue per employee at period end has increased from approximately $344,000 in 2022 to approximately $1,240,000 in the year ended December 31, 2025. Scalable Technology Platform Our network is powered by a single, AI-enabled cloud-native technology platform that facilitates connections across the global ecosystem. Businesses ranging from PSPs, traditional banks, card networks and open banking providers to commerce enablers, technology partners, in-store payment providers and shipping and return logistics providers join our network through a single shared API to enable fast and global connectivity nearly instantly. Diversified and Sustainable Business Model Our diversified revenue model, based primarily on merchant fees, aligns the interests of merchants, consumers and our business. The proportion of our revenue generated from merchants, consumers and advertising is generally more balanced compared to many of our competitors in the payments and the banking industries, who tend to depend more heavily than we do on either merchant revenue or interest income. Our banking license provides us with a diversified, flexible funding toolkit and enables us to maintain a low-cost, stable funding model based on consumer deposits as well as the ability to actively manage our balance sheet through a range of complementary funding and risk-transfer mechanisms as we scale. We currently offer savings accounts directly to residents of Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, the Netherlands, Norway, Poland, Portugal, Spain and Sweden. We are also able to collect deposits in Germany, the Netherlands, France, Spain and Ireland pursuant to a partnership with a third-party deposit-taking platform operated by Raisin. Our banking pedigree adds rigor to our underwriting processes, which are designed to continuously improve our credit decisioning and monitoring. These factors, combined with our efficient go-to-market model defined by a recognizable brand and partnerships with top global merchants, PSPs and commerce platforms, drive leverage in our operating model. Durable Growth Profile, with Scale Efficiencies Our network connects millions of consumers and hundreds of thousands of merchants at scale to power global commerce. Our scale enables our efficient growth. More consumers attract more merchants to our network, which, in turn, attract more consumers. As we have scaled our operations over the last 20 years, we have optimized our cost structure and driven meaningful operating leverage in the business. For example, for example, from 2023 to the year ended December 31, 2025, our operating loss improved by 29% while our transaction margin dollars increased by 14% and operating margin by 8 percentage points during the same period. Thanks to these competitive advantages, we believe we have a substantial opportunity to increase our market share across channels, geographies and verticals. Annual consumer retail and travel spending in the markets in which we currently operate is estimated to be $20 trillion for the year ended December 31, 2025, of which $9 trillion was in the United States, based on the Market Opportunity Study. We consider our SAM to be the approximately $560 billion payments revenue opportunity associated with that spend, KLARNA GROUP PLC84 based on our average take rate in the last twelve months ended December 31, 2025. The global retail and travel spending across all markets (excluding China) is estimated to reach $35 trillion in 2027, based on the Market Opportunity Study. We have the opportunity to expand into new markets, to reach further into that spend opportunity. We have also scaled our advertising revenue from approximately $13 million in 2020 to $190 million for the year ended December 31, 2025. Digital advertising represents an additional approximately $600 billion market opportunity globally (excluding China) as of December 31, 2025 (based on the Market Opportunity Study) that we believe we are uniquely positioned to address given our unique data from intent-driven consumers. Additionally, we are well positioned to build a leading presence in strategic adjacencies such as retail banking services, given our trusted relationships with consumers, our experience and our existing banking services in select regions, where we held $13 billion of consumer funds as of December 31, 2025. We continuously strive to develop innovative products and solutions for our consumers and merchants to continue to grow our addressable markets. These network effects power our robust and compounding financial model characterized by long-term growth and expanding margin profile. For example, for the year ended December 31, 2025, our GMV was $128 billion, representing 21% (or 20% on a like-for-like basis) year-over-year growth and our total revenue was $3,509 million, representing 25% year-over-year growth (24% on a like-for-like basis). Our adjusted operating profit was $65 million, representing a $116 million reduction year-over-year. Our transaction margin dollars equaled $1,238 million in the year ended December 31, 2025, stable year-over-year . Our net loss in the year ended December 31, 2025 was $273 million. Commerce and Financial Services Should Be Fair, Simple and Trustworthy Consumers face multiple pain points with commerce and financial services today: •Disparate and Disjointed Financial Intermediaries. Challenges faced by consumers span beyond just commerce. When making decisions about everything from long-term financial health to purchase decisions, consumers struggle to interact with antiquated and disconnected intermediaries from banks, to credit card providers, to marketplaces. Only 7% of surveyed Americans budget using their bank’s budgeting tools in 2025, and 96% of consumers want more detailed transaction information as of 2021, according to Debt.com and Mastercard, respectively. •Inefficient User Experience. Commerce discovery experiences are often inefficient and time- consuming. Consumers face an abundance of choice, yet struggle to compare prices, shipping options and reviews across various merchants in a time efficient or easy-to-use, single interface. Post-purchase, receipts and shipping details are often scattered throughout their inboxes, complicating the post- purchase experience. Consequently, only 14% of consumers claim they are satisfied with their online shopping experience and 83% of them believe brands do not care about their experience after checkout, according to IBM and ParcelPerform, respectively. •Irrelevant Advertising. 80% of shoppers want personalized experiences from merchants, according to Epsilon. Nonpersonalized advertising results in a poor user experience, wasted time and degrades consumer trust in the shopping experience. •Predatory Lending Practices. Consumer credit around the world is unnecessarily expensive. In the United States alone, consumers collectively paid $254 billion in credit card interest and fees in 2024, according to WalletHub. Many consumers are unaware of the hidden costs of their credit instruments and the impact on their overall financial well-being. •Scams and fraud. Payment and merchant fraud have negatively impacted the commerce experience for consumers. Among online shoppers, three out of four report experiencing financial fraud, according to Chubb. KLARNA GROUP PLC85 Merchants also face multiple pain points: •Low Conversion and High Customer Acquisition Cost. Customer acquisition is a mission-critical priority for merchants and advertising is a significant expense for merchants. The retail industry represented approximately 20% of total digital advertising spend in the United States in 2024, according to eMarketer. Merchants struggle to find ways to increase their reach in a cost-efficient manner and, even when they have access to high intent traffic, struggle to convert their visitors into customers. Despite the significant investment of time and money, businesses are ineffectively spending between 40% and 60% of their digital advertising budgets, according to Proxima, leading to low conversion rates and online shopping cart abandonment rates that now exceed 70% according to Baymard Institute. •Excessive Transaction Fees. Accepting digital payments is costly for merchants, as swipe fees can be some merchants’ second-largest expense after labor. Merchants face the hard choice of decreasing margins or passing costs to consumers, which can dampen sales. •No Brand Control. Whether through their own site using a payments provider or via a marketplace, many merchants struggle to build trusted, brand-enhancing direct relationships with consumers. •Lack of Data and Insight. Merchants face significant challenges understanding the holistic consumer commerce journey. While they may have purchase data, they have little insight into alternative products that consumers browsed, whether they compared prices and what advertisements resonated with consumers. Merchants lack the data to understand what factors contributed to a customer making a purchase. Without insight into consumer preferences, merchants struggle to optimize their business strategies and improve overall performance. Trends in Our Favor Powerful demographic, secular and technological trends are accelerating the need for new and innovative commerce solutions: •Digital Payments Are Becoming the Norm. 84% of American consumers shop online, according to Capital One Shopping. •Generational Shift Away from Credit Card Debt. As of June 2024, the average credit card balance of Gen Z Americans was 50% lower than that of all American consumers, according to Experian. They demand fairer and more sustainable forms of credit. •Low Trust in Banks. In 2024, only 30% of U.S. consumers had trust in their bank and its practices, according to Ipsos Global, trust in financial services providers remain close to the bottom among all business sectors and industries, according to Edelman. •Digital Wallets Are Increasingly Popular. Digital wallets are a convenient and secure method to store various payment methods and manage loyalty cards. Their popularity with consumers is expected to drive 20% annual growth in their use through 2027, according to the Market Opportunity Study. •New Avenues for Consumer Spending Growth. Through 2027, e-commerce global retail sales are expected to grow by 12% CAGR, according to the Market Opportunity Study, as consumers demand the ability to shop anywhere at any time and buying online becomes increasingly easier with advancements in logistics and payments. •Concerns about Data Security. Over 50% of consumers say they have abandoned an online purchase due to security concerns, according to a Make Trust Pay study in 2025. •Commerce-Aligned Advertising Models Gaining Share. Commerce media, where advertisements are placed alongside shoppable inventory, is projected to grow by a 19% CAGR through 2027, compared to the projected 9% growth for the broader digital advertising market, according to the Market Opportunity Study. KLARNA GROUP PLC86 The Klarna Network Over the past 20 years, we have built the next-generation commerce network that connects consumers and merchants globally. Our Network Efficiently Connects Consumers and Merchants We enable next-generation payments through direct relationships between consumers and merchants. Through our network, consumers can find and pay for goods, services and experiences in a highly efficient and flexible manner, and merchants are connected with more—and more empowered—consumers. We have built our network to directly connect consumers and merchants, removing reliance on card networks or issuing banks, which provides us with better data and a cost advantage compared to traditional providers. Consumers and merchants entrust us directly with their data. We use this data, including 2.6 billion data points collected in the year ended December 31, 2025, to better understand consumer preferences, more accurately underwrite consumer credit, provide clearer indications of consumer purchasing power and help merchants build trusted, brand-aligned relationships. We are able to provide our consumers and merchants key insights and services, in addition to payment processing, to facilitate more efficient commerce experiences. Our network also removes middlemen from a typical transaction, resulting in lower fees for both consumers and merchants. We believe that we operate one of the largest account-to-account (A2A) networks in Europe and the United States with direct connectivity to over 15,800 banks as of December 2025. This allows us to offer consumers the option to Pay in Full (i.e., debit) and to settle payments in a simple and cost-efficient manner by direct bank transfer. Our network offers the benefits of open and closed networks. We open our network to a broad consumer and merchant ecosystem, similar to Visa, MasterCard and Amex, but also benefit from our proprietary closed-loop network where we issue, fund, process and settle the entire payment, while retaining a direct relationship with our consumers. Our Network Sits at the Center of a Global Ecosystem We partner with a range of global constituents that facilitate commerce to make our network more ubiquitous and efficient for our consumers and merchants. Our network integrates with PSPs, who help grow our merchant presence, and traditional banks, card networks and open banking providers, who help facilitate payments. We also partner with commerce enablers (i.e., companies that offer end-to-end services to help businesses operate their stores) and technology partners to provide merchants holistic commerce solutions, in-store payments providers to facilitate offline transactions and shipping and return logistics providers who help our consumers manage purchases. By integrating Klarna with Apple Pay and Google Pay, our consumers can use Klarna’s payment solutions wherever Apple Pay or Google Pay is available online in the United States as well as, in the case of Apple Pay, in the U.K., without having the Klarna card. We allow hundreds of partner companies to integrate into our open network, which improves the value proposition we provide our consumers and merchants by making Klarna available at more checkout points. The Scale of Our Network Makes Klarna a Critical Growth Partner for Merchants and the Preferred Commerce Network for Consumers With 118 million active Klarna consumers distributed globally as of December 31, 2025, Klarna provides merchants with an extensive network and solutions for customer acquisition and loyalty, driving higher conversion and AOV as well as improved retention. We believe that merchants and other payment ecosystem participants recognize the value that we bring through the scale and reach of our network and see us as a critical growth partner. Merchants have the opportunity to benefit from our network across the globe. Similarly, consumers enjoy the benefits of searching, discovering and paying by Klarna, across our approximately 966 thousand merchants as of December 31, 2025, knowing they will have a positive consumer experience with our network’s abundance of choice, price comparison features and payment flexibility. KLARNA GROUP PLC87 We Have Built Market-Leading Underwriting Capabilities We believe that our credit underwriting capabilities differentiate us from other payment networks and improve our overall commerce experience. With enhanced underwriting, our consumers have access to numerous payment methods that help promote their financial well-being while our merchants drive additional sales. Our proprietary data, including purchase behavior from approximately 3.4 million transactions per day on average in the year ended December 31, 2025 made by 118 million active Klarna consumers, underpins our underwriting capabilities. With this data, we are able to make decisions in seconds, fully automate our process and underwrite every transaction in real time. We also provide a small spending capacity to consumers, which gradually increases over time as consumers responsibly spend more with Klarna, and clear repayment terms that encourage borrowers to repay on time, a unique approach to extending consumer credit compared to market alternatives. In the year ended December 31, 2025, our average balance per active Klarna consumer was $124 (Pay in Full: $0; Pay Later: $120 Fair Financing: $393) (compared to an average balance per credit card of approximately $6,961 in the United States in 2025, according to Experian). Based on contractual repayment schedules, our weighted average life (WAL) was approximately 39 days (27 days for Pay Later and 109 days for Fair Financing) (compared to a typical loan duration of more than five years at a typical Nordic bank in 2024, according to publicly available information, and an average of 2.5 years of a typical U.S. personal bank loan in Q1 2025, according to TransUnion). We believe this differentiated underwriting process provides more value to our consumers and merchants and lowers our credit losses relative to the industry, which drives our more sustainable financial performance. Our Network Fuels a Powerful Advertising Solution We have built a highly differentiated advertising solution based on the close relationship we maintain with our consumers and merchants and the vast amounts of data they entrust to us. We use proprietary data, including first-party, SKU-level data, such as browsing, searching, transacting, tracking, returning and customer service data, to help merchants reach and engage high-intent consumers with relevant advertisements. We offer brand, search and affiliate solutions to advertisers such that they can connect with consumers across the commerce journey. We also allow merchants to reach consumers in a commerce-centric environment, which we believe is the most effective place to reach consumers. These features, together with our vast amounts of data, allow us to deliver to our merchants marketing attribution and better measurability and, as a result, a higher ROI on their advertising spend. We Are a Licensed Bank We have operated as a licensed bank in the European Economic Area (“EEA”) since 2017, when the Swedish Financial Supervisory Authority (“SFSA”) approved our application for a bank license. This license reinforced our position as a stable, trustworthy institution among our consumers and merchants. Our license enables our differentiated funding strategy by allowing us to fund 95% of our lending activities during the year ended December 31, 2025 by utilizing deposits, which are highly stable and lower-cost than other non-bank funding strategies, such as asset-backed financing. As our consumers increasingly trust us with their savings, we have collected a large and growing pool of consumer deposits ($13 billion as of December 31, 2025). We also continue to expand the markets in which we collect deposits, including by utilizing third-party platforms, such as Raisin. We believe that consumers find our deposit platform attractive due to its ease of account opening, its intuitive digital platform and the competitive interest rates that we offer. Our business also benefits from an inherent duration gap between our consumer loans, which had based on contractual repayment schedules, a weighted average life (WAL) of approximately 39 days as of December 31, 2025 (27 days for Pay Later and 109 days for Fair Financing), and our deposits, 58% of which were fixed-term with an average duration of 268 days in the year ended December 31, 2025. As a result, we can adjust our lending policies more quickly than our deposit base might change. We also have the ability to deliberately change the length and interest rate on the deposits that we offer to adjust this duration gap. Finally, our banking license allows us to design and offer financial products and services KLARNA GROUP PLC88 that otherwise could require third-party partnerships, like card issuance, and extensive experience and investment to ensure compliance with applicable regulatory requirements. Our Structure Allows Us to Offer Fair and Affordable Products We operate a sustainable business model defined by lower fees for both merchants and consumers relative to legacy payment networks, such as credit cards. Merchants and consumers combined paid 1.2 times and 1.5 times more in fees using credit cards than with Klarna in Western Europe and the United States, respectively, comparing credit card fees in the year ended December 31, 2025 and our current fees, according to the Market Opportunity Study. Further, the average credit card annual percentage rate in the United States reached 24% in December 2025, according to Lending Tree, while the average credit card annual fee was $128 as of July 2023, according to NerdWallet. The revolving nature of credit cards and the broad use of a minimum balance payment keeps consumers in debt. For example, in 2024, U.S. consumers paid $254 billion in credit card interest and fees, according to the WalletHub analysis of Federal Financial Institutions Examination Council (FFIEC) and Federal Reserve data. By comparison, in the year ended December 31, 2025, consumer fees represented only 31% and 30% of a Klarna transaction in Western Europe and the United States, respectively. We believe our lower fees promote financial well- being for our consumers and align our success with that of our merchants. As we help consumers and merchants save more on each transaction, we