Results of Operations The following table sets forth our results of operations for the periods presented. Historical results for any prior period are not necessarily indicative of results expected in any future period. For example, in the fourth quarter of 2024, we completed the divestment of KCO, our online checkout solution, to a consortium of investors. As a result of this disposition, our revenue and growth figures for the year ended December 31, 2025 may appear lower on a comparative basis as a result of this disposition. To illustrate that point, after adjusting for the sale of KCO, our revenue and operating loss in the year ended December 31, 2024 was $2,749 million and $164 million, respectively. For the Year Ended December 31, 2025 2024 2023 (in $ millions) Revenue: Transaction and service revenue ................................................................... 2,500 2,136 1,768 Gain on sale of consumer receivables .......................................................... 73 — — Interest income .................................................................................................. 937 675 508 Total revenue ....................................................................................................... 3,509 2,811 2,276 Processing and servicing costs ....................................................................... (809) (596) (541) Provision for credit losses ................................................................................ (794) (495) (353) Funding costs ...................................................................................................... (667) (503) (297) Technology and product development ......................................................... (486) (444) (389) Sales and marketing .......................................................................................... (414) (328) (381) Customer service and operations .................................................................. (207) (203) (240) General and administrative .............................................................................. (306) (281) (270) Depreciation, amortization and impairments .............................................. (55) (82) (128) Total operating expenses .................................................................................. (3,739) (2,932) (2,599) Operating loss .................................................................................................... (230) (121) (323) Other income (expense) ................................................................................... (11) 154 19 Profit (loss) before taxes .................................................................................... (241) 33 (304) Tax (expense) benefit ....................................................................................... (32) (12) 60 Net profit (loss) .................................................................................................... (273) 21 (244) Year ended December 31, 2025 Compared to the Year ended December 31, 2024 KLARNA GROUP PLC131 Revenue % Change on aLike-for-Likebasis 1 2025 2024 $ Change % Change (in $ millions, except for percentages) Transaction and service revenue ...... 2,500 2,136 364 17% 17% Gain on sale of consumer receivables ............................................. 73 — 73 n.m. n.m. Interest income ...................................... 937 675 262 39% 34% Total revenue ......................................... 3,509 2,811 698 25% 24% n.m. = not meaningful ____________ 1 Year-over-year change on a like-for-like basis is calculated by adjusting our revenue for (1) the sale of KCO and (2) the impact of foreign currency fluctuations. The impact of foreign currency fluctuations is calculated by translating the reported amounts in the current period using the exchange rates in use during the comparative prior period. In year ended December 31, 2024, KCO contributed $62 million to our Transaction and service revenue. The year-over-year impact of foreign currency fluctuations on our Transaction and service revenue and interest income for the year ended December 31, 2025 was $73 million and $31 million, respectively. Total revenue Total revenue for year ended December 31, 2025 increased by $698 million, or 25% (24% on a like-for- like basis), compared to year ended December 31, 2024. This increase was generally in line with the increase in our GMV of $22.8 billion, or 21% (20% on a like-for-like basis). In 2025, we saw increased interest income, as a result of accelerated GMV growth through primarily consumer adoption of our Fair Financing product. We also saw growth driven by the continued expansion of our merchant network and distribution partnerships, as well as gains recognized from the sale of consumer receivables, as a result of entering into new arrangements with structured entities during 2025. Transaction and service revenue Transaction and service revenue for the year ended December 31, 2025 increased by $364 million, or 17% (17% on a like-for-like basis), compared to the year ended December 31, 2024. This increase was generally in line with the increase in our GMV, which grew 21%, compared to the year ended December 31, 2024 but was lower primarily due to product mix, as a higher proportion of GMV was generated from Fair Financing products, for which revenue is predominantly recognized in interest income rather than transaction and service revenue. Transaction and service revenue grew primarily driven by increases in merchant revenue from Pay Later and Pay in Full GMV, increases in fees from the Klarna card, in line with increases in card volume, in particular in the U.S. Gain on sale of consumer receivables During the year ended December 31, 2025, the Company entered into entered into sales agreements of Fair Financing receivables comprising both an initial sale of existing portfolio and additional forward flow agreements. These sales of receivables resulted in a gain on sale $73 million. There was no comparable revenue for the year ended December 31, 2025. Interest income Interest income for the year ended December 31, 2025 increased by $262 million, or 39% (34% on a like-for-like basis), compared to the year ended December 31, 2024. This increase was primarily driven by the acceleration of Fair Financing, where GMV accelerated sequentially throughout the year, with GMV increasing 123% year-over-year, reaching 165% in the fourth quarter of 2025. This supported a 61% ($213 million) increase in interest income from Fair Financing products, as well as an increase of $19 million from KLARNA GROUP PLC132 government bonds, driven by increased holdings, along with an increase in “snooze fees” of $32.5 million, driven by an increased volume of Pay Later transactions. Operating Expenses Year Ended December 31, 2025 2024 $ Change % Change (in $ millions, except for percentages) Processing and servicing costs ........................................ (809) (596) (213) 36% Provision for credit losses ................................................. (794) (495) (299) 60% Funding costs ....................................................................... (667) (503) (164) 33% Technology and product development .......................... (486) (444) (43) 10% Sales and marketing ............................................................ (414) (328) (87) 26% Customer service and operations .................................... (207) (203) (4) 2% General and administrative ............................................... (306) (281) (25) 9% Depreciation, amortization and impairments ................ (55) (82) 28 (34)% Operating expenses .............................................................. (3,739) (2,932) $(807) 28% Total operating expenses Total operating expenses for the year ended December 31, 2025 increased by $807 million, or 28%, compared to the year ended December 31, 2024. This was primarily driven by increases in our transaction costs and operating expenses as more fully described below. Processing and servicing costs Processing and servicing costs for the year ended December 31, 2025 increased by $213 million, or 36%, compared to the year ended December 31, 2024. Processing and servicing costs as a percentage of GMV increased from 0.57% to 0.63% for the year ended December 31, 2024 and 2025, respectively, predominantly driven by the U.S. market, which has structurally higher payment fees, growing as a share of our GMV, as well as an increase in card issuing and processing fees. Provision for credit losses Provision for credit losses for the year ended December 31, 2025 increased by $299 million, or 60%, compared to the year ended December 31, 2024. The provision for credit losses as a percentage of GMV rose from 0.47% to 0.63% for the year ended December 31, 2024 and 2025, respectively. This increase was primarily driven by changes in product mix, in particular growth in our Fair Financing product, which has higher upfront provisions in comparison to our Pay Later product. Fair Financing GMV accelerated sequentially throughout the year, with GMV increasing 123% year-over-year, reaching 165% in the fourth quarter of 2025. Funding costs Funding costs for the year ended December 31, 2025 increased by $164 million, or 33%, respectively, compared to the year ended December 31, 2024. Funding costs as a percentage of GMV increased from 0.48% to 0.52% for the year ended December 31, 2024 and 2025, respectively. The increase in funding costs to $667 million for the year ended December 31, 2025, compared to $503 million for the year ended December 31, 2024, was primarily driven by a $133 million increase in fair value adjustments on loans sold and held for sale, which amounted to $163 million in 2025 driven by increases in Pay Later forward flow arrangements. The increase was further supported by higher other funding costs and increased expenses related to liabilities to credit institutions. These effects were partially offset by lower costs associated with consumer deposits. KLARNA GROUP PLC133 Technology and product development Technology and product development expenses for the year ended December 31, 2025 increased by $43 million, or 10%, respectively, compared to the year ended December 31, 2024. This increase was primarily driven by increase in cloud-computing costs, as well as labor-related technology costs from higher share-based compensation and consulting costs. Sales and marketing Sales and marketing expenses for the year ended December 31, 2025 increased by $87 million, or 26%, respectively, compared to the year ended December 31, 2024. This increase primarily resulted from higher share-based payments expenses, as well as increased marketing spend to support product adoption. Customer service and operations Customer service and operations expenses for the year ended December 31, 2025 increased by $4 million, or 2%, compared to the year ended December 31, 2024. Cost increased at a slower pace than volumes, with volumes up 32% year-over-year and transactions up 25% year-over-year, indicating continued operating leverage. General and administrative General and administrative expenses for the year ended December 31, 2025 increased by $25 million, or 9%, respectively, compared to the year ended December 31, 2024. The increase primarily resulted from higher share-based payments expenses and professional services costs. Depreciation, amortization and impairments Depreciation, amortization and impairments for the year ended December 31, 2025 decreased by $28 million, or 34%, respectively, compared to the year ended December 31, 2024. The decrease was primarily driven by the write-off of certain intangible assets, resulting in lower amortization expenses for intangible assets, offset by impairment charges on right-of-use assets following a decision to reduce certain office spaces to better align our leased space with our hybrid work model and current office, during the year ended December 31, 2024. Other (Expense) Income Other (expense) income decreased $165 million for the year ended December 31, 2025, compared to the year ended December 31, 2024. This was primarily driven by the divestment of KCO, recycling of currency translation effects from other comprehensive income, and partially offset by the remark and administrative fine of issued by the SFSA, all occurring during the year ended December 31, 2024. Income Taxes Tax expense for the year ended December 31, 2025 of $32 million increased $20 million, compared to the tax expense of $12 million in the year ended December 31, 2024. The increase was primarily related to release of deferred tax liability related to the year ended December 31, 2024. Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023 Total revenue Total revenue for the year ended December 31, 2024 increased by $535 million, or 23% (25% on a like- for-like basis), compared to the year ended December 31, 2023. This increase was primarily driven by an increase in our GMV of $12.5 billion, or 14% (15% on a like-for-like basis), in that period. The increase in GMV was driven by the expansion of our network, including the increase in customer engagement, with our KLARNA GROUP PLC134 ARPAC growing from $27 to $30, as well as the growth in the number of active Klarna consumers, which grew by 9 million, or 11%, compared to the year ended December 31, 2023. Our revenue in the year ended December 31, 2024 grew faster than our GMV, primarily driven by higher take rates in various geographies, as discussed under “Transaction and service revenue” below. Transaction and service revenue Transaction and service revenue for the year ended December 31, 2024 increased by $368 million, or 21% (23% on a like-for-like basis), compared to the year ended December 31, 2023. The increase was primarily driven by a strong growth in GMV and revenue in the United States, the U.K. and Germany. Given that both the United States and the U.K. have higher take rates than our average take rate, higher GMV in those markets translated into disproportionately higher merchant revenue, which increased by $267 million year over year. Transaction and service revenue growth was also driven by higher consumer service revenue, which increased by $107 million year over year, due to an increase in revenue from consumer fees in various markets, including Germany, the United States and the U.K., corresponding to our higher GMV in the period. Interest income Interest income for the year ended December 31, 2024 increased by $167 million, or 33% (32% on a like-for-like basis), compared to the year ended December 31, 2023. This increase was partly driven by an increase of $69 million in the interest income earned on our interest bearing debt securities, resulting from a higher balance of treasury bills held at central banks which resulted in increased interest income earned on them. The remaining portion of the increase was primarily driven by increases in interest income from Fair Financing transactions of $65 million and interest income from “snooze” fees of $32 million due to increased volumes of Fair Financing and Pay Later transactions, respectively. Operating Expenses Year Ended December 31, 2024 2023 $ Change % Change (in $ millions, except for percentages) Processing and servicing costs ........................................ (596) (541) (55) 10% Provision for credit losses ................................................. (495) (353) (143) 40% Funding costs ....................................................................... (503) (297) (207) 70% Technology and product development .......................... (444) (389) (54) 14% Sales and marketing ............................................................ (328) (381) 53 (14)% Customer service and operations .................................... (203) (240) 37 (15)% General and administrative ............................................... (281) (270) (11) 4% Depreciation, amortization and impairments ................ (82) (128) 46 (36)% Operating expenses .............................................................. (2,932) (2,599) $(333) 13% Total operating expenses Total operating expenses for the year ended December 31, 2024 increased by $333 million, or 13%, compared to the year ended December 31, 2023. This was primarily driven by an increase in our funding costs and provision for credit losses, as more fully described below. Processing and servicing costs Processing and servicing costs for the year ended December 31, 2024 increased by $55 million, or 10%, compared to the year ended December 31, 2023. This increase was primarily driven by growth in our GMV, which grew 14% during the same period, partially offset by a reduction in authentication and scoring costs. KLARNA GROUP PLC135 Provision for credit losses Provision for credit losses for the year ended December 31, 2024 increased by $143 million, or 40%, compared to the year ended December 31, 2023, growing as a percentage of GMV from 0.38% to 0.47%. This increase was primarily driven by a change in our market mix, with the United States contributing a larger share of our GMV. The U.S. market is at an earlier stage of development compared to our more mature geographies, leading to a higher provision credit losses on a consolidated basis. A change in product mix also contributed to the increase in our provision for credit losses, as the share of transactions utilizing our Fair Financing product in our GMV increased. Funding costs Funding costs for the year ended December 31, 2024 increased by $207 million, or 70%, compared to the year ended December 31, 2023, which represented a 4.8 percentage point increase in our funding costs as a percentage of total revenue. This increase was primarily driven by an increase in our interest expense on consumer deposits of $153 million, resulting from higher prevailing interest rates in our European geographies between 2023 and 2024. In addition, our cost of securitizations increased by $42 million, primarily as a result of the cost of the 2024 forward flow transaction involving the sale of our U.K. Pay Later (30) and Pay in 3 receivables. As a result, our funding costs as a percentage of GMV grew from 32 basis points in the year ended December 31, 2023 to 48 basis points in the year ended December 31, 2024. Technology and product development Technology and product development expenses for the year ended December 31, 2024 increased by $54 million, or 14%, compared to the year ended December 31, 2023. This increase was primarily driven by an increase in labor-related technology costs of $47 million resulting from an increase in compensation expenses and a lower amount of capitalized expenses year over year. We currently only recruit for a limited number of engineering roles, focusing our investments on product development and AI to enhance customer experiences and internal efficiency Sales and marketing Sales and marketing expenses for the year ended December 31, 2024 decreased by $53 million, or 14%, compared to the year ended December 31, 2023, which represented a 5.1 percentage point decrease in sales and marketing expenses as a percentage of our total revenue. In the year ended December 31, 2024, we were able to continue to efficiently allocate our marketing spend, resulting in a decrease in our sales and marketing costs, partially offset by an increase in commission costs for third-party partners as a result of our GMV growth. Customer service and operations Customer service and operations expenses for the year ended December 31, 2024 decreased by $37 million, or 15%, compared to the year ended December 31, 2023, which represented a 3.3 percentage point decrease in customer service and operations expenses as a percentage of our total revenue. This decrease was primarily driven by a decrease in customer service costs as we continued to make significant efforts to optimize and manage such costs. General and administrative General and administrative expenses for the year ended December 31, 2024 increased by $11 million, or 4%, compared to the year ended December 31, 2023. The increase primarily resulted from an increase in professional services costs related to the inital public offering and the related preparations to become a publicly listed company in the United States. KLARNA GROUP PLC136 Depreciation, amortization and impairments Depreciation, amortization and impairments for the year ended December 31, 2024 decreased by $46 million, or 36% compared to the year ended December 31, 2023. The decrease was primarily driven by decreased impairment of certain property and equipment of $29 million, including right-of-use assets, and decreased depreciation and amortization of $16 million. Other (Expense) Income Other income for the year ended December 31, 2024 primarily related to a net gain of $171 million as a result of the divestment of KCO, as more fully described in Note 11 to the consolidated financial statements included elsewhere in this report. Other income for the year ended December 31, 2024 also included the recycling of currency translation effects from other comprehensive income of $18 million. These impacts were partially offset by the remark and administrative fine of $47 million issued by the SFSA in December 2024. Other income for the year ended December 31, 2023 primarily related to a gain of $13 million on the repurchase of convertible notes, as more fully described in the section titled “Certain Relationships and Related Party Transactions―Convertible Notes Repurchase” elsewhere in this report. Income Taxes Tax expense for the year ended December 31, 2024 was $12 million compared to a tax benefit of $60 million for the year ended December 31, 2023. The change to a tax expense from a tax benefit was primarily due to us generating a net profit before taxes of $33 million for the year ended December 31, 2024, compared to a net loss before taxes of $304 million, and the recognition of certain deferred tax assets and liabilities of $73 million in the year ended December 31, 2023. Non-IFRS Financial Measures For the Year Ended December 31, 2025 2024 2023 Transaction Margin Dollars .............................................................................. $1,238 $1,217 $1,085 Transaction Margin ........................................................................................... 35% 43% 48% Adjusted Operating Profit (Loss) .................................................................... $65 $181 $(49) Adjusted Operating Margin ............................................................................. 