give consumers more control over their finances and help them save money. We believe this positive experience encourages them to remain on our network and move more of their spending to Klarna, which supports our long-term financial success. Our network as a whole provides structural competitive advantages, which enable us to independently develop superior experiences for our consumers and merchants, while keeping costs low and driving long- term growth. The collective cost advantages of our network accelerate our network effects, while maintaining our own sustainable financial model. Better for Consumers We are revolutionizing the commerce experience for consumers around the world. We help consumers find personalized brands and products, pay and manage commerce transactions and finances. We do this through our network that prioritizes safety and fairness to consumers. We help our consumers save time and money and put them in control of their commerce experience. Our Consumers Adults around the world are using Klarna for their everyday spending, both online and in-store, across many types of verticals. There is no typical Klarna consumer. In fact, in Sweden, our most mature market, approximately 85% of the adult population were active Klarna consumers as of December 31, 2025. Our network is built for everyone, and our consumers are diversified across multiple demographics. KLARNA GROUP PLC89 ________________ Source: Klarna Global Consumer Survey from Q3 2023, n = 16,370. On the following pages, we provide testimonials from several of our consumers in different markets. While these case studies are only a selected sample, we believe that they provide a helpful example of how these consumers have integrated Klarna in their everyday shopping. In particular, the testimonials are designed to demonstrate the characteristics of our network and products and services that our consumers find particularly appealing, the diversity and engagement of our consumer base, the strength of our brand and the flexibility of the payment solutions that we offer our consumers. Our Globally Recognizable Brand Our brand is globally recognizable. Our global NPS in September 2024 was 73, according to our estimates, which is significantly higher than the average NPS for the finance industry of 44 in our top eight markets as of March 2023, according to CustomerGauge. As of December 2024, according to our estimates, we had 40% global brand awareness, as compared to 28% on average for our main competitors, and a global brand trust score of 54%. Our brand also defines our relationship with consumers. In a financial services ecosystem filled with opacity and mistrust, Klarna has created a brand associated with trust, transparency and financial wellness. This brand resonates with our consumers, merchants, partners and employees. •Culture. We are curiously bold. It defines the Klarna spirit. We partner with leading media companies and globally recognized icons, such as Snoop Dogg and Paris Hilton and her media company 11:11 media, to promote our network in fresh, bold ways reflective of our culture and spirit. •Personalization. Our AI-native product approach makes consumer interactions with Klarna deeply personal, including recommendations on brands, products and creators. •Human Connection. We are optimists, making everyday money moments better. We are rebels with a cause, daring to disrupt but always with a purpose to improve commerce and payments for all. And we do this all simply—we think less is more. We use words like “money” instead of “funds” and “improve” instead of “optimize.” These tenets allow us to connect deeply with our consumers. •Purpose. We care about our planet, and in 2021 launched our Give One planet health initiative to tackle climate, biodiversity and land degradation crises. Because we support global environmental initiatives and engage with local communities, our consumers know that we are more than just a corporation. KLARNA GROUP PLC90 Our Consumer Solutions Our consumer solutions are built to address the commerce journey: Find We allow our consumers to discover and engage with merchants pre-purchase with AI-powered, personalized recommendations. In 2024, we saw an average of 11.9 million daily pre-purchase interactions on our network (which include clicks by consumers using our discovery and search tools and on ads placed on our network) and delivered 838 million leads to merchants (i.e., click-throughs by a consumer to a merchant’s store from either the Klarna app or our website). Solutions we offer include personalized inspiration, merchant deals, cashback offers, product search, price drop notifications, price comparison and the ability to create wish lists. We also offer location-based product and store recommendations. In 2024, this solution had an eight times higher click-through rate than a leading competitor service (according to WordStream) and resulted in approximately 3.6 billion drive-to-store offer impressions. It also drove a higher purchase frequency, as consumers utilizing our location services made approximately 53% more purchases per month than consumers who had these services disabled. By tailoring recommendations based on consumer location and preferences, we believe that this solution enhances the shopping experience and helps alleviate the need for in-store product research by consumers. This is increasingly important, as approximately 87% of shoppers use their smartphone to research products while shopping in a store at least some of the time, as of the third quarter of 2023, according to 1WorldSync. Pay We offer consumers transparent and seamless purchase capabilities through our multiple payment options that allow consumers to pay in whichever way is most convenient for them, including debit and credit, without hidden fees or revolving credit. Our payment options have promoted safety and trust since our inception when we first enabled consumers to pay after receiving their goods. In the year ended December 31, 2025, we powered approximately 3.4 million daily purchases on average on our network. Solutions that we offer include our Pay in Full, Pay Later and Fair Financing payment methods. We continue to innovate our consumer solutions. For example, in 2024, we introduced Klarna balance, which allows consumers to Pay in Full or make Pay Later payments without connecting a bank account or a credit or debit card and facilitates the growth of cashback. Manage We provide consumers a holistic suite of services to fully understand purchases, track after-purchase activities such as shipping and returns, and manage personal finances with intuitive financial overviews and deposit and savings accounts. In 2024, there were on average 8.2 million daily post-purchase interactions and, in the year ended December 31, 2025, on average, 46 million million of our active Klarna consumers opened the Klarna app every month. Our solutions include loyalty cards, the ability to track delivery and returns, AI-enabled customer support, and insights into personal finances. In 2024, 48% of our active Klarna consumers visited the order information page on the Klarna app every month and had a more than 80% customer satisfaction score on average between February and August 2024. We believe we have a significant opportunity to expand into digital retail banking services as well. We have a leading deposit franchise in Europe that we have offered for 10 years. With Klarna balance, consumers can now also hold a positive monetary balance with us and add, store and withdraw money, settle existing Klarna debt, collect refunds and receive cashback. In select markets, we allow consumers to create sub-accounts that help them compartmentalize their money and create savings goals. We currently offer savings accounts directly to residents of Sweden, Germany, Austria, the Netherlands, Finland, France, Belgium, Spain, Ireland, Italy and Portugal. We are also able to collect deposits in Germany, the Netherlands, France, Spain and Ireland pursuant to a partnership with a third-party deposit-taking platform operated by Raisin. KLARNA GROUP PLC91 Advantages of Our Consumer Solutions Consumers shop effortlessly on our network. We believe we offer them a more relevant and convenient way to shop that also provides greater financial control. •Personalized. Shopping on our network is personalized with tailored search and recommended content based on past purchase behavior. Consumers receive personalized recommendations and deals for top products and brands. •Convenient and Easy. When shopping on the Klarna app, the entire commerce journey is in one place, including browsing, paying, tracking orders and deliveries, finding receipts and managing returns. We are reducing the commerce clutter for our consumers. •Safe and Trustworthy. Since our inception, we have allowed consumers to touch and feel products before they paid for them by offering them Pay Later solutions. Our payment methods give consumers confidence to transact. •Affordable. The majority of our payment options do not charge consumers interest as they allow consumers to spread the cost of a purchase interest-free. We do not offer revolving credit, and there are no hidden fees on our network. This results in lower costs for purchases by our consumers than for average credit card transactions that revolve. •Transparent and Fair. We believe we provide consumers greater financial control over their commerce journeys. Our multiple payment methods allow consumers to pay however they choose. They also have flexible and consumer-friendly terms that are easy to understand. New consumers start with a small spending capacity that increases as consumers responsibly spend more with Klarna. The repayment terms are fixed and typically short-term. Increasing Diversity of Use Cases and Frequency for Our Consumers We believe that the breadth and quality of our products drive consumers to use Klarna for more of their purchases and across additional verticals over time. As our markets mature and consumers use our network for longer, the average consumer purchase frequency typically increases. Similarly, purchases across verticals also generally become more diversified over time. Increased Consumer Adoption KLARNA GROUP PLC92 ________________ Note: The chart above refers to the last twelve months ended December 31, 2025. The “Years since launch” axis does not apply to the Klarna card or the typical U.S. credit card frequency data point. U.S. credit card use frequency based on data by Capital One. Better for Merchants We believe we are revolutionizing commerce for merchants, enabling them to succeed on every mission-critical business priority. Our Merchants Klarna is a preferred growth partner for approximately 966 thousand merchants in 26 countries across the world as of December 31, 2025. In the last twelve months ended July 31, 2025, 48% on average of the top 100 merchants in each of the major markets we serve (i.e, the United States, the U.K., the Nordics, Germany, Austria, Belgium, Spain, France, Italy, the Netherlands and Switzerland) chose Klarna to facilitate payments, based on data from eCommDB and Digital Commerce 360. Our broad adoption across merchants contributes to our GMV diversification, with no single merchant representing more than 10% of our GMV in any of our major markets in the year ended December 31, 2025. We power merchants across different verticals including Fashion & Accessories (H&M, Ray-Ban, Macy’s and Zara), Travel (Airbnb, Expedia, Booking.com and Cathay Pacific), Sports & Outdoor (JD Sports, On, Patagonia and Decathlon), Everyday Payments (Uber, Spotify, Walmart and Instacart), Luxury & Premium (Gucci, Farfetch, Vestiaire Collective and Net-a-porter), Health & Beauty (Sephora, Charlotte Tilbury, Rituals and Benefit Cosmetics), Home & Electronics (Samsung, Bose, Dyson and Sonos) and much more (Ikea, Ticketmaster, eBay and Etsy). On the following pages, we provide several case studies and other examples of what successful integration with Klarna can mean for our merchants in different verticals. Results achieved by individual merchants may vary for a number of reasons, including the number and the type of our solutions, products and services deployed by the merchant, the geography and vertical in which the merchant operates and the timeframe during which the results are measured, as well as because of our growing global presence and introduction of new and improved merchant solutions. At the same time, we believe that the examples that we have chosen are representative of the impact that our network has on enabling our merchants’ growth and the financial and performance results presented are typical of the results that our merchants generally experience. Our Merchant Solutions Our merchant solutions enable merchants to grow their businesses and attract, engage and retain customers by partnering with Klarna. •Numerous Channels to Connect to Our Consumers. We want to make it as easy as possible for merchants to join the Klarna network, accept our payment methods and connect to millions of our consumers. Merchants around the world can connect to our network through a single shared API and gain access to our consumers nearly instantly. We make local adaptations as needed in new markets, but the foundation of our network is built to support a global footprint. We offer multiple channels for merchants to connect to our network both online and offline, including embedding Klarna payment options at checkout on their websites or in apps, on the Klarna app, by accepting the Klarna card, in-store solutions and a full checkout experience that also accepts other payment options. •Merchant Enablement and Growth Tools. We provide merchants with several merchant tools that help accelerate the growth of their businesses. We offer a host of solutions that drive conversion at checkout, such as on-site messaging, which promotes Klarna as a payment method, express checkout, KLARNA GROUP PLC93 which provides a one-click purchase experience, and merchant offers, which promote products and services selected by the merchant. We also operate a merchant portal that organizes various tasks for business management such as daily sales overviews or customized settlement reports. •Advertising to Help Merchants Better Connect with Consumers. We have developed highly differentiated advertising solutions that allow merchants to reach and engage high-intent consumers in a commerce-centric environment. We use first- and third-party data, including browsing, searching, transacting, tracking, returning and choosing replacements, to serve consumers relevant and experience- enhancing products through ads. Our advertising solutions allow merchants to reach consumers across their shopping journey, whether in their discovery phase of shopping, or those with demonstrated intent or ready to transact. Advantages of Our Merchant Solutions •Better Conversion Rates. We provide efficient commerce through our multiple payment methods online and offline. This has helped drive a 20% conversion increase for certain of our merchants since they joined our network. •New Customers. We believe that our solutions help merchants acquire new customers more efficiently than other customer acquisition channels. Our advertising solutions leverage our scale, consumer and merchant engagement, and first- and third-party data to allow merchants to engage with consumers in a closed-loop, commerce-native network. •Higher AOV. Our consumer solutions promote the financial well-being of our consumers while unlocking consumer purchase power. For example, our study of 83 merchants across different verticals and geographies concluded that we drove on average 23% higher AOVs for our merchants (from 2022 to June 2024). •Fair Merchant Fees. We provide significant value to our merchants and charge fair fees for our service. We believe that our merchants gain greater benefits with Klarna when compared to other payment solutions, with fees in line with other providers. On top of this, we also save our merchants’ end customers money as compared to an average credit card transaction and give them greater control over their purchases and finances, helping improve both our merchants’ and customers’ experiences. •Full Brand Control. We want our merchants to leverage our network to define their brand and build direct relationships with their consumer base. As such, we offer the ability for merchants to promote themselves in their unique way on the Klarna app and our website. For example, merchants can set up storefronts on the Klarna app and our website which they design and manage themselves with their own branding. Direct relationships with consumers drive greater retention, and merchants using Klarna had 46% higher retention in September 2024 compared to legacy payment methods, according to our estimates. •Rich Data Insights. Merchants gain rich insights into consumers’ behavior across their shopping journeys, from browsing and advertising click-through rates to price comparison and cart dynamics, allowing them to optimize consumer commerce experiences. The chart below illustrates our expanding partnership with On, one of many globally trusted brands that joined our network in recent years. KLARNA GROUP PLC94 Accelerating Merchant Growth 2020 2021 2022 2023 2024 Share ofcheckout** 12% 15% 35% 30%* 32% GMV vs.2020 1x 2x 2x 3x 5x Revenue vs.2020 1x 2x 2x 4x 9x ________________ Note: On’s expansion to the United States impacted the share of checkout in 2023. Share of checkout is calculated as Klarna’s GMV share of the merchant’s total GMV generated online (including on the On app) in our markets. GMV represents the merchant’s total GMV transacted on our network. Revenue represents the merchant’s total revenue generated on our network. Source: Klarna’s calculations based on information received from the merchant. Our solutions have consistently proven to drive merchant growth across different markets and verticals, resulting in more efficient customer acquisition, higher AOV and better order conversion and customer retention rates for our merchants, as illustrated by the several case studies presented below. ________________ Note: In 2020, H&M integrated Klarna’s In-app mobile checkout into its app in ten markets. Klarna payment options were quickly adopted by H&M customers—in these markets, our share of checkout has reached almost 50% and, in Sweden, 60% of orders from new customers are made through Klarna. In partnership with us, Sephora has introduced flexible payment options across the United States and Canada, which have increased customer loyalty and purchase frequency. In 2023, Klarna users shopped at KLARNA GROUP PLC95 Sephora 6.8 times per year on average, compared to four times per year on average for all Sephora consumers. In recent years, members of Sephora’s Beauty Inside Loyalty program across tiers (Insider, VIB and Rouge) were two times more likely to use Klarna. Within the program, more than 40% of Klarna users enrolled in a Sephora loyalty program qualified in the top two tiers (VIB and Rouge), measured by annual spend. Using our affiliate program, Expedia increased its exposure on the Klarna app through a variety of channels and placements, including email campaigns and ads. For instance, in 2024, the percentage of Expedia transactions made by new Klarna customers more than doubled in the United States year over year. In the United States, through our affiliate program, Expedia and Hotels.com experienced an approximately 5% increase in their basket size in 2024 year over year. Since 2019, Foodora’s customers in Sweden have been able to pay for their purchases with Klarna. In August 2024, Foodora decided to use our advertising solutions to promote on our network. As a result, the purchase frequency of Klarna consumers increased by 14% in August 2024, as compared to October 2023, and our share of checkout in Sweden reached 35% on average between August 2024 and September 2024. Source: Klarna’s calculations based on information received from the merchant. Proprietary Data, Technology Platform and AI Strategy Since 2005, Klarna has been a constant innovator in our industry. We were a first mover in the “buy now, pay later” space, built a disruptive brand when we obtained our banking license, integrated “pay anywhere” into the Klarna app and leveraged our data to develop highly differentiated advertising solutions. Today, we are among the very first to adopt AI, which we use to improve consumer personalization as well as achieve internal efficiencies. Consumer Data at the Core of Our Technology Platform The strong trust and engagement we have earned from our consumers and merchants gives us a unique data advantage. We use consumer data to improve their commerce experience, with an aim to save them time and money. Our unique data set includes SKU-level data points, including 2.6 billion data points collected in the year ended December 31, 2025, and the learnings of more than 6.4 billion transactions conducted on our network to date. This data powers our understanding of: •Intent. We understand saved, wish listed and shared items, time spent browsing products, engagement with deals or campaigns and brand affinity. With such customer intent data, we are able to predict what our consumers are looking for, and help merchants offer them more relevant products and ads. •Purchase History. We have insight into consumer SKU-level purchase history, brand loyalty, payment method, price sensitivity, purchase frequency, AOV and order return rates. Consumer purchase history allows us to deeply understand how our consumers like to shop and we can therefore help merchants drive higher conversion. •Consumer Profiles. We understand details of our consumers such as purchase power, credit score and declared interests. With consumer profile data, we know how to relate to each consumer in a personal and tailored way that builds trust and delivers better commerce experiences. Our Single, Cloud-Based Technology Platform Data underpins our technology platform. The platform connects to the many constituents of our network, including consumers, merchants, PSPs, affiliate networks, credit bureaus and banks, to deliver a seamless user experience for our consumers and merchants across our core product offerings. Because we operate a single cloud-based platform, our consumer and merchant solutions are highly scalable and secure. This underlying technology enables merchants around the world to connect to our network through a single shared API and gain access to our millions of consumers nearly instantly. We prioritize KLARNA GROUP PLC96 building our own technology and investing in extraordinary engineering talent. As of December 31, 2025, over 1,500 of our positions, or approximately 53% of our entire organization, were engineering and data science positions. We Are an AI-Powered Company We believe that society will experience vast changes that will be powered by AI. Accordingly, we are utilizing AI to transform commerce. We harness AI for the benefit of consumers, merchants and our employees. AI makes us more productive and efficient. As of August 31, 2024, 96% of our employees used generative AI in their daily work, according to our internal data gathered from OpenAI and our internal AI tools. •Generative AI Improves Merchant Conversion and Accelerates Our Revenue. We present consumers with AI-powered personalized shopping feeds that allow them to discover dynamic and personalized brand, product and creator recommendations. We have also developed an AI shopping assistant that enables merchants to make strategic product recommendations to consumers. Our consumer data platform ensures that our merchants have high-quality customer targeting. These features drive higher consumer engagement and merchant conversion rates, leading to more transactions from our consumers, more revenue for our merchants and more revenue for us. •Generative AI Streamlines the Consumer Experience and Reduces Our Costs. In February 2024, we launched our AI assistant in partnership with OpenAI, available in the Klarna app. This chatbot enhances consumer shopping and payment experiences and manages various tasks, such as multilingual customer service and refunds and returns. Since launch, our AI assistant has achieved the same consumer satisfaction levels as human agents (according to internal consumer satisfaction surveys), more accurately resolved issues, reduced repeat inquiries by 25% (based on the number of repeat inquiries before and after the launch of our AI assistant) and resolved queries in two minutes compared to 12 minutes on average for human agents, as of September 2024 (based on our service chat log data). Available 24/7 in 23 markets, the AI assistant communicates in more than 35 languages. Since launch, our AI assistant has had 31 million conversations, handling 80% of customer service chats in the year ended December 31, 2025, according to our service chat log data. We estimate that our AI assistant does the equivalent work of over 700 full-time agents (based on the average monthly reduction in chat and telephone conversations in 2024 following the launch of our AI assistant) and delivered $39 million in cost savings in 2024. •ML Supplements Our Credit Underwriting. ML enhances our high-frequency, large-scale and real- time underwriting, which helps drive conversion rates and minimizes credit losses. Our underwriting model is based on our access to first- and third-party data, including data entrusted to us by our consumers. It becomes more accurate as our network scales and our ML models analyze growing amounts of data. In December 2024, our underwriting model had more than two times better predictability of default than the VantageScore benchmark in the United States, according to our estimates. •Generative AI Enhances Our Productivity and Drives Increasing Efficiency. We use AI to increase productivity within our engineering and operational teams. Our engineers and data scientists connect their work software to the AI copilot that can create and review code, while our legal teams use AI to expedite document review. We also use AI to minimize external vendor costs. We decreased spending on external marketing suppliers, such as translation, production, CRM and social agencies, by $7 million in the first quarter of 2024 (as compared to the first quarter of 2023) and we attribute 37% of this decrease to the use of AI (based on the savings realized from AI-powered marketing in the first quarter of 2024 and the total decrease in our spending on external marketing suppliers in that period). We also reduced or canceled contracts with over 1,700 suppliers following our AI adoption and standardization (based on the decrease in the number of suppliers we had in 2022, as compared to the number of suppliers in the year ended December 31, 2025, following our adoption of AI in our operations), and we estimate that we saved $10 million in 2024 from AI-powered marketing. Additionally, we operate an internal knowledge chatbot, which we call Kiki, that helps employees find information in real time across internal systems. Making information more readily available across our entire organization with Kiki increases transparency and collaboration KLARNA GROUP PLC97 across our teams, reduces repetition of tasks, boosts productivity, and ultimately reduces our operating costs. These internal applications of AI have dramatically increased our average revenue per employee in recent periods. Our Market Opportunity Our network addresses substantial and growing market opportunities in payments and digital advertising. Additionally, there are a number of adjacencies that we believe we have the ability to enter, including P2P transfers, bill payments and other retail banking services. We continuously strive to develop innovative products and solutions for our consumers and merchants and will continue to leverage and invest in our network over time. Payments Opportunity We have a track record of building and expanding globally. Annual consumer retail and travel spending in all markets globally (excluding China), including the markets in which we do not yet operate, is estimated to be $35 trillion in 2027, based on the Market Opportunity Study, which equals nearly $1 trillion in payments revenue based on our take rate. Our GMV for the year ended December 31, 2025 represented less than 0.5% of this global payments opportunity. Our network addresses the $20 trillion consumer retail and travel market spend opportunity in the markets where we operate, based on the Market Opportunity Study. We consider our SAM to be the approximately $560 billion payments revenue opportunity associated with that spend, based on our average take rate in the year ended December 31, 2025, of which $128 billion related to e-commerce. Our revenue in the year ended December 31, 2025 represented approximately 0.6% of our SAM. We believe that we are well positioned to continue to grow faster than the market. Our network is aligned with important secular growth drivers, including the continued share gain of digital payments and the declining portion of consumers who use credit cards. For example, based on the Market Opportunity Study, e-commerce is expected to grow at a 8% CAGR through 2027 and digital wallets are expected to grow by more than 20%, compared to the 9% expected growth of our SAM. The payments landscape remains highly fragmented. Even as a leader in certain markets, we see significant growth potential. In Sweden, approximately 85% of adults used Klarna in 2025, but our wallet share was still below 7%, according to our estimates. In the United States, as of December 2025, only 11% of adults used Klarna and our wallet share remains below 3%, according to our estimates. We believe that we can expand our penetration within existing markets by expanding our network into new verticals and launching new products and payment channels. Digital Advertising Opportunity Global digital advertising (excluding China) represents an over $600 billion market opportunity as of December 31, 2025, based on the Market Opportunity Study. Our advertising revenue in the year ended December 31, 2025 represented approximately 0.03% of this global digital advertising opportunity. We have developed innovative advertising solutions using our SKU-level data, which enables advertisers to reach high-intent consumers with relevant and engaging advertisements. We believe that our proprietary data, solutions that reach consumers across their commerce journey and ability to reach consumers in a commerce-centric environment position us well to capture a significant share of the digital advertising market. We have exposure to the fastest-growing segment of digital advertising—commerce media—because our network provides consumers the ability to shop directly in the Klarna app or on our website. Commerce media, where advertisements are placed alongside shoppable inventory, is projected to grow by a 19% CAGR through 2027, compared to the projected 9% CAGR for the broader digital advertising market, according to the Market Opportunity Study. KLARNA GROUP PLC98 Future Market Opportunities We are integrated in the everyday shopping of our active Klarna consumers and believe we have the opportunity to further embed Klarna in their daily financial lives. We already have a significant deposit- taking business that we have built over the past 13 years, with $13 billion in consumer deposits as of December 31, 2025. We continue to innovate on our digital retail banking opportunity as well. For example, we launched Klarna balance in 2024, which allows consumers to hold a positive monetary balance with Klarna and add, store and withdraw money, settle existing Klarna debt, collect refunds and receive cashback. We plan to continue to grow our consumer retail banking solutions, which we believe will allow us to capture new market opportunities. Our Competitive Advantages We enjoy several key competitive advantages that have enabled our continued success since our founding in 2005: •Compounding Network Effects. Klarna enjoys powerful network effects. Our personalized, highly engaging consumer experiences drive consumers to our network. As more consumers engage at scale, more merchants join our network and grow their businesses. As more merchants join the network, consumers benefit from increased selection across verticals, channels and geographies, and can purchase more frequently using, and demonstrate preference for, our network. Klarna has established a high-utility, high-frequency model, enabling the purchase of everyday goods and services that benefits both our consumers and merchants. •Trusted Brand, Global Distribution. We have built a brand that is distinctly global, universally recognized and well-loved by consumers and merchants, an accomplishment that we believe is rare among businesses that provide payments and financial services. Our global NPS in September 2024 was 73, according to our estimates, which is significantly higher than an average NPS of 44 for the finance industry in our top eight markets as of March 2023, according to CustomerGauge. As of December 2024, we also had a higher global brand awareness (40%) than the average of our main competitors (28%), according to our estimates. The strength of our brand contributes to our global scale. Our approximately 118 million active Klarna consumers and 966 thousand merchants as of December 31, 2025 operated in 26 countries around the world. Our merchants include global leaders across verticals, such as Walmart, Airbnb, H&M, Nike, Uber and eBay. The ability to provide merchants with global access to consumers almost instantly once connected to our network is a critical competitive advantage. •Industry-Leading AI Adoption and Implementation. Klarna has been an early and leading adopter of AI. Our network and AI capabilities are powered by a unique proprietary data set, built on SKU-level data points, including over 2.6 billion data points collected in 2025, and more than 6.4 billion transactions conducted through our network since our founding. We also utilize ML in our business, in particular to increase the speed and accuracy of our proprietary underwriting model. Consumers and merchants entrust us with their data because we use that data for their benefit by improving their experience with Klarna, as more fully explained below: •AI improves conversion and accelerates our revenue. We present consumers with AI-powered personalized shopping feeds, leading to more transactions on our network. •AI streamlines the consumer experience and reduces our costs. In February 2024, we launched our AI assistant in partnership with OpenAI. Our AI assistant has handled 80% of customer service chats in the year ended December 31, 2025 (according to our service chat log data), with no drop in consumer satisfaction levels since its introduction (according to internal consumer satisfaction surveys). •ML supplements our credit underwriting. ML enhances our high-frequency, large-scale and real-time underwriting. KLARNA GROUP PLC99 •AI transforms our productivity and drives increasing efficiency. AI adoption—including the related reduction in the use of third-party suppliers and vendors and the adoption of the AI copilot to create and review code—has led to internal efficiencies. Our average annual revenue per employee at period end has increased from approximately $344,000 in 2022 to approximately $1,240,000 in the year ended December 31, 2025. •Scalable Technology Platform. Our network is powered by a single, AI-enabled cloud-native technology platform that facilitates connections across the global ecosystem. Businesses ranging from PSPs, traditional banks, card networks and open banking providers to commerce enablers, technology partners, in-store payment providers and shipping and return logistics providers join our network through a single shared API to enable fast and global connectivity nearly instantly. •Diversified and Sustainable Business Model. Our diversified revenue model, based primarily on merchant fees, aligns the interests of merchants, consumers and our business. The proportion of our revenue generated from merchants, consumers and advertising is generally more balanced compared to many of our competitors in the payments and the banking industries, who tend to depend more heavily than we do on either merchant revenue or interest income. Our banking license provides us with a diversified, flexible funding toolkit and enables us to maintain a low-cost, stable funding model based on consumer deposits as well as the ability to actively manage our balance sheet through a range of complementary funding and risk-transfer mechanisms as we scale. We currently offer savings accounts directly to residents of Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, the Netherlands, Norway, Poland, Portugal, Spain and Sweden. We are also able to collect deposits in Germany, the Netherlands, France, Spain and Ireland pursuant to a partnership with a third-party deposit-taking platform operated by Raisin. Our banking pedigree adds rigor to our underwriting processes, which are designed to continuously improve our credit decisioning and monitoring. These factors, combined with our efficient go-to-market model defined by a recognizable brand and partnerships with top global merchants, PSPs and commerce platforms, drive leverage in our operating model. •Durable Growth Profile, with Scale Efficiencies. Our network connects millions of consumers and hundreds of thousands of merchants at scale to power global commerce. Our scale enables our efficient growth. More consumers attract more merchants to our network, which, in turn, attract more consumers. As we have scaled our operations over the last 20 years, we have optimized our cost structure and driven meaningful operating leverage in the business. For example, from 2023 to the year ended December 31, 2025, our operating loss improved by 29% while our transaction margin dollars increased by 14% and operating margin by 8 percentage points during the same period. Our Growth Strategies Our vision is a world where Klarna empowers everyone, everywhere, through seamless commerce experiences—as a personalized, trusted assistant making financial empowerment effortless. Success in the future will belong to global companies with lean technology and best-in-class customer acquisition models. We believe the foundations of our network that we have built and our strategic initiatives position us to deliver on this vision. Our unique go-to-market strategy, with a recognizable brand and partnerships with top global merchants, PSPs and commerce platforms, enables us to introduce new consumers and merchants to our growing network effectively. By combining this acquisition engine with a proven approach to building consumer and merchant engagement and trust, we believe we are well positioned to expand our commerce and financial offerings, as an everyday spending and saving partner. KLARNA GROUP PLC100 Our strategic priorities to fuel our future growth include: •Klarna at Every Checkout. We seek to continue to grow the number of merchants on our network and enable their success. •Leverage our proven global go-to-market merchant strategy. We have a winning approach that has secured approximately 966 thousand merchants across 26 markets globally as of December 31, 2025. Our success spans multiple verticals, with an average of 48% of the top 100 merchants in each of the major markets we serve (which include the United States, the U.K., the Nordics, Germany, Austria, Belgium, Spain, France, Italy, the Netherlands and Switzerland) already on our network, reinforcing Klarna as a preferred partner for merchants worldwide. •Deepen our partnerships with PSPs. We plan to make Klarna available at more checkout points by PSP integration that will make Klarna a default payment method of our partners, like Stripe, Worldpay, Adyen, Nexi and J.P.Morgan Payments. •Expand into new verticals. We are a market leader in the Fashion, Apparel, and Accessories verticals in most of our current markets. Our recent expansion into additional verticals has demonstrated that we can replicate that success in verticals with higher transaction frequency such as Travel (e.g., Airbnb), on-demand Local Services (e.g., Uber, DoorDash and Instacart) and Subscription Payments (e.g., Spotify). We plan to continue to diversify the merchant verticals available on our network. •Partner with digital wallets—seamless integration with Apple Pay and Google Pay. Digital wallets like Apple Pay and Google Pay are essential distribution channels for Klarna. These platforms are widely adopted by consumers and frequently used at physical terminals that support contactless Near Field Communication (NFC) payments. By integrating Klarna with Apple Pay and Google Pay, our consumers can use Klarna’s payment solutions wherever Apple Pay or Google Pay is available online in the United States as well as, in the case of Apple Pay, in the U.K., without having the Klarna card. •Enter new geographical markets. We have a proven strategy for entering new markets, as demonstrated by our continued progress in the United States, where we consistently improved our operating results following our entry into that market in 2019 and started generating positive transaction margin dollars in 2023. We will continue to seek attractive new markets to enter. •Klarna Card in Every Wallet. •We envision Klarna becoming the default payment method for our millions of active Klarna consumers and future consumers. With the Klarna card, we are making it easier for consumers to enjoy our popular flexible payment options, both online and offline. This flexibility is helping us extend Klarna’s reach into the offline world, driving adoption of our payment options across a wide range of consumers, regardless of their credit score. •The Klarna card has proven to boost the average purchase frequency by 2023 by three times in Sweden and eight times in Germany since it was first introduced in those markets, allowing consumers to pay in ways that suit them best—whether using Pay in Full, Pay Later or Fair Financing. KLARNA GROUP PLC101 •Klarna Card GMV growth increased from 92% in Q3’25 to 209% in Q4’25, with December growth reaching 261%. The Card now represents 15% of total transactions, supported by both rapid user adoption and higher transaction intensity. Increased Use of Klarna Card •Next-Generation Digital Financial Services. As a digital-first neobank, Klarna’s services are automated, insight-driven and designed to be transparent, fair and intuitive. We partner with PSPs, traditional banks, card networks, commerce enablers, technology partners, merchants