1.9% 6.4% (2.2)% We use certain non-IFRS financial measures to supplement our consolidated financial statements, which are presented in accordance with IFRS. These non-IFRS financial measures include transaction margin dollars, transaction margin, adjusted operating profit (loss) and adjusted operating margin. We use these non-IFRS financial measures to facilitate the review of our operational performance and as a basis for strategic planning. We also present period-over-period changes in certain metrics on a like-for-like basis, which are calculated by adjusting the applicable metric for (1) the sale of KCO and (2) the impact of foreign currency fluctuations. The impact of foreign currency fluctuations is calculated by translating the reported amounts in the current period using the exchange rates in use during the comparative prior period. We believe that presenting changes in our revenue and transaction margin dollars on a like-for-like basis, which exclude the impact of the recent sale of KCO and foreign currency fluctuations, provides useful information regarding our underlying business trends and facilitates comparisons of our financial performance over prior periods on a consistent basis. Transaction margin dollars and transaction margin are key performance measures used by our management to measure our ability to attain efficiency and scale and to grow these metrics over time. They measure our success in growing revenue while effectively managing our processing and servicing KLARNA GROUP PLC137 costs, provision for credit losses and funding costs in both maturing markets (which include the Nordics, Germany, Netherlands, Austria, Switzerland and the U.K.) and new markets (which include the remaining markets in which we currently operate, including the United States). We primarily strive to grow our revenue by increasing the number of our active Klarna consumers and ARPAC as well as expanding into additional markets. In parallel, we seek to drive efficiencies in our processing and servicing costs and to effectively manage our credit losses by improving our underwriting capabilities, in particular in our new markets, while maintaining low and stable funding costs. Our management uses transaction margin dollars and transaction margin in assessing our success in meeting these objectives. In addition, by excluding certain items that are nonrecurring or not reflective of the performance of our normal course of business, we believe that adjusted operating profit (loss) and adjusted operating margin provide meaningful supplemental information regarding our performance. Accordingly, we believe that these non-IFRS financial measures are useful to investors and others because they allow investors to supplement their understanding of our financial trends and evaluate our ongoing and future performance in the same manner as management. However, there are several limitations related to the use of non-IFRS financial measures as they reflect the exercise of judgment by our management about which expenses are excluded or included in determining these non-IFRS measures. These non-IFRS measures should be considered in addition to, not as a substitute for or in isolation from, our financial results prepared in accordance with IFRS. Other companies, including companies in our industry, may calculate these non- IFRS (or similar non-GAAP) financial measures differently or not at all, which reduces their usefulness as comparative measures. Transaction margin dollars is defined as total revenue less total transaction costs, consisting of processing and servicing, provision for credit losses and funding costs. Transaction margin is calculated by dividing transaction margin dollars by our total revenue. Adjusted operating profit (loss) is defined as operating profit (loss) excluding (i) depreciation, amortization and impairments, (ii) share-based payments expense, (iii) severance-related restructuring costs and (iv) expenses related to the preparation to initial public offering not connected to the issue and sale of ordinary shares by us in initial public offering. Adjusted operating margin is defined as adjusted operating profit (loss) divided by our total revenue. Depreciation, amortization and impairments below include amounts recorded within Technology and product development expenses in our consolidated statements of profit and loss. We consider the exclusion of certain nonrecurring or noncash items in calculating adjusted operating profit (loss), adjusted operating margin and adjusted non-transaction-related operating expenses to provide a useful measure for investors and others to evaluate our operating results and expenses in the same manner as management. The following table presents a reconciliation of our operating income (loss) and our operating margin, the most directly comparable financial measures presented in accordance with IFRS, to our transaction margin dollars and transaction margin: For the Year Ended December 31, 2025 2024 2023 Total revenue ..................................................................................................... $3,509 $2,811 $2,276 Operating loss .................................................................................................... $(230) $(121) $(323) Operating margin .............................................................................................. (6.6)% (4.3)% (14.2)% Adjustments: Technology and product development ....................................................... $486 $444 $389 Sales and marketing ......................................................................................... $414 $328 $381 Customer service and operations ................................................................. $207 $203 $240 General and administrative ............................................................................ $306 $281 $270 Depreciation, amortization (excluding software) and impairments ...... $55 $82 $128 Transaction margin dollars ............................................................................... $1,238 $1,217 $1,085 Transaction margin ............................................................................................ 35.3% 43.3% 47.7% KLARNA GROUP PLC138 Note: Amortization of acquired and internally developed software is included in Technology and product development. In the year ended December 31, 2024 and December 31, 2023, KCO contributed $240 million, and $72 million, respectively, to our transaction margin dollars. The year-over-year impact of foreign currency fluctuations on our transaction margin dollars in the year ended December 31, 2025, 2024, and 2023 was $47 million, $6 million, and $10 million, respectively. The following table presents a reconciliation of our operating income (loss) and our operating margin, the most directly comparable financial measure presented in accordance with IFRS, to our adjusted operating profit (loss) and adjusted operating margin: For the Year Ended December 31, 2025 2024 2023 Total revenue ..................................................................................................... $3,509 $2,811 $2,276 Operating loss ................................................................................................... $(230) $(121) $(323) Operating margin .............................................................................................. (6.6)% (4.3)% (14.2)% Adjustments: Depreciation, amortization and impairments ............................................. $106 $189 $227 Share-based payments expense .................................................................. $156 $93 $43 Severance-related restructuring costs ........................................................ $15 $6 $4 IPO-related costs ............................................................................................. $17 $14 $— Adjusted operating profit (loss) .................................................................... $65 $181 $(49) Adjusted operating margin ............................................................................. 1.9% 6.4% (2.1)% The following table presents a calculation of changes in our revenue and transaction margin dollars on a like-for-like basis: KLARNA GROUP PLC139 For the Year Ended December 31, % Change 2025 2024 Revenue Transaction and service revenue (as reported) ....................................... $2,500 $2,136 17% Impact of KCO disposition .............................................................................. N/A $(62) N/A Impact of foreign currency translation ........................................................ $(73) $— N/A Transaction and service revenue (like-for-like basis) ............................. $2,427 $2,074 17% Gain on sale of consumer receivables (as reported) ................................ $73 N/A N/A Impact of KCO disposition .............................................................................. N/A N/A N/A Impact of foreign currency translation ........................................................ $(2) N/A N/A Gain on sale of consumer receivables (like-for-like basis) ..................... $71 N/A N/A Interest income (as reported) ....................................................................... $937 $675 39% Impact of KCO disposition .............................................................................. N/A N/A N/A Impact of foreign currency translation ........................................................ $(2) $— N/A Interest revenue (like-for-like basis) ............................................................ $935 $675 39% Total revenue (as reported) ........................................................................... $3,509 $2,811 25% Total revenue (like-for-like basis) ................................................................. $3,433 $2,749 25% Transaction margin dollars Transaction margin dollars (as reported) ................................................... $1,238 $1,217 2% Impact of KCO disposition .............................................................................. $— $(43) (100)% Impact of foreign currency translation ........................................................ $47 $— N/A Transaction margin dollars (like-for-like basis) ......................................... $1,285 $1,174 9% Segment Results of Operations We manage our business as one operating segment. As a result, our consolidated financial statements included elsewhere in this report have been presented and disclosed as one reportable operating segment. Geographic Breakdown of Revenue In the year ended December 31, 2025, 2024, and 2023, our main geographic markets by revenue were Germany, the United States, and the U.K. No other market contributed more than 10% of revenues. Please refer to Note 3 to our interim condensed consolidated financial statements and Note 4 to our audited consolidated financial statements included elsewhere in this report for more information about the breakdown of our total revenue by geographic market. Quarterly Results of Operations The following table sets forth our unaudited quarterly interim condensed consolidated results of operations for each of the twelve quarters in the period from January 1, 2023 to December 31, 2025. The information for each of these quarters has been prepared on a basis consistent with our audited annual consolidated financial statements included elsewhere in this report and, in the opinion of management, include all adjustments necessary to present fairly our results of operations and financial conditions for the periods presented. The following unaudited interim condensed consolidated quarterly financial data should be read in conjunction with our annual consolidated financial statements, including the notes thereto, included elsewhere in this report. These quarterly results are not necessarily indicative of our operating results for a full year or any future period. KLARNA GROUP PLC140 Three Months Ended Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 March 31, 2024 June 30, 2024 September 30, 2024 December 31, 2024 March 31, 2025 June 30, 2025 September 30, 2025 December 31, 2025 (in $ millions) Revenue: Transaction and service revenue ........ 368 418 441 541 486 518 532 600 519 604 634 743 Gain on sale of consumer receivables ................. – – – – – – – – – – – 73 Interest income ......... 116 116 134 142 157 164 173 181 182 219 269 267 Total revenue ............. 484 534 575 683 643 682 705 781 701 823 903 1,082 Processing and servicing costs ........... (128) (131) (133) (149) (136) (148) (151) (161) (164) (187) (208) (250) Provision for credit losses .......................... (73) (88) (72) (120) (117) (106) (116) (156) (136) (174) (235) (250) Funding costs ............ (57) (62) (78) (100) (113) (120) (123) (147) (130) (147) (180) (210) Technology and product development .............. (88) (95) (91) (115) (99) (103) (107) (135) (115) (120) (123) (128) Sales and marketing . (76) (86) (81) (138) (79) (78) (70) (101) (91) (93) (102) (128) Customer service and operations .......... (63) (54) (53) (70) (57) (48) (44) (54) (51) (51) (53) (52) General and administrative ............ (64) (63) (53) (90) (51) (64) (65) (101) (94) (65) (77) (70) Depreciation, amortization and impairments ............... (37) (33) (18) (40) (19) (19) (17) (27) (10) (32) (8) (4) Total operating expenses .................... (586) (612) (579) (822) (671) (686) (693) (882) (791) (869) (986) (1,093) Operating profit (loss) (102) (78) (4) (139) (28) (4) 12 (101) (90) (46) (83) (11) Other income (expense) ................... 4 (4) 8 11 3 2 2 147 (2) — (4) (5) Profit (loss) before income taxes ............. (98) (82) 4 (128) (25) (2) 14 46 (92) (46) (87) (16) Tax benefit 55 (10) — 15 (5) (2) (6) (7) (7) (8) (10) Net profit (loss) .......... (43) (92) 4 (113) (30) (2) 12 40 (99) (53) (95) (26) Liquidity and Capital Resources Sources and Uses of Funds We have maintained a deliberate balance of growth and profitability, generating positive net income from 2005 to 2018. From 2019 to 2022, we invested to accelerate global revenue growth, specifically in the United States. While our expansion in the United States has contributed to an increase in our GMV, it has also led to operating and net losses in recent periods. Our Retained Earnings (Accumulated deficit) equaled $2,170 million and $(2,081) million as of December 31, 2025 and 2024, respectively. We are subject to regulatory requirements on liquidity and funding, including, among others, the Basel III framework (including its recent reforms known as “Basel IV”), CRD IV and CRR. See “—Regulatory Capital Requirements” below. Our funding needs are determined by the size and growth of our consumer loan portfolio and the size of our liquidity buffer. The funding needs are met primarily with consumer deposits as well as wholesale market funding and loan sale arrangements. We introduced deposit offerings in 2012. As of December 31, 2025, we held $13 billion of consumer funds. 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. We currently offer savings accounts directly to residents of Sweden, Germany, Austria, the Netherlands, Finland, France, Belgium, Spain, Ireland, Italy, Norway, Poland, Denmark and Portugal. We also raise deposits in Germany, the KLARNA GROUP PLC141 Netherlands, France, Spain, Finland and Ireland pursuant to a partnership with a third-party platform operated by Raisin. We do not take deposits in the United States, including interest-bearing deposits, as we do not maintain the necessary banking licenses to take U.S. deposits. Given our access to a variety of funding sources, as described below, and our decreasing net losses in recent periods, expanding our deposit-taking operations into the United States is not currently a part of our funding strategy. In addition to maintaining and growing our deposit base, we pursue a number of additional funding strategies. Through our subsidiaries, we utilize credit facilities as well as issue commercial paper, regulatory capital notes and other debt securities, including senior and subordinated notes under our Euro and Swedish Medium Term Note Programs, as more fully discussed under “—Indebtedness” below. We also utilize forward flow sale agreements, pursuant to which we sell loans originated on our network. See “— Securitization and Forward Flow Arrangements.” Accordingly, we believe that we have sufficient access to funding sources necessary to appropriately support our operations and future growth. We have a centralized funding model whereby substantially all deposits and other funding (e.g., wholesale market funding) is raised by Klarna Bank. Klarna Bank then provides, by utilizing currency swaps when needed, necessary funding to other entities within our consolidated group, including to enable our geographical expansion and growth in new markets outside of the EEA. There are currently no regulatory restrictions on the amount of such funding to our entities that are within the regulated banking group, which comprises Klarna Holding and its subsidiaries, including Klarna Inc., our U.S. operating subsidiary, and KFSUK, our U.K. operating subsidiary. Any funding from Klarna Bank to group entities outside the regulated banking group is subject to limits under large exposures rules, which restrict the amount of such funding to 25% of the regulated banking group’s Tier 1 capital. Our primary needs for liquidity are driven by regulatory requirements and our internal risk limits for liquidity risk. We take a conservative approach to liquidity. As of December 31, 2025, our LCR and NSFR were 892% and 193%, respectively, many times higher than the LCR and NSFR of major Nordic banks. We also had HQLA of $4,543 million as of December 31, 2025, 65% of which composed of cash held at various central banks and other demand deposits. Our liquidity risk arises through the need to fund withdrawals of consumer deposits as well as extending loans to our consumers, capital expenditures and working capital. Our future contractual obligations and outstanding indebtedness, respectively, are further discussed under “―Contractual Obligations” and “―Indebtedness” below. We had $3,803 million and $3,243 million of cash and cash equivalents as of December 31, 2025 and 2024, respectively. The $560 million increase in cash as of December 31, 2025 as compared to December 31, 2024 was primarily due to increases in consumer deposits, offset by an increase in consumer receivables. We believe that our existing cash and cash equivalent balances, projected cash inflows from operations, including from consumer deposits and repayment of consumer loans and loan sale arrangements, will be sufficient to meet our future liquidity needs for at least the next 12 months. Our long- term funding requirements may vary materially from those currently planned and will depend on many factors, including, but not limited to, our loan portfolio growth rate, the development of our network and introduction of new products, services and offerings, potential entrance into new geographies or adjacent categories or merger and acquisition activity, other strategic initiatives, increased regulatory requirements, credit losses, headcount, sales and marketing activities, capital expenditures and volatility in capital markets and overall economic conditions. To the extent that current and anticipated future sources of funding are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing or further increase the amount of our consumer deposits. The sale of additional equity securities would result in additional dilution to shareholders. Incurring debt financing would result in debt service obligations. The instruments governing such debt could provide for operating and financing covenants that may restrict our operations. There can be no assurance that we will be able to raise additional funds on terms that are KLARNA GROUP PLC142 attractive to us or at all. The inability to raise funds may adversely affect our business, results of operations, financial condition and future prospects. See “Risk Factors—Risks Related to Our Business and Industry—We may be unable to maintain our funding model based on consumer deposits or otherwise maintain, renew or replace our other funding arrangements.” Regulatory Capital Requirements We are subject to extensive capital adequacy requirements, including, among others, the Basel III framework (including its recent reforms known as “Basel IV”), CRD VI and CRR III. The capital adequacy framework specifies, among other things, minimum amounts and types of capital that we need to maintain, including CET1 capital and Tier 1 capital in relation to our risk-weighted exposure amounts. The table below presents a summary of capital adequacy and liquidity information on a consolidated basis, consistent with our presentation of such information in our Pillar 3 Reports, for the periods presented. We are required to prepare such reports on an annual basis. In addition, we publish select capital adequacy and liquidity information quarterly. As of December 31, 2025 2024 2023 Own funds: CET1 capital ...................................................................................................... 1,583 1,176 1,159 Tier 1 capital ..................................................................................................... 1,764 1,326 1,176 Total capital ..................................................................................................... 1,947 1,497 1,251 Total risk-weighted exposure amount ......................................................... 10,062 6,986 7,150 Capital ratios and requirements: (1) CET1 capital requirement .............................................................................. 8.6% 8.6% 8.6% CET1 capital ratio ............................................................................................ 15.7% 16.8% 16.2% Tier 1 capital requirement ............................................................................. 10.3% 10.3% 10.4% Tier 1 capital ratio ........................................................................................... 17.5% 19.0% 16.4% Overall capital requirement .......................................................................... 12.5% 12.6% 12.4% Total capital ratio ............................................................................................ 19.4% 21.4% 17.5% Leverage ratio and requirements: Total leverage ratio exposure amount ....................................................... 18,717 13,371 13,130 Leverage ratio requirement (2) ..................................................................... 5.3% 5.3% 6.0% Leverage ratio (3) ............................................................................................. 9.4% 9.9% 9.0% Liquidity coverage ratio (LCR): (4) HQLA ................................................................................................................. 4,543 3,143 2,909 LCR .................................................................................................................... 891.9% 570.9% 723.6% Net Stable Funding Ratio (NSFR): (5) Total available stable funding ...................................................................... 14,296 10,749 11,702 Total required stable funding ....................................................................... 7,423 6,014 5,974 NSFR .................................................................................................................. 192.6% 178.7% 195.9% Note: Tier 1 capital is calculated as a sum of CET1 capital and AT1 capital. Total capital includes Tier 1 capital and Tier 2 capital. ____________ 1 Capital ratios requirements include the minimum requirement, Pillar 2 requirement as well as any counter-cyclical and capital conservation buffer for the period. 2 Includes minimum leverage ratio requirement of 3% as well as any additional Pillar 2 guidance for the period. KLARNA GROUP PLC143 3 Leverage ratio is calculated by dividing Tier 1 capital by the total leverage ratio exposure amount. A higher leverage ratio indicates a less levered institution. 4 LCR is calculated by dividing HQLA by projected net cash outflows during a 30-day stressed period. This ratio should be equal to at least 100% on an ongoing basis. 5 NSFR is defined as the amount of available stable funding relative to the amount of required stable funding. This ratio should be equal to at least 100% on an ongoing basis. As illustrated by the table above, while the amount of own funds, high-quality liquid assets and available stable funding have fluctuated over the periods presented, they at all times remained significantly above the applicable regulatory requirements. Such fluctuations were mostly driven by our discretionary capital allocation decisions made in the ordinary course of business to support our growth and effectively manage our operations. They also reflect changes in our net loss (income) for the relevant period. In line with the applicable regulations, distributions from Klarna Bank and Klarna Holding are subject to ongoing compliance with capital requirements and to permission from the SFSA. For more information about the various capital adequacy regulations applicable to us and our capital adequacy analysis, see “Business—Regulatory Environment—Regulatory capital and liquidity requirements” and Note 3 to our consolidated financial statements included elsewhere in this report, respectively. Cash Flow Information The following table sets forth our consolidated cash flow information for the periods presented: For the Year Ended December 31, 2025 2024 2023 Cash provided by (used in): Operating activities .......................................................................................... $(1,032) $587 $808 Investing activities ............................................................................................ $(30) $154 $(83) Financing activities ........................................................................................... $988 $312 $(62) Year ended December 31, 2025 Compared to the Year ended December 31, 2024 Operating activities Cash inflow from operating activities, excluding the impact of movements in operating assets and liabilities, increased to $1,455 million in the year ended December 31, 2025, a year-over-year increase of $703 million. This increase was primarily driven by a $1,022 million, increase in interest income due to Fair Financing growth , an increase in the Provision for credit losses to $980 million, as well as an increase in share-based payment expenses to $157 million. Cash outflows from changes in operating assets and liabilities totaled $1,533 million, primarily due to year-over-year growth of Fair Financing and Pay Later receivables of $1.2 billion, as well as an increase in other working capital movements of $1,288 million, primarily driven by an increase in bonds and treasury bills with maturity > 90 days. This was offset by an increase in consumer deposits of $1,328 million, as we continue to raise consumer deposits to support our GMV growth, with cash inflows from such deposits reaching $2,148 million in 2025, compared to $820 million in the prior year. Investing activities Cash outflow from investing activities was $30 million in the year ended December 31, 2025, compared to cash inflow from investing activities of $154 million in the year ended December 31, 2024. The year-over- year decrease of $184 million in cash flow from investing activities was primarily due to the net cash KLARNA GROUP PLC144 received of $187 million related to the divestment of KCO in 2024. This was partially offset by a year-over- year decrease in investments in intangible assets of $17 million. Financing activities Cash inflow from financing activities was $988 million for the year ended December 31, 2025, compared to cash inflow from financing activities of $312 million in the year ended December 31, 2024. The year-over-year increase of $676 million in cash flow from financing activities was primarily due to $191 million from the issuance of shares related to the September 2025 IPO, the issuance of $165 million in senior unsecured bonds in Klarna Bank AB, the receipt of $589 million from our credit facility, and notes payable redeemed in Klarna Bank AB of $86 million. This was offset by $142 milion of issuances of AT1 securities and subordinated debt of $100 million in Klarna Holding during the year ended December 31, 2024. Operating activities Cash inflow from operating activities, excluding the impact of movements in operating assets and liabilities, increased to $752 million in the year ended December 31, 2024, a year-over-year increase of $311 million. This increase was driven by underlying improvements in our profitability, as reflected in our profit before taxes of $33 million compared to a loss before taxes of $304 million in the prior year. Cash outflows from changes in operating assets and liabilities totaled $530 million primarily due to a $696 million year-over-year decrease in cash flows from consumer deposits. We continue to raise consumer deposits to support our GMV growth, with cash inflows from such deposits reaching $820 million in 2024, compared to $1,516 million in the prior year. These outflows were partially offset by other working capital movements. Investing activities Cash inflow from investing activities was $154 million in the year ended December 31, 2024, compared to cash outflow from investing activities of $83 million in the year ended December 31, 2023. The year-over- year increase of $237 million in cash flow from investing activities was primarily due to net cash received of $187 million from the divestment of KCO, as more fully described in Note 11, and a year-over-year decrease in investments in intangible assets of $40 million. Financing activities Cash inflow from financing activities was $312 million for the year ended December 31, 2024, compared to cash outflow from financing activities of $62 million in the year ended December 31, 2023. The year- over-year increase of $374.00 million in cash flow from financing activities was primarily due to a year- over-year increase in cash inflow from issuances of notes payable and other borrowings of $160 million, including new issuances of $142 million of senior unsecured bonds under the Swedish Medium Term Note Program (as defined below), and new issuances of AT1 securities of $142 million in the year ended December 31, 2024. Indebtedness Swedish Medium Term Note Program Klarna Bank established a medium term note program (the “Swedish Medium Term Note Program”) for the issuance of medium term notes denominated in EUR, NOK and SEK (such notes, “Swedish MTN Notes”). Swedish MTN Notes may be issued in minimal denominations of EUR 100,000 (or the equivalent in any other available currency) and with a minimum term of one year. Klarna Bank has agreed that the total principal amount of Swedish MTN Notes will not exceed SEK 10 billion (approximately $1,086 million, using the SEK/USD exchange rate of 0.1086000 in effect as of December 31, 2025) at any time. Swedish MTN Notes may bear a fixed or floating interest rate determined by reference to a benchmark such as KLARNA GROUP PLC145 EURIBOR, NIBOR or STIBOR. Swedish MTN Notes are senior unsecured obligations of Klarna Bank and rank equally in right of payment to all of Klarna Bank’s existing and future senior debt and senior in right of payment to all of Klarna Bank’s existing and future subordinated debt. Neither Klarna Group plc nor any of its subsidiaries guarantees Swedish MTN Notes. The terms and conditions governing Swedish MTN Notes include certain covenants that, among others, limit Klarna Bank’s ability to consolidate, merge or transfer all or substantially all of its assets and require Klarna Bank to maintain a license to conduct banking and/or financing activities as required under the Swedish Banking Act as well as make certain information available to noteholders. Swedish MTN Notes are subject to the application of the bail-in tool, as more fully described in the section of this report titled “Risk Factors―Risks Related to Our Regulatory Environment―We are subject to regulatory requirements to facilitate the orderly resolution of large financial institutions, which may negatively affect our operations, the value of our outstanding debt securities and the value of your investment in our ordinary shares.” Euro Medium Term Note Program Klarna Holding and Klarna Bank established a medium term note program (the “Euro Medium Term Note Program”) for the issuance of medium term notes in DKK, EUR, NOK, GBP, SEK and USD (such notes, “Euro MTN Notes”). Euro MTN Notes may be issued in minimal denominations of EUR 100,000 (or the equivalent in any other available currency) and with a minimum term of one year. Klarna Holding and Klarna Bank have agreed that the total principal amount of Euro MTN Notes will not exceed EUR 3,000 million (approximately $3,540 million, using the EUR/USD exchange rate of 1.18 in effect as of December 31, 2025) at any time. Euro MTN Notes may bear a fixed or floating interest rate determined by reference to a benchmark such as EURIBOR, NIBOR, STIBOR, SOFR or CIBOR, or may be non-interesting bearing. Euro MTN Notes may be issued on a senior preferred basis (“Senior Preferred Notes”), on a senior non- preferred basis (“Senior Non-Preferred Notes”) or on a subordinated basis. The Senior Preferred Notes and the Senior Non-Preferred Notes are intended to be available to meet any MREL Requirement applicable to us. Neither Klarna Group plc nor any of its subsidiaries guarantees Euro MTN Notes. Euro MTN Notes are subject to the application of the bail-in tool, as more fully described in the section of this report titled “Risk Factors―Risks Related to Our Regulatory Environment―We are subject to regulatory requirements to facilitate the orderly resolution of large financial institutions, which may negatively affect our operations, the value of our outstanding debt securities and the value of your investment in our ordinary shares.” AT1 Notes Klarna Bank issues from time to time notes that are intended to be treated as Additional Tier 1 Capital (such notes, “AT1 Notes”). AT1 Notes have no set maturity date but Klarna Bank may, subject to the SFSA’s pre-approval, redeem such notes in its discretion five years after issuance. AT1 Notes may bear a fixed or floating interest rate determined by reference to a benchmark such as EURIBOR, NIBOR or STIBOR. AT1 Notes are junior unsecured obligations of Klarna Bank and rank equally in right of payment to all of Klarna Bank’s existing and future Additional Tier 1 Capital instruments, senior to all ordinary shares and other instruments that rank junior to AT1 Notes and junior in right of payment to all of depositors of Klarna Bank, other unsubordinated creditors of Klarna Bank, any non-preferred creditors, as defined in the Swedish Rights of Priority Act, and any subordinated creditors, including holders of instruments that qualify as Tier 2 Capital of Klarna Bank. AT1 Notes are subject to write-down upon occurrence of a trigger event, as set forth in the applicable terms and conditions governing the particular series of AT1 Notes. In addition, AT1 Notes are subject to the application of the bail-in tool, as more fully described in the section of this report titled “Risk Factors―Risks Related to Our Regulatory Environment―We are subject to regulatory requirements to facilitate the orderly resolution of large financial institutions, which may negatively affect our operations, the value of our outstanding debt securities and the value of your investment in our ordinary shares.” Tier 2 Notes Klarna Holding issues from time to time notes that are intended to be treated as Tier 2 Capital (such notes, “Tier 2 Notes”). Tier 2 Notes may bear a fixed or floating interest rate determined by reference to a KLARNA GROUP PLC146 benchmark such as EURIBOR, NIBOR or STIBOR. Tier 2 Notes are junior unsecured obligations of Klarna Bank and rank equally in right of payment to all of Klarna Holding’s existing and future Tier 2 Capital instruments, senior in right of payment to all of Klarna Bank’s existing and future Additional Tier 1 Capital instruments and all ordinary shares and other instruments that rank junior to Tier 2 Capital instruments and junior in right of payment to all of depositors of Klarna Bank, other unsubordinated creditors of Klarna Bank, and any non-preferred creditors, as defined in the Swedish Rights of Priority Act. The terms and conditions governing Tier 2 Notes include certain covenants that, among others, require Klarna Holding to make certain information available to the noteholders. Tier 2 Notes may be issued under the Swedish Medium Term Note Program or the Euro Medium Term Note Program, or in a standalone offering. In each case, Tier 2 Notes are subject to the application of the bail-in tool, as more fully described in the section of this report titled “Risk Factors―Risks Related to Our Regulatory Environment―We are subject to regulatory requirements to facilitate the orderly resolution of large financial institutions, which may negatively affect our operations, the value of our outstanding debt securities and the value of your investment in our ordinary shares.” Notes currently outstanding The table below includes details regarding series of notes outstanding as of December 31, 2025. The amounts in U.S. dollars included below were translated from SEK, where applicable, using the SEK/USD exchange rate of 0.1090 in effect as of December 31, 2025, and rounded to one decimal. Notes Maturity Year Interest Rate Program Outstanding Indebtedness Senior Unsecured Floating Rate Notes ..................................... 2026 Three-month STIBOR plus 2.250% Swedish Medium Term Note Program $54.3 million Senior Unsecured Floating Rate Notes ..................................... 2026 Three-month STIBOR plus 1.800% Swedish Medium Term Note Program $81.5 million Senior Unsecured Floating Rate Notes ..................................... 2027 Three-month STIBOR plus 2.050% Swedish Medium Term Note Program $27.2 million Senior Preferred Floating Rate Notes ........................................ 2027 Three-month STIBOR plus 1.550% Euro Medium Term Note Program $65.2 million Senior Preferred Floating Rate Notes ........................................ 2028 Three-month STIBOR plus 1.750% Euro Medium Term Note Program $97.8 million Tier 2 Subordinated Unsecured Floating Rate Notes ............. 2033 Three-month STIBOR plus 7.500% N/A $54.3 million Tier 2 Subordinated Unsecured Floating Rate Notes ............. 2033 Three-month STIBOR plus 7.500% N/A $27.2 million Tier 2 Subordinated Unsecured Floating Rate Notes ............. 2034 SOFR plus 7.000% Euro Medium Term Note Program $100.0 million AT1 Subordinated Unsecured Floating Rate Notes ................ No maturity Three-month STIBOR plus 7.000% N/A $30.0 million AT1 Subordinated Unsecured Floating Rate Notes ................ No maturity Three-month STIBOR plus 9.500% N/A $162.9 million Total .................................................................................................. $700.4 million Warehouse Financing facility To supplement our deposit-based funding strategy and further diversify our available funding sources, during the third quarter of 2025, we entered into a warehouse financing facility (the “warehouse facility”) with an affiliate of Banco Santander S.A. through a special-purpose consolidated subsidiary structured as KLARNA GROUP PLC147 a funding trust, as the funder, and Klarna Bank, as the borrower. Under the warehouse facility, we can borrow up to €1.4 billion ($1.6 billion) on a revolving basis. Any borrowings under the warehouse facility are secured by our German “Pay in 30” receivables and will be limited to 80% of the unpaid principal balance of the collateralized loans. Interest on the borrowings accrues at a variable rate by reference to one-month EURIBOR plus an applicable margin. Such borrowings will be classified within Notes payable and other borrowings in our consolidated balance sheets. The documents governing the facility contain customary representations and covenants reflective of our investment grade credit rating, including portfolio performance triggers. The warehouse facility is structured through a bankruptcy-remote special-purpose vehicle in which creditors do not have recourse against the general creditors of Klarna. As of the date of this report, $589 million was outstanding under the warehouse facility. Securitization and Forward Flow Arrangements We enter into synthetic securitization transactions with unconsolidated securitization vehicles (“SPVs”), pursuant to which we economically transfer a portion of credit risk for certain pools of consumer receivables (the “referenced pools”) to the SPV. The SPV then issues credit-linked notes to investors. Klarna retains contractual rights to receive the cashflows of the referenced pools and does not derecognize these consumer receivables from its consolidated balance sheet. Klarna pays a fee to the SPV for the transfer of credit risk that is recorded as incurred in Funding costs. The Company incurred fees of $30.7 million, $32.3 million and $21.9 million for 2025, 2024 and 2023, respectively, in connection with such transactions. The total consumer receivable pool was $1.3 billion, $2.1 billion and $1.7 billion as of December 31, 2025, 2024 and 2023, respectively. In 2024, we entered into a forward flow arrangement involving the sale of U.K. Pay Later receivables to an external securitization vehicle financed by the issuance of senior and junior notes to third parties. We derecognize these receivables upon transferring the contractual rights to the cash flows and substantially all associated risks and rewards, which is deemed to occur on the sale date. We also continue to service the sold receivables on behalf of the SPV. The structure has a maximum total consumer receivable pool of GBP 818 million ($1,104 million using the GBP/USD exchange rate of 1.3500000 in effect as of December 31, 2025). During the second quarter of 2025, we entered into a new forward flow arrangement involving the sale of U.S. Pay Later receivables to an external securitization vehicle, under which the sale of receivables is expected to begin during the third quarter of 2025, up to a maximum program size of $777 million. In the fourth quarter of 2025, we entered into a new forward flow and whole-loan sale program with a third party investor. The arrangement included the sale of $800 million of the Group’s existing portfolio of U.S. Fair Financing term loans and ongoing sale of newly originated receivables with a maximum facility size of $1 billion and up to $6.5 billion of originations over its duration. The total consumer receivables originated at fair value through profit and loss or at fair value through OCI during 2025 totaled $18 billion, of which $786 million was unsold as of December 31, 2025. Tabular Disclosure of Contractual Obligations The following table summarizes our contractual obligations as of December 31, 2025. Payments Due by Period Contractual Obligations1 Total < 1 year 1-5 years > 5 years (in $ million) Consumer deposits ............................................................ $13,337 $11,043 $2,294 $— Notes payable and other borrowings ........................... 1,565 450 876 240 Lease liabilities ................................................................... 85 26 54 5 Total ...................................................................................... $14,987 $11,518 $3,224 $245 KLARNA GROUP PLC148 ____________ 1 Includes principal amount and any interest and other amounts payable. Note: Our loan funding commitments are disclosed in Note 19 to our consolidated financial statements included elsewhere in this report. Obligations related to our securitization transactions had contractual maturities less than 12 months and are disclosed in Note 16 to our consolidated financial statements included elsewhere in this report. KLARNA GROUP PLC149 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the notes thereto, included elsewhere in this report, as well as the information presented under “About this report—Financial Statements” and “Annual Report Summary—Summary Consolidated Financial and Other Data.” The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of events may differ materially from those expressed or implied in such forward-looking statements as a result of various factors, including those set forth in “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors.” 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 KLARNA GROUP PLC150 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 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 KLARNA GROUP PLC151 $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. 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. Our Network’s Growth KLARNA GROUP PLC152 For 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 global leading 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 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. With the Klarna card, we are making it easier for consumers to enjoy our popular flexible payment options, both online and offline. •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. •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. KLARNA GROUP PLC153 •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 approximately 966 merchants in 26 countries as of December 31, 2025. 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 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. •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 thousand in 2022 to approximately $1,240 thousand 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 KLARNA GROUP PLC154 PSPs, traditional banks, card networks and open banking providers to commerce enablers, technology partners, in-store payment providers and shipping and 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 Financial Model Our financial model is defined by our ability to deliver sustainable growth and significant margins. We attract consumers and merchants with our powerful value proposition. Once on our network, our cohorts compound as consumers and merchants realize increasing value from using Klarna for more of their commerce needs over time. As network activity grows, so does ARPAC through diversified revenue streams, based primarily on merchant fees. We also maintain a conservative, cost-effective funding model and best-in-class underwriting process with low credit losses, which drives transaction margin dollar efficiency. Finally, we consciously manage operating expenses to drive leverage throughout our model. For example, our recent initiatives and strategic investments, such as wide-scale AI adoption in various aspects of our operations, have driven a significant margin expansion. The foundations of our financial model allow us to make deliberate decisions to invest in product and global expansion. We believe these decisions play a key role in our success and have allowed us to successfully compete in various markets and geographies for almost 20 years. We have maintained an intentional balance of growth and profitability, generating positive net income from 2005 to 2018. From 2019 to 2022, we invested heavily to accelerate our global revenue growth, specifically in the United States. In 2023, we reached an inflection point when the scale of our U.S. operations allowed us to achieve a significant operating loss improvement and generate positive transaction margin dollars in that market. The positive transaction margin dollars in the United States, combined with a blend of operational discipline and AI-driven efficiencies, allowed us to achieve significant operating margin improvement on a consolidated basis. 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. From 2023 to the year ended December 31, 2025, our operating margin grew by 8 percentage points. At the same time, we have achieved significant scale (reaching $128 billion in GMV in the year ended December 31, 2025), growth (25% year-over-year revenue growth in the year ended December 31, 2025). KLARNA GROUP PLC155 Our GMV has consistently grown faster than the broader market. From 2023 to 2025, our GMV grew at 18% CAGR, compared to a 5% CAGR for the total spend in the Retail and Travel categories in our current markets, according to the Market Opportunity Study. We have accomplished this financial performance while continuously innovating and investing in our growth. Merchant-Led Fees The chart below shows an illustrative Pay Later transaction, including its flow and life cycle, where consumers complete their purchase today, while deferring the full payment to a later date or paying in installments. 