and shipping and return logistics providers to improve the commerce experience for our consumers. This breadth of our ecosystem, coupled with our extensive portfolio of licenses and regulatory authorizations, allows us to provide consumer services that others cannot, such as instant refunds, cashback, real-time debit or order and return tracking. These features save consumers time and money and effortlessly put them in control of their finances. •Your New Lifestyle Partner: Where Smart Spending Begins. Traditional credit cards often entice high spending consumers with the allure of concierge services that promise life-changing benefits but frequently fail to deliver. We are redefining lifestyle services by becoming the genuine partner that truly enhances the everyday shopping experiences of all of our consumers. •Leveraging our unique insights from proprietary data, including first-party, SKU-level data, we offer personalized services that act as a true utility for consumers. This deep understanding enables us to tailor individualized offers for goods and services today and, in the future, we expect to expand into personalized financial services. By delivering highly relevant recommendations and exclusive deals, we not only enrich the consumer experience but also attract a growing number of merchants eager to advertise with us, recognizing the value of reaching engaged and satisfied customers. •Our AI-powered personal assistant is at the heart of this transformation, making the consumer journey both effortless and joyful. It anticipates needs, simplifies decision-making and adds delight to every interaction. •Consumers gain access to Klarna’s subscription tiers, allowing consumers to earn cashback and unlock additional benefits such as exclusive deals, travel protection and travel perks KLARNA GROUP PLC102 (including airport lounge access on higher tiers), and bundled digital subscriptions (e.g., Headspace, The Times and Condé Nast titles), designed to deliver greater convenience, savings, and an enhanced everyday experience. •AI-Powered Efficiency. We are a global centralized technology platform powered by AI. AI allows us to reduce external vendor expenses, increase internal productivity and better manage global compliance, regulation and banking operations centrally with fewer employees and more consistency. AI allows us to drive scale efficiencies greater than what was previously thought possible, allowing our deep talent pool to focus on innovation and growth. Our Solutions and Products We provide consumers and merchants a number of solutions, including payment, advertising and digital retail banking, through several channels. We offer several commerce features. Payment Solutions We provide a broad range of payment options that allow consumers to purchase how they choose, both online and offline. •Pay in Full. Pay in Full instantly settles purchases at the time of the transaction. Payment methods vary by market and may include direct debit from bank accounts, credit and debit card or digital wallets. In a Pay in Full transaction, we charge the merchant a fee after a successful transaction and the consumer pays no fee. In the fourth quarter of 2025, Pay in Full represented 10% of our GMV. •Pay Later. Pay Later enables consumers to purchase goods or services at the time of the transaction and pay the full amount at a later date. The most common version of Pay Later is Pay in 30, where the consumer pays 30 days after purchase. We also offer Pay Later as Pay in “N,” which allows the consumer to split their purchase into multiple installments which begin with a first payment when a purchase is initially made. The most common installment plans are Pay in 3, when installments are paid every 30 days, or Pay in 4, when installments are paid every 14 days. All of our Pay Later products are designed to be fee- and interest-free for the consumer. As a result, Klarna pays the merchant on behalf of the consumer when the order is placed and, generally, our consumers do not pay a fee or interest, with our fees being generated from merchants who offer the payment method. In a Pay Later transaction, we charge the merchant a fee after a successful transaction, and the consumer pays no interest on the deferred or installment payments unless the consumer chooses to utilize one of our payment flexibility features. In the fourth quarter of 2025, Pay Later represented 78% of our GMV. •Fair Financing. Fair Financing allows consumers to pay for their purchase over a longer duration, which ranges from three to 48 months. In a Fair Financing transaction, we charge the merchant a fee after a successful transaction. In addition, consumers typically pay interest for this payment method. In the fourth quarter of 2025, Fair Financing represented 12% of our GMV. Advertising Solutions Our commerce solutions have enabled us to build a highly differentiated advertising solution based on the close relationship we maintain with our consumers and merchants and the vast amounts of data they entrust to us. •Sponsored Search. Sponsored search allows merchants to reach consumers with intent. Sponsored search allows merchants to pay for premium placement of their products in consumers’ search results. KLARNA GROUP PLC103 •Affiliate Program. Merchants can partner with Klarna as a premium publisher to place shoppable inventory in front of high-intent Klarna consumers. For example, we offer a dedicated shelf, which is a full carousel in a consumer’s home feed for a merchant to promote various products. •Brand Ads. Brand ads are delivered via a programmatic advertising ecosystem (i.e., automated process of buying and selling digital advertising through the use of programmatic software) in which we partner with third-party providers that connect us to advertisers. As a publisher, Klarna offers access to ads inventory, which is the total amount of ad placements or ad space a publisher has available for advertisers to purchase, and consumer audiences, which drives awareness and traffic for advertisers. We also partner with third-party providers, such as advertising supply-side platforms, to scale beyond our current merchant reach. We generate advertising revenue from fees we collect from merchants using our advertising solutions. Typically, fees from sponsored search and brand ads solutions are charged using a cost-per-click and cost-per-mille (i.e., cost per thousand impressions) fee rate, respectively. Fees from our affiliate program are based on a cost-per-action or a cost-per-click rate or the merchant pays a flat fee for the entire campaign. In the year ended December 31, 2025, we recognized advertising revenue of $190 million in the aggregate from our affiliated program, sponsored search and brand ads solutions. Digital Retail Banking Solutions •Klarna Balance. Consumers can hold a positive monetary balance with Klarna by using our Klarna balance solution. They can also add money and withdraw money, settle existing Klarna debt or receive refunds or cashback (currently, up to 10% when shopping using the Klarna app). Klarna balance also offers additional features in select markets, such as flex accounts, which are sub- accounts that allow consumers to compartmentalize money and create savings goals, and fixed-term accounts, which are savings accounts at market-leading higher interest rates. •Deposit and Savings Accounts. Consumers in geographies where we offer deposit accounts can hold a variety of accounts, including fixed-term deposits, savings and bank accounts. We focus on providing secure, easy-to-access and cost-effective savings solutions. •Financial Insights. Consumers can manage their personal finances through the Klarna app. We offer insights into spending patterns and behavior over time. For example, consumers can view reports that show spending by category, and analyze their spending activities in comparison to their saving activities. Based on these insights, consumers can set a monthly budget and a personal limit on their Klarna spending to help them stay within their budget. We do not charge fees for utilizing our digital retail banking solutions. However, we may earn interest income on consumer funds deposited with us. Channels Consumers and merchants connect to our network through a number of different channels. Our payment methods are offered in these channels. •Klarna Payments. Klarna payments allows merchants to add Klarna as a payment method to their online checkout, on our website or the Klarna app. Merchants can choose how they integrate with Klarna payments—directly through our API or via their preferred platform, such as one of our partner PSPs. •Klarna App. The Klarna app creates one holistic commerce destination experience for consumers. It also presents merchants with a single streamlined location to reach our consumers. Merchants can reach our consumers with shoppable inventory, stores that link to their own websites and relevant advertisements, all within the Klarna app. KLARNA GROUP PLC104 Consumers can also request a virtual one-time card within the Klarna app, browser extension or website or pay with our payment methods at any online or physical store that accepts Visa. Consumers check out with the merchant as if they were using any other Visa card and then receive a payment plan with Klarna, which they can manage on the Klarna app. With a one-time card, consumers can use our payment methods at almost any merchant. •Klarna Card. The Klarna card allows consumers to access our payment methods in any physical store or online setting without the need for merchant integration to the Klarna network. The Klarna card differs from a traditional credit card in that it allows consumers to choose any of Klarna’s payment methods at the time of each transaction, offering differentiated flexibility and choice. The Klarna card has no annual or other ownership fee and customers are not charged interest on their purchases made with our Pay Later payment option or foreign exchange fees when using the Klarna card abroad. The Klarna card is available virtually and physically, and can be used with Google Pay and Apple Pay. The Klarna card is available today in Sweden, Germany, the U.K. and the United States. •Apple Pay and Google Pay. Apple Pay users in the United States and the U.K. have access to Klarna’s flexible payment options, including Pay Later and Fair Financing, while Google Pay users can access them in the United States. This integration makes our solutions even more accessible to consumers as they now can make purchases using Klarna directly on an iPhone, iPad or another mobile device, in the Klarna app and online with Apple Pay or Google Pay. •Klarna In-Store. Klarna in-store provides a seamless, flexible and consistent payment experience designed for physical stores. All of the payment methods available online can be offered in-store. Membership Program We launched a membership program in conjunction with the Klarna Card offering. During the Klarna Card sign-up process, consumers can choose between four membership tiers—Core, Plus, Premium, or Max. Benefits vary by plan and may include up to 2% cashback on debit purchases, access to selected third-party subscriptions, travel and purchase protection, exclusive offers, and dedicated customer support. Depending on usage and tier, the combined value of these benefits can be significant over the course of a year. As consumers increasingly seek flexible and cost-effective ways to manage their spending, Klarna’s membership model is designed to meet these evolving preferences by combining everyday payment functionality with added value services in a single offering. Commerce Features We offer multiple commerce features for consumers and merchants throughout the commerce journey. •Personalized Inspiration. We present consumers with an AI-powered shopping feed organized into sections filled with merchant-specific stores or products categorized by type, key trends or deals. Our shopping feed typically includes relevant advertisements as well. In 2024, this feature had an eight times higher click-through rate than ads displayed on a leading social media platform (based on our internal data and industry information collected by Filip Konecny), and from December 2023 to November 2024, generated more than 950 million impressions. We believe that personalized, curated advertising offerings are critical to effectively drive merchant success as more consumers become tired of intrusive and inefficient online ad campaigns. In 2024, 31.5% of internet users worldwide reported using an ad blocker, according to Backlinko. •Product Search and Price Comparison. Our search functionality is designed to assist consumers in finding the perfect product and address the many deficiencies of the on-site search experience of online retailers. According to Nosto, leading retailers surveyed across North America and the U.K. attribute approximately 39% of all traffic bouncing (i.e., shoppers leaving immediately) to poorly performing search KLARNA GROUP PLC105 features and shoppers failing to find relevant products. For example, 44% of shoppers reported that it took at least three minutes to find the product they need in the search results. In the search for the right product, sponsored adds are often prioritized over more helpful and relevant search results. For example, in the fourth quarter of 2021, shopping adds accounted for 59% of all clicks on Google paid advertising. Our consumers can search for specific products by using the search field or filters on the “Shop” tab of the Klarna app. Our search field or filters explore inventory across multiple merchants so that consumers are not confined to a single merchant’s inventory, allowing them to explore a wide range of products seamlessly. In December 2024, there were on average more than 91 million products available for search on the Klarna app every day, an increase of more than six times year over year. We also provide a price comparison tool that tracks the price history of any item, showing how the price of any item has fluctuated over time. This tool empowers consumers with the information they need to decide whether to buy now or wait for a better deal. We also provide rich product content within our search results, including reviews and shipping information. All of these features help consumers make informed purchase decisions. •Cashback Offers and Merchant Deals. We offer multiple ways for consumers to save while shopping on our network. We present cashback offers on certain purchases. We utilize cashback strategically to boost Klarna app shopping frequency and volume. Unlike many other cashback and loyalty programs, our cashback system is straightforward—all cashback earned is reflected on our consumer’s Klarna balance as cash that can be used at any of our merchant stores. We believe that this simplicity encourages our consumer to take advantage of more cashback offers, which contributes to the continued use of our Klarna balance solution. We also present merchant deals to help consumers take advantage of discounts. Deals are merchant- funded discounts that merchants offer our consumers to increase conversion and drive sales. Some of our past campaigns have led to an increase in incremental GMV by up to 200% during the promotional period and have also increased new customer acquisition for our merchants. •Wish Lists. Consumers can save products, buy again, create collections and continue shopping in a single convenient location with their wish list. These wish lists can be shared among consumers. Consumers creating wish lists provide us with strong intent signals about their future purchases. Wish lists are also an integral part of the modern e-commerce for many consumers. For example, as of the third quarter of 2023, approximately 39% of consumers used wish lists to save products they wanted to purchase later, compared to 12% of consumers, who used shopping carts for that purpose, according to Bizrate Insights. In 2024, every day there were on average approximately 31 thousand products saved on the Klarna app and approximately 10 thousand price drop alerts sent. In 2024, our consumers saved approximately 42.5 million items to their collections. •Loyalty Cards. We provide consumers a single place to store and access digital loyalty cards. This provides a streamlined way to collect points at consumers’ favorite stores. •Delivery Tracking, Returns and AI-Enabled Support. Delivery tracking allows consumers to track their orders in the Klarna app, which provides status updates and live tracking of package location. Tracking gives consumers increased visibility and control over their deliveries. Consumers can also begin a return and track return status on the Klarna app. We provide customer support, enabled by our AI capabilities, for the returns process and for a number of other consumer inquiries that may appear throughout the commerce journey as well. •Klarna Memberships. Klarna Memberships, our subscription program, allows consumers to choose between four membership tiers—Core, Plus, Premium, or Max. Benefits vary by plan and may include up to 2% cashback on debit purchases, access to selected third-party subscriptions, travel and purchase KLARNA GROUP PLC106 protection, exclusive offers, and dedicated customer support. Depending on usage and tier, the combined value of these benefits can be significant over the course of a year. •On-site Messaging. On-site messaging allows merchants to promote Klarna as a payment method during the consumers’ commerce journey. Merchants are able to inform shoppers about promotions, credit availability and the option to use Klarna as a payment method. This is a highly effective method to increase conversion. •Express Checkout. Express Checkout helps merchants increase conversion and minimize cart abandonment. Express Checkout pre-fills consumers’ details at checkout, creating a faster, more enjoyable shopping experience. Express Checkout is available to all merchants who use Klarna Payments and can be placed at any step of the checkout journey, for example, at product pages or in the shopping cart. •Sign in with Klarna. Sign in with Klarna allows users to quickly sign up or sign in to a website or application using their existing Klarna account. This eliminates the need for passwords and offers a pre- filled checkout, which saves time for consumers and enhances conversion rates for merchants. •Klarna Merchant Portal. Klarna Merchant Portal provides merchants, including H&M and Sephora, valuable business intelligence and analytics. Merchant tools include daily sales overviews, summary high priority to-do lists, a view of both online and in-store sales, the ability to fulfill multiple orders on the go with a single click, summarized consumer disputes in one place, customized settlement reports to best suit merchants’ chosen accounting system and immediate answers via Klarna’s Help tool, which is available 24/7 via chat, phone or email. Consumer Credit Underwriting Some of our payment methods, including Pay Later and Fair Financing, involve extending consumer credit. Pay Later enables consumers to purchase goods or services at the time of the transaction and pay the full amount at a later date. Fair Financing allows consumers to pay for their purchase over a longer duration. We have designed our short-term credit products to serve a wide range of consumers, including those with varying credit histories and borrowing needs. Rather than targeting a specific credit segment, our underwriting processes aim to responsibly provide our credit products across a broad customer base. To that end, we operate an ML-enabled, high-frequency, large-scale, real-time underwriting process. We target smaller-ticket transactions with a risk framework that we believe offers a more limited, standardized credit range (compared to traditional multi-product banks) and minimizes counterparty and consumer credit exposure. Our goal is for our consumer credit portfolio to be resilient during volatile economic conditions. Historically, we have been able to improve our operating results and expand our transaction margin dollars following each new market launch. As markets mature, returning customers increase, leading to more frequent use. Higher frequency has driven increased scale, which improves the data we use to underwrite, reducing losses for both new and existing consumers. This approach has led to decreasing operating losses and allowed all 10 markets that we launched before 2020 to generate positive transaction margin dollars in year ended December 31, 2025. Consumer Credit Underwriting Process We undergo a five-step consumer credit underwriting process. The entire process is automated and takes place in real time as consumers navigate through checkout: (1)Identification. We seek to understand if the consumer is new to Klarna. Using a combination of internally built identification models, external data and common practice authentication tools, we match consumers’ inputs to our internal databases of existing consumers. KLARNA GROUP PLC107 (2)Policy Rules. We seek to understand what types of credit we can extend to the consumer. We maintain comprehensive credit and fraud policies, which determine product eligibility, such as total debt limits, restrictions against lending to consumers with a history of fraud and abuse, restrictions against lending to consumers in default and age restrictions. (3)Risk Scoring (ML-Based Model). We seek to understand the consumer’s creditworthiness. We assess the consumer’s probability of default based on transactional data, consumer data (internal purchase and payment history) and credit bureau data and utilize external factors such as merchant data. (4)Debt Limits and Real-Time Unit Economic Decisions. We seek to understand if lending to a consumer is aligned with our risk appetite. (5)Decision. We assess transaction fraud risk and issue a final credit decision separately for each transaction. The final credit decision is determined based on our credit risk model score, the consumer’s total Klarna debt relative to transaction limits and other defined rules such as income, affordability or certain high-risk merchant categories. Dynamic Underwriting Our underwriting model is dynamic, optimized for sustainable lending that puts the consumer first. This compares to the more traditional credit card-based underwriting that is typically done only once when a consumer signs up for a credit card and is designed to maximize profitability for the lender. Our underwriting is defined by: •Real-Time Consumer Data. We build real-time views of a consumer’s financial situation when underwriting, by combining credit bureau data, internal insights and open banking data. •Underwriting Decision for Every Transaction. For every purchase, we make a new real-time underwriting decision and fraud assessment. We utilize advanced proprietary decisioning capabilities that leverage our vast data sets, dynamic API calls, early abuse detection and pattern recognition. •Small First Purchase Capacity and Gradual Increases. New consumers start with a small spending capacity, which increases gradually subject to repayment history. Accounts are frozen if payments are missed. •Clear Repayment Terms That Promote the Ability to Repay. We provide consumers clear repayment terms that are fixed and short-term. We also do not allow consumers to borrow in cash or withdraw money from an ATM. As we process more transactions, our credit models continuously improve to achieve increased performance in credit modeling and scoring. The predictive accuracy of our models is demonstrated by a notable improvement in our Gini score over time. In the credit scoring context, a Gini score is a scale of predictive power from 0 to 1, with a higher Gini score indicating higher predictive power. For example, in the United States, our Gini score improved from 0.36 in 2019 to 0.78 in the fourth quarter of 2025, while also representing a significant advantage over the models used by credit bureaus such as VantageScore 4.0, which had a Gini score of 0.43 in the fourth quarter of 2025, according to our credit scoring model. As a result, our Gini score in the United States, where we expanded in 2019, approached a similar level to our Gini score in Germany, one of our most mature markets, showing the increased predictive power of our models as we mature our presence and operations in a new market. Our high credit modeling and scoring performance allows us to responsibly extend credit to consumers with different credit scores while maintaining the quality of our loan portfolio. For example, in the United States and the United Kingdom, our financing products are used by a broad customer base that includes consumers with both subprime and super prime credit scores (as defined by the VantageScore 4.0 and Experian methodology commonly used in those markets, respectively). At the same time, our loan- KLARNA GROUP PLC108 weighted average consumer credit score in those markets in 2025 qualified as near-prime and prime, respectively. We also expect that, as we continue to expand our consumer base and further mature our operations in these markets, in particular the United States, the weighted average credit score of our consumers will further increase, in line with our most mature markets, including Sweden and Germany. In addition, our geographical diversification adds further resilience to our underwriting model as our loan portfolio is not heavily concentrated in a single market. For example, in the year ended December 31, 2025, Germany and the United States represented 32% and 21% of our GMV (which is closely tied to our loan portfolio distribution), respectively, with Sweden and the United Kingdom accounting for 13% and 12%, respectively. ________________ •Gini score indicates the model’s discriminatory power, namely, the model’s effectiveness in differentiating between “bad” borrowers, who will default in the future, and “good” borrowers, who will not default in the future. Our Gini score above was calculated for our Pay in 4 payment option (for the United States) and our Pay Later payment option (for Germany). •*U.S. Benchmark Gini is calculated using the VantageScore 4.0 model. German Benchmark Gini is calculated using the Schufa Bank 3.0 model. Effectively Steering Credit Risk In addition to our dynamic credit underwriting model, the diversification of our credit portfolio and the short duration of loans on our balance sheet contribute to our low credit loss rates as compared to the industry averages in the United States. KLARNA GROUP PLC109 We maintain a diversified portfolio of loans with principal balances across multiple industries and markets. As of December 31, 2025, we made our financing solutions available in 26 markets to our 118 million active Klarna consumers. This results in diversification across markets and merchant segments. The charts below show the breakdown of our GMV across various markets and verticals which contributes to the diversification of our revenue sources and loan portfolio. Our average order value (“AOV”) in the year ended December 31, 2025 was 103, our average balance per active Klarna consumer was $124 (Pay in Full: $0; Pay Later: $120 Fair Financing: $393). Our consumers typically purchase low-value, everyday items with our financing products, which contributes to our ability to manage credit risk given limited potential losses upon consumer defaults. During in the year ended December 31, 2025, 86% of our orders were $500 or less. Distribution of Consumers per Average Order Value in the Year ended December 31, 2025 KLARNA GROUP PLC110 We also leverage our short-duration balance sheet to quickly react to market changes. In the year ended December 31, 2025, based on contractual repayment schedules, the weighted average life (WAL) of our loans was approximately 39 days (27 days for Pay Later and 109 days for Fair Financing), compared to a typical loan duration of more than five years for a typical Nordic bank in 2024 (according to publicly available information) and an average of 2.9 years for a typical U.S. personal bank loan in 2022 (according to the U.S. Federal Reserve). In the year ended December 31, 2025, 84% of our loans were three months or less in duration, and 97% of them were one year or less. This allows us to swiftly adjust our portfolio risk profile. For example, if we decided to implement changes in the underwriting process, as of December 31, 2025, it would only take two months to renew 79% of our loan portfolio. Time to Renewal At the start of the COVID-19 pandemic and before the effects of the pandemic on the e-commerce industry were known, we implemented changes to our underwriting process in light of the expected macroeconomic distress. The first changes were adopted in just three days and were designed to lower our risk exposure with respect to new consumers in the United States, a market that we entered a year before. As a result of those changes, from March to April 2020, our approval rates for the Pay in 4 payment solution in the United States decreased by 10 percentage points from 67% to 57%. The results were immediate—our credit losses for our March 2020 purchase cohort to our April 2020 purchase cohort decreased by 60%, despite record high unemployment rates. We implemented similar changes in the U.K., Germany, the Nordics and the Netherlands. As a result, our credit losses in those markets in 2020 decreased by 20% year over year while our GMV decreased by just 3%. Our Technology Our global network is built on an AI-powered single cloud native platform. Our technology platform connects to the many constituents of our network—including consumers, merchants, PSPs, affiliate networks, credit bureaus and banks—to create a seamless user experience. Our platform uses our data advantage to deliver streamlined payments, intelligent underwriting, card issuing, open banking, targeted ads and personalized discovery. Key attributes of our technology platform include the following: KLARNA GROUP PLC111 Fraud Detection and Monitoring Capabilities We continuously work to prevent, identify and mitigate fraudulent activity. We use a new class of ML models purpose-built to detect credit abuse and digital fraud. Key inputs to our anti-fraud models include: •Proprietary Risk Engine. Our sophisticated in-house risk engine is built on data collected over the last 20 years of operations. When a consumer attempts a purchase, we check over 100 data points as well as third-party vendors for verification. •Identity Checks. We verify the identity and addresses of all our consumers against external data sources, as well as conduct credit checks. Where we do not have sufficient data or cannot receive sufficient confirmation from our independent data providers, we reject transactions. •Authentication Checks. We require further authentication checks for certain higher-risk purchases, where we request additional identity verification information using methods such as knowledge-based questioning. Merchant Risk Management Merchant counterparty risk primarily arises when we act as a payment facilitator and assume the responsibility of refunding consumers if the merchant does not fulfill its contract with the consumer. Our technology models leverage our access to significant amounts of data to help manage merchant risk. We monitor merchant exposures against daily risk limits and take action where appropriate to ensure exposures remain within established risk appetites. We can mitigate exposures through payment delays, rolling reserves, insurance and withholding payments. Ease of Integration Our technology platform is designed with flexibility and ease of use to make integration as effortless as possible. •API Connectivity. We provide a single API for merchants and partners to seamlessly connect to our network through various channels, such as Klarna Payments and Klarna In-store. For merchants, Klarna API provides a simple and flexible way to initialize, authorize and manage payments. Payment service providers can also use our API to enable Klarna as a payment method for multiple merchants. •Mobile Software Development Kit (“SDK”). Our mobile SDK is the best way to integrate Klarna’s payment methods into mobile apps. The mobile SDK offers a seamless and straightforward way to render individual payment methods through our various channels, including allowing consumers to pay with Klarna Payments, enabling on-site messaging or gaining access quickly to any number of our other merchant solutions. •Platform Partnerships. We maintain a robust partner ecosystem that helps merchants and other partners connect to our network. For example, we partner with other payment providers, e-commerce enablement platforms, in-store solution providers, marketing software providers and numerous other partners all of which help their own customers become Klarna merchants. Our global network thrives on data-driven insights. We aggregate and analyze significant volumes of data to optimize consumer and merchant experiences. Our technology platform is: •Flexible and Fast. ML decisions typically have less than one second latency, ensuring that our decision-making is quick and efficient for our consumers and merchants. •Reliable. In the year ended December 31, 2025, our technology platform had 99.979% uptime on average, ensuring that our networks’ services remained virtually always available. KLARNA GROUP PLC112 •Scalable. We continuously deploy new updates—with an average of over 80,000 new monthly deployments in the year ended December 31, 2025—to keep our platform at the forefront of innovation and user needs. Our single technology platform powers our business globally. Every product we bring to market can be launched globally with only limited local adaptations required. •Intuitive. The intuitive nature of our technology makes it easier to onboard new engineers. •Secure. Security is paramount. We aim to identify and patch known vulnerabilities within days of being identified, ensuring our integrations are not only fast but also secure and compliant with industry standards. Sales and Marketing We believe our global, universally recognized and well-loved brand is central to our sales and marketing strategy. Our brand is defined by culture, personalization, human connection and purpose, and we believe these characteristics allow it to resonate deeply with consumers. We use global multimedia campaigns and celebrity partnerships, such as with Snoop Dogg and Paris Hilton, to enhance our brand. We use additional marketing strategies to attract consumers and merchants, including Klarna app messaging, digital campaigns across search engines, social media presence across multiple platforms and promotions to incentivize consumers to increase their engagement on our network. Many merchants onboard the Klarna network using our self-serve capabilities. We also operate a global dedicated sales team that identifies, onboards and supports merchants, including those who advertise with us. Our powerful go-to-market strategy is complemented with partnerships that extend our reach to merchants, such as our deep integration with PSPs. For example, by making Klarna a default payment method at partners like Stripe, Adyen and Worldpay, we plan to make Klarna available at thousands of more merchants. Our Consumer and Merchant Support Customer Support Our customer support provides assistance to consumers at every step of their commerce journey, including help with purchases, account management, returns and merchant disputes. We provide instant support in any language, callback functionality through the Klarna app and live chat 24/7. AI is central to our efforts to continuously streamline customer support. Our AI assistant enhances the shopping and payment experience for our consumers by managing tasks like customer service, refunds, and returns. Since we launched our AI assistant in February 2024, it has achieved the same consumer satisfaction as human agents (according to internal consumer satisfaction surveys), resolved issues more accurately than human agents, reduced repeat inquiries by 25% (based on the number of repeat inquiries before and after the launch of our AI assistant) and resolved queries in two minutes compared to 12 minutes on average for human agents, as of September 2024, based on our service chat log data. We plan to continue to leverage our AI assistant to improve customer support. Merchant Support Our merchant support team assists merchants across our solutions, including onboarding and sales management help. We also offer merchants support in their interactions with consumers. For example, we help them market products and manage orders. Much of this Klarna-facilitated customer support is provided in the Klarna Merchant Portal. KLARNA GROUP PLC113 We also maintain a merchant-focused website with a list of responses for the most frequently asked questions to facilitate self-support. If merchants cannot find the information they seek on that website, we also offer multi-channel merchant support, including online chat as well as email and phone communication. Our Employees, Culture and Values Klarna’s culture is built on integrity, inclusivity and a commitment to our contributors, consumers and merchants. We take pride in our diverse team of employees who are located in offices across three continents and represent more than 100 nationalities. We strive to unlock the full potential of our employees to drive our success. Key attributes of working at Klarna include: •Supportive Team Dynamics. We promote positive and collaborative work environments. •Autonomy and Trust. We empower employees with independence and trust from their leads, which fosters role autonomy. •Impactful Work. We enable meaningful contributions from our team and encourage our employees to embrace challenging tasks for their own professional growth. •Recognition and Appreciation. We value employee contributions through recognition, awards and competitive compensation. •Supportive Leadership. We provide constructive feedback and clear expectations on development. •Clear Organizational Goals. We ensure a working environment of open dialogue, transparency and alignment with company objectives. Klarna’s culture is foundational to our success, driven by ethical values, inclusivity and employee well- being. We foster a supportive environment such that our employees thrive and significantly contribute to our achievements. As of December 31, 2025, 2024, and 2023, we had approximately 2,831, 3,422, and 4,352 full-time employees, respectively. The reduction in the number of full-time employees resulted from our strategic decision to reduce our overall headcount and drive operational efficiency by leveraging AI in our business and focusing on what really matters to our mission. We expect the number of employees to continue to decrease in future periods. As of December 31, 2025, over 1,500 of our positions, or approximately 53% of our entire organization, were engineering and data science positions. As of December 31, 2025, 1,166 and 530 of our employees in Sweden and Germany, respectively, were affiliated with labor unions and workers councils, respectively. We believe we have a constructive relationship with these organizations, and we have not experienced a material strike, work stoppage or disputes leading to any form of downtime. Competition The markets in which we operate are competitive and evolving rapidly, including with respect to consumer preferences and regulatory landscape. Our network connects consumers and merchants with comprehensive payment and advertising solutions across multiple markets in Europe, North America, Australia and New Zealand. KLARNA GROUP PLC114 As a result, depending on the market and a particular product or solution, our network may compete with any of the following: •Alternative payment methods, such as credit and debit cards—including those provided by card- issuing banks such as J.P. Morgan Chase, Citibank, Bank of America, HSBC, BNP Paribas, Barclays, Credit Agricole, Santander or American Express—and payment networks such as Affirm, Block or PayPal; •Traditional credit card networks, such as Visa, Mastercard, American Express, Capital One or Discover; •Neobanks, such as Revolut or NuBank; •“Buy now, pay later” solutions, such as AfterPay; and •E-commerce platforms with merchant enablement solutions, including advertising solutions, and integrated payment capabilities, such as Shopify, Amazon or Walmart. We believe the key competitive factors in our market include: •product and solution quality, for both consumers and merchants; •operating efficiency; •early adoption of AI; •engineering talent; •brand recognition; •security and trust; •our technology platform; and •our regulatory authorization portfolio. Our ability to innovate quickly further differentiates our platform from our competition. We believe we are positioned favorably when seeking to attract consumers because we provide consumers with more relevant and more convenient commerce experiences. We also compete for merchants and believe we provide merchants with better consumer acquisition, drive higher AOV and increase conversion, all while providing them the ability to control their brands. See “Risk Factors—Risks Related to Our Business and Industry—We operate in an industry of substantial and increasingly intense competition and may be unable to compete successfully.” Regulatory Environment We operate in a complex and rapidly evolving regulatory environment. As a result, we are subject to extensive regulation, both directly and indirectly (e.g., because of our relationships with bank partners, including originating bank partners such as WebBank, PSPs and card networks), in various jurisdictions, including the EU, the United States and the U.K. These laws and regulations cover multiple aspects of our business and operations and include, among others, banking, lending and financial services laws, consumer protection laws and privacy laws. They also impact our contractual relationships and obligations. We could become subject to additional legal and regulatory requirements following future changes to the applicable regulatory regime in jurisdictions in which we presently operate or may operate in the future and/or as a result of entering into new geographies or introducing new products, solutions or services. Such new requirements may require us to obtain additional regulatory approvals or licenses, KLARNA GROUP PLC115 such as for lending, brokering, servicing, collections or money transmission. Our bank partners, including originating bank partners, also operate in a highly regulated environment, and many laws and regulations that apply directly to our bank partners