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. Merchant fees vary based on several factors, including the geography and transaction type. Similarly, in the case of Pay in Full, consumers pay for the transaction immediately, and Klarna charges the merchant a fee after a successful transaction. Fair Financing is similar to Pay Later in that we allow the consumer to pay over time, but for longer periods (generally over six to twelve months, but can be up to 36 months depending on the purchase). Consumers using Fair Financing may also be charged predetermined and clearly labeled interest on their outstanding borrowings over the borrowing period. In a Fair Financing transaction, we may earn interest income on the consumer’s use of credit provided by us. Our consumers can also take advantage of two payment flexibility features for a fee. “Snooze” gives them additional days to pay for their purchase. For larger purchases, our consumers can also convert their Pay Later transaction to a Fair Financing product, which helps consumers better manage their finances. In the quarter ended December 31, 2025, Pay Later represented 77% of our total transactions (78% of our GMV), Pay in Full (after excluding transactions processed through KCO unbranded channels) 18% of our total transactions (10%) and Fair Financing the remaining 4% (12%). The increase in the proportionate share of Fair Financing transactions corresponds to the continued expansion of the full suite of our payment products across a growing number of merchants. For example, the number of merchants offering Fair Financing has doubled in two years, from approximately 61k merchants in December 2023 to 194k merchants in December 2025, including leaders in their respective categories, like Walmart. This expansion underpinned a 165% year-over-year growth in our Fair Financing GMV in the quarter ended December 31, 2025. As an everyday spending partner, 97% of all of our transactions in the year ended December 31, 2025 were interest-free. We anticipate that these interest-free products will continue to account for a significant majority of our total transactions in the future. At the same time, we expect the relative contribution of our Fair Financing product to both the total number of transactions and our overall GMV to increase in future periods. We also believe that any changes in our payment mix will be gradual, given our broad diversification across merchants, verticals and geographies. KLARNA GROUP PLC156 Illustrative Pay Later Transaction ____________ Reflects our average take rate in the year ended December 31, 2025 In addition to the revenue we generate from facilitating transactions on our commerce network, we also earn revenue from providing value-added services to our consumers and merchants. In the year ended December 31, 2025, on average, 46 million of our active Klarna consumers opened the Klarna app every month to track their purchases, use our budgeting and banking tools, or to shop taking advantage of our AI assistant, our specialized shopping search-engine, our offers, or our inspirational product catalog. We generate advertising revenue when a consumer clicks on an ad placed on the Klarna app or our website after their initial search, or purchases an item they have found through the Klarna app. We also generate consumer service revenue from our consumers using Klarna Membership, our subscription service that grants consumers access to a variety of features and offers, including special merchant deals. Advertising revenue reached $190 million in the year ended December 31, 2025, or 5% of our total revenue. As we continue to build on our lifestyle, shopping and financial services, we believe the composition of our revenue streams will continue to evolve. Flexible and Low-Cost Base We are able to attract consumers and service them at a structurally low cost base. •Low Cost to Acquire. We acquire many consumers organically, thanks to our strong brand and our intuitive sign-up process, which enables consumers to use us for the first time when registering at the merchant checkout. •Low Cost of Risk and Flexible Credit Issuance. Our expertise in credit underwriting, built over nearly two decades of experience and incorporating the latest ML technology, has resulted in our provision for credit losses representing less than 0.2% of GMV in our most mature markets and 0.63% overall in the year ended December 31, 2025. The transactional nature of our credit model makes the duration of our average loan short-term (approximately 39 days in the year ended December 31, 2025, including 27 days for Pay Later and 109 days for Fair Financing), meaning that changes in our credit policy have an almost immediate impact on our results of operations. •Low Cost of Funding. Because of the short duration of our credit, our average consumer receivables in the year ended December 31, 2025 were $9.3 billion, compared to our GMV of $128 billion. Thanks to the trust of our consumers and our banking license, in the year ended December 31, 2025, we funded 90% of our lending activities by utilizing consumer deposits, which equaled $13 billion as of December 31, 2025. As KLARNA GROUP PLC157 a result, our average cost of funding was approximately 2.4% compared to xIBOR in Europe of approximately 2.5% in the year ended December 31, 2025. •High Operating Leverage. Our centralized product development enables us to scale without proportionally increasing our cost base. Increasing use of AI and a focus on cost optimization is also supporting our ability to reduce our expenses, more than offsetting any associated increase in salaries and technology costs. Despite the reduction in our workforce, thanks to AI-driven efficiency gains and normal course employee attrition, we have continued to innovate, launching our Klarna Card in 16 markets in 2025. Our focus on cost-disciplined innovation has driven a 54% revenue growth in the year ended December 31, 2025 compared with 2023 while our operating expenses increased by 44% for the same period. 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. Key Business Metrics The following table sets out our key business metrics as of and for the periods indicated. We review these key business metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions. In addition, these business metrics are presented to assist investors to better understand our business and how it operates. As of, or for the Year Ended, December 31, 2025 2024 2023 GMV (in $ millions) ............................................................................................... 127,862 105,015 92,465 Year-over-year change (in %) .......................................................................... 22% 14% N/A Year-over-year change on a like-for-like basis* (in %) .............................. 20% 15% N/A Number of Active Klarna Consumers (in millions)1 ........................................... 118 93 84 Year-over-year change (in %) .......................................................................... 27% 11% N/A ARPAC (in $)2 ........................................................................................................ 29 30 27 Year-over-year change (in %) .......................................................................... (3)% 11% N/A Year-over-year change on a like-for-like basis* (in %) .............................. (2)% 13% N/A Transaction Margin Dollars (in $ millions)3 ........................................................ 1,238 1,217 1,085 Year-over-year change (in %) .......................................................................... 2% 12% N/A Year-over-year change on a like-for-like basis* (in %) .............................. 9% 15% N/A n.m. = not meaningful ____________ 1 The year-over-year increase the number of our active Klarna consumers in the year ended December 31, 2025 was partly driven by the transition of Stocard customers into our network. 2 The year-over-year decrease in our ARPAC in the year ended December 31, 2025 was driven by the transition of our former Stocard customers into our network, which resulted in a significant increase in the number of our active Klarna consumers over a short period of time. 3 Transaction margin dollars is a non-IFRS measure. See “—Non-IFRS Financial Measures” below. Note: Our key business metrics presented in the table above include transactions processed through KCO. Adjusted for the sale of KCO, our key business metrics equalled in the year ended December 31, 2024 and 2023, respectively: (1) GMV: $102,455 million (16% year-over-year change) and $88,665 million; (2) ARPAC: $30 (15% year-over-year change) and $26; and (3) transaction margin dollars: $1,189 million (17% year-over-year change) and $1,016 million. The divestment of KCO does not affect the number of active Klarna consumers nor any fiscal period subsequent to the fourth quarter of 2024 when the sale of KCO was completed. *Year-over-year change on a like-for-like basis is calculated by adjusting the relevant metric for (1) the sale of KCO and (2) the impact of foreign currency fluctuations. The impact of foreign currency fluctuations is calculated by translating the reported amounts in the current period using the exchange rates in use during the comparative prior period. We present like-for-like changes in our metrics when one of the KLARNA GROUP PLC158 comparative periods is, or includes, the fourth quarter of 2024, the period in which the sale of KCO was finalized. Gross Merchandise Volume We define GMV, measured for a period, as the total monetary value of all completed purchases on our network in that period, excluding any additional fees (such as interest, reminder or other fees) and any subsequent actions (such as returns, settlements and disputes). GMV does not represent revenue earned by us. However, GMV is a measure of the scale of our network and is a key driver of our revenue. GMV growth is driven by an increase in the number of merchants on our network that our consumers can transact with, the number of active Klarna consumers and the average spend of our consumers. While GMV is a key indicator of the payment volume of our network, it does not reflect all of the transactions that are enabled through our network. For example, a customer may purchase products from a merchant in response to an ad placed by that merchant in the Klarna app but not use a Klarna payment solution to complete the transaction. In that case, the transaction would not contribute to our GMV or generate merchant revenue, but would generate advertising revenue for us. In the year ended December 31, 2025, our GMV was $128 billion, which represented an increase of approximately 38% from 2023. We have observed a notable acceleration of our GMV growth in recent months, both in the United States and our more mature markets, driven by Klarna becoming, or on track to become, a default payment option with a growing number of PSPs, including JP Morgan Payments, Stripe, Nexi and Worldpay, as well as the continued expansion of our merchant relationships. We believe that such partnerships position us well to further expand our GMV globally. We generate GMV from two points of purchase: •At the merchant’s checkout, when a consumer chooses a Klarna payment option to purchase goods or services from a merchant on our network; and •Direct-to-consumer, when a consumer uses a Klarna-issued payment card—either the Klarna card or a one-time card—at any online or physical store that accepts Visa, irrespective of whether the merchant is on our network. KLARNA GROUP PLC159 The table below shows the breakdown of our GMV between these two points of purchase for the periods presented: For the Year Ended December 31, 2025 2024 2023 Total (in $ millions) ............................................................................................... 127,862 105,015 92,465 Merchant checkout (in $ millions) .................................................................... 112,916 95,623 84,642 as share of total GMV (in %) ............................................................................. 88% 91% 92% Direct-to-consumer (in $ millions) .................................................................... 14,946 9,392 7,823 as share of total GMV (in %) ............................................................................. 12% 9% 8% In addition, the table below shows the relative breakdown of our GMV among our payment options for the periods presented: For the Year Ended December 31, 2025 2024 2023 Pay in Full ............................................................................................................. 11% 16% 21% Pay Later .............................................................................................................. 80% 79% 75% Fair Financing ...................................................................................................... 9% 5% 4% Note: Data in the table above excludes GMV generated through KCO unbranded channels. Number of Active Klarna Consumers We define active Klarna consumers as consumers who have made a purchase or a payment using a Klarna-branded product or logged into the Klarna app within the past 12 months. As a result, this metric represents consumers who have engaged in a revenue-generating activity in a relevant period, either by making a purchase or a payment using Klarna (therefore generating merchant and/or interest revenue) or logging into the Klarna app (therefore generating advertising revenue). In the year ended December 31, 2025, the number of active Klarna consumers increased 28% year-over-year compared to the year ended December 31, 2024, reaching approximately 118 million, primarily driven by our growth in key markets, including the United States and the U.K., as well as the successful conversion of Stocard users into our active Klarna consumers. In the year ended December 31, 2025, on average, 46 million of our active Klarna consumers opened the Klarna app every month. The number of active Klarna consumers excludes consumers using Sofort (an online payments company acquired by us in 2014, operating primarily in Germany and consolidated into Klarna Bank in December 2024), Billpay (a German online payments company acquired by us in 2017), Pricerunner (a comparison price leader acquired by us in 2022) as well as consumers who have transacted through unbranded channels. We continuously work to better integrate our acquired businesses into our operations and network and, as a result, to transition their users that we have engaged with us over time into active Klarna consumers. For example, we recently transitioned Stocard users to the Klarna app. This migration integrated Stocard’s active users into Klarna’s ecosystem, enhancing their experience with loyalty card management and flexible payment options. The successful integration of Stocard users has significantly contributed to the recent growth in Klarna’s active consumer base, strengthening our position as a leading global payments and shopping platform. Average Revenue per Active Consumer We define ARPAC as our total revenue divided by the number of active Klarna consumers over the period. We monitor our ARPAC to track the value we generate across all our active Klarna consumers in a given period. ARPAC is a key indicator of consumer success on the Klarna network because it quantifies the spending behavior and engagement of active Klarna consumers on our network over time. When we are successful in growing our active Klarna consumers and average spend per user, our ARPAC expands. KLARNA GROUP PLC160 Our ARPAC grew by 7% from 2023 to the year ended December 31, 2025, despite being temporarily negatively affected in recent periods by the Stocard user integration discussed above. ARPAC is driven by purchase frequency, AOV and take rate. Typically, purchase frequency, which is defined as the total number of transactions on our network over the past 12 months divided by the number of active Klarna consumers in the same period, increases as our market penetration and maturity grow. For example, in Sweden, where we launched in 2005, consumers transacted on average 33 times per year in the year ended December 31, 2025, as compared to 30 times per year in 2023. In the United States, where the Klarna app launched in 2019, consumers transacted on average 6 times per year in the year ended December 31, 2025, as compared to 5 times per year in 2023. We aim to further increase purchase frequency by expanding our network into new verticals and through various initiatives, including the Klarna card, our shopping browser extension and additional PSP integrations, in particular with MoRs, each of which increases the merchant adoption of our network and its relevance to consumers. Expanding Purchase Frequency ________________ Note: The chart above refers to the year ended December 31, 2025 for Klarna. 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. Purchase frequency is the primary driver of ARPAC growth. Typically, consumers transact more frequently the longer they are on our network, as they experience the benefits and increased value our network provides over time. There is also a correlation between the number of merchants using our network in a geography and the consumer purchase frequency in that geography, reflecting the network effects we have created. KLARNA GROUP PLC161 New Cohort Purchase Frequency Accelerating Faster than Older Cohorts ________________ Note: Consumer cohorts are based on the date of first purchase on our network. Purchasing consumers refers to consumers who have made a purchase using a Klarna payment method. ARPAC generally increases the longer consumers have been using our network. In addition, as we have expanded, new cohorts typically have a higher starting point for average revenue per purchasing consumer resulting from a higher initial purchase frequency and feature usage. Transaction Margin Dollars We define transaction margin dollars as total revenue less total transaction costs, which consist of processing and servicing costs, provision for credit losses and funding costs. From 2024 to the year ended December 31, 2025, our transaction margin dollars grew 2% to $1,238 million from $1,217 million. In contrast GMV grew 22% in 2025, reflecting mix and timing effects from the rapid expansion of Fair Financing. As Fair Financing scales, we provision expected credit losses upfront while revenue is recognized over subsequent quarters. In 2025, this drove an increase in provision for credit losses ($794 million vs. $495 million), creating near-term margin pressure. The result is deferred profitability, with growth in higher-duration Financing products weighing on current-year Transaction Margin Dollars. We expect the relative portion of Fair Financing products in our overall payment option mix to increase as we continue to expand the availability of our full suite of payment products across our growing merchant network, including at leading merchants in their respective categories, like Walmart. In line with IFRS accounting standards, we recognize a provision for credit losses at the time of each Fair Financing transaction, even though we will generate interest income on such transactions over the life of the loan. As a result of this provisioning process, we have seen a near-term negative impact to our transaction margin dollars in 2025 driven by increased provisions for credit losses as we continue to increase our GMV generated from Fair Financing. At the same time, our transaction margin dollars are expected to increase as we recognize interest income from such Fair Financing products over time in excess of the provision for credit losses originally taken, as illustrated below. KLARNA GROUP PLC162 Illustrative Impact of Fair Financing on Income Statement Over Time Other Key Metrics Underlying Our Financial Model Revenue Our revenue is driven by the number of consumers transacting through our network and ARPAC associated with these transactions. Revenue is influenced by three factors: the primary and overarching factor is growth of GMV on which we generate transaction and service revenue, followed by advertising revenue from the use of the Klarna app and consumer service revenue from the use of Klarna Membership. Take rate We define take rate as our total revenue as a percentage of GMV. Our take rate increased from 2.5% in 2023 to 2.7% in the year ended December 31, 2025. Take rate is a function of multiple dynamics of our business, which are continuously evolving as we expand our offerings and enter additional markets, including geographic, product, channel and vertical mix. For example, generally the U.S. market has higher take rates than our other geographies, so any increase in the share of the U.S. market in our GMV is expected to, all other things being equal, result in a higher overall take rate. Similarly, longer duration financing products have higher take rates compared to Pay in Full or the Klarna card. In turn, higher purchase frequency verticals, such as services, have generally lower take rates. Finally, our revenue increases as we add value to consumers and merchants through the use of the Klarna app, driving advertising and consumer service revenue without an associated increase in GMV. We divide our revenue into two categories: (i) transaction and service revenue and (ii) interest income. The majority of our revenue is transaction and service revenue, which primarily consists of merchant revenue. Transaction and service revenue Transaction and service revenue represented 71%, 76% and 78% of our total revenue in the year ended December 31, 2025 , 2024, and 2023, and grew 17% and 21% year over year, respectively. Transaction and service revenue is composed primarily of the following: •Merchant Revenue. Merchant revenue primarily refers to fees paid by our merchants, generated when consumers transact on our network and also includes interchange revenue and fees for settling KLARNA GROUP PLC163 disputes. In the year ended December 31, 2025 and in 2024 and 2023, merchant revenue represented 74%, 75%, and 76%, respectively, of our transaction and services revenue. This revenue is derived from the volume of transactions we process multiplied by the fees we charge, which vary across our geographies. Our pricing is a combination of value-based and fixed pricing, charged either ad valorem (proportional to the estimated value of goods and services transacted through our network) or fixed fees on each transaction, or a mix of both, depending primarily on the merchant vertical. Our growth in the United States was a meaningful driver of the merchant revenue growth, given the higher take rates in the U.S. market. •Advertising Revenue. We define advertising revenue as revenue paid by merchants who advertise on our network. In the year ended December 31, 2025 , 2024, and 2023, advertising revenue represented 7%, 8%, and 9%, respectively, of our transaction and service revenue. We earn advertising revenue from search solutions as well as affiliate and brand ads placed on our network. •Consumer Service Revenue. We define consumer service revenue as revenue we earn from fees charged to consumers. In the year ended December 31, 2025 , 2024, and 2023, consumer service revenue represented 15%, 16%, and 13% of our transaction and services revenue, respectively. A declining share of our consumer service revenue comes from reminder fees, which represented 66%, 74%, and 83% of our consumer service revenue in the year ended December 31, 2025 , 2024, and 2023, respectively. Klarna’s reminder fees are flat, capped, clearly disclosed and applied only when a payment is several days late. Reminder fees are always preceded by multiple friendly reminders (e.g., push notifications, emails and app reminders). These fees are designed to encourage timely repayment and help cover our costs. Reminder fees vary by geography and payment option. Gain on sale of consumer receivables Gain on sale of consumer receivables consists of gains recognized on the sale of Fair Financing receivables to institutional investors which transfer the related credit risk and funding exposure. During the year ended December 31, 2025, the Company entered into entered into sales agreements of Fair Financing receivables comprising both an initial sale of existing portfolio and additional forward flow agreements. The total Fair Financing receivables sold during the year was $1.6 billion. These sales of receivables resulted in a gain on sale $73 million, of which $25 million was