are directly and indirectly applicable to us as a counterparty or a service provider to our bank partners. Our payment options and consumer lending solutions are relatively novel and must comply with regulatory regimes applicable to consumer credit transactions, electronic money transactions and payment services. The regulatory framework applicable to us and our bank partners is evolving and uncertain as supranational bodies and national, federal and state governments consider the application of existing laws and adoption of new laws to regulate these structures. Certain banking laws and regulations apply to Klarna Bank, our banking subsidiary that holds a banking license in Sweden and passports it to other markets in the EEA, and its branches and subsidiaries, and may also apply to WebBank and our other bank partners, including those with whom we may seek to partner in the future. In addition, we continue to monitor the impact changes in U.S. government policies and priorities over the past 12 months will have on our business going forward. These include continued reforms of trade tariffs, immigration reform and changes at the agencies that regulate us or our banking partners, including the modification, rescission, withdrawal or changes to the approach and enforcement of, rules and guidance relating to business models like ours. We have policies and procedures in place to help us navigate the various and changing regulatory environments in which we operate, with the goal of managing the long-term viability and flexibility of our business model, including the manner in which we rely on bank partners. As such, we have established a business model pursuant to which we may originate loans directly through our network under our banking, lending, servicing and brokering licenses across various jurisdictions, and we may also purchase loans originated by our originating bank partners through our network. For more information on the risks relating to our regulatory environment, see “Risk Factors—Risks Related to Our Regulatory Environment.” Banking Regulation Regulatory capital and liquidity requirements We are subject to extensive capital adequacy and liquidity requirements, including, among others, the Basel III framework (including its recent reforms referred to as “Basel IV”), CRD V and CRR. CRD V and CRR are supplemented and complemented by a set of binding technical standards developed by the EBA. The capital adequacy framework specifies minimum amounts and types of capital—CET1 capital, AT1 capital and Tier 2 capital—that we need to maintain (Pillar I of the Basel III framework) sets forth rules for the internal capital adequacy process and internal liquidity adequacy assessment process (“ICLAAP”) as well as the supervisory review and evaluation process (Pillar II of the Basel III framework), and specifies regulatory disclosure requirements (Pillar III of the Basel III framework). The minimum amount of regulatory capital that we must hold is primarily determined based on our risk-weighted exposure amounts, which consist of on-balance sheet assets and off-balance sheet exposures weighted according to their associated risk. These requirements are supplemented by certain capital buffer requirements. . In addition to capital adequacy requirements, Klarna is subject to regulatory liquidity and funding requirements. These include, in particular, the Liquidity Coverage Ratio (“LCR”), which requires us to maintain a sufficient buffer of High Quality Liquid Assets to withstand a severe 30-day liquidity stress scenario, and the Net Stable Funding Ratio (“NSFR”), which is intended to ensure that our assets are funded with a sufficient amount of stable funding over a longer-term horizon. Capital adequacy requirements consist of the following components: •Pillar I minimum regulatory requirement for credit, credit valuation adjustments, market and operational risks; •Pillar II capital requirement for other risks not covered by Pillar I; KLARNA GROUP PLC116 •Capital conservation buffer of 2.50% of our risk-weighted exposure, designed to allow us to remain a going concern during times of severe financial distress; •Countercyclical capital buffer of 0.00 to 2.50% of our risk-weighted exposure, designed to allow us to build up capital during favorable business conditions, set quarterly by the SFSA; and •Any Pillar 2 requirement that may be communicated by supervisory authorities, intended to address risks that are not sufficiently covered by other regulatory capital requirements. In addition, we may be required to hold additional capital following internal capital stress tests conducted in accordance with the ICLAAP. Klarna is also subject to a capital requirement based on a leverage ratio, which is calculated based on total on-balance sheet assets and certain off-balance sheet exposures and does not take risk weights or capital buffer requirements into account. In addition, supervisory authorities periodically communicate a guidance, indicating their supervisory expectation for Klarna’s minimum capitalization. While this is not considered a binding requirement, failure to maintain capital equal to the Pillar 2 Guidance may trigger supervisory measures including increased capital requirements. The capital adequacy calculations are conducted for Klarna Bank and on a consolidated basis in accordance with applicable regulations. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Regulatory Capital Requirements” and Note 3 to our audited consolidated financial statements included elsewhere in this filing for more information on our capital adequacy analysis. We are obligated annually to prepare and publish risk management and capital adequacy reports in accordance with CRR and applicable regulations of the SFSA as well as the EBA guidelines. As a result of these requirements, we are required to monitor and manage our asset composition and balance sheet more generally to ensure that we continue to meet the minimum capital adequacy and liquidity requirements. Any failure to meet such requirements could result in one or more of our regulators placing limitations or conditions on our operations or growth initiatives, which could affect our brand and reputation as well as customer and investor confidence, increase our funding costs, or limit the ability of our regulated subsidiaries to distribute funds to us or our ability to pay dividends in the future on our ordinary shares. Bank recovery and resolution regime We are subject to the EU special resolution regime for credit institutions established by BRRD. BRRD requires EU credit institutions, including Klarna Bank, to prepare and maintain recovery plans specifying steps to be taken to restore the long-term viability of the credit institution in the event of a material deterioration of its financial condition. Credit institutions are also required under BRRD to meet the MREL Requirement determined by the relevant resolution authority, which in Sweden is the Swedish National Debt Office (Riksgäldskontoret), acting in accordance with the Resolution Act. BRRD also contains several resolution tools and powers which may be used by the applicable resolution authority under certain conditions. Such tools and powers (which may be used alone or in combination with others) include, among others, a general power to write down all or a portion of the principal amount of, or interest on, certain eligible liabilities, whether subordinated or unsubordinated, of the institution in resolution and/or to convert certain unsecured debt claims, including senior and subordinated notes, into other securities, which could then also be subject to the general bail-in provisions. This means that most of such institution’s debt is subject to bail-in provisions, except for certain classes of debt, such as certain deposits and secured liabilities. Under the Resolution Act, the resolution authority furthermore has the power to take control of the credit institution in distress and, for example, facilitate its sale to private investors or to a publicly controlled entity pending a private sector arrangement. Such actions of the relevant resolution authority can be taken without any prior shareholder (or other) approval. The MREL Requirement includes a minimum Pillar 1 subordination requirement for systemically important institutions. Because Klarna Bank is not classified as a systemically important institution by the Swedish National Debt Office, our MREL Requirement is currently lower than our applicable capital adequacy requirements. KLARNA GROUP PLC117 However, there can be no certainty that Klarna Bank will not be designated a systemically important institution in the future and thereby become subject to a higher MREL Requirement. As a result of these requirements, we must continuously monitor the growth and complexity of our products and services to ensure that we maintain the capability to prepare and execute a recovery plan in the event of a material deterioration of our financial condition. Regulatory Supervision Banking license requirements and regulatory supervision in Sweden Klarna Bank operates as a Swedish banking association and is licensed and supervised by the SFSA under the Swedish Banking Act. We utilize the EU-established passporting system for banks and financial services companies to provide banking or payment services in other EEA member states under our Swedish banking license, and as such, are subject to various requirements, including a requirement to maintain our banking license in Sweden. Our banking license has no expiration date. However, it can be revoked by the SFSA in certain circumstances. As a Swedish bank, we are required to provide payment services through general payment systems such as RIX, and accept deposits which, upon notice of withdrawal, are available to the depositor no later than 30 days following the notice. In addition, if we cease to carry out our banking activities for six consecutive months, the SFSA may issue a warning to us or even revoke our banking license. Further, to offer our services in the EEA under CRD IV, we must qualify as a credit institution. This, in turn, requires that we provide credit to the public. If we cease to accept deposits or provide credit to the public, we would no longer be entitled to offer our services in other EEA member states under our Swedish banking license. As a Swedish bank that operates in other EEA member states, we are subject to an expanding regulatory framework consisting of EU and Swedish laws, regulations and guidelines and, to a lesser extent, laws, regulations and guidelines adopted in other EEA member states in which we operate, including Germany, France, Spain and Denmark. Under the EEA’s principle of home state supervision, the SFSA is our main supervisory authority and as such is principally responsible for monitoring and enforcing our compliance with applicable regulatory requirements. The SFSA is also the head of our supervisory college that comprises our principal regulators in various geographies, including Germany and the U.K. The SFSA has a range of supervisory tools available to it for this purpose, including, but not limited to, meetings with management, desk-based reviews, making recommendations and on-site inspections, as well as the right to issue sanctions in the form of administrative fines in case of breaches of applicable laws and regulations. German regulatory supervision We offer financial services in Germany through Klarna Bank, German Branch. As a domestic branch of a Swedish EU credit institution, Klarna Bank, German Branch is generally subject to the supervision of the SFSA. Only certain provisions of the German Banking Act (Kreditwesengesetz or the “KWG”) apply to Klarna Bank, German Branch. This includes, for example, the requirement to review the creditworthiness of customers before entering into a consumer credit agreement, as well as certain reporting requirements or organizational requirements in relation to AML prevention. Similarly, any solutions, products and services that we offer in Germany on a cross-border basis are generally subject to Swedish laws, regulations and supervision, while solutions, products and services that we may offer locally in Germany, such as bank accounts, are subject to German laws, regulations and supervision. In addition, Klarna Bank, German Branch, as a domestic branch of an EU credit institution, is subject to the requirements of the GwG. Compliance with the GwG is supervised by BaFin. BaFin’s statutory objective is to ensure the proper functioning, stability and integrity of Germany’s financial system. As such, BaFin ensures that financial services, including payment or banking services, are provided in Germany only by appropriately licensed entities and that such entities comply with the GwG. Within its statutory mandate, BaFin is also obliged to protect the collective interests of consumers and, to that end, may issue orders to supervised institutions that are necessary to prevent or eliminate consumer rights’ abuses. KLARNA GROUP PLC118 U.K. regulatory supervision We offer certain financial products and services in the U.K. through our indirect subsidiary, KFSUK. In the past, we also provided financial services in the U.K. through a U.K. branch of Klarna Bank, which offered limited services under the U.K.’s supervised run-off regime until March 28, 2024. KFSUK is authorized and regulated by the FCA to conduct certain consumer credit activities, the issuance of electronic money under the Electronic Money Regulations 2011 and for the provision of payment services under the Payment Services Regulations 2017. The FCA has various statutory objectives that inform its operations and regulatory and enforcement priorities. The FCA’s strategic objective is to ensure that financial services markets function well. The FCA’s operational objectives are securing an appropriate degree of protection for consumers, protecting and enhancing the integrity of the U.K. financial system and promoting effective competition in the interests of consumers. The FCA is responsible for supervising KFSUK’s regulated consumer credit activities, electronic money issuance and payment services. In exercising its supervisory functions, the FCA follows a preemptive approach based on making forward- looking judgments about a firm’s business model, product strategy and operational efficacy. The FCA has a wide range of supervisory tools available to it and extensive powers to intervene in the affairs of authorized firms, including, but not limited to, meetings with management, desk-based reviews, making recommendations and on-site inspections. The FCA also has various disciplinary and enforcement powers, which include powers to (i) limit or withdraw a firm’s permissions, (ii) suspend individuals from performing certain functions, (iii) impose restitution orders and (iv) fine, censure or impose other sanctions on firms or individuals. Consumer Protection Laws EU consumer protection requirements We must comply with various EU consumer protection and payment services regimes pursuant to EU regulations that are directly applicable to us and EU directives that are implemented through national legislation, including, but not limited to, the following regulations and directives as well as any related delegated and implementing acts and guidelines from relevant EU and national authorities, each as amended through the date of this report: •PSD2, which governs transparency and information requirements for payment services as well as respective rights and obligations of PSPs in the provision of payment services; •Directive 2014/49/EU on deposit guarantee schemes, which establishes rules and procedures relating to the establishment and the functioning of deposit guarantee schemes, including a requirement for every credit institution to join a deposit guarantee scheme; •CCD1, which regulates consumer credit agreements, including information requirements, interest rate and fee limits and changes; •Regulation 2021/1230/EU on cross-border payments, which sets forth rules on cross-border payments and the transparency of currency conversion charges within the EU; •Directive 2011/83/EU on consumer rights, which sets forth uniform standards for distance and off- premises contracts, including information requirements and termination rights; •Directive 2002/65/EC concerning the distance marketing of consumer financial services, which regulates marketing of financial services by means of distance communication, including online or by email; •Directive 2005/29/EC concerning unfair business-to-consumer commercial practices in the internal market, which prohibits unfair commercial practices, including aggressive marketing techniques; KLARNA GROUP PLC119 •Directive 2009/110/EEC on the taking up, pursuit and prudential supervision of the business of electronic money institutions, which sets forth the rules for electronic money institutions, including providers of prepaid electronic payment products; and •Regulation (EU) 2015/751 on interchange fees for card-based payment transactions, which sets forth uniform technical and business requirements for card-based payment transactions carried out within the EU. We are also subject to regulations and general guidance issued by the Swedish supervisory authorities, including the SCA, the Swedish Resolution Authority and the SFSA. These authorities may undertake supervisory actions to assess our compliance with applicable consumer protection laws and regulations, including investigations, administrative fines and mandated changes to our operations, services and products, including the marketing and advertising thereof, as well as internal policies and procedures. The Swedish parliament has recently adopted a number of legislative proposals relating to the extension of consumer credit, with the goal of reducing over-indebtedness and strengthening consumer protection. The change, among others, introduce restrictions on repeated extensions of credit and caps on arrangement fees, lower interest rate caps and limit the tax deductibility of certain unsecured loans. We believe that these changes are consistent with our mission of providing fairer, more sustainable financing solutions to consumers and, as a result, do not expect that our operations will be materially and adversely affected by them. U.S. federal and state consumer protection requirements We are subject to various U.S. federal consumer protection regimes, both as a counterparty or a service provider to our bank partners, including our originating bank partners, and as a loan originator with respect to loans we originate directly, including, but not limited to, the following laws and regulations: •the Truth in Lending Act and Regulation Z promulgated thereunder, which require certain disclosures to consumers regarding the terms and conditions of their loans and credit transactions; •Section 5 of the Federal Trade Commission Act, which prohibits unfair and deceptive acts or practices in or affecting commerce, and Section 1031 of the Dodd-Frank Act, which prohibits unfair, deceptive or abusive acts or practices in connection with any consumer financial product or service; •the ECOA and Regulation B promulgated thereunder, which prohibit creditors from discriminating against credit applicants on the basis of race, color, sex, age, religion, national origin, marital status, the fact that all or part of the applicant’s income derives from any public assistance program or the fact that the applicant has in good faith exercised any right under the Federal Consumer Credit Protection Act or any applicable state law. In addition to acts of intentional discrimination, the ECOA has been interpreted by federal regulators and courts to prohibit creditors from maintaining policies and practices that, while facially neutral, result in a disproportionate, adverse impact on applicants or consumers in protected groups. For this reason, a loan decisioning or credit scoring model must not use any variable that may be deemed a proxy for a protected characteristic such as race, ethnicity or sex. Further, the variables used in the model must be supported by documented, legitimate business justifications where the model results in a disproportionate effect on applicants or consumers of certain demographic groups; •the Fair Credit Reporting Act, as amended by the Fair and Accurate Credit Transactions Act, and Regulation V promulgated thereunder, which promote the accuracy, fairness and privacy of information in the files of consumer reporting agencies; •the Fair Debt Collection Practices Act, Regulation F promulgated thereunder and the Telephone Consumer Protection Act, each of which provide guidelines and limitations concerning the conduct of certain creditors and third-party debt collectors in connection with the collection of consumer debts; KLARNA GROUP PLC120 •the Gramm-Leach-Bliley Act, which includes limitations on use and disclosure of nonpublic personal information about a consumer by a financial institution; •the U.S. Bankruptcy Code, which limits the extent to which creditors may seek to enforce debts against parties who have filed for bankruptcy protection; •the Federal Trade Commission’s Holder in Due Course Rule (the “Holder Rule”), and equivalent state laws, which require holders of a consumer credit contract to include the required notice and become subject to all claims and defenses that a borrower could assert against the seller of goods or services; •the Electronic Fund Transfer Act and Regulation E promulgated thereunder, which provide disclosure requirements, guidelines and restrictions on the electronic transfer of funds from consumers’ bank accounts; •the Electronic Signatures in Global and National Commerce Act and similar state laws, particularly the Uniform Electronic Transactions Act, which authorize the creation of legally binding and enforceable agreements utilizing electronic records and signatures; •the Military Lending Act and similar state laws, which provide disclosure requirements, interest rate limitations, substantive conduct obligations and prohibitions on certain behavior relating to loans made to covered borrowers, which include both servicemembers and their dependents; and •the Servicemembers Civil Relief Act and similar state laws, which allow active-duty military members to suspend or postpone certain civil obligations so that the military member can devote his or her full attention to military duties. In addition, many states and local jurisdictions have consumer protection laws analogous to, or in addition to, the federal laws listed above, such as usury laws, state debt collection practices laws and requirements regarding loan disclosures and terms, credit discrimination, credit reporting, money transmission, recordkeeping, the arranging of loans made by third parties and unfair or deceptive business practices. We are also subject to regulation by the CFPB under the Dodd-Frank Act and other acts described herein, and we are subject to the CFPB’s enforcement authority with respect to our compliance with these requirements as a facilitator, servicer, originator or acquirer of consumer credit and provider of consumer financial services. As such, the CFPB have in the past requested, and may in the future request, reports or other information concerning our organization, business conduct, markets and activities. In addition, depending on regulatory changes and further development of our network and the products and services that we offer through it, the CFPB may begin to supervise us in the future. The CFPB’s supervision will enable it, among other things, to conduct comprehensive and rigorous examinations to assess our compliance with consumer financial protection laws, which could result in investigations, enforcement actions, regulatory fines and mandated changes to our business products, policies and procedures. The CFPB is authorized to pursue administrative inquiries, proceedings or litigation for violations of federal consumer financial laws. In these proceedings, the CFPB can obtain cease-and-desist orders (which can include orders for restitution or rescission of contracts, as well as other kinds of affirmative relief) and monetary penalties. Also, where a company has violated Title X of the Dodd-Frank Act or CFPB regulations under Title X, the Dodd-Frank Act empowers state attorneys general and state regulators to bring civil actions for the kind of cease-and-desist orders available to the CFPB (but not for civil penalties). In May 2022, the CFPB issued an Interpretive Rule to clarify the authority of states to enforce federal consumer financial protection laws under the Consumer Financial Protection Act of 2010 (the “CFPA”). Specifically, the CFPB confirmed that states can enforce the CFPA, including the provision making it unlawful for covered persons or service providers to violate any provision of federal consumer financial protection law; the enforcement authority of states under section 1042 of the CFPA is generally not subject to certain limits applicable to the CFPB’s enforcement authority, such that states may be able to bring actions against a broader cross-section of companies than the CFPB; and state attorneys general KLARNA GROUP PLC121 and regulators may bring (or continue to pursue) actions under their CFPA authority even if the CFPB is pursuing a concurrent action against the same entity. The CFPB subsequently rescinded this interpretive rule in May 2025. Nevertheless, if the CFPB or one or more state officials find that we have violated the foregoing laws, they could exercise their enforcement powers in ways that could adversely affect our business. In addition, the Biden administration brought an increased focus on enforcement of federal consumer protection laws and appointed consumer-oriented regulators at federal agencies such as the CFPB, the OCC and the FDIC. It is possible that such regulators could promulgate rulemakings, initiate inquiries and bring enforcement actions that ultimately materially impact our business and the business of our originating bank partners. These regulators may augment requirements that apply to loans facilitated by our network or impose new programs and restrictions and could otherwise revise or create new regulatory requirements that apply to us or our bank partners, including our originating bank partners. For example, in May 2024, the CFPB issued an interpretive rule that extended certain provisions of Subpart B and Subpart G of Regulation Z to “lenders that issue digital user accounts used to access credit, including to those lenders that market loans as ‘Buy Now, Pay Later,’” which prompted us to alter the manner and format in which we provide certain lending disclosures to borrowers. The CFPB subsequently rescinded this interpretive rule in May 2025 and further announced that it would not prioritize enforcement actions under it. Further, we are subject to the enforcement authority of other federal, state and local governmental and regulatory authorities in analogous or similar ways as discussed above. We closely review any new or modified products and services in light of applicable consumer protection laws. To that end, we have developed policies and procedures designed to assist in this process. However, no assurance can be given that our compliance policies and procedures will be effective in all instances, if at all. We have in the past been, and may in the future be, subject to findings of breach of consumer protection requirements. National, State and Local Licensing Requirements We must observe applicable laws and regulations in each individual country, state, territory and province in which we operate. Certain states, provinces and localities have adopted laws regulating and requiring licensing, registration, notice filing or other approval by parties that engage in certain activity relating to consumer finance transactions, including facilitating and assisting such transactions in certain circumstances, debt collection or servicing and/or purchasing or selling consumer loans. We have engaged in discussions with regulatory agencies in various jurisdictions regarding requirements to obtain licenses from those agencies or register in such jurisdictions, including in countries or states where we have determined that we are not required to obtain such a license or be registered with the state, and we may have similar such discussions in future. In addition, we are subject to licensing requirements, supervision and examination by applicable regulatory authorities in certain jurisdictions in which we operate, and we have obtained or are in the process of obtaining necessary licenses in these jurisdictions. Licensing statutes vary from country to country and state to state and prescribe different requirements, including, but not limited to, restrictions on loan origination and servicing practices (including limits on the type, amount and manner of fees), solicitation activities, interest rate limits, disclosure requirements, periodic examination requirements, surety bond and minimum specified net worth requirements, periodic financial reporting requirements, notification requirements for changes in principal officers, share ownership or corporate control, restrictions on advertising and requirements that loan forms be submitted for review, among others. The application of country, state and provincial licensing requirements to our business model is not always clear, and while we believe that as of the date of this report we are in compliance with material applicable licensing, registration or other regulatory requirements, regulators may request or require that we obtain (or we may independently determine that we should obtain) additional Authorizations in the future. There can be no assurance that we will be able to obtain them in a timely manner, if at all. KLARNA GROUP PLC122 U.S. Federal and State Interest Rate Requirements and Lending Laws We and our originating bank partners may also be subject to federal and state law interest rate limitations on personal consumer loans in the United States. Certain jurisdictions have no such limitations, while other jurisdictions impose a maximum rate on such loans. In addition, the applicable maximum interest rate may vary based on the location of the transaction parties, the nature of the transaction, the status of the borrower (e.g., military service member) and other factors. If any of the loans facilitated through our network were found to impose rates higher than the maximum rate for the applicable jurisdiction, such loans could be in violation of interest limitation laws, which could result in such loans being unenforceable, or which may reduce or extinguish the principal and/or interest (paid or to be paid) on such loans, or result in fees, damages and penalties to us or our originating bank partners. Through our partnerships with our originating bank partners—including WebBank, an FDIC-insured Utah state-chartered industrial bank through whom a portion of the loans facilitated through our network in the United States are originated—our model automates the underwriting process in accordance with our originating bank partners’ underwriting policies, which only our originating bank partners may change and which we must follow in reviewing, approving and administering loans facilitated by our network. When originating loans through our network, our originating bank partners may contract to charge interest based on authority granted to state-chartered, FDIC-insured banks under U.S. federal law and based upon legal principles detailed in the FDIC’s final rule relating to the Federal Interest Rate Authority. Section 27 allows an FDIC-insured bank such as our originating bank partners to charge interest to consumers on a nationwide basis based on the rates allowed by the state where the loan is made. When a borrower is charged interest, in most cases, we rely on our originating bank partners’ authority under applicable law to establish interest rates and charge interest on the loans our originating bank partners originate through our network. However, if the legal structure underlying our relationship with our originating bank partners was successfully challenged, we may be found to be in violation of state licensing requirements and state laws regulating interest rates and other aspects of consumer lending. In the event of such a challenge or if our arrangements with our originating bank partners were to change or end for any reason, we would need to rely on an alternative bank relationship, find an alternative bank partner, rely on existing state licenses, obtain new state licenses, pursue a federal or state bank charter and/or be subject to the interest rate limitations and loan product requirement limitations of certain states. There are three examples of claims that have been raised that could each, separately or jointly, result in this outcome in some or all states. •The first of these is a challenge to the FDIC’s codification of the “valid when made” doctrine via its final rule relating to the Federal Interest Rate Authority. Under this rulemaking by the FDIC, the interest rate applicable to a loan originated by a state-chartered bank regulated by the FDIC (such as our originating bank partners) on the date of origination will carry with the loan irrespective of ownership (i.e., the interest rate is “valid when made”). The OCC has issued a similar rule with respect to loans originated by national banks. Both rules were unsuccessfully challenged shortly after their adoption in separate suits by state attorneys general who alleged that they had statutory and/or administrative procedural deficiencies. However, it is uncertain whether these or other state attorneys general will file similar suits with respect to any other rule regarding the permissibility of interest rates by the FDIC, the OCC or other regulators. It is also unclear whether these rules will be given effect by courts and regulators in a manner that actually mitigates risks relating to state interest rate limits and related risks to us, our originating bank partners, any other program participant or the loans facilitated through our network. •The second challenge relates to which entity is the “true lender” for a loan. There have been both private litigation and governmental enforcement actions seeking to recharacterize a lending transaction, claiming that the named lender was not the true lender, and that instead another entity was the true lender or the de facto lender. These claims are traditionally based on state lending laws, other statutory provisions or state common law through which a private litigant or governmental agency could seek to license, regulate or prohibit the activities of the entity they consider the true lender or de facto lender. KLARNA GROUP PLC123 •The FDIC and OCC rules addressing the “valid when made” doctrine underscore that they do not address the question of whether a bank within each agency’s respective jurisdiction is a real party in interest with respect to a loan or has an economic interest in the loan under state law, i.e., which entity is the “true lender.” Following a rulemaking during the first Trump administration under which the OCC promulgated a true lender rule, President Biden signed a Congressional Review Act resolution to repeal the OCC’s rule, as a result of which the OCC may not issue any substantially similar rule without subsequent statutory authorization. •The third challenge relates to the Depository Institutions Deregulation and Monetary Control Act of 1980 (“DIDMCA”), which preempts state interest rate caps and permits state-chartered banks to lend up to the federal limit or the state limit where the bank is located, whichever is greater. States are permitted to opt out of the interest rate preemption provision of DIDMCA with respect to loans “made in” the opt-out state. Multiple jurisdictions have introduced or adopted legislation to opt out of this provision of DIDMCA with the intention of enforcing lower in-state interest rate caps against out-of-state bank lenders. In NAIB, et al. v. Weiser, et al., trade groups sought and received a preliminary injunction against one such state, Colorado, by arguing that loans are not “made in” Colorado for purposes of the DIDMCA if the lender is located in another state. Any litigation or enforcement action with respect to a loan facilitated through our network, whether based on a challenge to the true lender, the legal interest rate or another theory, against us, any successor servicer, prior owners or subsequent transferees of such loans (including our originating bank partners) could subject them to claims for damages, disgorgement or other penalties or remedies. While most enforcement and litigation has historically targeted high-interest rate programs (i.e., > 100% APR), which we consider to be predatory and contrary to our mission of providing fairer, more sustainable financing solutions to our consumers, we nonetheless could be subject to litigation, whether private or governmental, or administrative actions regarding the above claims. An adverse determination could prevent us from collecting on our loans at the interest rates contracted for or result in licensing violations, our loans being found to be unenforceable or void, the reduction of interest or principal or other penalties or damages. Third-party purchasers of loans facilitated through our network may also be subject to scrutiny or similar litigation, whether based on the inability to rely upon the “valid when made” doctrine or because a party other than the originating bank is deemed the true lender. In addition, certain states have adopted or are considering adopting laws that subject us to the state’s lending licensing and/or maximum interest rate requirements if we have a predominant economic interest in the loan or other material relationship with the borrower or loan, even if such loans are originated by our originating bank partners. Where such circumstances exist, we must comply with applicable state licensing requirements, interest rate limitations and other laws with respect to those loans. We maintain various Authorizations pertaining to brokering, servicing, collections and lending to operate across U.S. states, and we believe that, as of the date of this report, we are in compliance with all material applicable licensing, registration or other regulatory requirements necessary to conduct these activities. In connection with these Authorizations, various state regulators have supervisory authority over us, with the primary objective of protecting consumers, but also various other objectives, such as enhancing the integrity of the financial system, increasing access to financial services and promoting effective competition in the marketplace. Money Transmission Through our indirect subsidiary, Klarna Inc., we hold licenses to operate as a money transmitter (or its equivalent) in certain states and jurisdictions of the United States, and we believe that, as of the date of this report, we are in compliance with all material applicable licensing, registration or other regulatory requirements necessary to conduct these activities. Klarna Inc. is actively seeking additional licenses and certifications of this nature. As a licensed money transmitter, we are subject to net worth requirements, bonding requirements, liquidity requirements, restrictions on our investment of customer funds, reporting requirements, AML compliance requirements and cybersecurity requirements, among others. We may KLARNA GROUP PLC124 expand our stored value product offerings in reliance on our money transmitter licenses, which stored value products generally do not have the benefit of FDIC deposit insurance or other insurance. As such, state money transmission regulators may place increased focus on our net worth, liquidity and other capital adequacy requirements. In connection with our money transmitter licenses, various state regulators have supervisory authority over us, with the primary objective of protecting consumers, but also various other objectives, such as enhancing the integrity of the financial system, increasing access to financial services and promoting effective competition in the marketplace. As a result, we have developed policies, procedures and controls designed to maintain compliance with applicable licensing requirements and to ensure that the licenses and various certifications that we hold remain valid and appropriately reflect the current scope of our products and services offered in various jurisdictions. However, no assurances can be given that our compliance policies and procedures will be effective in all instances, if at all. AML, Sanctions and Anti-corruption Requirements Klarna is subject to international anti-money laundering and counter-terrorist financing (AML/CFT) laws and regulations and is required to implement measures to prevent money laundering, terrorist financing, and other illicit financial activities in the jurisdictions in which we operate. In accordance with applicable legal and regulatory requirements, we have established and operate a risk-based, group-wide AML/CFT compliance framework designed to mitigate the risk that our operations are misused for financial crime. The framework is supported by governance arrangements intended to promote compliance with applicable laws and regulatory expectations. Our AML/CFT framework includes, among other things, measures to monitor for and report suspicious activity, comply with relevant transaction reporting obligations, and meet applicable recordkeeping requirements. The framework incorporates policies, procedures, reporting protocols, and internal controls designed to identify, assess, manage, and mitigate financial crime risks and is subject to ongoing review and enhancement to address evolving risks, regulatory developments, and business changes. We apply risk-based due diligence processes for customers, vendors, and other third parties, including screening of products and services offered through our network. In addition, Klarna is subject to economic sanctions laws and regulations across multiple jurisdictions, including those of the European Union (and its member states), the United Kingdom, the United States, and other applicable international regimes. We maintain a risk-based sanctions compliance framework designed to promote compliance with applicable sanctions and export control requirements and to prevent our network from being used to facilitate prohibited activities involving sanctioned countries, regions, individuals, or entities. Klarna is also subject to anti-corruption and anti-bribery laws and regulations in the