reclassified from other comprehensive income during 2025. There was no comparable revenue for the year ended December 31, 2025. Interest income We define interest income as income we earn when consumers choose to spread the cost of transactions over time with one of our interest-bearing financing products or delay the cost of transactions with our payment flexibility features, such as “snooze.” Since 2021, we have only charged consumers interest on our Fair Financing products, with a duration of three months or longer. Pay in Full or Pay Later products are non-interest bearing. Interest income represented 27%, 24% and 22% of our total revenue in the year ended December 31, 2025 and in 2024, and 2023. Operating Expenses Operating expenses include processing and servicing costs, provision for credit losses, funding costs, technology and product development expenses, sales and marketing expenses, customer service and operations expenses, and general and administrative expenses. From 2023 to the year ended December 31, 2025, we saw a decrease across our operating expenses as a percentage of our revenue, as revenue growth has outpaced operating expense growth. Technology and product development expenses as a percentage of revenue decreased 3 percentage points, sales and marketing expenses as a percentage of revenue decreased 5 percentage points, customer service and operations expenses as a percentage of revenue decreased 5 percentage points, and general and KLARNA GROUP PLC164 administrative expenses as a percentage of revenue decreased 3 percentage points. This led to our total operating expenses as a percentage of revenue decreasing 8 percentage points from 2023 to the year ended December 31, 2025, even as our GMV increased 38% in the same period. As a result, our operating result improved by $93 million (or 29%) in the year ended December 31, 2025. In the same period, our adjusted operating result improved by $114 million (or 233%), from an adjusted operating loss of $49 million to an adjusted operating profit of $65 million. In fact, during the year ended December 31, 2025, the difference between our revenue, on the one hand, and adjusted operating expenses has been increasing. This increased leverage has been the result of a number of efficiencies we are implementing throughout our business, including certain AI-focused initiatives which have reduced our costs. The below chart illustrates our expanding operation margins from 2019 to the year ended December 31, 2025. Expanding Operating Margin ________________ Note: Adjusted operating expenses are non-transaction related IFRS operating expenses excluding processing and servicing costs, provision for credit losses and funding costs. In particular, from 2023 to the year ended December 31, 2025, as a result of our declining operating expenses as a percentage of our total revenue, our operating result improved by $93 million (or 29%). In the same period, our adjusted operating result improved by $114 million, from an adjusted operating loss of $49 million to an adjusted operating profit of $65 million. Transaction Margin Dollars and Transaction Margin We define transaction margin dollars as our total revenue less total transaction costs, which consist of processing and servicing costs, provision for credit losses and funding costs. The most directly comparable financial measure presented in accordance with IFRS to our transaction margin dollars is operating income (loss). We calculate transaction margin dollars as operating income (loss) plus technology and product development costs, sales and marketing costs, customer service and operations costs, general and administrative costs and depreciation, amortization and impairments costs. Transaction margin is calculated by dividing transaction margin dollars by our total revenue. See “—Non-IFRS Financial Measures.” KLARNA GROUP PLC165 Processing and servicing costs We define processing and servicing costs as costs we pay to settle transactions, including payment fees, authentication fees and scoring costs. Processing and servicing costs typically vary as a result of the relative mix of payment methods and the geographies in which we operate. For example, while in the United States our take rates are higher, our payment fees are similarly higher as a result of a less regulated payments ecosystem as compared to other jurisdictions, which leads to higher processing and servicing costs. Provision for credit losses We define provision for losses as provisions for future losses and realized losses associated with all consumer lending activities during the relevant period. Our provision for credit losses have consistently remained below 1% of GMV (0.63% in the year ended December 31, 2025). Funding costs We define funding costs as net interest costs associated with funding our consumer financing products. They include interest that we pay on our consumer deposits. From 2023 to the year ended December 31, 2025, our funding costs increased from $297 million to $667 million, or from 0.32% to 0.52% of our GMV and from 3.1% to 5.1% of our deposits over the same period. Our highly competitive deposit savings platform and bank license provide us greater operational flexibility and a relatively lower funding cost compared to wholesale funding models. For example, in the year ended December 31, 2025, 90% of our lending activities were funded from our consumer deposits, 58% of which are fixed and longer-term than the average duration of the consumer loans that we funded through such deposits. The below table illustrates changes in our various transaction costs from 2023 to the year ended December 31, 2025. As shown below, we increased our total transaction costs by 91% while growing our revenue by 54% over the same period. For the Year Ended December 31, 2023 to 2025 % Change 2025 2024 2023 Processing and servicing costs ........................................ $(809) $(596) $(541) 50% Provision for credit losses ................................................. (794) (495) (353) 125% Funding costs ....................................................................... (667) (503) (297) 125% Total ....................................................................................... $(2,270) $(1,594) $(1,191) 91% Our priority is to drive transaction margin dollar growth, given that our margin can fluctuate with changes in our product, merchant, vertical and geographical mix. Transaction margin is calculated by dividing transaction margin dollars by our total revenue. We have consistently delivered increasing transaction margin dollars in a new geography following our entry into that geography. As our markets mature, the number of active Klarna consumers and their purchase frequency typically increase, leading to a more frequent use of our network. Higher purchase frequency drives increased scale, which in turn improves the data that we collect and use to underwrite, reducing credit losses from both new and existing consumers. This approach allowed us to generate positive transaction margin dollars in all 10 markets that we launched before 2020. Our Ability to Grow Our Global Consumer Base The growth and engagement of our global consumer base is a critical factor in our ability to grow our total revenue and operating results. KLARNA GROUP PLC166 Consumer growth We have a track record of growing the number of active Klarna consumers over time. As of December 31, 2025, we had 118 million active Klarna consumers, an increase of 42% from 2023. This growth was primarily driven by our success in attracting new consumers in our key markets, including the United States and the U.K., as well as our ability to successfully convert our former Stocard users into active Klarna consumers. Number of Active Klarna Consumers (in millions) Our consumer base growth is supported by powerful secular trends such as the growth of digital payments and increasing distrust of credit cards among younger generations. For example, 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. Additionally, in 2024, only 72% of U.S. consumers had trust in their bank and their practices, according to Ipsos. In 2024, Americans collectively paid $254 billion in credit card interest and fees, according to WalletHub. We expect to continue to grow the number of our active Klarna consumers by capturing more consumers in existing markets, including gaining customers from merchants at the checkout and converting consumers from other parts of the Klarna ecosystem. Increasing consumer penetration in existing markets Our active Klarna consumers are geographically diverse, even though our market penetration varies materially around the world. For example, in Sweden, our most mature market, approximately 85% of the adult population were active Klarna consumers as of December 31, 2025, while in the United States, the market that we entered only five years ago, that number was approximately 11%. Although we have reached significant scale, the penetration of the addressable consumer base in the markets we serve today was only 14.8% as of December 31, 2025. We believe we have an opportunity to significantly increase our market penetration over time, particularly in the United States. We have a track record of increasing KLARNA GROUP PLC167 consumer penetration as we mature and expand our offerings in individual geographies, as shown in the chart below. Expanding Consumer Penetration Effective consumer acquisition strategy We initially reach consumers in their commerce discovery journey at the point of purchase. We enable consumers to sign up to Klarna at the point of checkout, with minimum friction. Since we partner with some of the largest merchants globally, being able to sign up consumers at checkout is a very effective consumer acquisition strategy. We are very focused on acquiring consumers in a highly efficient manner. Our cohorts demonstrate high degrees of repeatability and predictability, which, in combination with our transaction margin dollars, enables us to continue investing in consumer acquisition outside of the merchant checkout. We expect to continue to focus on acquiring new consumers and increasing our engagement with our existing consumers, with the goal of becoming their everyday spending and saving partner. Our Ability to Increase Engagement and Expand Revenue from Existing Consumers Purchase frequency growth drives increased spend on our network As consumers find value on our network, they are typically more engaged and use Klarna for more of their purchasing needs, which is visible in our frequency trends. On average, our 2019, 2020 and 2021 consumer cohorts made three transactions during their first year on our network and at least ten transactions by year three. Purchase frequency typically increases as we launch and scale key product initiatives and as we expand into new verticals. These initiatives contribute to purchase frequency expanding as we mature within our existing markets, as demonstrated in the graphic below. In Sweden, for example, our average purchase frequency has reached 33 times per year in 2025. In the United States, purchase frequency in that period was approximately 6 times per year and grew from 5 in 2023. KLARNA GROUP PLC168 Purchase Frequency by Cohort Expanding Purchase Frequency ________________ Note: The right-hand side chart above refers to the year ended December 31, 2025 for Klarna. 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. Our purchase frequency has consistently grown in the last three years as the proportion of consumers in our more recently launched markets increased. Average annualized purchase frequency across our network reached 10.5 times in the year ended of 2025. Purchase frequency increases with key product initiatives Purchase frequency typically increases as consumers build trust in our brand and progressively discover the added value of our solutions, products and services. New product launches, such as the Klarna card (which allows customers to use Klarna offline) or the shopping browser extension (which makes Klarna available at merchants outside of our network), also increase the utility of our network. In the United States for example, we expect that our average purchase frequency will increase as the product range available through the Klarna card increases. The average U.S. credit card was used over 257 times per year in 2024, according to Capital One, and as we build our product offerings in the United States, we give our consumers more opportunities to use Klarna for more of their purchases. As consumers engage with us more, their use cases of our network expand, which drives engagement and purchase frequency. Consumers typically use more of our products the longer they are on our network. Product cross-adoption, as well as the network effects of our business, where more consumers on our network drive more merchants, accelerates purchase frequency. For example, in the last twelve months ended December 31, 2025, in Germany and Sweden, Klarna card users made on average 96 more purchases per year using Klarna than non-Klarna card users, and in the last twelve months ended December 31, 2025, Klarna app users in the United States transacted 2.8 times as frequently as non-Klarna app users. In short, greater product adoption over time leads to higher purchase frequency. KLARNA GROUP PLC169 Proven Formula to Grow Engagement and Adoption ________________ Note: The increase in the number of transactions by Klarna card users in Germany and Sweden is based on the purchase frequency of German Klarna card users as compared to non-Klarna card users in our 2024 consumer cohort and is calculated by comparing their purchase frequency before such Klarna card users signed up for the Klarna card to their purchase frequency in the following 365 days. The increase in the purchase frequency for Klarna app users in the United States was based on data from the twelve months ended December 31, 2025. Consumer cohorts are defined by reference to the date of the consumer’s first purchase. Purchase frequency increases as we expand into new verticals We actively seek to diversify our merchant verticals as we grow within our geographies. For example, purchase by vertical is most diversified in Sweden—our most mature market where the percentage of total purchases is almost evenly distributed across Apparel & Accessories, Health & Beauty, Home & Electronics, Food & Beverage, and Leisure—while, for example, in the United States, the majority of purchases are still within the Apparel & Accessories vertical. Our newer verticals are often the more frequent purchase categories for consumers. Accordingly, there is a strong correlation between market maturity, vertical diversification and purchase frequency in the markets in which we operate. KLARNA GROUP PLC170 Category Expansion Average Order Value (“AOV”) Expansion Our AOV was $103 in the year ended December 31, 2025 and increased 2% from 2023. AOV is primarily a function of our geographic, product and vertical mix. The increase in our AOV from 2023 to the year ended December 31, 2025 was primarily driven by the growth in our U.S. business, where AOV is generally higher than in our other markets. Conversely, lower AOV may be driven by an increase in higher purchase frequency transactions, such as in the Events and Services vertical, including Transportation, which typically have a lower AOV. Compounding Cohort Growth We generally have generated more GMV, and consequently revenue, from our consumer cohorts the longer they have been using Klarna, demonstrating our network’s increasing value to our consumers over time. Every cohort since 2019 has increased GMV annually. On average, purchase frequency in year two was approximately 2.6 times higher than in the first year and 4 times higher by the fourth year. Our Ability to Attract Merchants and Enable Merchant Success Our strategy of turning Klarna into the everyday spending and saving partner depends on our ability to advance our merchants’ success and adding new merchants to our network. We employ a highly efficient, multi-strategy approach to acquire merchants. Our three main channels—Klarna Payments, Klarna In-store and Klarna In-app—facilitate seamless and fast transactions, which help us attract and retain merchants. As of December 31, 2025, we served approximately 966 thousand merchants. While our network has had success with enterprise merchants, our value proposition is relevant to all merchant categories regardless of their size, vertical or AOVs. We serve a diverse global merchant base across 26 markets and more than 15 verticals, including Apparel & Accessories, Everyday Payments, Travel, Health & Beauty, Home & Electronics, and much more, as illustrated by the chart below. 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, the United KLARNA GROUP PLC171 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 to facilitate payments, while an even greater percentage (66%) advertised on our network during the same period. This represents a significant increase in our adoption rate among top merchants from 2019, as illustrated by the chart below. 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 2024. In the year ended December 31, 2025, we also added more than 285 thousand net new merchants to our network, a 42% year-over-year growth. We also leverage our growing partner network, primarily PSPs, to boost merchant adoption. We are usually an opt-in payment method with our PSP distribution partners, with our GMV accounting for less than 1% of our PSP partners’ total GMV in the year ended December 31, 2025. Opt-in typically requires us to proactively market our payment methods toward their merchants. Becoming a default payment option with our PSP partners, where a merchant no longer needs to opt-in but rather has the option to opt out, represents a significant opportunity for us to attract merchants. For example, based on publicly available information provided by the largest PSPs in the markets in which we operate, we estimate that the total addressable volume processed by them equaled approximately $8 trillion in the year ended December 31, 2025 of which $6.7 trillion was processed by our current PSP partners that are committed to or already live with Klarna. We expect these steps, combined with our trusted global brand, our consumer reach and our comprehensive and innovative products, will allow us to continuously expand our merchant network. We are highly focused on, and benefit from, the growth of our merchants. As merchants begin to use our solutions, they realize the value we deliver and often then expand their use of our network into additional products, services and geographies, which in turn increases our share of their checkout and drives further GMV gains. At that point, merchants often decide to use our additional solutions to acquire new consumers, from which we generate additional advertising revenue. The chart below illustrates our expanding partnership with On, one of many globally trusted brands that joined our network in recent years. This chart and the case studies that follow provide several 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. KLARNA GROUP PLC172 Accelerating Merchant Growth ________________ 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 Sephora 6.8 times per year on average, compared to four times per year on average for all Sephora KLARNA GROUP PLC173 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. We have continued to add high-quality merchants to our network, as measured by the size of the merchant cohort added, and its consistent GMV and revenue growth over time. We also benefit from the global nature of our network. While we may add a merchant in one country, that same merchant can grow their global reach by launching Klarna in more and more markets, driving further revenue expansion of our merchant cohorts. As we deliver more value to our merchants, they become more engaged with us, which results in a meaningful revenue expansion. Impact of Evolving Global Geography, Product and Merchant Vertical Mix on Our Operating Results and Transaction Margin Our operating results, including take rates and transaction margin dollars, are impacted by geographical, product, and merchant vertical mix. While these factors may impact various line items of our operating results in different ways at any given point in time, they collectively drive our long-term growth. Geographical mix Geographical mix impacts our operating results due to differences among our markets, including consumer spending behaviors, take rates, consumer credit profiles, the maturity of our credit underwriting and varying processing costs. Our U.S. market today, for example, has higher take rates, as well as higher processing and servicing costs compared to other regions and as a result, has a lower transaction margin than our more established geographies. As we have entered and scaled in new markets, our operating losses have consistently decreased while our transaction margin dollars expanded. As a result, over the longer term, we anticipate that our transaction margin will expand, especially on a country-by-country basis. However, in the short term, while our transaction margin dollars may grow in absolute terms, our transaction margin may decline in percentage terms, as our U.S. operations continue to grow faster than our more mature markets, notwithstanding the impact of our existing and future forward flow sale arrangements, which are expected to mitigate the transaction margin percentage impact of our continued growth in the U.S. market. As we mature our operations in new markets, greater scale typically enables us to lower our processing and servicing costs and better data and understanding of consumer credit enables us to improve our provision for credit losses. Payment option mix Payment option mix impacts our operating results due to varying consumer and merchant economics, take rates and our cost to provide various payment options, including differences in processing fees and provision for credit losses. While we have a range of options, we are able to deliver strong transaction margin dollars across all of them. For example, our Fair Financing payment option is longer in duration than our other solutions and as such, has higher associated take rates but also higher associated provision for credit losses. Our Pay in Full payment option on the other hand generally has lower take rates but has no funding costs and minimal provision for credit losses. KLARNA GROUP PLC174 Merchant vertical mix Our merchants’ verticals also impact our operating results. Different verticals have different purchase frequencies and AOV as well as may transact to varying degrees with different Klarna payment methods. For example, we are currently growing in Services and Experiences verticals, such as Events and Food & Beverage. These verticals typically have a higher purchase frequency but lower AOVs than other verticals, and are transacted with the Klarna card or Pay in Full. At the same time, our largest merchant vertical is Apparel & Accessories, which in the year ended December 31, 2025 represented approximately 41% of our GMV. In the year ended December 31, 2025, this vertical had a higher-than-average AOV and purchase frequency. In addition, the share of GMV generated from transactions made with our Pay Later payment product in 2025 in this merchant vertical was significantly higher than the average share of Pay Later across all of the transactions conducted on our network. Our Ability to Maintain Our Cost-Effective Stable Funding Our funding base is stable, low-cost and flexible as we have the ability to access a variety of forms of funding, including consumer deposits that our banking license, a core competitive advantage, allows us to collect. Higher funding costs would negatively impact our transaction costs and transaction margin dollars. We have a conservative, deposit-based approach to funding. In the year ended December 31, 2025, we funded 90% of our lending activities by using funds raised by offering our fixed deposits to our consumers. This contributes to our relatively low cost of funding, as deposit-based funding is generally cheaper than nonbank sources, such as ABS-based funding. We have been operating this deposit-based approach for over 14 years, and we believe we can continue to grow our deposit base if and when needed given the size of our current deposits relative to the overall market demand for deposits. We also have the flexibility to diversify our funding strategy across multiple sources if desired. Our investment grade rating with S&P (BBB-/A-3) allows us to issue a variety of debt securities at a relatively low cost. We have also entered into a number of synthetic securitizations and wholesale funding transactions to support our continued growth and believe we can continue to access capital markets for our financing needs when advantageous to us in various market conditions. We have a centralized funding model whereby substantially all deposits and other funding (e.g., wholesale market funding) is raised by Klarna Bank. Klarna Bank then provides, by utilizing currency swaps when needed, necessary funding to other entities within our consolidated group, including to enable our geographical expansion and growth in new markets outside of the EEA. There are currently no regulatory restrictions on the amount of such funding that can be provided to our entities that are within the regulated banking group, which comprises Klarna Holding and its subsidiaries, including Klarna Inc., our U.S. operating subsidiary, and KFSUK, our U.K. operating subsidiary. Any funding from Klarna Bank to group entities outside the regulated banking group is subject to limits under large exposures rules, which restrict the amount of such funding to 25% of the regulated banking group’s Tier 1 capital. The inherent duration gap between our deposits and consumer loans drives stability in our funding costs. In the year ended December 31, 2025, the average term of our deposits was 268 days, compared to the weighted average life (WAL) based contractual repayment schedules of approximately 39 days (27 days for Pay Later and 109 days for Fair Financing). This duration gap stabilizes the rate at which our funding costs change in response to interest rate changes. We also have control over the average term of our deposits, 58% of which were fixed term in the year ended December 31, 2025. We can adjust terms based on our expectation of market interest rates to lengthen or shorten the duration gap and best respond to different interest rate environments. We expect the relative portion of Fair Financing products in our overall payment option mix to increase as we continue to expand the availability of our full suite of payment products across our growing merchant network, including at leading merchants in their respective categories, like Walmart. We anticipate that the average term of our consumer deposits will continue to remain significantly above such average loan duration. We also expect to be able to raise deposits and other forms of funding and utilize KLARNA GROUP PLC175 forward-flow arrangements as needed to support the extension of consumer loans, including as a result of our recently announced partnership with Walmart, in line with our regular business practice. Accordingly, we do not believe that our deposit-based funding model or our short- or long-term financing needs will be materially different in the near-future. Finally, although we expect our funding costs to continue to fluctuate to reflect the broader market conditions, we believe that our funding model will remain conservative in any market environment. Banking License Advantage: Stable Low-cost Funding _________________ •Reflects on-balance sheet cost of funding. Excludes off-balance sheet funding costs, which are included within Funding costs in our consolidated statements of profit or loss. Note: Figures refer to the year ended December 31, 2025 unless otherwise indicated. Our Ability to Maintain Best-In-Class Underwriting Capabilities and Achieve Low Consumer Credit Losses Our consumer credit offering consists of installment payments and financing products. Pay Later enables consumers to purchase goods or services at the time of the transaction and pay the full amount at a later date. All of our Pay Later products are designed to be fee- and interest-free for the consumer. Fair Financing allows consumers to pay for their purchase over a longer duration. Consumers typically pay interest for this payment method and durations range from three to 48 months. We operate an ML- enabled high-frequency, large scale, real-time underwriting process across a standardized set of products. 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), and 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 only provide credit for specific purchases, with clear repayment terms that are fixed and short-term. We do not allow borrowing in cash, revolving balances or balance transfers, and we freeze an account if the consumer misses a payment, all of which help us maintain low credit losses. KLARNA GROUP PLC176 GMV Growth Coupled with Reducing Credit Losses _________________ Note: Figures refer to the year ended December 31, 2025 unless otherwise indicated. High-growth markets refer to all of our markets excluding the United States, the U.K., the Nordics, Germany, Austria and Switzerland. The number of transactions since inception refers to the period from January 2005 to December 31, 2025. 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 extend credit across a broad customer base. To that end, we have built market-leading underwriting capabilities based on our access to proprietary data set, including first- and third-party data, and a unique credit underwriting process that becomes more accurate as it scales and our ML models analyze growing amounts of data. We provide a new, real-time underwriting decision for each transaction, leveraging our own records, including the customer’s history with Klarna, and purchase behavior from an average of approximately 3.4 million transactions per day made by 118 million active Klarna consumers in the year ended December 31, 2025. We also leverage merchant data, credit bureau reports and open banking data to understand the financial position of the consumer at that point in time. Our underwriting process utilizes ML-based credit models and is fully automated, making decisions in a matter of seconds. The underwriting process begins with the identification and authentication of the consumer and the evaluation of our credit and fraud policies to prevent over- indebtedness as well as potential abuse and fraud. We then assess the consumer’s creditworthiness with our ML-based risk scoring and compare approved consumer credit against our own internal risk appetite, all before providing a final credit decision. 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 KLARNA GROUP PLC177 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- 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. Increasing Accuracy of Our Credit Models* _________________ •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 KLARNA GROUP PLC178 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. Our underwriting process allows us to increase repayment rates and reduce losses, while preventing consumers from taking on unmanageable levels of debt, a stark contrast to credit cards that provide revolving credit and allow cash withdrawals and balance transfers. Each consumer starts with a small spending capacity, compared to large credit limits for new credit card holders, and we gradually increase that limit based on the customer’s repayment history, unlike credit cards, which automatically increase the credit limits to promote usage. We provide consumers clear repayment terms and, by carefully setting the spending capacity based on the customer’s profile and repayment history, ensure that our loans are easy to repay, with less friction than credit cards which permit minimum repayment. Our underwriting process is optimized for sustainable lending that puts the consumer first. In the second half of 2022, we implemented a strategic initiative to adjust our underwriting standards in an effort to improve the overall credit quality of our portfolio. The initiative was driven by our strategic recalibration to a more balanced growth and shift towards profitability. These changes included updates to our credit underwriting decision framework, such as launching new risk models to manage risk return trade-off in line with our profitability targets for 2023, including first-generation new-consumer-level risk models, targeted risk-based down-payment policies, updating decline thresholds following the new model implementation and adjusting our risk-based pricing policies for our consumer loans to drive a higher yield on the portfolio. In particular, we increased the number of consumers that were required to make a down payment in order to take advantage of our financing products. We also increased the average amount of such down payment based on our updated credit risk models, historical delinquency behavior and information from credit bureaus. As a result, in 2023, our credit portfolio comprised loans extended to consumers with either a well-established repayment history with Klarna or a repayment behavior similar to our existing well-performing customer base. Consequently, in the year ended December 31, 2025, our provision for credit losses represented 0.63% of total GMV. Credit Risk Governance and Monitoring We evaluate the repayment ability of our consumers both at origination and post-origination through a structured governance and monitoring framework. On an operational level, our underwriting teams conduct daily and weekly cohort-level monitoring to flag delinquencies and payment deviations, which in turn trigger automated alarms. At the portfolio level, we maintain a dedicated consumer credit committee, comprising our chief financial officer, chief risk officer and chief product and design officer. The committee holds monthly reviews to assess several delinquency indicators, including early- and late-stage delinquencies, volume distributions and loan acceptance rates. Key findings from this review are summarized and escalated to the chief executive officer and our board of directors. This multi-tiered governance and monitoring framework provides early-warning signals and portfolio-level controls that enable timely risk adjustments. Key Credit Metrics We monitor the credit performance of our two primary consumer credit products, Pay Later and Financing, through delinquency rates (leading indicators), cumulative net charge-off curves (realized losses by origination cohort), and allowances for expected credit losses (forward-looking provisioning). Together, these metrics provide a comprehensive view of the credit health of our consumer receivables portfolio. As described below, our credit metrics have remained within our risk appetite parameters throughout the periods presented. Delinquency Rates KLARNA GROUP PLC179 •We monitor credit-risk metrics with particular emphasis on 30-day and 60-day past due rates (“30+ DPD” and “60+ DPD”), which measure the share of quarterly originated volume that is over 30 or 60 days past due. These rates serve as leading indicators of credit quality. •Delinquency rates are calculated by dividing the aggregate origination volume (principal) of consumer loans of a given type (Pay Later or Financing) extended in a given quarter that subsequently become 30/60 days past due, by the total origination volume of that cohort. The calculation is volume-based, not count-based. Once a loan enters a cohort, it remains in the denominator permanently—regardless of subsequent repayment, charge-off, transfer, or sale. The metric therefore captures the proportion of originated volume that has experienced delinquency, independent of whether loans remain on our balance sheet. By including all originated loans irrespective of subsequent developments, we believe the metric provides a useful indicator of underwriting quality. •For Financing, 60+ DPD rates are measured six months post-issuance and 30+ DPD rates at four months, irrespective of original maturity—allowing performance to stabilize for a more reliable read on credit quality. For Pay Later, the observation period is three months, reflecting its short-term nature. •30+ DPD delinquency rates are disclosed alongside our existing 60+ DPD rates. The 30+ DPD metric provides earlier-stage visibility into emerging credit trends and, as described further below, has been instrumental in giving us confidence that the delinquency increases observed in the US during the first half of 2025 are transitory in nature. Cumulative Net Charge-Off Rates •Cumulative net charge-off rates are calculated by dividing net charge-offs (principal amounts deemed uncollectible, net of recoveries) for a given cohort by the originated receivables for that cohort that remain on our balance sheet. A loan is charged off when deemed unlikely to be collected. Loans sold through forward-flow arrangements are included in the cohort at origination. We believe this metric provides meaningful insight into our actual credit-risk exposure and its financial impact on our results of operations. Allowance for Expected Credit Losses •We monitor our allowance for expected credit losses as a proportion of total consumer receivables over time. This balance sheet metric reflects estimated expected losses across the portfolio, determined in accordance with applicable accounting standards, and provides an indication of how our provisioning levels respond to observed and anticipated changes in credit performance. KLARNA GROUP PLC180 Pay Later Credit Performance Delinquency Rates Pay Later delinquency rates in both the US and the Group (which includes the US) showed a modest increase through the first half of 2025. This was consistent with a shift in portfolio mix toward Direct-to- Consumer ("DTC") card-backed products (comprising the Klarna Card, Debit flex Card, and One-time-card). Reflecting this broader strategic shift, full-year 2025 volume growth for these DTC products reached 59% year-over-year, significantly outpacing overall merchant checkout volume growth of 18%. US Pay Later 60+ DPD rates rose incrementally from approximately 1.2% in Q1 to 1.4% in Q2 2025 before moderating in Q3. This pattern is corroborated by our 30+ DPD data, which confirms that the Q2 uptick has since normalized. At the Group level, trends were consistent, with 60+ DPD rates remaining within a narrow range of approximately 0.7–0.9% across 2025 cohorts. Group 30+ DPD rates similarly showed limited movement, staying around 1.5–1.7%, further supporting the view that the Pay Later portfolio has not experienced a structural shift in credit quality. Group refers to all markets in which Klarna operates, including the U.S. “U.S.” refers solely to the United States market. KLARNA GROUP PLC181 Cumulative Net Charge-Off Rates The modest delinquency increase observed in Q2 2025 is reflected in our cumulative net charge-off curves, with the Q2 2025 origination cohort tracking above prior cohorts at the same point in its life cycle. As noted above, the 30+ DPD data confirms a normalization in Q3 2025 delinquency rates and we expect cumulative charge-off curves for subsequent cohorts to converge toward historical levels. Group refers to all markets in which Klarna operates, including the U.S. “U.S.” refers solely to the United States market. Allowance for Expected Credit Losses The allowance for expected credit losses as a proportion of gross Pay Later receivables decreased from 4.2% in Q3 2025 to 3.5% in Q4 2025. This movement reflects mechanical portfolio composition effects rather than any deterioration or improvement in underlying credit quality. The elevated coverage ratio in Q3 2025 was driven by the launch of our US forward flow programs, under which newly originated Pay Later receivables were sold to third-party purchasers. As a result of this offloading activity, the receivables remaining on our balance sheet in Q3 2025 were disproportionately skewed toward later-stage exposures, which carry higher expected loss provisions by their nature. This mix effect mechanically inflated the ECL coverage ratio relative to a steady-state portfolio composition. As those later-stage exposures subsequently charged off through Q4 2025, the portfolio composition normalized, and the ratio declined accordingly. The Q4 2025 ratio of 3.5% reflects a more balanced on- balance-sheet portfolio and is broadly consistent with the 3.7% observed at year-end 2024. Pay Later Receivables 24'Q4 25'Q3 25'Q4 Gross Carrying Amount 5,388 5,793 6,347 Allowance for ECL 201 242 220 ECL (% of Gross Carrying Amount) 3.7% 4.2% 3.5% KLARNA GROUP PLC182 Fair Financing Credit Performance Delinquency Rates Financing delinquency performance showed an increase at the 60+ DPD level in the US, from 2.7% in Q1 2025 to 3.7% in Q2 2025. This increase, albeit one consistent with our risk appetite, reflects the seasoning profile of a rapidly growing book. US Financing origination volumes increased 296% between Q1 2023 and Q1 2025. Group-level trends were broadly consistent, with 60+ DPD rates remaining close to prior year-levels as we expanded the product across more jurisdictions and partners. Our 30+ DPD data shows a stabilization in the most recent US cohort at around 3.4–3.5%, broadly in line with prior-year levels. At the Group level, 30+ DPD rates remained stable at approximately 3.0% from Q2 to Q3 2025. As observed in prior periods, 30 DPD serves as a leading indicator for 60 DPD. We expect the observed improvement in 30 DPD in Q3 to be mirrored in a corresponding improvement in 60 DPD in the following periods. Group refers to all markets in which Klarna operates, including the U.S. “U.S.” refers solely to the United States market. Cumulative Net Charge-Off Rates The cumulative charge-off curves for US Financing demonstrate the consistency of our underwriting standards through a period of significant volume growth. Through Q1 2025, loss curves have remained within a narrow band of approximately 3.0–3.5% at maturity, with no material change in shape or level KLARNA GROUP PLC183 across vintages. The Q2 2025 cohort is tracking moderately above this range at a comparable point in its life cycle, consistent with the transitional dynamics described above in relation to delinquency rates. At the Group level, cumulative charge-off curves remain tightly clustered around 2.0–2.5%, with more limited divergence in the most recent cohort. Allowance for Expected Credit Losses The allowance for expected credit losses as a proportion of gross Financing receivables has increased relative to the prior year, primarily reflecting a higher share of US receivables within the portfolio. US receivables represented about 50% more of the Financing portfolio at year-end 2025, compared to year- end 2024. Because the US book is younger and carries a different risk profile than our European markets, it requires higher expected loss provisions, driving the Group-level ratio higher. The quarter-on-quarter increase from Q3 to Q4 2025 (reaching 5.9%) is a mix effect rather than a reflection of underlying credit deterioration. In Q4 2025, we conducted our first Financing backbook sale and forward-flow transaction, which removed a portion of receivables from the balance sheet. The remaining portfolio had a higher average lifetime ECL, mechanically increasing the coverage ratio. To illustrate the scale of this effect: had all US Financing loans remained on the balance sheet, the coverage ratio would have been 5.5% in Q4 2025 compared to 5.2% in Q3 2025. The remaining difference between Q3 2025 and Q4 2025 was driven by the continued shift in portfolio composition toward US originations, rather than a change in credit quality. Financing Receivables 24'Q4 25'Q3 25'Q4 Gross Carrying Amount 3,085 4,793 4,604 Allowance for ECL 131 249 272 ECL (% of Gross Carrying Amount) 4.2% 5.2% 5.9% Operating Leverage from Economies of Scale in Combination with Continued Deployment of AI Our ability to deliver improvements in our operating results is a function of our increasing operating leverage. From 2023 to the year ended December 31, 2025, we saw a decrease across our operating expenses both in absolute terms and as a percentage of our revenue. Technology and product development expenses as a percentage of revenue decreased 3 percentage points, sales and marketing expenses as a percentage of revenue decreased 5 percentage points, customer service and operations KLARNA GROUP PLC184 expenses as a percentage of revenue decreased 5 percentage points, and general and administrative expenses as a percentage of revenue decreased 3 percentage points. This led to our total operating expenses as a percentage of revenue decreasing 8 percentage points from 2023 to the year ended December 31, 2025, even as our GMV increased 38% in the same period. As a result, our operating result improved by $93 million (or 29%) in the year ended December 31, 2025. In the same period, our adjusted operating result improved by $114 million (or 233%), from an adjusted operating loss of $49 million to an adjusted operating profit of $65 million. These efficiencies have been driven by our increased scale. Additionally, we have prioritized a number of initiatives that improve our operating leverage, including implementing AI throughout our business to drive cost savings. We announced a partnership with OpenAI in 2023 and in February 2024 launched our AI assistant powered by OpenAI to improve customer support. Our AI assistant handled 80% of customer service chats in the year ended December 31, 2025, according to our service chat log data, doing the work equivalent of over 850 full-time agents (estimated based on the average monthly reduction in chat and telephone conversations handled by full-time agents in 2025 following the launch of our AI assistant), and in 2025 delivered approximately $59 million in cost savings. Based on our service chat log data and consumer satisfaction surveys, AI-handled consumer chats rank on par with human agents in consumer satisfaction and demonstrate higher accuracy in errand resolution. Following the launch of our AI assistant, repeat inquiries dropped by 25% between December 2023 and January 2024. Additionally, AI- handled consumer chat resolutions averaged two minutes, compared to the 12-minute average for human agents in 2024. Our AI assistant has been trained to handle complex errands and assist consumers with a wide range of their queries. At the same time, appreciating that certain consumers may nevertheless prefer to interact with human representatives, we continue to offer all of our customers that option. This reflects our dual-track approach of combining broad and continuing implementation of scalable AI in our customer service with high-quality human support. We similarly continue to invest in AI in other aspects of our operations to drive innovation and efficiencies across Klarna. Recognizing the critical importance of human capital, we continue to focus on internal talent development and upskilling programs in AI, fostering a data-driven culture across our entire organization. We are actively monitoring emerging AI technologies and best practices. While we continue to utilize well-established ML techniques in our underwriting processes, we do not use generative AI for credit underwriting. As exemplified by our approach to customer service, we also continue to refine our processes throughout our business to maximize the benefits of AI while aiming to effectively manage associated risks and ensure the quality and reliability of our network, products and overall consumer experience. We are embracing AI in our internal operations as