jurisdictions in which we operate. These laws generally prohibit improper payments or other corrupt practices involving public officials, private counterparties, or third parties. We maintain policies, procedures, and controls designed to promote compliance with applicable anti-corruption and anti-bribery requirements and to mitigate related risks across our operations and third-party relationships. While we believe our compliance frameworks are appropriately designed and implemented, no assurance can be given that these policies, procedures, and controls will be effective in all circumstances. Trust, integrity, and responsible business conduct are fundamental to Klarna’s long-term success and to the value it creates for customers, society, and shareholders. As a regulated financial institution, Klarna recognises that preventing financial crime is an essential part of its responsibility to protect the integrity of the financial system and to support sustainable economic activity. KLARNA GROUP PLC125 Klarna maintains a low tolerance for financial crime risk and is committed to preventing the misuse of its products and services for money laundering, terrorist financing, sanctions evasion, corruption, or other illicit activities. The company applies a risk-based financial crime framework that is embedded in its governance and enterprise risk management structures, with oversight by senior management and the Board. The framework is designed to be scalable and resilient, supporting Klarna’s growth while ensuring that risks are identified, understood, and managed in line with regulatory expectations and the company’s risk appetite. A strong culture of ethics and compliance underpins Klarna’s approach. The company invests in skilled teams, data-driven controls, and continuous improvement of systems and processes to strengthen financial crime prevention capabilities over time. Klarna does not engage in activities or relationships where financial crime risks cannot be adequately understood, monitored, or mitigated. Financial crime risk is an inherent aspect of financial services and cannot be fully eliminated. Klarna’s approach is therefore focused on managing these risks responsibly, proportionately, and transparently. By doing so, Klarna contributes to a safer and more trustworthy financial ecosystem, supports regulatory confidence, and reinforces the foundations for long-term, sustainable value creation. Data Privacy and Cybersecurity In the course of our operations, we collect, use, store, disclose, transfer and otherwise process a wide variety of personal information. Accordingly, we are subject to a number of U.S. federal, state and foreign laws and regulations and industry standards regarding data privacy and cybersecurity. These requirements, and their application, interpretation and amendment, are constantly evolving. For example, at the U.S. federal level, we are subject to, among other laws and regulations, the rules and regulations promulgated under the authority of the Federal Trade Commission (which has the authority to regulate and enforce against unfair or deceptive acts or practices in or affecting commerce, including acts and practices with respect to data privacy and cybersecurity). Additionally, we are subject to certain data privacy and cybersecurity laws and regulations that regulate financial entities in the United States. For example, we are considered a “financial institution” or service provider to “financial institutions” under Title V of the Gramm-Leach-Bliley Act (GLBA). The GLBA regulates, among other things, the use of certain information about individuals (“non-public personal information”) in the context of the provision of financial services, including by banks and other financial institutions. The GLBA includes both a “Privacy Rule,” which imposes obligations on financial institutions relating to the use or disclosure of non- public personal information, and a “Safeguards Rule,” which imposes obligations on financial institutions and, indirectly, their service providers to implement and maintain physical, administrative and technological measures to protect the security of non-public personal financial information. Moreover, the U.S. Congress has recently considered, and is currently considering, various proposals for more comprehensive data privacy and cybersecurity legislation, to which we may be subject if passed. Additionally, we regularly receive requests for access to data from government bodies, including law enforcement agencies, tax authorities and customs offices, and we are subject to the Right to Financial Privacy Act and similar state laws that protect the privacy of consumer financial records. At the U.S. state level, we are subject to laws and regulations such as the California Consumer Privacy Act (CCPA), which broadly defines personal information and requires businesses that process personal information of California residents to, among other things: (i) provide certain disclosures to California residents regarding the business’s collection, use and disclosure of their personal information; (ii) receive and respond to requests from California residents to access, delete and correct their personal information or to opt out of certain processing of their personal information; and (iii) enter into specific contractual provisions with service providers that process California resident personal information on the business’s behalf. Numerous other states also have enacted, or are in the process of enacting or considering, comprehensive state-level data privacy and cybersecurity laws and regulations that share similarities with KLARNA GROUP PLC126 the CCPA. Moreover, laws in all U.S. states require businesses to provide notice under certain circumstances to consumers whose personal information has been disclosed as a result of a data breach. Additionally, the New York State Department of Financial Services (the “NYDFS”) issued in 2017 Cybersecurity Requirements for Financial Services Companies (23 NYCRR Part 500), which require banks, insurance companies and other financial services institutions regulated by the NYDFS to establish and maintain a cybersecurity program designed to protect consumers and ensure the safety and soundness of New York State’s financial services industry. The cybersecurity regulation includes specific requirements for these institutions’ cybersecurity compliance programs and imposes an obligation to conduct ongoing, comprehensive risk assessments. Further, on an annual basis, covered entities are required to submit either a Certification of Material Compliance for the prior calendar year or an Acknowledgement of Noncompliance. An Acknowledgement of Noncompliance must identify the provisions of Part 500 with which the entity has not materially complied, describe the nature and extent of such noncompliance, and include a remediation plan and timeline or confirmation that remediation has been completed.. Furthermore, as we accept debit and credit cards for payment, we are subject to the PCI-DSS, issued by the Payment Card Industry Security Standards Council. PCI-DSS contains compliance guidelines with regard to our security surrounding the physical and electronic storage, processing and transmission of cardholder data. Costs and potential problems and interruptions associated with the implementation of new or upgraded systems and technology, such as those necessary to achieve compliance with PCI-DSS or with maintenance or adequate support of existing systems could also disrupt or reduce the efficiency of our operations. At the international level, we are subject to the EU GDPR and the UK GDPR, each of which imposes stringent operational requirements on both data controllers and processors, and introduces significant penalties for noncompliance. The EU GDPR and U.K. GDPR impose various data privacy compliance obligations in relation to our collection and use of data relating to an identifiable living individual or “personal data.” The EU GDPR and U.K. GDPR impose obligations, including a principle of accountability and the obligation to demonstrate compliance through policies, procedures, training and audits. The EU GDPR and UK GDPR also impose additional requirements for the processing of special categories of personal data such as biometric data, precise geolocation data and data regarding trade union membership. For instance, we are only allowed to process such data where we have a proper legal basis and meet one of the conditions for processing special categories of personal data, such as explicit consent of the individual, and more stringent security requirements should be applied to our processing of such data. Furthermore, the evolving regulatory framework complicates data transfers across borders. For example, legal developments in the EEA and the UK have created complexity and uncertainty regarding processing and transfers of personal data from the EEA and the UK to the United States and other so- called third countries outside the EEA and the UK that have not been determined by the relevant data protection authorities to provide an adequate level of protection for privacy rights. Ongoing legal challenges and changes in adequacy decisions, such as the EU-US Data Privacy Framework, may further restrict our ability to transfer personal data internationally, potentially disrupting our operations. In many cases, these laws and regulations apply not only to third-party transactions, but also to transfers of information among our entities. We are also required to observe laws and regulations relating to the security of our network and information systems supporting our operations, including DORA, which became effective in the EU in January 2025. DORA’s goal is to strengthen the IT security of financial entities such as banks, insurance companies and investment firms and make sure that the financial sector in Europe is able to stay resilient in the event of severe operational disruptions. It establishes a harmonized and comprehensive digital operational resilience framework across the whole EU financial sector by requiring a wide range of financial institutions, including banks, to manage their ICT risks in a robust and effective way through internal governance, control and risk frameworks. DORA also requires financial institutions to report major ICT-related incidents to regulatory authorities and undertake digital operational resilience testing. Enforcement of DORA is carried out by national-level authorities and primary EU supervisory authorities, KLARNA GROUP PLC127 including the European Banking Authority for the banking sector. The authorities have powers to carry out on-site inspections, compel information from regulated entities, require remedial measures, and impose administrative and criminal penalties for DORA violations. The intended launch of a stablecoin and other digital‑asset offerings exposes us to additional cybersecurity and privacy risks, including risks related to private‑key compromise, blockchain infrastructure vulnerabilities, irreversible transactions, and incidents affecting third‑party custody, wallet, or blockchain service providers. We contract with third-party service providers, including shared cloud computing services, to store or process data (including personal data) on our behalf in compliance with applicable laws, regulations, rules and standards. To that end, we seek to enter into data processing agreements with all our third-party providers to clearly define the services being provided and the nature of the engagement, for example the protection and ownership of the data being processed by the service provider. We also maintain processes designed to oversee and identify cybersecurity risks associated with third‑party service providers, including cloud service providers, through due diligence, contractual requirements, and ongoing monitoring. However, such measures may not in all circumstances fully mitigate the risk of claims, proceedings, liability, or adverse publicity arising from data privacy or cybersecurity matters, and limitations may exist in the scope and effectiveness of our data processing agreements.. If laws and regulations relating to data privacy and cybersecurity are implemented, interpreted or applied in a manner inconsistent with our current or future practices or policies, or if we fail to comply with applicable laws or regulations, we could be subject to investigations, enforcement actions and other proceedings. See “Risk Factors—We are subject to complex and evolving laws, regulations, rules, standards, contractual obligations and other requirements regarding data privacy and cybersecurity” and “—We or our third-party providers may fail to protect confidential information, including personal information, and/or experience data breaches or other cybersecurity incidents” for more information regarding other risks related to data privacy and cybersecurity. Intellectual Property We believe that our intellectual property rights, including those in our proprietary technology, software, data, processes, know-how and brand, are important to the success of our business. We rely on a combination of patent, trademark, copyright, trade secret and other intellectual property laws in the United States and certain foreign jurisdictions, as well as contractual arrangements, to obtain, maintain, protect and enforce our intellectual property rights. We strive to require all of our employees and third parties who develop intellectual property on our behalf to enter into confidentiality and invention assignment agreements and third parties with whom we share our confidential proprietary information to enter into nondisclosure and confidentiality agreements or to be bound by professional, fiduciary or other contractual obligations requiring the applicable employee or third party to protect our trade secrets, proprietary know-how and other confidential proprietary information, including those related to our material proprietary AI models. However, we cannot guarantee that we have entered into agreements containing such obligations with each party that has been involved in the development of intellectual property for us or that has, or may have had, access to our trade secrets, proprietary know-how and other confidential proprietary information. We have an ongoing trademark registration program pursuant to which we register our brand names and product names and a patent program to identify and protect a portion of our intellectual property in technologies relevant to our business to the extent we determine them to be appropriate and cost- effective. As of December 31, 2025, we owned (i) 17 registered trademarks and 2 pending trademark applications in the United States, (ii) 254 registered trademarks and 35 pending trademark applications in 37 foreign jurisdictions, (iii) 27 issued patents and 1 pending patent applications in the United States and (iv) 3 issued patents and 4 pending patent applications in 6 foreign jurisdictions. KLARNA GROUP PLC128 We intend to pursue additional intellectual property protection to the extent we believe it would be beneficial and cost-effective. However, despite our efforts to protect our intellectual property rights, they may not be respected in the future or may be invalidated, circumvented, reduced in scope, deemed unenforceable or otherwise challenged, and our contractual arrangements may be breached or may otherwise not effectively prevent disclosure of, or control access to, our trade secrets, proprietary know- how or other confidential proprietary information. The efforts undertaken to protect our intellectual property and confidential proprietary information may not be sufficient or effective. See “Risk Factors—We may be unable to sufficiently obtain, maintain, protect or enforce our intellectual property and other proprietary rights.” Facilities We lease office space under operating leases with various expiration dates through 2031. We do not own any real property. Our registered office is located at 10 York Road, London SE1 7ND, United Kingdom and is subject to a membership agreement with an affiliate of WeWork Inc. for co-working space. We have leased offices in several other locations, including Germany, the United States and the Netherlands. The table below sets forth additional information regarding our principal facilities as of December 31, 2025: Location Type Ownership Size(in sq. feet) Stockholm, Sweden .......................................................................................... Office Leased 189,714 Berlin, Germany ................................................................................................. Office Leased 83,733 Giessen, Germany ............................................................................................. Office Leased 48,491 Munich, Germany .............................................................................................. Office Leased 35,725 Total .................................................................................................................... 357,663 In addition, we have membership agreements for co-working space in various locations, including Madrid, Spain, Milan, Italy, New York, United States, Paris, France, Shanghai, China, Tokyo, Japan and Warsaw, Poland. As part of our strategic decision to drive operational efficiency, leverage AI and reduce administrative costs in our business, we have decided to reduce the size of our office space. Accordingly, the operating leases for our facilities located in Mannheim, Germany and Amsterdam, Netherlands have been terminated, with the terminations becoming effective on September 29, 2025 and June 30, 2025, respectively. We believe that our existing facilities are sufficient for our current needs. We continue to periodically review our facility requirements and may further consolidate or dispose of additional rented facilities that are no longer required or, where appropriate, lease additional space to meet the needs of our business, including in new geographies. KLARNA GROUP PLC129 Legal Proceedings From time to time, we may be subject to legal proceedings and claims in the ordinary course of business. We are not presently a party to any legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business, results of operations, financial condition and future prospects. The results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. Organizational Structure Klarna Group plc is a public limited company incorporated in England and Wales and serves as the holding company for the Klarna group. The Company conducts its business through a number of subsidiaries and affiliated entities organized across multiple jurisdictions. The principal operating entity of the Klarna group is Klarna Bank AB (publ), a Swedish public limited liability company that is licensed as a bank and supervised by the Swedish Financial Supervisory Authority. Klarna Bank AB provides the core payment, financing and banking services offered to consumers and merchants and operates through subsidiaries, branches and passported activities in various jurisdictions within the European Economic Area and the United Kingdom. In addition, the Klarna group includes subsidiaries that support technology development, product distribution, merchant services, marketing and regional operations. Klarna Group plc does not itself conduct banking operations and functions as the ultimate holding company of the group. For further information regarding the Company’s principal subsidiaries, see Exhibit 8.1* Corporate Information We are a public company with limited liability incorporated pursuant to the laws of England and Wales on November 7, 2022 as Klarna UK II PLC and renamed as Klarna Group plc on December 13, 2023. We are registered with the Registrar of Companies in England and Wales under number 14467769. Our registered office is located at 10 York Road, London SE1 7ND, United Kingdom, and the telephone number at that office is +44 8081 893 333. Our banking operations in the EEA are conducted through Klarna Bank AB. Klarna Bank AB was incorporated as a public limited company with the legal name Kreditor Finans AB under Swedish law on September 5, 2007, with the company number 556737-0431. After its incorporation, Kreditor Finans AB changed its legal name to Klarna Finans AB and, following the receipt of a license to carry out banking activities under the supervision of the SFSA, subsequently changed its legal name to Klarna Bank AB on June 19, 2017. Klarna Bank AB is a subsidiary of Klarna Holding AB (publ). As a result of our corporate reorganization in May 2024, Klarna Holding AB(publ) and Klarna Bank AB (publ) became indirect subsidiaries of Klarna Group plc. Our main U.S. subsidiary is Klarna Inc., a Delaware corporation. Its principal office is located at 800 N. High St., Ste. 400, Columbus, Ohio 43215, and the telephone number at that office is +1 (844) 552 7621. Our website address is www.klarna.com. We have included our website address in this annual report solely as an inactive textual reference. Information contained on, or that can be accessed through, our website is not incorporated by reference into this annual report, and you should not consider information on our website to be part of this annual report. Our agent for service of process in the United States is Klarna Inc. KLARNA GROUP PLC130