well, which we expect to drive additional operating leverage. The vast majority of our employees use various generative AI tools in their daily work. For example, our engineers use an AI-assisted case log classification tool that organizes documents and categorizes over one million monthly chat conversations. We also operate an internal knowledge chatbot powered by AI, which we call Kiki, that helps employees find information across internal systems, which boosts productivity, compliance, discovery and collaboration. General Economic Conditions and Industry Trends Our results of operations are impacted by the relative strength of the overall economy and the related levels of unemployment, interest rates, consumer confidence, economic recessions, downturns or extended periods of uncertainty or volatility, all of which may influence consumer spending behavior and consumer demand for financing-enabled commerce. Our merchants’ underlying business activities are also linked to the macroeconomic environment. Our top merchants, for example those in the retail space, are impacted by fluctuations in general economic conditions and consumer spending behavior that affect their sales of products and will generally result in lower credit sales and, therefore, lower loan volume and associated interest income for us. KLARNA GROUP PLC185 Currency Fluctuations We are exposed to currency risks in light of our global operations. The functional and presentation currency of Klarna Group plc is the U.S. dollar. The functional currency of our subsidiaries is generally the currency of the country in which they are located. As a result, change in currency rates may create additional volatility in our operating and financial results, as more fully discussed below under “— Qualitative and Quantitative Disclosures About Market Risk—Currency Risk.” Seasonality We experience seasonal fluctuations in our revenues as a result of consumer spending patterns. Historically, our revenue has been strongest during the fourth quarter of our fiscal year due to increases in retail commerce during the holiday season. Similarly, many advertisers devote a disproportionate amount of their advertising budgets to the fourth quarter of the calendar year to coincide with such increased holiday purchasing, which may lead to seasonal increases in our advertising revenue. Accordingly, adverse events that occur during these months could have a disproportionate effect on our financial results for the fiscal year. In addition, other seasonal trends may develop or these existing seasonal trends may become more extreme, and the existing seasonality and consumer and merchant behavior that we experience may change or become more significant, which would contribute to fluctuations in our results of operations. As a result, our results may fluctuate significantly and our results in any given fiscal period may not fully reflect the underlying performance of our business or be indicative of the results we may achieve in any other fiscal period. Key Components of Our Results of Operations Revenue Transaction and service revenue Transaction and service revenue includes merchant revenue, consumer service revenue and advertising revenue. Merchant revenue refers to fees paid by our merchants, generated when consumers transact on our network. It includes merchant fees, interchange revenue and fees for settling disputes. Merchant revenue is derived from the volume of transactions we process multiplied by the fees we charge, which vary among our geographies. Our pricing is a combination of value-based and fixed pricing, charged either ad valorem (proportional to the estimated value of goods and services purchased on our network) or fixed fees on each transaction, or a mix of both. Where consumers return merchandise or goods and merchants process a refund, merchant fees charged for the original transaction are not returned to the merchant. Advertising revenue is earned from merchants who place advertisements on our network, including sponsored search, affiliate programs and brand ads. We enter into contracts for advertising either directly with merchants or through other third parties. Consumer service revenue refers to revenue we earn from consumer fees, primarily consisting of certain administrative fees, including reminder fees and fees for issuing one-time cards. Consumers may be charged a fee, being a fixed amount that constitutes the transaction price and recognized at the point in time that the consumer is charged. This fee income is earned in relation to the Company’s ordinary activities. Reminder fees are flat, capped and clearly disclosed. They are applied only when a payment is several days late and are always preceded by multiple friendly reminders (e.g., push notifications, emails and app reminders). These fees are designed to encourage timely repayment and help cover our costs. They vary by geography and payment option. Gain on sale of consumer receivables Gain on sale of consumer receivables consists of gains recognized on the sale of Fair Financing receivables to institutional investors which transfer the related credit risk and funding exposure. KLARNA GROUP PLC186 Interest income Interest income includes interest earned when consumers choose to spread the cost of transactions over time through one of our interest-bearing financing products or to delay the cost of transactions with our payment flexibility features, such as “snooze.” We also recognize interest income related to incremental fees earned from certain merchants for providing interest-free promotional loans to their consumers. Since 2021, we have only charged consumers interest on our Fair Financing products, which have a duration of more than three months. Pay in Full or Pay Later products are non-interest bearing and, as such, we derive no interest income from them. Interest income also includes interest from debt securities. Operating Expenses Processing and servicing costs Processing and servicing costs are costs that we pay to settle transactions. They consist primarily of authentication costs to verify user identities, scoring costs related to purchasing credit and fraud data from various bureaus, distribution costs related to direct communication with consumers, commissions paid to third parties for debt collection and payment fees to credit card companies and financial institutions. Processing and servicing costs typically vary as a result of the relative mix of payment methods and the geographies in which we operate. For example, while in the United States our take rates are higher, our payment fees are similarly higher, which leads to higher processing and servicing costs. Provision for credit losses Provision for credit losses for the period consist of realized credit losses, provisions for credit losses for granted credit, less reversal of provisions for credit losses made previously. Realized credit losses are losses whose amount is, for example, determined via bankruptcy, a composition arrangement, a statement by an enforcement authority or the sale of receivables. Our provision for credit losses represents our estimate of the credit losses inherent in our loans held for investment and is based on a variety of factors, including the composition and quality of the portfolio, loan-specific information gathered through our collection efforts, current economic conditions and our historical net charge-off and loss experience. Funding costs Funding costs include interest that we pay on our consumer deposits, calculated using the effective interest method, and securitization costs, including fair value adjustments on Pay Later receivables held at fair value through profit and loss related to forward flow agreements, and premiums paid in connection with our synthetic securitization transactions. Technology and product development Technology and product development expenses primarily consist of personnel-related costs for technology functions as well as other expenses, including hosting, software licenses, external service providers, hardware costs and amortization of internally developed and acquired technology assets. Sales and marketing Sales and marketing expenses primarily consist of personnel costs, general marketing and promotional activities costs, referral commissions, costs related to sponsorships and partnerships, and costs related to consumer promotional programs. KLARNA GROUP PLC187 Customer service and operations Customer service and operations expenses primarily consist of personnel costs for customer support functions and outsourced assistance to help with purchases, account management, returns and merchant disputes. General and administrative General and administrative expenses consist of personnel costs for directors and executives, legal and human resources, and finance functions, lease expenses related to short-term leases, low-value assets, and variable lease expenses, professional services costs and merchant and other losses. We recognized certain non-recurring costs in connection with the initial public offering and the related preparations to become a publicly listed company in the United States, consisting of professional fees and other expenses. We incurred $14 million in such fees in 2024 and $11 million in the year ended December 31, 2025. These fees are not directly attributable to the issuance and sale of ordinary shares by us in the initial public offering and have been expensed as incurred. We expect to incur additional expenses as a result of operating as a public company, including costs related to compliance and reporting obligations pursuant to the rules and regulations of the SEC, costs to comply with the rules and regulations applicable to companies listed on the NYSE and increased expenses for insurance, investor relations and professional services. We also expect that our general and administrative expenses will increase in absolute dollars as our business grows. Depreciation, amortization and impairments Depreciation, amortization and impairments consists of non-cash charges relating to recognition of depreciation, amortization and impairment of property, equipment, software, internally developed intangibles and right-of-use assets. Other Income (Expense) Other income (expense) primarily consists of other income or expenses not classified in the foregoing categories of our operating expenses. Income Taxes Income taxes consist of current tax and deferred tax. Critical Accounting Policies and Estimates Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in conformity with IFRS. The preparation of our consolidated financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amounts and related disclosures. We believe that the estimates, assumptions and judgments involved in the accounting policies described below have the greatest potential impact on our financial statements and, therefore, we consider these to be our critical accounting policies. Accordingly, we evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions and conditions. We consider the following policies and estimates critical because they are both important to the portrayal of our financial condition and operating results, and they require us to make judgments and estimates about inherently uncertain matters. Please refer to Note 2 of our consolidated financial KLARNA GROUP PLC188 statements included elsewhere in this report for information about these critical accounting policies, as well as a description of our other significant accounting policies. Transaction and service revenue We recognize revenue from merchants, advertising and consumers. Merchant revenue primarily refers to fees paid by our merchants, generated when consumers transact on our network and also includes interchange revenue and fees for settling disputes. Merchant revenue is derived from the volume of transactions we process multiplied by the fees we charge, which vary among our geographies. Where consumers return merchandise or goods and merchants process a refund, merchant fees charged for the original transaction are not returned to the merchant. We generally recognize merchant revenue at the point in time when the merchant successfully confirms the transaction, which is when the terms of the contract are fulfilled. We provide a reduction of merchant fees to certain merchants based on performance measures, including volume of processed transactions. Such fee rebates are recorded as a reduction of merchant revenue. Advertising revenue is earned from merchants who place advertisements on our network, including sponsored search, affiliate programs and brand ads. We enter into contracts for advertising either directly with merchants or through other third parties. The transaction price is determined based on the advertising model, with fees that may be fixed or variable, typically based on the number of impressions delivered or actions taken by users, such as clicks or purchases. Revenue from impression-based ads is recognized in the period when an ad is displayed to users. For action-based ads, revenue is generally recognized at a point in time, when a specified action, such as a click or purchase, occurs. Consumer service revenue refers to revenue we earn from consumer fees, primarily consisting of certain administrative fees, including reminder fees and fees for issuing one-time cards. Consumers may be charged a fee, being a fixed amount that constitutes the transaction price and recognized at the point in time that the consumer is charged. This fee income is earned in relation to the Company’s ordinary activities. Reminder fees are flat, capped and clearly disclosed. They are applied only when a payment is several days late and are always preceded by multiple friendly reminders (e.g., push notifications, emails and app reminders). These fees are designed to encourage timely repayment and help cover our costs. They vary by geography and payment option. Consumer service revenue also includes subscription revenue. Subscription revenue represents monthly subscription fees related to a single performance obligation for a bundle of services and are recognized over the subscription period as those services are provided. We enter into contracts with certain merchants and other partners to expand our user base and market presence, and for brand promotion through co-marketing activities, in which Klarna provides cash, share warrants, or both as consideration. We evaluate if the consideration payable is in exchange for a distinct good or service. Where the payment is for a distinct good or service, it is recognized as sales and marketing expenses. If a payment is not for a distinct good or service, it is recognized as a reduction of the transaction price. Allowance for expected credit losses We recognize an allowance for expected credit losses upon origination of our consumer receivables and settlement and trade receivables. Adjustments to the allowance each period for changes in our estimate of expected credit losses are recognized in our provision for credit losses or general and administrative, depending on the nature of the receivable, in our consolidated statements of profit or loss. In estimating the allowance for expected credit losses, we estimate the likelihood that a receivable will progress through various stages of delinquency. This analysis focuses on the pertinent factors underlying the quality of the receivables portfolio, including historical performance and the age of the receivable balance. We also take into consideration certain qualitative factors for which we adjust our quantitative KLARNA GROUP PLC189 baseline using our best judgment to consider the inherent uncertainty regarding future economic conditions and consumer loan performance. For example, we consider the impact of current economic and environmental factors at the reporting date that did not exist over the period from which historical experience was used. The underlying assumptions, estimates and assessments that we use to provision for expected credit losses are updated periodically to reflect our view of current conditions, which can result in changes to our assumptions. Changes in such estimates can significantly affect the allowance and provision for expected credit losses. It is possible that we will experience credit losses that are different from our current estimates. Income taxes We are subject to income taxes in U.K., Sweden, the United States and numerous other foreign jurisdictions. Deferred tax assets are recognized for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available, against which they can be used. Unused tax loss carry-forwards are reviewed at each reporting date and have not been recorded when we believe we will not generate future taxable income to utilize the loss carry- forwards. In determining the amount of current and deferred income tax, we take into account the impact of uncertain tax positions and whether additional taxes, interest, or penalties may be due. Although we believe that we have adequately reserved for our uncertain tax positions, we can provide no assurance that the final tax outcome of these matters will not be materially different. We make adjustments to these reserves when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made and could have a material impact on our financial condition and operating results. Partner share warrants We have granted share warrants to certain partners, including merchants and other service providers, in return for services. Share-based payments to partners are generally measured at the fair value of the goods or services received, and measured at the time when such goods and services are received. If the fair value of goods and services cannot be reliably measured, the fair value of the equity instruments is used. We recognize commercial agreement assets where the consideration paid represents a future economic benefit, and these assets are amortized over the relevant performance period within the commercial agreement, and recognized within sales and marketing expenses where the payment is in exchange for a distinct service, or as a reduction to transaction prices if in exchange for no distinct service. Structured entities and forward flow securitization arrangements We have entered into transactions with unconsolidated securitization vehicles (“SPVs”) managed by third-party institutional investors, including forward flow arrangements whereby specified pools of consumer receivables are transferred. These SPVs are structured entities because voting rights are not the dominant factor in determining control and the relevant activities are directed by contractual arrangements, and we typically continue to service certain sold receivables in exchange for a market- based servicing fee. We consolidate such SPVs when we determine that we control the entity in accordance with IFRS 10. This judgment requires assessing the purpose and design of the SPV, whether we have power over the relevant activities, exposure or rights to variable returns, and the ability to use that power to affect those returns, including whether we act as principal or agent. We classify the specified pools of consumer receivables into either fair value through OCI (“FVOCI”), or fair value through profit or loss (“FVTPL”) on the basis of both Klarna’s business model for managing the KLARNA GROUP PLC190 assets, and the contractual cash flow characteristics of the financial assets. See Note 16 to our consolidated financial statements included elsewhere in this report. Fair value is determined using a discounted cash flow methodology that projects contractual cash flows over the remaining life of the instruments. Cash flows are adjusted for unobservable inputs, including a weighted-average lifetime probability of default, conditional loss given default, and prepayment rates reflecting an average modeled probability, based on portfolio-level assumptions applied at the reporting date are classified within Level 3 of the fair value hierarchy. This consistent with the overall policy outlined in Note 2. The cash flows are discounted using observable zero-coupon rates, plus a portfolio-specific credit spread applied as a margin over the risk-free curve. We derecognize receivables upon transferring the contractual rights to the cash flows and substantially all associated risks and rewards. The transfers are deemed to occur on the sale date, at which point, the derecognition criteria are satisfied. Upon disposal gains related to Fair Financing receivables are recognized within Gain on sale of consumer receivables, and losses related to Pay Later receivables are recognized within Funding costs, reflecting the nature and underlying characteristics of the sold receivables. Recent Accounting Pronouncements New accounting guidance that we have recently adopted, as well as accounting guidance that has been recently issued but not yet adopted by us, is included in Note 2 to our consolidated financial statements included elsewhere in this report. Internal Control over Financial Reporting As previously disclosed in our registration statement on Form F-1, in connection with the preparation of our consolidated financial statements, we previously identified a material weakness in our internal control over financial reporting related to our IT general controls for information systems that are relevant to the preparation of our consolidated financial statements, related to (i) user access controls, including management of privileged access, (ii) change management with respect to monitoring segregation of duties, and (iii) IT operations controls with respect to certain third-party service providers. We implemented certain measures to address the material weakness which we have concluded is remediated as of December 31, 2025. We remain committed to maintaining and improving our internal control over financial reporting, but we can give no assurance that the measures we have taken and plan to take in the future will remediate the material weakness in our internal control over financial reporting or that they will prevent or avoid potential future material weaknesses in our internal control over financial reporting. In addition, our current internal control over financial reporting and disclosure controls and procedures, and any new internal control over financial reporting and disclosure controls and procedures that we develop, may become inadequate because of changes in our business, operations and other factors, some of which may be beyond our control. We are not required, pursuant to Section 404, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting until our first annual report required to be filed with the SEC. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting. At that time, our management may conclude that our internal control over financial reporting remains not effective. In addition, our independent registered public accounting firm will be required to attest to the effectiveness of our internal control over financial reporting. Even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may disagree with our assessment and may issue a report that contains an adverse opinion if, in their evaluation, there are deficiencies that, individually or in combination, result in one or more material weaknesses. KLARNA GROUP PLC191 See “Risk Factors—Risks Related to Our Business and Industry”— We may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls.” KLARNA GROUP PLC192 SELECTED STATISTICAL INFORMATION The tables below set forth selected statistical information regarding our banking operations as required by subpart 1400 of Regulation S-K under the Securities Act (“Regulation S-K”). The statistical information presented below is derived from our audited consolidated financial statements, our unaudited interim condensed financial statements as well as our financial reporting and management information systems. The statistical information included below has been prepared by our management and has not been externally audited, reviewed or verified. Overview We are a leading global commerce network that provides our customers a broad range of payment options: •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. •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. •Fair Financing. Fair Financing allows consumers to pay for their purchase over a longer duration. Consumers typically pay interest for this payment method and durations range from three to 48 months. The table below shows the relative breakdown of our GMV among our payment options for the periods presented: For the Year Ended December 31, 2025 2024 2023 Pay in Full .................................................................................................... 11% 16% 21% Pay Later .................................................................................................... 80% 79% 75% Fair Financing ............................................................................................. 9% 5% 4% ____________ Note: Data in the table above excludes GMV generated through KCO unbranded channels. We have operated as a fully licensed bank since 2017, when the SFSA approved our application for a bank license. We conduct our operations through Klarna Bank, its branches and subsidiaries, and are currently active in 26 countries. In all of our active markets, we extend short-term consumer credit by offering Pay Later and/or Fair Financing payment options to our consumers. In addition, we currently offer savings accounts directly to residents of Sweden, Germany, Austria, the Netherlands, Finland, France, Belgium, Spain, Ireland, Italy and Portugal. We also raise deposits in Germany, the Netherlands, France, Spain and Ireland pursuant to a partnership with a third-party platform operated by Raisin. In addition, we also offer the Klarna card in Sweden, Germany, the U.K. and the United States. In most of our active markets we maintain one or more corporate offices. See “Business—Facilities.” We do not have any retail locations or branches and all of products and offerings are available online. KLARNA GROUP PLC193 Although we take deposits from, and extend credit to, our consumers, unlike traditional banks, we generate our revenue mostly from our merchants and the fees they pay when consumers use our network for making purchases. At the same time, the loans that we extend to our consumers are mostly non- interest bearing and, as such, interest income (which we define as income we earn when consumers choose to spread the cost of transactions over time with one of our interest-bearing financing products, such as Fair Financing or delay the cost of transactions with our payment flexibility features) does not constitute the main portion of our overall revenue. For example, in 2024, interest income accounted for 27% of our total revenue. As a result, our net interest income, net interest margin (calculated as net interest income as a percent of average interest-earning assets) and other similar measures of performance commonly used in the banking industry and presented elsewhere in this section as required by subpart 1400 of Regulation S-K may not be indicative of the overall performance of our business and, as such, may be of limited value in evaluating our financial performance as compared to our peers and competitors. Domestic assets and liabilities refer to those of Klarna Inc., our U.S. operating subsidiary, while international assets and liabilities represent those of our various non-U.S. operating subsidiaries. Average Balance Sheet and Interest Information The table below sets forth the average balances of our interest-earning assets and interest-bearing liabilities, other assets and liabilities, the interest generated from such assets and liabilities and average return rate for the periods indicated. Average balances are calculated using month-end figures, including the prior year-end figures. The presentation of historical averages in this section on a daily basis would involve unreasonable effort and expense. We do not believe that monthly averages present trends materially different from those that would be presented by daily averages. Average balance sheet Year ended December 31, 2025 2024 2023 (in $ millions, except for percentages) Averagebalance Interest Averageyield/rate(in %) Averagebalance Interest Averageyield/rate(in %) Averagebalance Interest Averageyield/rate(in %) Assets Interest-earning deposits with banks Domestic .................................... $175 $3 1.45% $132 $1 0.76% $128 $1 1.10% International .............................. 325 7 2.23% 328 5 1.53% 243 1 0.49% Central bank funds sold Domestic .................................... 0 0 0.00% 0 0 0.00% 0 0 0.00% International .............................. 4,526 75 1.66% 3,284 108 3.30% 2,036 45 2.21% Securities purchased with agreements to resell Domestic .................................... 0 0 0.00% 0 0 0.00% 0 0 0.00% International .............................. 15 0 1.97% 0 0 0.00% 0 0 0.00% Loans Domestic .................................... 0 0 0.00% 0 0 0.00% 0 0 0.00% International .............................. 3,749 803 21.30% 2,667 531 19.90% 2,424 434 17.91% Taxable investment securities Domestic .................................... 0 0 0.00% 0 0 0.00% 0 0 0.00% International .............................. 1,228 49 3.98% 805 27 3.36% 983 22 2.21% Nontaxable investment securities Domestic .................................... 0 0 0.00% 0 0 0.00% 0 0 0.00% International .............................. 0 0 0.00% 0 0 0.00% 0 0 0.00% KLARNA GROUP PLC194 Year ended December 31, 2025 2024 2023 (in $ millions, except for percentages) Averagebalance Interest Averageyield/rate(in %) Averagebalance Interest Averageyield/rate(in %) Averagebalance Interest Averageyield/rate(in %) Other short-term investments Domestic .................................... 0 0 0.00% 0 0 0.00% 0 0 0.00% International .............................. 6 0 2.55% 4 0 1.58% 1 0 1.38% Total interest-earning assets .. $10,023 $937 9.35% $7,220 $672 9.31% $5,815 $503 8.66% Domestic .................................... 175 2 1.35% 132 1 0.76% 128 1 1.10% International .............................. 9,847 935 9.49% 7,088 671 9.47% 5,687 502 8.83% All other assets 7,620 0 0.00% 7,200 0 0.00% 6,512 0 0.00% Domestic .................................... 1,008 0 0.00% 496 0 0.00% 341 0 0.00% International .............................. 6,613 0 0.00% 6,704 0 0.00% 6,171 0 0.00% Total domestic assets .............. $1,183 $2 0.20% $628 $1 0.16% $469 $1 0.30% Total international assets ........ 16,460 935 5.68% 13,792 671 4.87% 11,858 502 4.23% Total assets ............................... $17,643 $937 5.31% $14,420 $672 4.66% $12,327 $503 4.08% Liabilities Savings deposits Domestic .................................... $2 $0 0.00% $0 $0 0.00% $0 $0 0.00% International .............................. 12,392 (347) (2.80)% 9,766 (359) (3.68)% 7,910 (203) 2.57% Other time deposits Domestic .................................... 0 0 0.00% 0 0 0.00% 0 0 0.00% International .............................. 0 0 0.00% 0 0 0.00% 0 0 0.00% Central bank funds purchased Domestic .................................... 0 0 0.00% 0 0 0.00% 0 0 0.00% International .............................. 0 0 0.00% 0 0 0.00% 0 0 0.00% Securities sold with agreements to repurchase Domestic .................................... 0 0 0.00% 0 0 0.00% 0 0 0.00% International .............................. — 0 0.00% 1 0 (3.73)% 21 0 0.72% Commercial paper Domestic .................................... 0 0 0.00% 0 0 0.00% 0 0 0.00% International .............................. 46 (1) (2.68)% 37 (1) (3.91)% 20 (1) 5.01% Other short-term debt Domestic .................................... 76 (1) (1.49)% 87 (1) (1.33)% 32 (1) 4.60% International .............................. 630 (34) (5.35)% 442 (20) (4.55)% 396 (16) 4.15% Long-term debt Domestic .................................... 0 0 0.00% 0 0 0.00% 0 0 0.00% International .............................. 407 (29) (7.10)% 226 (22) (9.92)% 168 (9) 5.56% Total interest-bearing liabilities ..................................... $13,554 $(412) 3.04% $10,559 $(405) 3.83% $8,547 $(230) 2.71% Domestic .................................... 78 (1) 1.45% 87 (1) 1.33% 32 (1) 4.60% International .............................. 13,476 (411) 3.05% 10,472 (403) 3.85% 8,515 (229) 2.70% All other liabilities 1,605 0 0.00% 1,556 0 0.00% 1,499 0 0.00% Domestic .................................... 237 0 0.00% 173 0 0.00% 241 0 0.00% International .............................. 1,368 0 0.00% 1,384 0 0.00% 1,258 0 0.00% Total domestic liabilities .......... $315 $(1) 0.36% $260 $(1) 0.45% $273 $(1) 0.53% Total international liabilities .... 14,844 (411) 2.77% 11,855 (403) 3.40% 9,773 (229) 2.35% Total liabilities ........................... $15,159 $(412) 2.72% $12,116 $(405) 3.34% $10,046 $(230) 2.30% KLARNA GROUP PLC195 Analysis of changes in interest and similar income and interest expense 2025 For the year ended December31, 2025 compared to the yearended December 31, 2024 2024 For the year ended December31, 2024 compared to the yearended December 31, 2023 2023 (in $ millions, except for percentages) Amount Netchange Changedue tovolume Changedue torate Amount Netchange Changedue tovolume Changedue torate Amount Interest and similar income: Interest-earning deposits with banks Domestic .................................... $2 $1 $0 $0 $1 $0 $0 $0 $1 International .............................. 7 2 0 2 5 4 0 3 1 Central bank funds sold Domestic .................................... 0 0 0 0 0 0 0 0 0 International .............................. 75 (33) 29 (62) 108 63 28 36 45 Securities sold with agreements to repurchase Domestic .................................... 0 0 0 0 0 0 0 0 0 International .............................. 0 0 0 0 0 0 0 0 0 Loans Domestic .................................... 0 0 0 0 0 0 0 0 0 International .............................. 798 267 114 152 532 98 44 54 434 Taxable investment securities Domestic .................................... 0 0 0 0 0 0 0 0 0 International .............................. 49 19 6 14 29 3 (5) 8 27 Nontaxable investment securities Domestic .................................... 0 0 0 0 0 0 0 0 0 International .............................. 0 0 0 0 0 0 0 0 0 Other short-term investments Domestic .................................... 0 0 0 0 0 0 0 0 0 International .............................. Total domestic interest and similar income ........................... $2 $0 $0 $0 $1 $0 $0 $0 $1 Total international interest and similar income .................... $929 $255 $149 $106 $674 $168 $67 $101 $507 Total interest and similar income ....................................... $931 $256 $149 $106 $675 $167 $67 $100 $508 Interest expense: Savings deposits Domestic .................................... $0 $0 $0 $0 $0 $0 $0 $0 $0 International .............................. (348) 12 (37) 49 (360) (155) (69) (86) (205) Other time deposits Domestic .................................... 0 0 0 0 0 0 0 0 0 International .............................. 0 0 0 0 0 0 0 0 0 Central bank funds purchased Domestic .................................... 0 0 0 0 0 0 0 0 0 International .............................. 0 0 0 0 0 0 0 0 0 Securities purchased with agreements to resell Domestic .................................... 0 0 0 0 0 0 0 0 0 International .............................. 0 0 0 0 0 0 0 0 0 Commercial paper Domestic .................................... 0 0 0 0 0 0 0 0 0 KLARNA GROUP PLC196 2025 For the year ended December31, 2025 compared to the yearended December 31, 2024 2024 For the year ended December31, 2024 compared to the yearended December 31, 2023 2023 (in $ millions, except for percentages) Amount Netchange Changedue tovolume Changedue torate Amount Netchange Changedue tovolume Changedue torate Amount International .............................. (1) 0 (1) 2 (1) 0 (1) 1 (1) Other short-term debt Domestic .................................... 0 1 (1) 2 (1) 0 (1) 2 (1) International .............................. (34) (11) (23) 11 (23) (1) (21) 20 (21) Long-term debt Domestic .................................... 0 0 0 0 0 0 0 0 0 International .............................. (29) (6) (22) 16 (22) (13) (9) (4) (9) Total domestic interest expense ..................................... $0 $1 $(1) $2 $(1) $0 $(1) $2 $(1) Total international interest expense ..................................... $(412) $(5) $(83) $78 $(406) $(170) $(100) $(69) $(236) Total interest expense ............. $(412) $(4) $(84) $80 $(407) $(169) $(101) $(67) $(237) Net change in net interest income ....................................... $520 $251 $65 $186 $268 $(2) $(36) $33 $271 Net interest income(1) ................ $520 $0 $0 $0 $268 $0 $0 $0 $271 Domestic .................................... 1 0 0 International .............................. 519 268 271 Net interest margin(2) ................. 5.2% 3.71% 4.68% Domestic .................................... 0.7% (0.12)% (0.04)% International .............................. 5.3% 3.78% 4.8% ____________ 1 Net interest income is the difference between interest earned on interest-earning assets and interest paid on interest-bearing liabilities. 2 Net interest margin is calculated as net interest income as a percent of average interest-earning assets. Debt Securities Our total holdings in debt securities as of December 31, 2025 and December 31, 2024 was $1,518 million and $454 million, respectively (at amortized cost). The following tables present the approximate weighted average yields (based on amortized cost) by maturity distribution of our investments in debt securities as of December 31, 2025 and December 31, 2024: (in $ millions, except for percentages)December 31, 2025 < 1 year 1-5 years 5-10 years > 10 years Total Debt Security Category Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield Central Banks ................ $88 3.5% $— —% $— —% $— —% $88 3.5% Governments ................. 109 1.9% 50 2.3% — — — — 159 2.0 Municipalities ................ 137 1.8% 176 2.4% — — — — 313 2.1 Supranationals .............. 272 2.1% 159 2.3% — — — — 431 2.2 Covered Bonds ............. —% 58 2.5% — — — — 58 2.5 Corporates ..................... 134 2.0% 335 2.5% — — — — 469 2.4 Total ................................ $740 2.0% $778 2.4% $— —% $— —% $1,518 2.2% KLARNA GROUP PLC197 (in $ millions, except for percentages)December 31, 2024 < 1 year 1-5 years 5-10 years > 10 years Total Debt Security Category Amount Yield Amount Yield Amount Yield Amount Yield Amount Yield Central Banks ................ $42 0.00% $— 0.00% $— —% $— —% $42 0.00% Governments ................. 12 0.17 — 0.00 — — — — 12 0.17 Municipalities ................ 144 0.21 40 1.09 — — — — 185 0.40 Supranationals .............. 140 1.65 66 0.53 — — — — 206 1.29 Covered Bonds ............. 9 0.36 — 0.00 — — — — 9 0.36 Corporates ..................... — 0.00 — 0.00 — — — — — 0.00 Total ................................ $347 0.77% $106 0.74% $— —% $— —% $454 0.76% Loan Portfolio The tables below set forth our loan portfolio by maturity, together with the split between fixed and floating interest rates for the loans, as of December 31, 2025 and December 31, 2024. We have included our receivables related to non-interest bearing Pay Later loans under “Fixed rate loans” under the < 1 year column. (in $ millions)December 31, 2025 Consumer Loan Category < 1 year 1-5 years 5-15 years > 15 years Total Fair Financing ....................................... $1,893 $2,439 $— $— $4,332 Pay Later ................................................ $6,127 $— — — 6,127 Total ....................................................... $8,020 $2,439 $— $— $10,459 (in $ millions)December 31, 2025 Loan Category < 1 year 1-5 years 5-15 years > 15 years Total Fixed rate loans ..................................... $8,020 $2,439 $— $— $10,459 Floating or adjustable rate loans ....... — — — — — Total ......................................................... $8,020 $2,439 $— $— $10,459 (in $ millions)December 31, 2024 Loan Category < 1 year 1-5 years 5-15 years > 15 years Total Consumer loans .................................... $6,485 $1,656 $— $— $8,141 Total ....................................................... $6,485 $1,656 $— $— $8,141 (in $ millions)December 31, 2024 Loan Category < 1 year 1-5 years 5-15 years > 15 years Total Fixed rate loans .................................... $6,485 $1,656 $— $— $8,141 Floating or adjustable rate loans ...... — — — — — Total ....................................................... $6,485 $1,656 $— $— $8,141 As of December 31, 2025 and December 31, 2024, we had $125 million and $274 million, respectively, in consumer receivables from a legacy revolving credit portfolio. These legacy loans do not have fixed maturities but we expect these to continue to be paid down over 1-5 years as borrowers make ongoing minimum monthly payments. KLARNA GROUP PLC198 Allowance for Credit Losses The tables below set forth our total loans at period end, the average amount of loans during the period, the amount of allowances for credit losses at period end, the ratio of our allowances for credit losses to total loans outstanding at period end and the ratio of net charge-offs during the period to average loans outstanding at period end, in each case, as of December 31, 2025, 2024, and 2023. As of December 31, 2025 (in $ millions, except for percentages) Outstandingamount at end ofperiod Averageoutstandingamount duringperiod Allowance forcredit losses atend of period Ratio ofallowance forcredit losses tototal loansoutstanding Ratio of netcharge-offs toaverage loansoutstandingduring theperiod(1) Fair Financing ......................................... $4,604 $3,845 $(272) (5.9)% (6.5)% Pay Later ................................................. 6,347 5,868 (220) (3.5)% (6.4)% Total ......................................................... $10,951 $9,712 $(492) (4.5)% (6.4)% As of December 31, 2024 (in $ millions, except for percentages) Outstandingamount at end ofperiod Averageoutstandingamount duringperiod Allowance forcredit losses atend of period Ratio ofallowance forcredit losses tototal loansoutstanding Ratio of netcharge-offs toaverage loansoutstandingduring theperiod(1) Consumer loans ..................................... $8,473 $8,434 $(332) (3.9)% (5.5)% Total ......................................................... $8,473 $8,434 $(332) (3.9)% (5.5)% As of December 31, 2023 (in $ millions, except for percentages) Outstandingamount at end ofperiod Averageoutstandingamount duringperiod Allowance forcredit losses atend of period Ratio ofallowance forcredit losses tototal loansoutstanding Ratio of netcharge-offs toaverage loansoutstandingduring theperiod(1) Consumer loans ..................................... $8,394 $7,763 $(311) (3.7)% (5.9)% Total ......................................................... $8,394 $7,763 $(311) (3.7)% (5.9)% ____________ 1 Ratio of net charge-offs to average loans outstanding during the period is calculated by dividing the net charge-offs during a period by the average loans outstanding during that period. The increase in our consumer loans as of December 31, 2025 as compared to December 31, 2024 and December 31, 2023, resulted from the growth in our GMV. At the same, our allowance for credit losses has decreased year over year as a result of the increased maturity of our underwriting models from further scaling up our operations, including in the United States and U.K. Deposits We currently offer savings accounts directly to residents of Sweden, Germany, Austria, the Netherlands, Finland, France, Belgium, Spain, Ireland, Italy and Portugal. We also raise deposits in Germany, the Netherlands, France, Spain and Ireland pursuant to a partnership with a third-party platform operated by Raisin. We do not take deposits in the United States, including interest-bearing deposits. We currently do not maintain the necessary banking licenses to take U.S. deposits. To the extent that our customers, including our customers in the United States, utilize our Klarna balance solution or maintain deposits with KLARNA GROUP PLC199 any of our bank partners in connection with their use of our solutions, products and services, such funds do not constitute our deposits and, as a result, are not reflected in the tables below. The tables below set forth deposit balances as of December 31, 2025, 2024, and 2023. As of December 31, 2025 (in $ millions) Balance Foreign Rate Uninsured Consumer deposits ............................................................. $13,003 $13,003 2.4% $681 Total ....................................................................................... $13,003 $13,003 2.4% $681 As of December 31, 2024 (in $ millions) Balance Foreign Rate Uninsured Consumer deposits ............................................................. $9,510 $9,510 3.8% $437 Total ....................................................................................... $9,510 $9,510 3.8% $437 As of December 31, 2023 (in $ millions) Balance Foreign Rate Uninsured Consumer deposits ............................................................. $9,478 $9,478 2.4% $320 Total ....................................................................................... $9,478 $9,478 2.4% $320 Our consumer deposits in the year ended December 31, 2025 increased by 3,493, or 36.7% , compared to 2024, in order to support our GMV growth. While interest rates on our consumer deposits increased from 2022 to 2024, primarily driven by the rising central bank interest rate environment in Europe, they decreased by 1.4 percentage points during in the year ended December 31, 2025. Our consumer deposits are subject to the Swedish Deposit Guarantee Scheme (the “Guarantee Scheme”), as administered by the Swedish National Debt Office (Sw. Riksgälden). As of December 31, 2025 and December 31, 2024, approximately 95% and 96% of our deposits, respectively, were covered by the Guarantee Scheme. The remainder of our deposits were not eligible for coverage under the Guarantee Scheme because they were in excess of the applicable statutory coverage limit. We are required to pay an annual fee to the Swedish National Debt Office, which is calculated based on the volume of guaranteed deposits and the Swedish National Debt Office’s assessment of our risk profile. We do not collect any time deposits in the United States and as such, our deposits are not subject to the FDIC insurance limits. The table below sets forth consumer deposit balances by geographic location as of December 31, 2025, and December 31, 2024, 2023 and 2022. As of December 31, (in $ millions) 2025 2024 2023 Germany ............................................................................................................... $10,209 $7,271 $7,169 Sweden ................................................................................................................. 643 752 1,114 Netherlands ......................................................................................................... 1,774 1,306 1,054 Other countries .................................................................................................. 377 181 141 Total ..................................................................................................................... $13,003 $9,510 $9,478 KLARNA GROUP PLC200 The table below sets forth consumer deposit balances by source as of December 31, 2025, 2024, and 2023. As of December 31, (in $ millions) 2025 2024 2023 Klarna Bank AB ................................................................................................. $7,679 $5,746 $6,475 Third-party platforms ...................................................................................... 5,324 3,764 3,003 Total ................................................................................................................... $13,003 $9,510 $9,478 KLARNA GROUP PLC201